Merit Goods : A Concept First Introduced By Richard Musgrave Essay

1632 Words Mar 30th, 2016 7 Pages
Merit goods are a concept first introduced By Richard Musgrave in 1957. Merit goods are goods that are considered worthy of being consumed by all, regardless of consumer’s willingness or ability to pay (Musgrave, 1959). Consumers receive a strong benefit from merit goods, whether or not they recognize it. There are several reasons that a consumer could fail to see the correct worth of a good, whether through lack of complete information, distorted preferences due to advertising, or overvaluing the short term costs compared to long term benefits. Musgrave believed that “there may arise a distortion in the preference structure that needs to be counteracted” (Musgrave, 1959), mainly through government intervention, in the form of full or partial subsidy and legislation. An example of merit goods mentioned in Article 26 of the Universal Declaration of Human rights is Education. Many consider education to be a merit good, as it creates many benefits for those who consume it beyond the obvious ones of greater employability and potential income, and therefore lower levels of inequality. These include a greater life expectancy, greater life satisfaction and greater civic participation (Miyamoto, 2013).

In contrast, Demerit goods are by contrast goods or services which are considered to have a negative effect on the consumer, and yet if left to market forces these goods and services would be overconsumed. Therefore government intervention is required to help limit the consumption…

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