Bad (economics)
In
economics, a
bad is the opposite of a
good. Bads can helpfully be thought of as any goods with a negative value to the consumer, or a negative price in the marketplace. Garbage is an example of a bad.
A bad is a physical object that lowers a consumer's level of happiness, or stated alternately, a bad is an object whose consumption lowers the utility of the consumer.
With
normal goods, a two-party transaction results in the exchange of money for some object, e.g. money is exchanged for a
car. With a bad (such as garbage), however, both money and the object in question go the same direction, e.g. a household loses money and the garbage. The garbageman is being compensated to take the object from the consumer. In this way, garbage has a negative price, the garbageman is receiving both garbage and money, and thus is paying a negative amount for the garbage.
Goodness and badness are an inherently subjective declaration, however. As an example: two diners at a restaurant discover that the "secret ingredient" in the house specialty is
peanuts. One of the diners is a peanut-lover, and the other is allergic to peanuts. In this case, peanuts are, in the same time and in the same place, both a good and a bad in economic terms.
