Factors in lay preferences for government or private supply of services

Three studies investigated how New Zealanders' and English citizens' preferences for whether services should be supplied privately or by the government related to the nature of the service. In Study 1 participants indicated aspects of the service they thought important for their supply preferences. Study 2 presented participants with scenarios in which aspects of the service were systematically manipulated and found that if the service was related to health, if the number wanting or needing it was high, if the service produced a negative externality, and if supplier was a monopoly, the preference for government supply was significantly increased. In Study 3, participants were presented with different services and their preferences for government supply were found to be increased if they rated the service as having few suppliers and if the service was rated as important for health. Overall, the relevant aspects of the service for deciding whether lay people would prefer government supply appear similar to those that determine when they would like scarce goods to be distributed by regulation rather than by the market. Lay people's preferences take into account some but not all of the factors suggested as relevant by economic theory.