Final answer:
The term for the government spending more on public transportation leading to individuals spending less on private transportation is a 'shift from private consumption to public provision.' This is part of public sector spending on public goods, which can change consumer behavior and benefit the society through collective funding, primarily from tax revenue.
Step-by-step explanation:
The term used to describe the scenario where government spending on public transportation leads to reduced individual spending on private transportation is often referred to as a shift from private consumption to public provision. This typically happens because a public good, like transportation infrastructure, is enhanced by the government, thereby changing consumer preferences or behaviors.
For example, if the government provides free or subsidized public transportation, individuals might choose to use these services instead of driving their own cars or paying for other private transport options, which could save them money and align with the encouragement of using environmentally friendly public transport options.
Public goods, such as transportation services, are characterized by their non-excludable and non-rival nature, meaning they are accessible to all members of the public and one person's use does not prevent another's. The government, recognizing the benefits that public goods bring to society, might choose to invest in these services and fund them through tax revenue.
As public sector spending has an enormous impact on resource allocation, an increase in government funding for public transportation could stimulate local economies by providing jobs and growth. These decisions are based on the belief that the associated benefits of government spending justify the costs which are typically funded by taxpayers.