Credence Good

AAA

DEFINITION of 'Credence Good'

A type of good with qualities that cannot be observed by the consumer after purchase, making it difficult to assess its utility. Typical examples of credence goods include expert services such as medical procedures, automobile repairs and dietary supplements.

INVESTOPEDIA EXPLAINS 'Credence Good'

Credence goods that do not perform as expected can have adverse consequences ranging from financial loss to ill-health and even death. For example, the U.S. Food & Drug Administration has, over the years, prohibited a number of dietary supplements from being marketed, either due to misleading advertising claims by their manufacturers, or because they could induce serious side-effects.

RELATED TERMS
  1. Food And Drug Administration - ...

    A government agency established in 1906 with the passage of the ...
  2. Medical Savings Account - MSA

    A medical plan combining high-deductible medical insurance protection ...
  3. Capital Goods

    1. Any tangible assets that an organization uses to produce goods ...
  4. In-App Purchasing

    The purchase of goods and services from an application on a mobile ...
  5. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
  6. Social Sentiment Indicator

    A measurement based on aggregated social media data that helps ...
RELATED FAQS
  1. How is the basket of goods selected for the Consumer Price Index?

    In the United States, the inflation level in the economy is approximated by the Bureau of Labor Statistics via a basket of ... Read Full Answer >>
  2. What other sectors are most highly correlated with the automotive sector?

    The automotive sector is a broad category correlated with a variety of related industries. Auto parts manufacturers and raw ... Read Full Answer >>
  3. How do you calculate the income effect distinctly from the price effect?

    Economists calculate the income effect separately from the price effect by keeping real income constant in the calculation. ... Read Full Answer >>
  4. What's the difference between the income effect and the substitution effect?

    The economics concepts of income effect and substitution effect express changes in the market and how these changes impact ... Read Full Answer >>
  5. What's the difference between the substitution effect and price effect?

    The substitution effect is caused solely by the change in price of a consumer item. The price effect relates directly to ... Read Full Answer >>
  6. What's the difference between economic value added (EVA) and producer surplus?

    The difference between economic value added (EVA) and producer surplus is that EVA measures the returns of a company above ... Read Full Answer >>
Related Articles
  1. Budgeting

    How To Avoid Buying A "Lemon" Product

    A lack of information can lead people into bad purchases and bad investments. Find out how you can avoid these lemons.
  2. Savings

    How to Invest in Liquor (and Avoiding the Hiccups)

    Investing in liquor has been profitable for ages but there could be some hiccups along the way.
  3. Economics

    What are Consumer Goods?

    Products that are purchased for consumption by the average consumer. Clothing, food, automobiles and jewelry are all examples of consumer goods
  4. Economics

    What are Consumer Packaged Goods?

    Consumer packaged goods, CPGs, are items that consumers use and purchase often.
  5. Mutual Funds & ETFs

    This ETF Can Weather Any Market Condition

    Looking for a winning ETF that's capable of performing in almost any environment?
  6. Home & Auto

    The Real Cost Of A Speeding Ticket

    Speeding can come at a cost that goes well beyond one driver and one ticket.
  7. Investing

    What's Next For Alibaba?

    Alibaba excited Wall Street its September IPO on the New York Stock Exchange. Seven months later, the e-commerce giant is still looking to shake things up.
  8. Investing News

    Facebook Money Transfer: Transforming E-Commerce

    Facebook's payment service holds huge prospects for Facebook’s business. Here’s how it works, and how it will impact e-commerce and Facebook's business.
  9. Chart Advisor

    Why Now is the Time for Food and Beverage Stocks

    As volatility rears its ugly head, it's natural to investigate stable sectors such as food and beverages. Here's an appropriately-named ETF to consider.
  10. Savings

    Top 10 Fastest Growing Industries in the United States

    Six of the ten fastest growing industries are directly related to new residential construction.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center