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Lessons from the Old Masters on Assessing Equity and Efficiency: A Primer for Fiscal Policymakers
Author:
Vitor Gaspar
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,
Mr. Paolo Mauro
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, and
Mr. Tigran Poghosyan
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 214
Language:
English
Publication Date:
03 Oct 2017
DOI:
https://doi.org/10.5089/9781484322000.001
ISBN:
9781484322000
ISSN:
1018-5941
Pages:
34
Keywords:
WP; income; equality component; equality and efficiency; fiscal redistribution; income distribution; inequality aversion; taxation model; mean income; Personal income; Income inequality; Income distribution; Purchasing power parity; Consumption; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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How can a society’s well-being be measured to include not only average incomes but also their distribution? How can the effects of policies be assessed by considering both equity and efficiency? This primer outlines the seminal contributions of influential economists of the past, including Arthur Okun, who developed a simple method to elicit people’s preferences regarding redistribution, and Anthony Atkinson, who showed how equity and efficiency can be measured simultaneously and summarized in a single, intuitive index expressed in monetary units (such as dollars). These methods are applied to recent data to gauge how countries fare when both mean incomes and their distribution are considered together, and to a hypothetical tax-and-transfer scheme assessed through a general equilibrium model for household-level data.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund