Merit Want Status and Motivation: The Knight Meets the Self-Loving Butcher,Brewer,and Baker

Abstract

When governments intervene in response to the presence of irrationality, merit wants are provided by reference to experts. Neoclassical microeconomic theory says little about why, when, or how such intervention is required. However, literature in experimental economics identifies anomalous behavior that is irrational by reference to predicted behavior of homo economicus but that is, nevertheless, systematic. This literature informs public finance theory. Government action, difficult to explain by reference to the preferences of homo economicus, can be rationalized by reference to a broader perspective of individual behavior. Although public finance discussion of merit wants has focused on demand, a more general analysis recognizes a rationale for merit want status with respect to supply considerations. Governments have an incentive to describe some public sector goods as merit wants when this affects willingness to supply labor.