Social Equity, Context-Dependence and Analytical Rigour: can they be brought together for better policy design?

Date: 30 Nov 2010
Speaker(s): Steven Schilizzi
Venue: London School of Economics and Political Science (LSE)

Part of the Climate Change and Environment Seminar Series (LSE) in October and November 2010

Until very recently in policy design and evaluation, economists have shied away from equity analysis – the distribution of benefits and costs across stakeholders – and have focused instead on economic efficiency as their primary performance criterion.

Yet it is well known that political constituencies place at least as great a weight on social equity (fairness, justice) as on efficiency, if not greater.

One reason for this discrepancy is that defining equity is context-dependent. It has thus been viewed as a slippery concept, unfit for rational analysis.

In this seminar, we show this is not the case.

Once the multidimensional nature of equity is acknowledged, field theory can be brought to bear to analyse how equity depends non-randomly on context. Equity-efficiency trade-offs can then also be analysed in a context-dependent way.

We tested this approach by generating equity judgment data through surveys and controlled lab experiments.

It was clear that:

  • One can study equity both rationally and numerically, on a par with efficiency;
  • Context-dependence is non-random and highly structured;
  • Equity analysis can therefore complement benefit-cost analysis in such a way as to reduce the likelihood the policy will be rejected or face high implementation costs.

Speaker: Steven Schilizzi, School of Agricultural and Resource Economics, The University of Western Australia

Date and location: 30 November 2010, LSE, London