The relative decline of a Musgrave ‘Merit Good:’ the case of public support of flagship public universities

Abstract

Fifty years ago, Richard Musgrave put forward the notion of a “merit good”—one that despite its virtue would be undersupplied and under consumed in a free market economy driven by traditional notions of consumer sovereignty. Higher education is considered by many to be a merit good because they believe it generates highly desirable spin-off effects. If higher education has been a merit good, then that status appears to be disappearing. Declining state funding for higher education, increasing tuition rates and highly successful fund-raising by independent institutions have diminished public flagship universities, at least relatively. Consequently, their rankings have declined.