Equality in Context: An Evaluation of Pure and Efficiency-Integrated Measurements of Inequality

In this paper, I explore the inherent tradeoff that exists between equality and efficiency. I consider the degree to which our concern for efficiency infiltrates our concern for equality: do we really care about equality? Or do we only care about equality insofar as it promotes efficiency? While this question has been well explored in the philosophical work on equality, many of the principles have been defended in terms of inequality of well-being. Though interesting and fruitful to theorize about, there is no practical way to measure well-being, so if we want to measure inequality, we will have to turn to measurable metrics that we think might be good markers for well-being. Focusing on income and health, I discover that once we shift from inequality of well-being to inequality of one of these parameters, it becomes unclear whether or not the principles from the philosophical work should still apply. With this in mind, I turn to the practical task of evaluating different inequality measurements in both income and health. How to measure inequality has also been well explored by philosophers and economists, and both have discovered that this question is incredibly complex and difficult. I focus on one of the most primitive questions within measuring inequality that pertains to the equality and efficiency tradeoff: should we measure inequality and efficiency together, in one combined measure, or separately? The answer to this question divides all the inequality measures that have been proposed into two categories: pure measures, that will later need to be combined with a separate efficiency measure, and efficiency-integrated measures, that already take efficiency into account. I then evaluate each of these types of measures in three dimensions which I call feasibility, acceptability, and comprehensibility. In Chapter 2, I perform this evaluation for commonly-used measures of income inequality. In Chapter 3, I do the same for proposed measures of health inequality. I demonstrate that our intuitions about the goodness and badness of inequality seem to shift when we move from well-being, to income, to health because both income and health depart from well-being in interesting and significant ways. In Chapter 4, I present a complex health measure—the Extended Cost-Effectiveness Analysis—that takes both health and income factors into account and incorporates aspects of both pure and efficiency-integrated inequality measures. I conclude that deciding whether to use a pure or efficiency-integrated inequality measure is complicated, and will be context-dependent. Using a method of evaluation like the one I proposed will allow one to better understand the underlying assumptions, benefits, and shortcomings of each type of measurements in a given context