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Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness

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  • Jonathan Pincus

Abstract

For economists, the main test of a microeconomic policy change is its effect on efficiency: gains minus losses, equally weighted. However, it is standard economics that individuals value losses more than gains. Moreover, imposing large, uncompensated and uninsurable policy‐induced losses would be widely regarded as unfair, when they are merely collateral damage from policy action. The article argues the case for adjusting the calculation of efficiency to take account of this ‘unfairness’ and discusses how it could be done. The context is the relatively recent acceptance in Australia of competition, if planned and regulated, as being generally socially beneficial.

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  • Jonathan Pincus, 2009. "Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(2), pages 121-130, June.
    • Handle: RePEc:bla:ausecr:v:42:y:2009:i:2:p:121-130
    DOI: 10.1111/j.1467-8462.2009.00547.x
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    References listed on IDEAS

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    1. Productivity Commission, 2008. "Modelling Economy-wide Effects of Future TCF Assistance," Research Reports, Productivity Commission, Government of Australia, number 31.
    2. Productivity Commission, 2008. "Modelling Economy-wide Effects of Future Automotive Assistance," Research Reports, Productivity Commission, Government of Australia, number 30.
    3. George Verikios & Xiao-guang Zhang, 2008. "Distributional Effects of Changes in Australian Infrastructure Industries during the 1990s," Staff Working Papers 0802, Productivity Commission, Government of Australia.
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    Cited by:

    1. Jonathan Pincus, 2014. "Public Choice Theory had Negligible Effect on Australian Microeconomic Policy, 1970s to 2000s," History of Economics Review, Taylor & Francis Journals, vol. 59(1), pages 82-93, January.

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