Demerit Goods

Demerit goods are goods that are considered unhealthy or socially harmful, and people tend to overconsume them because their negative effects are not immediately obvious or appreciated. Examples include cigarettes and alcohol. Governments often regulate or tax these goods to reduce their consumption, aiming to protect individuals and society from potential harm. Essentially, demerit goods are products where individual choices may lead to negative consequences that justify some level of intervention.