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Merit goods


Those kinds of commodity which society appears to consider intrinsically good or bad, and so adopts measures to stimulate or discourage their consumption. For example, it may be decided that education is desirable, not simply because it increases the productivity of labour but because it is inherently a good thing. Resources may then be devoted to making it more widely available, e.g. through the state-school system, than would be the case if left to market forces. Similarly, consumption of hard drugs is considered intrinsically undesirable and therefore made illegal. It should be noted that there is an element of paternalism in policies towards merit goods. Society decides that the preferences of individuals cannot be left to determine the levels of consumption of such commodities.

Reference: The Penguin Dictionary of Economics, 3rd edt.