Bad (economics)

An economic bad is the opposite of an economic good. A "bad" is anything with a negative value to the consumer, or a negative price in the marketplace. Refuse is an example of a bad.

A bad is a physical object that lowers a consumer's level of happiness, or stated alternately, a bad is an object whose consumption or presence lowers the utility of the consumer.

With normal goods, a two-party transaction results in the exchange of money for some object, as when money is exchanged for a car. With a bad, however, both money and the object in question go the same direction, as when a household gives up both money and garbage to a waste collector being compensated to take the garbage. In this way, garbage has a negative price; the waste collector is receiving both garbage and money and thus is paying a negative amount for the garbage.

Goodness and badness are an inherently subjective declaration, however. As an example: two diners at a restaurant discover that the "secret ingredient" in the house specialty is peanuts. One of the diners is a peanut-lover, and the other is allergic to peanuts. In this case, peanuts are, in the same time and in the same place, both a good and a bad in economic terms.

Additionally, a good consumed by the same individual can turn into a bad over time, and vice versa; the nicotine from cigarettes may give a smoker a feeling of relieved anxiety and reduced stress. Continuing, long-term consumption of cigarettes, however, may have serious adverse effects on a smoker's health, thus turning the utility of cigarettes into the negative. On the other hand, some forms of medical treatment or side effects of medication may seem rather unpleasant to a patient at the time of treatment, but will greatly improve their health and well-being in the long run.

References

  • Varian, Hal R. (2006), Intermediate Microeconomics (London: W.W. Norton & Company)
  • Peter Smith (2012), "Bad Economics" (Melbourne: Connor Court Publishing)

See also

  • Chore division - the problem of fairly dividing a heterogeneous bad among agents with different preferences.

  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.


Bad_(economics)



 
Connect with defaultLogic
What We've Done
Led Digital Marketing Efforts of Top 500 e-Retailers.
Worked with Top Brands at Leading Agencies.
Successfully Managed Over $50 million in Digital Ad Spend.
Developed Strategies and Processes that Enabled Brands to Grow During an Economic Downturn.
Taught Advanced Internet Marketing Strategies at the graduate level.



Manage research, learning and skills at defaultLogic. Create an account using LinkedIn or facebook to manage and organize your IT knowledge. defaultLogic works like a shopping cart for information -- helping you to save, discuss and share.


  Contact Us