A meritorious good ( meritorious , from the Latin meritum "merit") is a good in economics for which private demand falls short of the socially desired extent. The term was introduced in 1957 by Richard Musgrave and describes goods that a person "deserves" regardless of their individual performance.
Conversely, a good is referred to as demeritic if this benefit is viewed as less and demand should therefore be hindered.
From the lagging behind in sales, it is usually deduced that they should be promoted through state action, even if the provision of the goods continues to be private. This support meritorious goods is Meritorisierung called.
Causes of Lack of Demand
Merit goods arise as a result of a political decision-making process. From an economic point of view, this process is often influenced by one or more of the following relationships:
- Irrational decisions
- It is believed that consumers do not make their purchasing decisions based on rational considerations because they do not sufficiently think through the advantages and disadvantages or do not understand the complex interdependencies. (Example: not wearing the seat belt in a car was assessed by the legislator as an irrational decision, which led to the introduction of seat belts.)
- Incomplete information
- It is believed that consumers do not have the information necessary for optimal budget allocation. (Example: Homeowners often do not know what savings can be achieved through thermal insulation measures , which is why the state sometimes subsidized corresponding tests.) This also includes information asymmetry and adverse selection .
- Incorrect rate of time preference
- The time preference rate indicates how much less importance one attaches to future events than to present ones. Merit goods are often justified by the fact that the time preference rate of consumers is too high, i.e. they think too little about the future. (Example: The introduction of compulsory long-term care insurance was justified by the fact that people at a young age attach too little importance to their later need for long-term care.)
- External effects
- Due to external effects , the benefit of the individual who decides on demand differs from the overall economic benefit. Since the consumer does not take into account benefits other than his own or not enough in his decisions, the demand does not correspond to the economic optimum. (Example: A house owner assesses the benefits of maintaining a listed facade only according to the benefits to be derived from it for its residents; but since the other residents and visitors to the city also benefit from it, the preservation of the facade is classified as a meritorious asset through conditions and Subsidies promoted.)
The same reasons are also seen as the causes of an excessively high demand for demerit goods measured against the social or political desirability.
Examples of goods considered by law or by scientists to be meritorious are - with very different assessments in individual cases:
- Insurance, in particular social insurance and certain liability insurance
- Information supply through public broadcasting
- statutory pension scheme
- Wealth accumulation
- Job placement and career counseling
- Books (e.g. fixed book prices, low sales tax on print products)
- Youth care
- Health care (e.g. vaccinations , protection against pandemics )
- Agriculture or landscape management (via agricultural policy / subsidies: quotas and grants at national and EU level)
- Biodiversity (e.g. funding through Natura 2000 )
- Security (e.g. police , judiciary )
The following examples show how difficult it is to delimit and justify the offer of meritorious services: high-quality information is also offered in private (e.g. print) media, while public radio and television offer high-quality journalistic services as well as pure entertainment and is consumed. When it comes to sport, a distinction must be made between active-interactive sport and pure “spectator sport”, which is effectively marketed privately. With regard to the good of security, it must again be questioned whether it is actually provided as a public service because of a lack of private demand - this is certainly present in the case of private security services - or because of other politically undesirable consequences.
Examples of goods that are (partially) regarded as demeritic are:
The question of whether a good is merit or demerit also depends on the amount consumed. The excessive consumption of tourism services threatens their recreational effects.
Possible sanctioning measures are:
- Consumption requirements or prohibitions (e.g. compulsory social insurance , compulsory schooling , narcotics law )
- Subsidies or taxes and duties (e.g. cultural funding , mineral oil tax )
- Information and (compulsory) advice for consumers (e.g. health education, guidance on subjects and career choices through numerus clausus )
- Budgeting (e.g. in the health system)
- Indirect intervention in the market (e.g. advertising restrictions for tobacco products)
Proponents of the concept of (de) meritorious goods assume a state that acts paternalistically in the positive sense . Its actors could make better decisions with regard to the social well-being than the individual himself.
On the other hand, the concept is criticized by some libertarians because the provision of merit goods represents an interference with the consumer sovereignty of individuals. This is especially true when it comes to an individual good. To the extent that the concept of merit goods is tenable, it is not new, but is covered by other approaches, above all the theory of market failure ; What is new about the theory of merit goods, on the other hand, cannot be kept on an individualistic basis. In fact, when assessing a good with regard to its merit character, economics abstracts from the individually different preferences of consumers.
Another objection to the free provision of merit goods is that their possible objective use is often not recognized by consumers precisely because they have no price. The inflation of the provision of merit goods could also lead to the deactivation and irresponsibility of consumers.
If meritorious goods are offered privately, but the results of a market control are subsequently corrected, e.g. B. through budgeting or subsidies, there is a risk that they are produced at higher costs than necessary (economic inefficiency) or that production is not geared enough to the wishes of potential beneficiaries (economic inefficiency).
Differentiation from the concept of the collective good
It is difficult to distinguish it from the term collective good. For this purpose, various criteria have already been proposed by Musgrave, but they remain largely unsatisfactory: e.g. For example, the question of whether the orientation towards the interests of consumers dominates the question of provision, whether the decision-making behavior of consumers is to be viewed as irrational, or whether an ethical weighting of individual preferences is possible. Easier to use, but in no case indisputable are criteria such as the extent of paternalistic tutelage of consumers (e.g. through food vouchers); the question of whether a parliamentary majority or a judiciary based on the principle of equality considers the goods to be necessary - as was the case in the 2009/2010 discussion about the Hartz IV rule set; or the close link between benefits and the welfare state principle, for example in contrast to ecologically motivated steering taxes.
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