Equity efficiency trade-off

The equity-efficiency trade-off involves balancing fairness and maximum productivity in economic policies or resource allocation. Equity seeks to reduce inequalities and ensure fair distribution of resources, while efficiency aims to maximize total output and economic growth. Prioritizing equity might mean redistributing resources, which can sometimes reduce incentives to work or invest, potentially lowering overall efficiency. Conversely, focusing solely on efficiency may increase wealth gaps or reduce fairness. Policymakers must find a balance that promotes both a fair society and a productive economy, recognizing that efforts to improve one can sometimes impact the other.