Benefit principle

Updated: Aug 20, 2021

The principle that the cost of public expenditures should be met by those who benefit from them. This is an alternative to the ability to pay principle. The benefit principle faces several difficulties in application. There may be groups judged as needy of government support because they do not have the earning power to be self-sufficient. By definition, the benefit principle cannot be applied in this case. Benefits may also be very difficult to measure, especially for non-excludable public goods where there is no revelation of preferences.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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