A Level Economics Mind Map/ Why Education is considered as a merit good

Why education is a merit good — explanation

Use these points as a concise, student-friendly explanation right below your mind map. They align with typical 2-mark responses: one clear reason plus a developed link.

Information Failure ? Under-consumption

• Consumers underestimate benefits of education (imperfect information).
• They focus on short-term costs (fees, time) and miss long-term gains.
• Missed gains include higher lifetime earnings, better career opportunities, and personal development.
• Result: market demand is below the socially desirable level ? under-consumption.

Merit goods = undervalued privately Policy link: information campaigns

Positive Externalities ? Social Benefits

• Education creates benefits to others beyond the individual learner.
• Examples: more productive workforce, higher innovation, improved civic outcomes.
• Therefore, social marginal benefit > private marginal benefit.
• Market on its own provides too little education ? case for government intervention.

External benefit = spillover gain Policy link: subsidies/public provision

Exam tip: For a 2-mark answer, give one pathway clearly: either information failure ? under-consumption or positive externalities ? social benefit. Add a short consequence (e.g., “justifies subsidies/public provision”) to secure the second mark.