Results are out! Find what you Get quick advice or join the chat
Hey! Sign in to get help with your study questionsNew here? Join for free to post

How does rise in income affect demand for government service

Announcements Posted on
  1. Offline

    Can someone please explain why an increase in income will lead to demand for many government services ( e.g. health and education) to rise?

    The revision guide says it is because demand for government services is income elastic but I do not understand why this is true
  2. Offline

    I would say you're right to question this assumption. When incomes rise I'd expect demand for government services such as health and education to lower as individuals sourced healthcare and their child's education from the private sector. As government essentially provide services for 'free' anyway (i.e you're not paying for schooling/health at the point of use) I don't see why changes in income would have that much of an impact. A rise in my monthly pay packet makes absolutely no difference to my consumption of the free local newspaper that drops through my letterbox everyweek, the same is surely true with government services.
  3. Offline

    The general assumption is that as income for people increases, the GDP in the country increases, so growth will increase and government will benefit from receiving more money ie from taxes eventually they will use that money to fund public services
  4. Offline

    Perhaps poorer people have imperfect knowledge due to market failures and thus demand less government based services? Many merit goods are underconsumed as the poor do not realise the true value of it's consequences.


Submit reply


Thanks for posting! You just need to create an account in order to submit the post
  1. this can't be left blank
    that username has been taken, please choose another Forgotten your password?
  2. this can't be left blank
    this email is already registered. Forgotten your password?
  3. this can't be left blank

    6 characters or longer with both numbers and letters is safer

  4. this can't be left empty
    your full birthday is required
  1. By joining you agree to our Ts and Cs, privacy policy and site rules

  2. Slide to join now Processing…

Updated: April 9, 2012
2015 general election
New on TSR

Loved by Students

Our big survey results unveiled

Article updates
  • 0 new posts
Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.