Edited by Chris Nash
The Oxford Dictionary (Turner 1984) defines equity as ‘1. Fairness; recourse to principles of justice to correct or supplement law’. Hausman and McPherson (2006, p. 198) note that it is common for economists to use ‘equity’ this way and that, ‘The questions of justice that are important to economists concern the distribution of benefits and burdens among members of a community . . . Economic evaluation presupposes well-defined principles of justice.’ Principles of justice are particularly relevant, but frequently not recognised as such, at two important stages in the policy process: first, in identifying priorities for policy, program and/or project attention, which brings in the idea of equity in needs definition; and, second, in evaluating the relative merits of alternative possible ways of satisfying priorities, whether this evaluation is ex ante or ex post, which raises the question of equity in needs evaluation. Welfare economics has long recognised that there are a vast number of potentially efficient allocations of a society’s resources, each of which meet a set of economic efficiency requirements. Each different efficient allocation corresponds to a different distributional outcome. Economists frequently argue that their concern is only with efficiency and that distributional considerations are a matter for politicians, who can use various redistributive mechanisms to achieve desired distributional outcomes.
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