Lessons from the Old Masters on Assessing Equity and Efficiency: A Primer for Fiscal Policymakers
IMF Working Papers, October 3, 2017
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Bibliographic details
- Authors: Vitor Gaspar, Paolo Mauro, Tigran Poghosyan
- Published: October 3, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484322000.001
Overview
- Purpose: To measure societal well-being by including both average incomes and their distribution, and to assess policy effects considering both equity and efficiency.
- Core contribution: Outlines seminal methods from Arthur Okun and Anthony Atkinson and applies these methods to recent data and to a hypothetical tax-and-transfer scheme assessed through a general equilibrium model for household-level data.
Methods and Conceptual Framework
- Arthur Okun: Developed a simple method to elicit people’s preferences regarding redistribution.
- Anthony Atkinson: Demonstrated how equity and efficiency can be measured simultaneously and summarized in a single, intuitive index expressed in monetary units (such as dollars).
- Modeling approach: Uses a general equilibrium model for household-level data to assess a hypothetical tax-and-transfer scheme.
Applications and Key Findings
- Empirical application: Methods are applied to recent data to gauge how countries fare when both mean incomes and their distribution are considered together.
- Policy experiment: A hypothetical tax-and-transfer scheme is evaluated through a general equilibrium model for household-level data.
- No numerical welfare or distributional results are reported on the landing page; substantive quantitative findings are contained in the full working paper.
Policy Implications and Use for Fiscal Policymakers
- Provides tools to:
- Elicit redistribution preferences (Okun’s method).
- Measure combined equity and efficiency outcomes in monetary terms (Atkinson’s index approach).
- Evaluate tax-and-transfer reforms accounting for general equilibrium effects at household level.
- Intended audience: Fiscal policymakers seeking integrated equity-efficiency measures to inform redistribution and tax policy design.
Publication and Metadata
- Authors: Vitor Gaspar, Paolo Mauro, Tigran Poghosyan
- Date: October 3, 2017
- Publication type: IMF Working Papers
- Pages: 34
- Volume: 2017
- Issue: 214
- Series: Working Paper No. 2017/214
- DOI: https://doi.org/10.5089/9781484322000.001
- Stock No: WPIEA2017214
- ISBN: 9781484322000
- ISSN: 1018-5941
- Subjects: Consumption, Foreign exchange, Income distribution, Income inequality, National accounts, Personal income, Purchasing power parity
- Keywords: Africa, Consumption, equality and efficiency, equality component, fiscal redistribution, income, income distribution, Income distribution, Income inequality, inequality aversion, mean income, Personal income, Purchasing power parity, taxation model, WP
Content summarized from "Lessons from the Old Masters on Assessing Equity and Efficiency: A Primer for Fiscal Policymakers", IMF Working Paper by Vitor Gaspar, Paolo Mauro, and Tigran Poghosyan (October 3, 2017).