The goal of all governments is or should be to increase the well-being of their citizens. Generally, well-being means just feeling well. Well-being can be achieved by satisfying the needs and / or eliminating unnecessary desires and dreams. In economic terms, ‘meeting needs’ implies facilitating the consumption of different types of goods. There are different opportunities for classifying or grouping goods. Here we divide the goods into types based on two characteristics: rivalry and excludability. On the basis of the existence or non-existence of these characteristics, the goods can be divided into four classes: private goods, club goods, common goods, and public goods.
The market economy is relatively successful in providing private and club goods but fails in the provision of public and common goods. This situation is called market failure. In a market economy, governments deal with solutions to market failures. The organization of the distribution of public and common goods depends on the government’s socio-economic policy. According to Esping-Andersen (1990), such an approach may be liberal, social-democratic, or corporate-conservative.
The main purpose of this study material is to provide an overview of how different types of welfare states deal with the provision of public and common goods and in doing so increase the well-being of citizens. To achieve this goal we will cover the following topics:
- How to explain well-being?
- How is classifying goods and services based on rivalry and excludability?
- Problems with supply of common and public goods.
- Social welfare and the welfare state.
- Three types of social welfare states and their vision of the provision of public and common goods.
- How to measure well-being and the success of social welfare policies.
