Problem

Under the right set of conditions (i.e. perfect competition), the market will promote efficiency. However, policy analysts must often deal with two problems.  First, several pareto-optimal allocations can be achieved through the market.  Depending on individual preferences, allocations in which individuals receive equal quantities of resources may be just as pareto-optimal as allocations in which one individual owns all the resources in an economy and all others own nothing.  Therefore, the efficiency criterion alone cannot help us determine which pareto-optimal outcomes we might as a society prefer. Second, efficiency is not the only criterion for judging a policy.  Society has many normative goals and values.  Sometimes to achieve a normative goal such as equity we must sacrifice efficiency.  In other words, policy makers often face equity-efficiency tradeoffs.  An analysts job is to make these trade-offs more explicit.

Analysis -- Setting Normative Goals

To provide guidance to policy makers regarding conflicts over which outcomes society should strive for, policy analysts evaluate the implications of various policies with respect to different norms of distributive justice or equity.  Several different classification of competing norms of distributive justice can be found.  In this class, we used a simple heuristic developed by Deborah Stone.  She differentiates between norms of distributive justice that focus on the equality of or differences between individuals, the goods they are receiving, and the process through which they receive them.

Below I devide these into norms of distributive justice that emphasize that equality of individuals and those that emphasize the differences between people.  Each of these norms of justice and equity are invoked routinely in policy debates.  Which norms get invoked depends both on an individual's or group's ideological viewpoint and on the domain of life which the policy may be affect (e.g., social, economic, or political).  In some circumstances, part of the job of the analyst is to make the distributive and normative implications of a policy explicit.
 

Principles of Equality 

• Strict Equality of Outcomes:  Distribute resources in equal quantities.
• Equality of Chance:  Distribute resources by lottery.
• Equality of Voice:  Distribute resources by majority voting.
• Equality of Need/Subjective Equality:  Ensure that basic needs are met.
• Equality of Value: Ensure that individuals are equally satisfied with their shares.  Those that value a resource more have more claim to it.

• Rank-based distributions:  Treat like groups alike (horizontal equity) and unlike groups differently (vertical equity)
• Membership-based distributions:  Distribute resources on the basis of merit, sex, race, citizenship, class, etc....
• Reward-based distributions/Proportional Equality:  Distribute resources on the basis of community investments, productivity or social contributions.

• Ensure that individuals have an equal opportunity to take part in the institution (e.g. the market) or are equally protected by the institution (e.g. the courts).
• Focus on the legitimacy and fairness in the way decisions are made.