Merit goods

Merit goods are goods or services that are deemed to be socially desirable and are therefore provided by the government or other public bodies. Examples of merit goods include education, healthcare, and public transportation. These goods are considered to have positive externalities, meaning that the benefits they provide to society as a whole are greater than the benefits they provide to the individual consumer. As a result, they are often provided free or at a reduced cost to ensure that everyone has access to them, regardless of their ability to pay.

Reasons for government spending on merit goods

There are a number of reasons why merit goods should be financed by government. One of the main reasons is that merit goods are considered to have positive externalities, meaning that the benefits they provide to society as a whole are greater than the benefits they provide to the individual consumer. This means that the market may not provide enough of these goods and services, so government intervention is necessary to ensure that everyone has access to them.

Another reason is that merit goods are considered to be essential for the development and well-being of society. For example, education is considered essential for personal development and for the development of a skilled workforce, while healthcare is essential for the physical and mental well-being of individuals and society as a whole.

Additionally, some merit goods, such as public transportation, are considered to be infrastructure, which is necessary for the functioning of society and the economy.

Finally, some merit goods are provided to certain groups that are considered to be in need of special assistance, such as low-income families or the elderly, and are not able to pay for these goods and services.

All these reasons make government financing of merit goods a necessary step to ensure that everyone has access to these goods and services and that they are available in sufficient quantity and quality.

Reasons against goverment financing merit goods

There are a number of reasons why some people may argue that merit goods should not be financed by government. One of the main reasons is that government financing of merit goods can be costly and may lead to budget deficits. This could lead to higher taxes or government debt, which can be a burden on taxpayers and future generations.

Another reason is that government financing of merit goods can lead to inefficiency and lack of competition. If the government is the sole provider of these goods and services, there may be little incentive to innovate or improve quality.

Additionally, some argue that government financing of merit goods can lead to a lack of personal responsibility. If people are not paying for these goods and services themselves, they may be less likely to use them responsibly or appreciate their value.

Some people may also argue that government financing of merit goods can lead to overuse of these goods and services, which can be costly for the government and for society as a whole.

Finally, some people may argue that government financing of merit goods interferes with personal freedom and choice, as it may limit the ability of individuals to make their own decisions about how to spend their money.

It's important to note that these are some of the arguments against government financing of merit goods and there could be counter arguments for each of them. Ultimately, the decision on whether to finance merit goods by government or not depends on the specific context and trade-offs that are involved.

Merit goods — recommended articles

Employment — Parallel economy — Money — Local market — Precariat — Policy instrument — Activity center — Income stream — Structural inflation

References

• Fiorito, R., & Kollintzas, T. (2004). Public goods, merit goods, and the relation between private and government consumption. European Economic Review, 48(6), 1367-1398.
• Nichols, D., Smolensky, E., & Tideman, T. N. (1971). Discrimination by waiting time in merit goods. The American Economic Review, 61(3), 312-323.
• Desmarais-Tremblay, M. (2019, July). The normative problem of merit goods in perspective. In Forum for Social Economics (Vol. 48, No. 3, pp. 219-247). Routledge.

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