Monday, September 24, 2007

Ecstasy - An example of a De Merit Good.

The man who took 40,000 ecstasy tablets. at Guardian

"Though the man, who is now 37, stopped taking the drug seven years ago, he still suffers from severe physical and mental health side-effects, including extreme memory problems, paranoia, hallucinations and depression. He also suffers from painful muscle rigidity around his neck and jaw which often prevents him from opening his mouth. The doctors believe many of these symptoms may be permanent."

- I just wonder how he managed to count them all...

The two characteristics of a demerit good are:

1. People underestimate the damage they can do. Basically this is a normative statement that people make irrational (bad) choices. In this case, the man choose to ignore the likely mental health problems arising from excessive consumption of drugs.

2. Usually cause negative externalities. In this case the negative externality will include the cost to the NHS of treating his mental health problems.

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