Merit goods

Why is it that markets tend to under-produce these goods?  It is essentially because consumers, in general, do not appreciate the total benefits that each service provides to both themselves and/or society more generally.  In this respect, consumers would tend to spend an insufficient amount of money on these services, which leads to relatively low production levels.  For example, health food can be considered a merit good because the consumption of health food will provide long term benefits for the consumer (such as fewer illnesses) as well as benefits for society more generally (such as less strain on the nation’s health care system).  Without some form of government intervention, some consumers would tend to over-consume junk foods (de-merit goods) and under-consume health food.  In simple terms, these consumers are either ignorant of the long term benefits of health food consumption or lack the discipline to make correct choices on most occasions. Accordingly, governments provide funding to promote healthier lifestyle choices.  This includes Community Food Grants to support the establishment or improvement of community food initiatives, such as farmers’ markets, food cooperatives, food hubs, community gardens and city farms.