Free-rider problem in the context of Property right

In economics, excludability is the degree to which a good, service or resource can be limited to only paying customers, or conversely, the degree to which a supplier, producer or other managing body (e.g. a government) can prevent consumption of a good. In economics, a good, service or resource is broadly assigned two fundamental characteristics; a degree of excludability and a degree of rivalry.

Excludability was originally proposed in 1954 by American economist Paul Samuelson where he formalised the concept now known as public goods, i.e. goods that are both non-rivalrous and non-excludable. Samuelson additionally highlighted the market failure of the free-rider problem that can occur with non-excludable goods. Samuelson's theory of good classification was then further expanded upon by Richard Musgrave in 1959, Garrett Hardin in 1968 who expanded upon another key market inefficiency of non-excludable goods; the tragedy of the commons.

Welfare reforms are changes in the operation of a given welfare system aimed at improving the efficiency, equity, and administration of government assistance programs. Reform programs may have a various aims; sometimes the focus is on reducing or increasing the welfare state and at other times reforms may aim to ensure greater fairness and effectiveness at the same total welfare spending. Classical liberals, neoliberals, right-wing libertarians, and conservatives generally criticize welfare and other tax-funded services for reducing incentives to work, exacerbating the free-rider problem and redistribution. On the other hand, in their criticism of capitalism, both social democrats and other socialists generally criticize welfare reforms that minimize the public safety net and strengthen the capitalist economic system. Welfare reform is constantly debated because of the varying opinions on a government's need to balance providing guaranteed welfare benefits and promoting self-sufficiency.

From the 1970s, welfare systems came under greater scrutiny around the world. Demographic changes such as the post-war "baby boom" and the subsequent "baby bust", coupled with economic shifts such as the 1970 oil shocks, led to aging populations, a dwindling workforce, and increased dependency on social welfare systems, which inevitably brought up the issue of welfare reform. U.S. systems primarily focused on reducing poor single parents' need for welfare assistance through employment incentives. The United Kingdom focused primarily on reducing general unemployment through the New Deal introduced by the New Labour government in the 1990s. The Netherlands emphasized reforming disability programs, and Latin America focused primarily on pension reforms.