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This excerpt from the New York Times on Thursday describes the impact of exposing children to aging lead-based paint: "A 2005 study concluded that increasing a child's blood lead level to 10 micrograms from 2
This excerpt from the New York Times on Thursday describes the impact of exposing children to aging lead-based paint: "A 2005 study concluded that increasing a child's blood lead level to 10 micrograms from 2.4 translated to a 3.9-point drop in I.Q. A 2015 study of Chicago elementary school students concluded that blood lead concentrations of five to nine micrograms explained up to 15 percent of failing grades in reading and math."
With public goods, common resources, and externalities in mind, what sort of market failure is this? Please explain.
Expert Solution
This is the case of missing markets.
Missing market is the type of market failure when free market fails to provide a certain good despite existing demand for it. Like here, that is very often the case of public goods.
Public goods are the type of non-rival and non-excludable goods from which everyone can benefit but it is not clear who and how pays for them. Usually the provider is the government and they are financed through taxes. Public education is one of the examples of such a public good which is provided by government and financed by taxes.
Like most public goods or common resources, public education also faces overuse and under-financing. The failing grades of the students are in this case a negative externality caused precisely by the under-financing of this public good.
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