The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 135
reveals either that he has changed his taste or that at least he
prefers it to the money he exchanged for it. His action has spoken,
in this interpretation, louder than all his protestations to the
contrary.
Second, and perhaps in the present scenario more straightforwardly,
we can reinterpret the good that was actually purchased.
What was really bought was not only chocolate, but
chocolate plus the pleasure of “proving Mises wrong.” If it had
been a question of the chocolate alone, a true chocolate hater
would not have purchased it perhaps at any positive price. It was
the compensatory pleasure of attempting to disprove the thesis
(that only human action establishes value orderings) that more
than made up for the disutility of the chocolate. And if the person
went so far as to eat the hated chocolate in order to prove his
point, our interpretation would still apply and would be fully
consistent with the Misesian view.
The trouble with the revealed preference doctrine put forth
by Samuelson, Savas, and Haveman is that it assumes a preference
ordering on the part of the general public which is completely
divorced from actual choices and actions. There is no
room in scientific economics for “true preferences” which are not
embodied in action. Samuelson may contend that “it is in the
selfish interest of each person to give false signals”—i.e., signals
which underestimate that person’s true value for the collective
good—but he cannot show that his interpretation has any scientific
validity. This is not to say that his statement is meaningless.
Indeed, in the ordinary discourse that has room for measured
and interpersonal utility comparisons, it is perfectly sensible. But
if we are to remain true to the strict discipline of economics, we
shall have to relinquish such loose talk from our vocabulary.
There is simply no action that anyone can take which would
demonstrate the truth of Samuelson’s contention. Samuelson
might reply with an admission that he is citing inaction, not
action; a refusal to purchase, not an actual purchase. The problem,
though, is that (temporary) inaction is consistent with all too
many other things. No one can logically reason from the fact that
a person is not buying something (a “public good”) to the con-