Marketing Papers

Document Type

Book Chapter

Date of this Version

1993

Publication Source

Psychological Perspectives on Justice: Theory and Applications

Start Page

138

Last Page

154

DOI

10.1017/CBO9780511552069.008

Abstract

At the heart of many debates about distributive justice is the widely assumed trade-off between equality and efficiency (Okun, 1975). In the present chapter, equality refers to the distribution of income within a society. Equality increases whenever income variability is reduced. Efficiency refers to the goods and services that result from a given input – production, physical capital, or human labor. Efficiency increases whenever society produces more from the same input. Trade-offs between equality and efficiency occur because increases in one often lead to decreases in the other. An egalitarian society satisfies basic needs by establishing programs that redistribute wealth. But those programs can reduce efficiency when they introduce bureaucratic waste or diminish financial incentives. A reduction in efficiency can lead to fewer investments, fewer jobs, and declining productivity.

Copyright/Permission Statement

This material has been published in Psychological Perspectives on Justice: Theory and Applications edited by Mellers, B.A. & Baron, J. This version is free to view and download for personal use only. Not for re-distribution, re-sale or use in derivative works. © 1993 Cambridge University Press.

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Date Posted: 15 June 2018