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The market/benefit equity and demand perspectives

Last month’s column described the compensatory equity and equality operationalizations of equity, but many communities adopt neither. Rather, they embrace market/benefit equity or demand as their guiding principle for allocation resources.

Market/Benefit Equity

This interpretation of equity is similar to the private-sector market mechanism used to allocate goods and services (i.e., those who receive a service should pay the cost of providing it). The number of services sought by different beneficiary groups that could be provided by a park and recreation agency invariably exceeds the resources it has available, so priorities have to be identified.

If a neighborhood desires to have a higher level of service than the norm, then a special taxing district may be established to enable those residents to pay for it. More commonly, it suggests that, whenever possible, a full-cost recovery pricing policy should be adopted for recreation services.

Two mechanisms are available for equitably prioritizing which services should be offered. First, when users pay a break-even price for all recreation services, they prioritize services with their wallets. Advocates of this mechanism argue it is a fairer (more equitable) and more responsive mechanism than the alternative, which is an administrative and political process that frequently is cumbersome and controversial. The administration option too often results in inequities whereby some services are under-resourced or discarded, while others are over-resourced. Thus, priority is given to “wrong” services, in “wrong” quantities and delivered to “wrong” groups.

When a recreation service is subsidized, it is likely to result in people demanding an unreasonably high supply of it for two reasons. First, some who use the service would not do so if a break-even price were charged. Second, those who benefit from a program correctly perceive that increasing its supply occurs at little or no cost to themselves. Investments in one service means those investments cannot be made in another service, which, therefore, is not offered — so the subsidies create inequities.

Demand

The important principle underlying this approach is that the market, not the agency, determines the pattern of service delivery. Demand may be viewed as transposing the central role of cash in market equity into the context of the participants’ investments in time and effort in services that are subsidized. It allocates services on the basis of demands or “requests,” not on fees or taxes paid. This interpretation of equity is manifested in one of three forms:

• Demonstrated use, which means allocating resources to those park and recreation services that have most participation. For example, parks that receive the most use receive the most maintenance resources.
• Demonstrated interest, by which allocations are based on residents’ responses to surveys or similar measuring instruments. It differs from demonstrated use in that it embraces latent potential participation as well as actual use.
• Advocacy, by which administrators and elected officials prioritize services (and make equity decisions) by the intensity of residents’ engagement in the democratic process.

Ostensibly, demand sounds fair (equitable), but it often harbors a hidden allocation bias since economically disadvantaged residents are likely to make less use of park and recreation services, are less likely to respond to surveys, and tend to be less actively and assertively engaged with government.

The demand interpretation of equity does not guide the allocation of services in a pre-determined agreed direction. Rather, it is a pragmatic, reactive approach that park and recreation managers and elected officials use because it is administratively convenient. Its use is likely to result in an unpredictable and inconsistent set of winners and losers.

However, it is consistent with the utilitarian philosophy that states, “the sole foundation, the end and aim of all good government, should be the greatest happiness for the greatest number of people.” The utilitarian focus is on maximizing aggregated community benefits. It does not address social goals, such as the distribution of those benefits. Budgetary pressures have led many park and recreation agencies to embrace this interpretation of equity. In essence, it emphasizes efficiency and asks: What programs will generate the most participants at the lowest cost per participant?

Long Timeframe

A commitment to an equity policy is likely to require consistency over a period of many years before the intended changes are accomplished. Three factors make it inevitable that short-term, annual shifts will be small.

First, park and recreation department annual budgets invariably are set by making relatively small incremental increases or decreases from an existing year’s budget. Thus, it is likely that, for example, 95 percent of resource allocations reflect historical patterns of an agency’s interpretation of equity in its delivery of services.

Second, the difficulty of substantive changes when using incremental budgeting is reinforced by most park and recreation services being based in existing facilities, which are immovable assets that often were a function of opportunity taxpayer-funded purchases (e.g., funded by bonds and located where land was relatedly inexpensive) or philanthropic donations. Consequently, elected officials are likely to feel obligated to give funding preference to maintaining and operating these fixed assets, even though this may be inconsistent with a new equity policy.

Third, cities are organic. There is regular turnover of elected officials, and it is likely that the value systems of new officials will differ to some degree from those of their predecessors. There also is turnover in neighborhoods, so the profile of communities will change over time because of residents’ changes in preferences and perceptions. The changing membership of both these stakeholder groups make retention of a consistent policy over a multi-year period challenging.

John L. Crompton, Ph.D., is a University Distinguished Professor, Regents Professor and Presidential Professor for Teaching Excellence in the Department of Recreation, Park and Tourism Sciences at Texas A&M University and an elected Councilmember for the City of College Station