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Why is education a merit good?
Education as a merit good For example, being educated not only provides the individual with private benefits, including job prospects and pay, but it also provides benefits to others. The allocation and sharing of these benefits will vary considerably depending on the type of education being considered.
Is education a public or merit good?
Merit goods include primary education, basic health care, life insurance to poor people etc. The report by the National Institute of Public Finance and Policy titled “Central Government Subsidies in India” (2004), classifies merit goods under two categories- Merit I and Merit II, in terms of their priority.
Why is education not a merit good?
They will be well aware of the sacrifice required to study, but will not know the benefits to them in terms of a future job, salary, status and skills. Therefore, with education, as with other merit goods, there is a significant information failure in terms of expected benefits.
What is a merit good?
Economists define merit goods as goods and services that have external benefits to society when they are produced and consumed. Unlike public goods though, they are both rivalrous and excludable in nature. Education is the classic example of a merit good. An educated population brings widespread benefits to the society.
For example, education is considered as a merit good. When people are educated they bring wider benefits to society in terms of lower crime, higher productivity in the economy and potentially higher taxes from employment.
Is education a merit good or an investment?
Education as a merit good. Parents may be unaware of the longer-term benefits that their children might derive from education. Education is a long-term investment decision. The private costs must be paid now but the private benefits (including higher earnings potential over one’s working life) take time to happen.
What is the role of the government in providing merit goods?
The government will usually intervene and provide merit goods free of charge, or subsidised, so that everyone can consume them. Consequently society will be better off as a whole due to the increase in external benefits created by merit goods. For example, education is considered as a merit good.