A la recherche des Merit Goods

Abstract

Musgrave’s so-called merit goods, introduced in 1957, intend to deal with the situations where the social weight or concern of a good differs from the information given by individual preferences. Merit goods are often referred to as a case for government intervention in education, health care or biodiversity protection policies…. But the theoretical roots of this concept seem a bit fuzzy and are, at best, very controversial. To put it crudely, what –if anything- can justify that government choices rule out individual choices? The paper tries to answer this question. What role do merit goods play in economic theory? The first part of the paper defines the concept of merit good and emphasizes the theoretical issues at stake. The second part studies in what way the concept of merit good can be compatible with economic theory. We show, in particular, how this concept fits well with the development related to individual decision making theory, known as behavioural economics.