Figure 5.2: Efficiency and Fairness as Criteria for Evaluating Allocations
Figure 5.2 provides a visual summary of the framework used to evaluate the impact of an economic policy. The framework involves first describing the factual outcome of the policy (the allocation) and then judging it against two key criteria: Pareto efficiency and fairness. This evaluation also often includes a comparison to the original allocation to determine if the policy resulted in an improvement.
0
1
Tags
Social Science
Empirical Science
Science
Economy
Economics
CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
Related
Consumer-Led Tendering as an Alternative Market Institution
Evaluating Societal Welfare: Beyond Market Surplus
A government introduces a policy that results in a significant increase in the country's total economic output. However, this growth is concentrated among the wealthiest 1% of the population, while the income of the bottom 50% slightly decreases. A government official defends the policy, stating: 'This policy is an unqualified success because the overall economic pie has grown larger.' What is the most significant flaw in this official's evaluation when judged against the standard two-part framework for assessing economic allocations?
Evaluating Housing Allocation Policies
Critique of a Policy Evaluation Stance
An economist is evaluating four different government policies for allocating scarce medical supplies during a public health crisis. Match each policy outcome with the most appropriate evaluation based on the core principles of efficiency and fairness.
Applying the Economic Evaluation Framework
An economic policy that results in a Pareto efficient allocation of resources is, by definition, a desirable policy that a society should always choose to implement.
When using the standard two-part framework to evaluate the desirability of an economic policy, an analyst follows a specific sequence of steps. Arrange the following steps into the correct logical order, from the initial analysis to the final judgment.
A policy that results in a Pareto efficient allocation might still be considered undesirable by a society if it fails to meet the second key normative criterion of the evaluation framework, which is ______.
Evaluating Urban Transportation Policies
A city government changes its zoning regulations to allow for the development of high-end commercial properties in a historically residential area. The factual outcome is that the city's overall tax revenue increases significantly, but many long-term residents with modest incomes are forced to move because of rising property taxes and rents.
Which of the following statements represents the most complete and appropriate evaluation of this policy's outcome, based on the standard two-part framework for assessing economic allocations?
Two Grounds for Judging Fairness: Substantive vs. Procedural
Figure 5.2: Efficiency and Fairness as Criteria for Evaluating Allocations