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Merit good
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Merit good
The economic concept of a merit good (or worthy good), originated by Richard Musgrave (1957, 1959), is a commodity or service that it is judged an individual or society should have on the basis of some concept of benefit, rather than ability and willingness to pay. The term is, perhaps, less often used in the 2020s than it was during the 1960s to 1980s, but the concept still motivates many economic actions by governments. Essentially, these are private goods that are subject to collective consumption.
Examples of merit goods include in-kind transfers to people such as the provision of food stamps to assist nutrition, the delivery of healthcare services to improve quality of life and reduce morbidity, and subsidized housing and education.
The opposite of a merit good is a demerit good, "a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves" (e.g., tobacco, alcoholic beverages, recreational drugs, gambling and junk food).
A merit good can be defined as a good which would be under-consumed (and under-produced) by a free market economy, for two main reasons:
In many cases, merit goods are services which proponents believe should be made available universally to everyone in a particular situation, an opinion that is similar to that of the concept of primary goods found in work by philosopher John Rawls or discussions about social inclusion. Lester Thurow claims that merit goods (and in-kind transfers) are justified based on "individual-societal preferences": just as we, as a society, permit each adult citizen an equal vote in elections, we should also entitle each person an equal right to life, and hence an equal right to life-saving medical care.
On the supply side, it is sometimes suggested that there will be more endorsement in society for implicit redistribution via the provision of certain kinds of goods and services, rather than explicit redistribution through income.
It is sometimes suggested that society in general may be in a better position to determine what individuals need, since individuals might act in a fashion which is deemed not to be in their own interest by others (for example, using welfare payments to buy alcohol instead of nutritious food).
Sometimes, merit and demerit goods (goods which are considered to affect the consumer negatively, but not society in general) are simply considered as an extension of the idea of externalities. A merit good may be described as a good that has positive externalities associated with it. Thus, an inoculation against a contagious disease may be considered as a merit good, because others who may not catch the disease from the inoculated person also benefit.
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Merit good AI simulator
(@Merit good_simulator)
Merit good
The economic concept of a merit good (or worthy good), originated by Richard Musgrave (1957, 1959), is a commodity or service that it is judged an individual or society should have on the basis of some concept of benefit, rather than ability and willingness to pay. The term is, perhaps, less often used in the 2020s than it was during the 1960s to 1980s, but the concept still motivates many economic actions by governments. Essentially, these are private goods that are subject to collective consumption.
Examples of merit goods include in-kind transfers to people such as the provision of food stamps to assist nutrition, the delivery of healthcare services to improve quality of life and reduce morbidity, and subsidized housing and education.
The opposite of a merit good is a demerit good, "a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves" (e.g., tobacco, alcoholic beverages, recreational drugs, gambling and junk food).
A merit good can be defined as a good which would be under-consumed (and under-produced) by a free market economy, for two main reasons:
In many cases, merit goods are services which proponents believe should be made available universally to everyone in a particular situation, an opinion that is similar to that of the concept of primary goods found in work by philosopher John Rawls or discussions about social inclusion. Lester Thurow claims that merit goods (and in-kind transfers) are justified based on "individual-societal preferences": just as we, as a society, permit each adult citizen an equal vote in elections, we should also entitle each person an equal right to life, and hence an equal right to life-saving medical care.
On the supply side, it is sometimes suggested that there will be more endorsement in society for implicit redistribution via the provision of certain kinds of goods and services, rather than explicit redistribution through income.
It is sometimes suggested that society in general may be in a better position to determine what individuals need, since individuals might act in a fashion which is deemed not to be in their own interest by others (for example, using welfare payments to buy alcohol instead of nutritious food).
Sometimes, merit and demerit goods (goods which are considered to affect the consumer negatively, but not society in general) are simply considered as an extension of the idea of externalities. A merit good may be described as a good that has positive externalities associated with it. Thus, an inoculation against a contagious disease may be considered as a merit good, because others who may not catch the disease from the inoculated person also benefit.