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.

Learn More
Rule of Three Jonathan Poland

Rule of Three

The rule of three is an economic theory that posits that large, mature markets tend to be dominated by three…

Original Research Jonathan Poland

Original Research

Original research refers to the creation of new knowledge through the investigation of a topic or problem. This can involve…

Chaos Theory Jonathan Poland

Chaos Theory

Chaos theory is a branch of mathematics that studies the behavior of complex systems and the impact of small changes…

Business Process Reengineering Jonathan Poland

Business Process Reengineering

Business process reengineering, or BPR, involves examining and redesigning current business processes and workflows to achieve greater efficiency, cost-effectiveness, and…

Conformance Quality Jonathan Poland

Conformance Quality

Conformance quality refers to the production of products and delivery of services that meet specified standards or requirements. It is…

Organizational Culture Jonathan Poland

Organizational Culture

Organizational culture refers to the shared beliefs, values, customs, behaviors, and symbols that characterize an organization and differentiate it from…

Data Proliferation Jonathan Poland

Data Proliferation

Data proliferation refers to the rapid growth of data, often resulting in a large amount of replicated and low-quality data.…

Inherent Risk Jonathan Poland

Inherent Risk

Inherent risk is a term used in the field of auditing to describe the risk that a company’s financial statements…

Puffery Jonathan Poland

Puffery

Puffery refers to exaggerated or overstated claims in marketing communications. It is a legal concept that acknowledges that customers expect…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Strategic Partnership Jonathan Poland

Strategic Partnership

A strategic partnership is a relationship between two or more organizations that is characterized by mutual cooperation and the sharing…

What is a Durable Product? Jonathan Poland

What is a Durable Product?

A durable product is a product that is designed to last for an extended period of time, typically several years…

Cash Conversion Cycle Jonathan Poland

Cash Conversion Cycle

The cash conversion cycle (CCC) is a financial metric that measures the amount of time it takes for a company…

Program Risk Jonathan Poland

Program Risk

Program risk refers to the likelihood of a program failing to achieve its goals due to potential outcomes. This type…

Key Strengths Jonathan Poland

Key Strengths

Key strengths are talents, character traits, and knowledge that are particularly relevant to a given role. These are often listed…

Corporate Governance Jonathan Poland

Corporate Governance

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It…

Bank Derivatives Jonathan Poland

Bank Derivatives

Bank derivatives are financial instruments whose value is derived from an underlying asset, index, or other financial instruments. They are…

Gap Analysis Jonathan Poland

Gap Analysis

A gap analysis is a method used to determine the distance between an organization’s current state and its desired future…

Sales Management Jonathan Poland

Sales Management

Sales management is the process of overseeing and directing an organization’s sales team. It involves setting sales goals, analyzing data,…