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An economic bad is a result of business activity and consumption that is negative. This is the opposite of an economic good. Economic bads are often consequences of producing goods. Ideally, economic systems account for both economic goods and bads. The following are illustrative examples of an economic bad.
Pollution such as air pollution. For example, a factory that produces $1 million in goods per month and $7 million in damages to quality of life due to air pollution.Loss of ResourcesLoss of resources such as poorly managed agriculture that results in soil erosion. Unhealthy FoodA food item that causes poor health and disease.
NoiseAn economic process such as transport that results in noise pollution.Risk such as a highly speculative investment product that constitutes a risk to the stability of a financial system.Loss of privacy such as a company that loses confidential data about customers to a malicious entity.
Misinformation such as a promoter of an investment that spreads false rumors.Destruction of ValueIncentives or systems that destroy value. For example, an executive who stands to make a great deal of money if a company is sold, even if the stock declines 90% before the sale occurs. An example of perverse incentives.
Other impacts to quality of life such as loss of freedom, stress and fear. For example, a pollution emergency that restricts people's freedom of movement as it's dangerous to go outdoors.NotesEconomic measurements such as GDP often don't account for economic bads. This can result in irrational decisions. For example, a war might boost GDP even if it results in a large debt, considerable loss of life, destruction of cities, pollution, shortages of necessities and a general state of unhappiness. This is an example of the broken window fallacy.|
| Type | | | Definition | A result of business activity and consumption that is negative. | | Related Concepts | |
Goods
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