Merit and De_Merit Goods

We had an interesting brainstorming session in our AS micro today! We wanted to discuss which examples of consumption and/or production deserved the sobriquet of merit or de-merit goods. The point was made very early on that what each of us regards as socially beneficial or socially damaging depends very much on our own value judgements. And the other aspect of merit and de-merit that we emphasised was the ever-present issue of information failure. Just today there was an article in the Telegraph about how ”taking aspirin can cut breast cancer risk by 20%” and at the same time, we know the risks of addiction to painkillers and other treatments.

This was the list of merit and de-merit goods that my two groups came up with - fuelled it has to be said by a plentiful supply of mini doughnuts and chocolate cookies from Sainsburys! I used this as an example. We wanted to test doughnuts and consider their social benefits (!) but the plastic packaging and waste we created also has a social cost. I have linked to some relevant BBC news stories as well.

Driving without insurance - market failure?

In Britain, every three minutes, the police find an uninsured car. Is the market for motor vehicle insurance failing? I am putting an article together for the next edition of EconoMax and I want to test the water by asking blog readers why they think the scale of uninsured driving in the UK is so high - one of the worst in the European Union. 

A Licence To Print Money?

An innovative method of internalising the externality of smoking? The introduction of a £10 permit to purchase tobacco products has been proposed in an attempt to increase the cost and inconvenience of buying cigarettes and similar goods.

The ban on smoking in enclosed public spaces which began in England in July 2007 has been touted as a considerable success, contributing to a 7% drop in cigarette sales compared with the year before. But this has not been without unintended consequences, highlighted already on these blog pages. And with approximately one third of imported cigarettes already arriving in the country illegally (at a cost of £2bn per year to the UK Treasury), won’t any attempt to drive up the price of legal tobacco products - and the inconvenience of buying them - simply result in greater demand for smuggled goods?

Perhaps more radical and shocking methods to reduce demand for cigarettes are needed (this link shows some of the campaigns that have been used in various countries.)