AbstractIn standard neo-classical economics, efficiency and equity issues are largely treated as separate and separable issues. In this paper, I will discuss findings from four strands of literature that challenge this separability and in fact suggest that greater equity will promote greater efficiency in the sense of maximizing well-being in a society. There four strands refer to findings from the experimental literature on the importance of equity or fairness, the subjective well-being literature on the importance of relative incomes and inequality on subjective well-being, the distribution-adjusted well-being literature that combines measures of mean incomes with measures of income inequality to derive at welfare judgements across space and time, and the literature on the relationship between income and gender inequality on economic growth. Some implications for research and policy are explored.
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Bibliographic InfoPaper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 145.
Length: 19 pages
Date of creation: 09 Jun 2006
Date of revision:
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Efficiency; equity; experimental economics; subjective well-being;
Find related papers by JEL classification:
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
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