Merit goods

Merit good meaning

A good for which the social benefits or consumption exceed the private benefits

Demerit goods meaning

A good for which the social costs or consumption exceed the private costs

Merit goods

Goods and services that the government feels that people will under consume in a free market

And which ought to be subsidised or provided free at the point of use and funded by the government sector 

Subsidy

A payment made by government or other authority usually to producers for each unit of the subsidised good they produce 

With merit goods individuals may not act in their own interest

Because of imperfect information

Unlike pure public goods merit goods can be

Rival and excludable

Merit goods lead to partial market failure

Consumption of merit goods is believed to

Generate positive externality effects 

Where the social benefit from consumption exceeds the private benefit 

A merit good is a

Product that society values and judges

Examples of merit goods

Health services

Education

Work/ business training programmes

Public libraries and museums