Merit goods, such as medical care, education, and museums, are provided or subsidized by the government because their supply would be inadequate if left to market forces. Their benefits are greater than the market can value and are specific to the individual receiving them. Critics argue that it is an excuse for government intrusion.
A merit asset refers to goods or services provided for the benefit of society. Merit goods are often provided or subsidized by the government because their supply would be inadequate if controlled by private companies or left to market forces. These are things like medical care, education and museums that are provided to the public cheaply or free because the government wants to encourage their use and consumption.
In economics, a commodity is different from other goods in that its benefit to the individual or society is not certain at the “point of consumption,” when the benefit is conferred. With education, for example, society generally regards it as something of value, both to the individual and to society. It may take years for an education to show economic benefits to the student. However, personal enrichment is assumed to come from education. It is also believed that society will benefit from an educated individual with marketable skills.
Another distinctive economic aspect of a merit good is that its benefits are generally greater than the market can value and are specific to the individual receiving them. Museums and libraries are considered important for the cultural knowledge and education they can provide to the public, yet many people may never visit one. The economic theory is that social benefits are more important than the level of private consumption.
With a merit merit such as free or low cost addiction services, there is a benefit to the individual in becoming substance free. There are also many potential earnings for the company. The healer’s family will benefit. If successful in treatment, the patient could likely become a more productive employee. Another individual may fail treatment or succeed only after years of multiple attempts.
For the most part, valuable assets are considered “equity” assets that shouldn’t be tied to the ability to pay for them. Their long-term benefits are considered greater than the short-term benefits gained. In economics, a merit good is different from a public good. A public good, like clean air or police protection, cannot be denied to anyone. It is shared by all without losing any value.
Critics of the merit goods theory argue that it is simply an excuse for unwarranted government intrusion into what is “best” for people. Things like using government health care or having mandatory income withholding for retirement are choices that many people wouldn’t make on their own. Consumers should not fund activities that a government deems “good for the people,” such as public museums, ballets, orchestras, or television stations.
Protect your devices with Threat Protection by NordVPN
