Equality and equity - these terms are often interchangeably used. But, what do they mean exactly and which goal should governments pursue?
Equality is recognizing that as humans, we should all be treated fairly and have the same opportunities. Equity, on the other hand, is recognizing that each person has different circumstances, and allocates the exact opportunities needed for people to reach the same outcome.
For example, the government would be pursuing equality if they gave out payouts of $4000 to each family during the COVID-19 crisis. To pursue equity instead, the government could give out payouts of $6000 to families who have children with special needs in order to support their education.
A real life example of an equality based policy would be government funding that public schools receive in the US. According to the National Centre for Education Statistics, the government provides the same amount of funding to each school regardless of their need. However, high poverty districts, on average, received $1000 less per student than low poverty districts.
On the other hand, an equity based policy would be affirmative action. In the US, this policy was just ruled out for the college admissions process. This was a policy whereby universities implemented race-conscious admission policies to increase the enrollment of underrepresented minority students. According to a report by the National Center for Education Statistics, in 2019, African American students made up 13% of total undergraduate enrollments. Though beneficial, many argued that this led to “reverse discrimination”, whereby individuals from non-targeted groups are at a disadvantage as admission officers factored race heavily into their admissions decisions, leading to unfair disadvantages for other more ‘privileged’ groups of people. Additionally, policies aiming to pursue equity must take each individual’s situations into account, leading to administrative inefficiencies - if there are multiple layers to apply to a certain support scheme, it may lead to individuals not applying for support even though they may need it.
To pursue both these goals, governments may implement schemes such as progressive taxation to lower the level of income inequality and inequity in a country. A country with an extremely low Gini coefficient (an index measuring the distribution of income from 0-1, 0 being perfectly equal) of 0.28 is Sweden, where marginal tax rates for the lowest bracket are 7%, and marginal tax rates for the highest bracket can reach up to 52%. Progressive taxation thus reduces the amount of money that is in the hands of the rich. However, is it always favourable to do this? Is it fair that people who may work harder and have a higher income, such as doctors and lawyers, get such a large proportion of their income taken away from them?
This leads to an equity-efficiency trade-off, whereby highly skilled workers may move to other countries where tax rates are lower in order to have a higher standard of living. This leads to many skilled workers leaving the country, thus reducing a country’s overall productivity and preventing the government from collecting enough tax revenue to fund its operations.
Thus, it is essential to note that the effectiveness of a policy depends on its implementation and design - no one policy is inherently effective. Both equity and equality are important goals for governments to achieve but they should not be achieved at an expense to other groups of people who are just as vital to a country’s economy. Policies need to be carefully crafted and continually evaluated to ensure they achieve their intended goals while minimizing these trade-offs.
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