## 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

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### 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).*

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_Source: https://www.imf.org/en/publications/wp/issues/2017/10/03/lessons-from-the-old-masters-on-assessing-equity-and-efficiency-a-primer-for-fiscal-45289_