The Privatization of Roads and Highways - Ludwig von Mises Institute

132 The Privatization of Roads and Highways
applicable anywhere, they are applicable only to truly random
events such as flipping a coin or tossing dice.
In terminology employed by Mises, what we have here is a
confusion of class probability (“We know, or assume to know,
with regard to the problem concerned, everything about the
behavior of a whole class of events or phenomena; but about the
actual singular events or phenomena we know nothing but that
they are elements of this class”) with case probability (“We know,
with regard to a particular event, some of the factors which determine
its outcome; but there are other determining factors about
which we know nothing”). 48 Road openings and their effects on
sales are, at best, amenable to study in terms of case probability.
Econometrics, however, can function only in a milieu of class
probability. It is therefore inappropriate to use econometrics in
measuring a new belt highway’s effects on sales.
REVEALED PREFERENCES
We now return to our second criticism of the Samuelson-
Savas-Haveman assertion that the market will fail, in the case of
public goods, because economic actors will fail to register their
true preferences. The basic drawback of this approach to the
question of “revealed preference” is the vantage point from
which the decision-maker is viewed. Let us, then, focus our
attention on how these economists view market participants who
refuse to voluntarily purchase the public good on the market.
Under their theory a market actor would have as his constant
refrain, “Let George do it.” Unwilling to spend his own money
on a good which he may enjoy through the payment of others,
this person contributes to the unlikelihood of private provision of
that good.
An embarrassing question arises: How does the economist
propose to determine the preference scales of market participants?
It might be suggested that each individual knows his own
preference ranking by introspection, and that the rest of us come
48 Mises, Human Action, pp. 107, 110.