Merit good
A
merit good is defined in
economics as a
good that is under consumed if provided by the market mechanism because individuals typically consider how the good benefits them as individuals rather than the benefits that consumption generates for others in society. In economic terms, this is because the positive
externalities of the good are not
internalized by consumers. To increase efficiency, the
state may choose to encourage greater production or consumption of a merit good through regulation, subsidies or to produce the good itself.
Goods typically considered to be merit goods include
education and
preventive healthcare.
