Bad (economics)
Encyclopedia
In economics
, a bad is the opposite of a good. A "bad" is anything with a negative value to the consumer, or a negative price in the marketplace. Garbage 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 good
s, a two-party transaction results in the exchange of money for some object, e.g. money is exchanged for a car
. With a bad, however, both money and the object in question go the same direction, e.g. a household loses money and the garbage. The waste collector
is being compensated to take the object from the consumer. 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 peanut
s. 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 cigarette
s 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.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, a bad is the opposite of a good. A "bad" is anything with a negative value to the consumer, or a negative price in the marketplace. Garbage 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
Utility
In economics, utility is a measure of customer satisfaction, referring to the total satisfaction received by a consumer from consuming a good or service....
of the consumer.
With normal good
Normal good
In economics, normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive income elasticity of demand...
s, a two-party transaction results in the exchange of money for some object, e.g. money is exchanged for a car
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
. With a bad, however, both money and the object in question go the same direction, e.g. a household loses money and the garbage. The waste collector
Waste collector
A waste collector is a person employed by a public or private enterprise to collect and remove refuse and recyclables from residential, commercial, industrial or other collection site for further processing and disposal...
is being compensated to take the object from the consumer. 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
Secret ingredient
A secret ingredient is a component of a product that is closely guarded from public disclosure for competitive advantage. Sometimes the ingredient makes a noticeable difference in the way a product performs, looks or tastes; other times it is used for advertising puffery...
" in the house specialty is peanut
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
s. 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
Nicotine
Nicotine is an alkaloid found in the nightshade family of plants that constitutes approximately 0.6–3.0% of the dry weight of tobacco, with biosynthesis taking place in the roots and accumulation occurring in the leaves...
from cigarette
Cigarette
A cigarette is a small roll of finely cut tobacco leaves wrapped in a cylinder of thin paper for smoking. The cigarette is ignited at one end and allowed to smoulder; its smoke is inhaled from the other end, which is held in or to the mouth and in some cases a cigarette holder may be used as well...
s may give a smoker a feeling of relieved anxiety
Anxiety
Anxiety is a psychological and physiological state characterized by somatic, emotional, cognitive, and behavioral components. The root meaning of the word anxiety is 'to vex or trouble'; in either presence or absence of psychological stress, anxiety can create feelings of fear, worry, uneasiness,...
and reduced stress
Stress (biology)
Stress is a term in psychology and biology, borrowed from physics and engineering and first used in the biological context in the 1930s, which has in more recent decades become commonly used in popular parlance...
. 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.