The Concept 'Merit Good': The Ethical Dimension in Economic Theory and the History of Economic Thought or the Transformation of Economics into Socio-Economics (French)

31 Pages Posted: 20 Nov 2003

Date Written: 2001

Abstract

In this paper, I point out that economists feel epistemologically obliged to introduce a concept in their science that demonstrates the unavoidability of ethical considerations in economic theory. It is the concept of "merit good." The concept of merit good refers to economic activities in which the state disregards the preferences of consumers (obligatory education, prohibition of smoking). Such activities cannot be justified by the "value-free" principle of "Pareto-efficiency," according to which changes in the economy are unambiguously better if some people are better off and nobody is worse off. I object to attempts by economists to reduce the concept of merit good to that of public good, which is conceptualized as obeying the Pareto-principle. Instead, I demonstrate with the help of the history of economic thought (e.g., Adam Smith, Henry Simons), that for the economy to work, to work efficiently, and to work justly a series of institutional arrangements must be imposed. These institutional arrangements fit, in my opinion, the definition of merit good, because they are imposed against the self-interests of some and intend to do so. However, giving the state the right to impose institutional arrangements on the economy, unavoidably raises ethical questions. With Kantian arguments I demonstrate, first, the instrumental necessity of some institutional arrangements (e.g., property rights) and then end with pointing to the categorical necessity of other institutional arrangements (some forms of public education and some measures of the social welfare state).

The paper does not so much provide ethical arguments for specific governmental actions, as it articulates a series of governmental actions (institutional arrangements) that are either instrumentally or categorically necessary for the economy. Whether they are instrumentally or categorically necessary, the governmental actions raise ethical questions, some of which I briefly address. The paper makes it clear that, contrary to the thesis of Milton Friedman, a value-free economic theory is technically impossible.

Note: The downloadable paper is in French.

Suggested Citation

Ver Eecke, Wilfried, The Concept 'Merit Good': The Ethical Dimension in Economic Theory and the History of Economic Thought or the Transformation of Economics into Socio-Economics (French) (2001). Available at SSRN: https://ssrn.com/abstract=350260 or http://dx.doi.org/10.2139/ssrn.350260

Wilfried Ver Eecke (Contact Author)

Georgetown University ( email )

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