Fairness, Distribution, and Equality

Questions of fairness, distribution, and equality play an important role in economics and policy analysis. Broadly speaking, economists hold one of three views about these questions. One view is that efficiency and fairness are the two main goals for appraising how well an economy is doing and for devising, implementing, and evaluating economic policy. More specifically, every economic policy change – which usually impacts people differently – needs to be scrutinized for its distributional implications. A second view is that fairness necessarily involves value judgments and economists, as scientists, should concentrate only on efficiency, leaving judgments about fairness to society as a whole. A third view is that questions of equality and distribution are unimportant and divert attention from the important goals of efficiency and growth. The second view, we have argued in Chapter 2, is untenable, both because the notion of efficiency itself involves a value judgment, and because, more generally, one cannot avoid making value judgments in economics. Whether one subscribes to the first or third views, however, economists need to explain what they mean by equality, how it relates to fairness, and why distributional equality and inequality are worthy or not worthy of attention.