Do Unprejudiced Societies Need Equal Opportunity Legislation?
AbstractTo what extent should banks, insurance companies and employers be allowed to use personal information about the people whom they lend to, insure or employ in setting the terms of the contract? Even when different treatment is motivated by profit not prejudice, banning discrimination (when combined with mandatory protection against failure) may well be the best way of effecting redistribution of income. Unlike income taxation, this policy achieves its goals without much adverse effect on incentives. Public provision of low-powered incentive contracts issued on generous terms is also a potent instrument of efficient redistribution. This is true even if the government cannot observe type but the private sector can.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 55.
Date of creation: 04 Jun 2003
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equal opportunities; incentive contracts; asymmetric information; distribution;
Other versions of this item:
- David de Meza, 2002. "Do Unprejudiced Societies Need Equal Opportunity Legislation?," The Centre for Market and Public Organisation 02/057, Department of Economics, University of Bristol, UK.
- D3 - Microeconomics - - Distribution
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- J7 - Labor and Demographic Economics - - Labor Discrimination
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- Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
- Piketty, Thomas, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 173-89, April.
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