ABSTRACT
This article from Psychology Today (1968) summarizes Wilbur Thompson’s key ideas about urban economics as a field.
Three concepts Thompson describes are fundamental in urban economics: the idea of public goods, merit goods, and payments to redistribute income.
Public goods are provided by government at no cost for everyone to use. Police and fire departments, libraries, and streets are examples.
Merit goods are provided by government for free because they are deemed so important that everyone should have them regardless of whether they would voluntarily choose them and without regard to ability to pay. Free polio shots is an example.
Payments to redistribute income are to meet essential needs of people who cannot afford to pay for them. A monthly welfare payment to an indigent blind person is an example. One group (taxpayers) pays; another group (indigent, elderly, blind people) receives the good.
Thompson and other neo-liberal economists, argue that most goods and services can and should be provided by the private market. Government intervention should occur when there is markets failure, individuals cannot provide a public good, people hurt themselves and others by not paying for merit goods, or indigent people cannot survive without government aid.
