[Cross-posted on Agoraphilia, where comments are enabled.]

A recent re-watching of the movie The Incredibles — and a conversation with my Agoraphilia co-blogger Tom W. Bell — got me pondering the economics of superheroes. Specifically, how should superhero services be funded? At the beginning of the movie, it appears the government has been hiring, or at least subsidizing, heroes to protect the public. Would such funding be justified on economic grounds?

As an alternative, superheroes could fund themselves with payments from potential victims. If you wanted superhero protection, you could subscribe to your local Justice League’s protection program. The difficulty with this model is that superheroes seem to possess the key features of a public good, at least in some of their capacities. Two aspects of superhero service tend to make it non-excludable. First, if heroes regularly save anonymous victims — say, by protecting little old ladies from purse-snatchers — they cannot effectively deny services to non-payers. Heroes could try to exclude them by, say, demanding proof of a Justice League subscription. But by the time the checking’s done, the crime could be over — the victim already victimized and the villain long gone. When time is of the essence, asking for advance proof of payment just isn’t feasible. Second, superheroes may provide non-excludable benefits simply by apprehending non-discriminating villains. When Leather-Wing finally takes out the Jester, all of the Jester’s potential future victims are better off, whether or not they contributed to Leather-Wing’s hero training. These two factors mean that potential victims have an incentive to free-ride, since they’ll be protected whether they’ve paid or not.

The other key feature of a public good is non-rivalry: the cost of providing the service to one more person is effectively zero. Now, for protection of specific individuals and households, superhero services are rivalrous: it takes more superheroes (or superhero time) to protect a larger population. But the protection of geographic areas — e.g., stopping Galactor from dropping a meteor on Megalopolis — is indeed non-rivalrous. It costs the same (in time, effort, etc.) to save Megalopolis whether its population is 5 million or 10. In this respect, superhero services are much like the levees that were supposed to protect New Orleans.

So at least some superhero services are public goods. Does it follow that government support is required? Not necessarily. Despite the simplistic claims of some econ textbooks, public goods can be provided privately. Some heroes will be heroes out of the goodness of their hearts; indeed, altruistic heroes dominate the comic-book genre. And some heroes may have low enough opportunity cost of their time and effort that even a meager level of voluntary funding would be sufficient. The real question isn’t whether superhero services will be provided at all (in a universe where they are possible), but whether enough of them will be provided. At the margin, there could be some potential heroes whose total benefit to the public would be great enough to justify the sacrifice, but who choose to live normal lives because they bear all the burdens while garnering almost none of the benefits. These marginal superheroes could be coaxed into donning the spandex by a large enough public subsidy.

Maybe superheroes could be supported by charitable donations. Red Cross Man might get all the funding he needs. Unlike the Justice League subscription model, the RCM model harnesses widespread altruism: even if the heroes themselves aren’t especially altruistic, they can be funded via the contributions of a generally altruistic public. But like any model that relies heavily on altruism, the charity model can by stymied by free riders. Selfish people can game the system by refusing to make contributions while still experiencing the benefits.

Or maybe superheroes could be covered as a kind of marketing expense. Just as broadcast television (which has both features of a public good) is funded by advertising revenue, Wal-Mart Woman could fight the good fight for peace, justice, and always low prices. And that’s no joke. Companies will do a lot to burnish their public image and gain the attention of consumers.

Still, we cannot blithely assume private sector will provide superhero services at the efficient level. Altruistic and marketing motives might have no particular correlation with the actual need for superhero services. To make a strong case against public funding of superheroes, we need to consider the potential for government failure. To be continued!

This entry was posted on Tuesday, September 13th, 2005 at 6:11 pm by Glen Whitman and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.