Merit goods

Some goods are underproduced and underconsumed. Least controversially, the class of such goods will include Samuelsonian public goods of varying degrees of purity (i.e., goods that exhibit significant nonappropriability and/or joint consumption characteristics). Unless market provision of such goods is supplemented by nonmarket provision of an appropriate kind, a Pareto-inferior output will result. More controversial is the existence of merit goods, items underconsumed even in ideal markets. Among the goods for which such status has been claimed are the fine arts, attendance at economics lectures, and nutritious cholesterol-free diets. And as well, there can be demerit goods – those that are overconsumed at market prices. A representative listing of contenders for this status would include heroin, cigarettes, gambling, whiskey, and perhaps rock music. While the concept of a public good can be presented in terms that may appear to be value free, it is apparent that the concept of a merit good is fundamentally and ineliminably normative.