Merit goods are goods that society thinks people should consume or receive, no matter what their incomes are

Merit Goods

Governments are concerned not just with the distribution of income, but also with the consumption of particular goods and services.

Merit goods typically include health, education, shelter, and food. Thus we – society – might think that everyone should have adequate housing and take steps to provide it. Is there an economic justification for government intervention in regard to merit goods? In a sense there always is, because the sight of someone who is homeless creates an externality, making everyone else unhappy. By proving housing or shelter for those who would otherwise be on the streets, the government makes the rest of us feel better.

Society’s concern over merit goods is closely related to its concern over the distribution of income. The difference in the case of merit goods is that society wants to ensure an individual’s consumption of particular goods rather than goods in general. Some of the goods provided by the government (such as health and education) are merit goods.

With merit goods, as with public goods, government concern with consumption does not justify government production. Economic theory justifies policies that ensure that individuals consume the specific amounts of merit goods. It does not say that the government should produce these goods itself, nor does it say exactly how the government should intervene.

One way would simply be to require that the right amounts of the goods be consumed. In the case of education, everyone has to go to school up to a certain age. But nobody has to go to a state school; any accredited school will do. In the case of housing, the government can build low-income houses and rent them at a subsidized rate, provide rent supplements, or simply specify minimum housing standards.

The most difficult question that has to be answered in discussing both merit goods and the distribution of income is how society or the government decides who should get what. Any one person can have a perfectly sensible point of view on these issues – for instance, that the more even the distribution of income the better, that the distribution of income we have is best, that people who work harder should be rewarded, or that everyone should have decent housing and no one should starve. Transferring these different opinions into a consistent view that is taken by the government and implemented in taxation and transfer policy is impossible task of policies.

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1. What are merit goods?

2. Give examples of merit goods.

3. Why do you think any society is concerned with merit goods?

4. What are public goods?

5. Surf on the Web to find information on public goods to compare them with merit goods.

6. In what way do governments decide how many merit goods and how much distributed income everyone should get?

Дата добавления: 2014-12-27