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Do Unprejudiced Societies Need Equal Opportunity Legislation?

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  • David de Meza

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Abstract

To 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.

Suggested Citation

  • 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.
  • Handle: RePEc:bri:cmpowp:02/057
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    File URL: http://www.bris.ac.uk/Depts/CMPO/workingpapers/wp57.pdf
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    References listed on IDEAS

    as
    1. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    2. Thomas Piketty, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Oxford University Press, vol. 64(2), pages 173-189.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    equal opportunities; incentives; contracts; asymmetric information; distribution;

    JEL classification:

    • 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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