Efficiency vs. Equality
I chose to blog about this topic since it relates to the content of my macroeconomics class.
According to Gregory Mankiw, professor of economics at Harvard University, efficiency and equality are defined as follows:
Efficiency: “the property of a resource allocation of maximizing the total surplus received by all members of society”
Equality: “the property of distributing economic prosperity uniformly among the members of society”
Society faces a trade-off between these two properties. Is it better to get the most out of society’s scarce resources, or is it best to have a uniform distribution of prosperity among society members? Economists disagree.
Consider the United States’ progressive tax system. Wealthier Americans are taxed at higher rates than poor Americans. In this way, income is redistributed. Some believe this system is beneficial, while others think it is unfair. However, it is up to the individuals of a society to make their own decisions by thinking critically.
Source: Mankiw, Gregory. Principles of Macroeconomics. 8th ed., Cengage Learning, 2018.