There is a standard South African anecdote that explains why people pay car guards: so that they don’t damage the car while they’re not there.

Obviously, that’s ridiculous. Because we tip car guards on departure, not arrival – so how are they to know if they should key your car in advance?

Unless, of course, you’re trying to park curbside in the vicinity of a cricket game at Wanderers – in which case, the car guards charge you R30 as you exit your vehicle (scandalous).

But those specific situations aside, why do we actually tip car guards?

An Introduction to Public Goods

A good is considered public when it has the following characteristics:

  • the good is non-rivalrous: meaning that my use does not, in general, limit your use. A good example of this is a television station. We don’t all have to watch CNN one at a time. We can all watch CNN whenever we want, provided that we have the right tools (ie. a physical TV) to access it.
  • the good is non-excludable: that is, it is near impossible to exclude people from the benefit. Much as we might like to package air into breathable pockets for those that are willing and able to pay for it – at this point in technological time, it’s just not possible.

The Suggestion: Car Guards Are A Public Good?

Well, in principle:

  • car guards are non-rivalrous, in that a car guard watching my car does not preclude him/her from watching yours.
  • car guards are non-excludable, in that said car guard watches all cars in his/her area, regardless of whether the driver chooses to pay or not at the end.

But Aren’t They Just A Public Menace?

To be clear, something can be both non-rivalrous and non-excludable – but that does not make it a good. Pollution is also non-rivalrous and non-excludable. As is general obnoxiousness. And the loud music coming from my neighbour’s house in the early hours of Sunday morning.

No – in order for something to be a public good, there has to be a public benefit. If car guards are going to be providing us with some kind of public good, then they need to actually be doing something useful.

Some people feel that car guards are just a form of professionalized begging – one in which car guards impose a kind of moral obligation on me to pay them for a service that I did not request after they’ve “provided” it. And a rather dubious service (“guarding my car”) at that. After all, very few car guards are actually going to fight crime on my vehicle’s behalf. Is the promise of R5 (±$0.50) enough to risk even a mild confrontation? Probably not.

So to what end then?

Well, this paper by the South African Labour and Development Research Unit suggests that the real benefit is actually more of a by-product. Car guards, by their presence, create the illusion of detectability and thus deter petty theft. And given how the car guard market has formalised (many restaurants and shopping malls now officially appoint car guards to their parking areas), there does seem to be some truth in that.

Also, car guards are incentivised to keep the drunken and disorderly away from their designated watch areas.

So in summary:

  1. car guards deter petty criminals and drunks; and
  2. if you’re going to be bugged by anyone, rather a car guard than a drunk.

Consider this a somewhat-begrudging epiphany – because occasionally giving R5 to a car guard is much less admin than having to get a broken window repaired, and much less unpleasant than having an intoxicated homeless man getting abrasive at my window.

Meaning that this story ends with everyone winning a little bit (even if the driver doesn’t always realise it).

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at