Difference between revisions of "Efficiency vs. Equity"

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(Social Welfare Functions)
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== Social Welfare Functions ==
 
== Social Welfare Functions ==
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Cost-Benefit analysis--it's about trade offs
  
 
Utilitarianism
 
Utilitarianism
  
 
Rowlslian
 
Rowlslian

Revision as of 09:27, 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

Cost-Benefit analysis--it's about trade offs

Utilitarianism

Rowlslian