251Ch5lecture4 - happiness for the greatest number Assume...

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9/14/2011 1 1 Chapter 5: Efficiency and Equity Lecture 4: Equity The Big Trade Off • Equity vs. efficiency Symmetry Principle = People in similar situations should be treated similarly • Same treatment? → same rules • Same outcome? → same results – Griggs v. Duke Power (1971) – Univ. of Michigan (undergrad vs. law school) Fairness • Two options for fairness 1. Utilitarianism = achieve greatest
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Unformatted text preview: happiness for the greatest number Assume that rich people value $1 less than poor people Mike has $70,000 MB of $1 = 5 Sara has $25,000 MB of $1 = 8 Mike gives $1 to Sara Fairness 2. Maximin Principle Make the poorest person as well off as possible Tax the rich and redistribute to the poor Administrative costs of taxation...
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This note was uploaded on 09/21/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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