Question

Explain why Mankiw classifies fighting poverty as a public good.

Answer 1

There are a few economists who believe that fighting poverty should be a public good. It is seen that though nobody likes living in a society with poverty but nobody also takes an initiative to fight poverty. Fighting poverty can be classified as a public good because:

1. Non rival- It's non rival in consumption because one individual living a comfortable life outside poverty does not affect another individual. But rather poverty is caused when individuals do not have income opportunities.

2. Non excludable- Once poverty is removed from the society, no individual in the society can be excluded from enjoying it's benefit. The benefit would be a society with higher growth opportunities and higher standard of living. This is why people are usually not willing to contribute for removing poverty but they would all want to live in a society without poverty.