Volume 11, 2006
Agency Issues and the Production Of Merit Goods
In any society, the political feasibility of transforming a private good into a public merit good financed with tax dollars will depend on the skewness of the income distribution in that society. In Canada, the income distribution is positively skewed and various merit good programs have been introduced. The transformation of health care into a merit good has created a number of new stakesholders each with legitimate claims on the resources of the health care system. The delivery
of quality health care to the sick, in a timely fashion, is no longer the primary objective of the health care system. It is only one objective among many. For the families of the 2000 victims who died as a result of the C. difficile epidemic in Montreal it might appear that the government did not fulfill its responsibilities to society and perhaps individual caregivers were negligent in their duties. However, it should be noted that, given the systematic causation and the system of incentives that is a central component of a merit good system, each member of the health care delivery system acted rationally. No one did anything wrong.