..Merit Goods..

The concept of a merit good introduced in economics by Richard Musgrave (1957) is a commodity which is judged that an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay.
Examples include the provision of food stamps to support nutrition, the delivery of health services to improve quality of life and reduce morbidity, subsidized housing and arguably education.
A merit good can be defined as a good which would be under-consumed (and under-produced) in the free market economy. This is due to two main reasons:
1. When consumed, a merit good creates positive externalities (an externality being a third party/spill-over effect which arises from the consumption or production of the good/service). This means that there is a divergence between private benefit and public benefit when a merit good is consumed (i.e. the public benefit is greater than the private benefit). However, as consumers only take into account private benefits when consuming merit goods, it means that they are under-consumed (and so under-produced).
2. Individuals are myopic , they are short-term utility maximisers and so do not take into account the long term benefits of consuming a merit good and so they are under-consumed.