Thursday, December 22, 2005

Policy Trade-offs

My son is involved in Special Olympics programs, and his current activity is basketball. At a recent game, I noticed that while his team was warming up, waiting for the other team to show, there were a large number of young boys from the local community shooting at other baskets in the gym.

I was reminded how policy decisions generally involve a trade-off between equity and efficiency. Certainly reserving the gym for my son's team to use for practice and games involves providing equity, given the small number of people on the team vs. the number of who could/would be using the facility.

Making the facility available to the larger numbers would be more efficient use of resources, but would not be equitable to the small group of Special Olympians who play on the team.

When discussing policy options with my students I used to ask them to analyze the proposal a number of ways, but always to consider equity vs. efficiency, and to remember that one frequently comes at the expense of the other.

Your thoughts, as always, are welcome.

Posted by TSchilling at December 22, 2005 2:56 PM

Equity versus efficiency may be an artificial dichotomy. We could parse the definitions of both, but given that value is totally subjective, and the practice of being able to measure value (the exercises of diminishing marginal utility) we can adequately state that the value the Special Olympian receives in utilizing the gym is likely far greater than the utility others would receive for that same time. Therefore, making the scarce gym space available to all increases the efficiency of distribution of this scarce space, and to get away from the 'cold, dismal science', makes all of us realize what is truly important, providing us an attitude adjustment in what really counts in the long run. Equity and efficiency may be the same thing.

Posted by: Robert Wiersema at December 26, 2005 3:58 PM

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