What is an Economic Bad?

What is an Economic Bad?

What is an Economic Bad? Jonathan Poland

An economic bad refers to a negative outcome or impact that results from business activity and consumption. This is in contrast to an economic good, which refers to a positive outcome or impact. Economic bads may arise as a consequence of producing goods, and it is important for economic systems to consider and account for both economic goods and bads. The following are illustrative examples of an economic bad.

Pollution
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 Resources
Loss of resources such as poorly managed agriculture that results in soil erosion.

Unhealthy Food
A food item that causes poor health and disease.

Noise
An economic process such as transport that results in noise pollution.

Risk
Risk such as a highly speculative investment product that constitutes a risk to the stability of a financial system.

Privacy
Loss of privacy such as a company that loses confidential data about customers to a malicious entity.

Misinformation
Misinformation such as a promoter of an investment that spreads false rumors.

Destruction of Value
Incentives 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.

Quality of Life
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.

What is Alpha? Jonathan Poland

What is Alpha?

Alpha is typically used in finance to demonstrate the risk-adjusted measure of how an investment performs in comparison to the…

Business Analysis Jonathan Poland

Business Analysis

Business analysis is the practice of researching and developing strategies, plans, solutions, and studies to support the goals and objectives…

Product Diffusion Jonathan Poland

Product Diffusion

Product diffusion refers to the process by which a product or service is accepted and adopted by a target market.…

Market Development Jonathan Poland

Market Development

Market development is the process of entering new markets to expand revenue and reduce concentration risk. It involves identifying and…

Positive Risk Jonathan Poland

Positive Risk

Positive risk refers to the potential for achieving an outcome that is too good. While risk is often associated with…

Comparative Risk Jonathan Poland

Comparative Risk

Comparative risk is a method of evaluating and comparing the potential impacts and likelihood of different risks. It is used…

Strategic Direction Jonathan Poland

Strategic Direction

Strategic direction refers to the long-term vision and direction of an organization, and it serves as a guiding principle for…

Commercialization Jonathan Poland

Commercialization

Commercialization is the process of introducing a new product or service into the market and making it available for purchase…

What is the Snob Effect? Jonathan Poland

What is the Snob Effect?

The snob effect refers to the phenomenon of a brand losing its prestige and exclusivity as it becomes more widely…

Learn More

Inverted Yield Curve Jonathan Poland

Inverted Yield Curve

The inverted yield curve is a financial phenomenon that has garnered significant attention because of its historical association with upcoming…

Financial Controls Jonathan Poland

Financial Controls

Financial controls are the policies, procedures, and processes that an organization puts in place to manage and protect its financial…

Influence Jonathan Poland

Influence

Influence is the ability to have an impact on the thoughts, behaviors, and values of an individual. It can involve…

Commercialization Jonathan Poland

Commercialization

Commercialization is the process of introducing a new product or service into the market and making it available for purchase…

Price Sensitivity Jonathan Poland

Price Sensitivity

Price sensitivity is a measure of how much the demand for a product or service decreases as the price increases.…

Pricing Strategies Jonathan Poland

Pricing Strategies

Pricing strategy involves deciding on the right prices for a company’s products or services in order to achieve specific business…

Employee Goals Jonathan Poland

Employee Goals

Employee goals are specific targets or objectives that are set for an individual employee in order to align their work…

Embedded System Jonathan Poland

Embedded System

An embedded system is a specialized computer designed to perform a specific task. It consists of both hardware and software…

Legal Risk Jonathan Poland

Legal Risk

Legal risk is the risk of financial loss or other negative consequences that may arise from legal action or non-compliance…