Difference between revisions of "Efficiency vs. Equity"

From Diversifying Economic Quality: A Wiki for Instructors and Departments

Jump to: navigation, search
(Pareto Efficiency)
Line 8: Line 8:
 
Allocation so that no one can be made better off  
 
Allocation so that no one can be made better off  
  
[[File:paretoefficiency.gif]]
+
[[File:paretoefficiency.gif[frame]]
  
 
Microeconomic Definition of Maximization of Utility via Minimization of Cost
 
Microeconomic Definition of Maximization of Utility via Minimization of Cost
Line 21: Line 21:
  
 
counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital
 
counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital
 +
 +
== Social Welfare Functions ==
 +
 +
Utilitarianism
 +
 +
Rowlslian

Revision as of 09:16, 1 June 2011

Economic Efficiency

Pareto Efficiency

Vilfredo Pareto

Allocation so that no one can be made better off

[[File:paretoefficiency.gif[frame]]

Microeconomic Definition of Maximization of Utility via Minimization of Cost

failure to account for equity

"what if"...society can derive utility from equity...(MBequity>MCequity => Efficiency = Equity)

conflict of incentives, because someone can be made better off, they have an incentive to not support equity

cost effects of attempting (Effect on PPF, inhibit econ growth...$ could be used on capital)

counterarg...$ used for equity has a higher effect on economic growth, spending chain, human capital

Social Welfare Functions

Utilitarianism

Rowlslian