Sunbeds banned in Queensland - a good move?

Merit goods are technically 'lack of information goods', where consumers do not have all the information necessary to make a decision on consumption, or ignore information that is relevant.

Demerit goods, such as tobacco, are similarly lack of information goods. Where they are present in the market an inefficient allocation of resources will occur. Consumers will overestimate the benefits and underestimate the costs of the good.

The result  is that the quantity consumed in the market is more than the allocatively efficient level.

 

The diagram shows that consumers consider the good to give benefits equivalent to the demand curve D and consume quantity 0Qmkt. However the true benefits are given by the curve MSB and the efficient quantity to consume is 0Qef.

Usually an economists would say that the market price should be raised until consumers only want to buy 0Qef. But sometimes this leaves costs that are still too high.

In Australia it has long been recognised that ultraviolet radiation causes skin cancer. It appears that sunbeds cause a much greater amount of harm than natural sunlight, but consumers do not consider the full information on harmful effects and continue to use sunbeds.  Therefore Australian governments are starting the process of closing solarium's.

Queensland are the latest state to ban sunbeds. The reason for a ban rather than a tax is that any consumption is harmful. As with all policy choices there are costs of acting. There is no guarantee that it will work for a while as second hand sun beds are traded and who knows if there will be a trade in illegal sunbeds from states that do not act?

The Brisbane Times reports the ban here