With the school year ended and the weather finally showing some hint of summer, pools across Indiana have opened. I was even temporarily able to dispossess myself of two ornery ankle-biters at the local concrete pond for several hours. While hoping for a warm summer, it is useful to think about the economic nature of pools in our state.
Obviously pools are a recreational item, the vast majority of which are provided by the private sector, mostly in backyards. There is a fairly long continuum of private ownership and operation of these pools.
Some pools are operated solely on a for-profit basis as part of a country club. Others are provided on a quasi-private basis, such as often operated as nonprofit affairs, exempt from local property taxes but are paid for through membership dues.
Still other pools are owned by the public, such as municipal pools, but operated under a local contract for concessions, lifeguards and the like. In some cities, the pool is owned and operated by the government, usually a city or town.
This raises important questions, such as why would a city operate a pool, and what should we expect from it as taxpayers?
First, I think that some types of recreational activities can be easily justified as a something economists call a “public good.”
A public good is something that will be under-provided by free markets, primarily because there is no way to prevent a third, nonpaying party from enjoying the benefits of the good. A classic example is national defense. We can all sleep safely due to the benevolent might of the Air Force, even if we don’t pay our taxes.
Clearly a swimming pool doesn’t meet the strict definition of a public good; if you put a fence up and charge a fee you can keep nonpaying patrons away. But having a variety of recreational activities within a community does have many of the characteristics of a public good. Thus, a bundle of activities or venues would meet the standard of a public good, even if some of the individual elements cannot.
The importance of acknowledging a clear public role in the provision of a pool is that they are almost certain to run an operating deficit when the construction and maintenance costs are accounted for. But public goods aren’t expected to be profitable.
The impact is not captured by a balance sheet. Rather, their benefit manifests itself elsewhere; in higher property values of surrounding homes, population growth, better health or reduced youthful mischief.
I am not advocating a vast construction spree of public pools, trails and amphitheaters. However, I do think that we taxpayers would be wise to view a set of high-quality municipal recreational venues as something reasonably provided for public use, not a subsidy or white elephant.
These community attributes are as critical to modern cities as sidewalks and traffic lights, so we should be judging their costs and benefit in the same ways.
Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to email@example.com.