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How to Successfully Drive Efficiency and Equity as a Public Policy Maker

Frequently, policymakers must choose how to allocate resources to advance social goals and the trade-off between efficiency and equity emerges as a significant dilemma.

Knowledge arises as one of the most effective tools to tackle the balance between equity and efficiency. Policymakers can learn how to approach policy making through a public policy innovation online certificate course. they will acquire the ability to suggest new ways to enhance current operations and systems.

Assessing Overall Performance 

In the new economic environment, policymakers must undertake collective reflection at all costs to anticipate the performance of the public sector. To foresee future social and economic developments, decision-makers should develop more efficient economic plans. 

  • Efficiency refers to the optimum production and distribution of resources given current production parameters. For instance, manufacturing at the lowest possible cost.  
  •   Equity is concerned with the fair distribution of resources across society. 

Improving the efficiency and effectiveness of public expenditures not only has a significant impact on preserving fiscal discipline but also alleviates budgetary constraints and enables achieving the same results with less expenditure or better results at the same level of public expenditure.

Exploring the Causes of the Efficiency & Equity Conundrum

The supply and demand of the economy are to blame for the widening gap in income and wealth as a result of recent trends. 

The supply side of the equation becomes unequal as a result of the demand side of the equation. This is because wealthy people spend a lesser percentage of their income than those less well off. As a result, general consumer spending is lowered, leading to an increase in the proportion of capital held by the rich. 

On the demand side, we see inequality via credit limits on education, which results in poorer students having a less positive educational experience as a direct result of these constraints. This behaviour, which ultimately leads to further inequitable results, has a negative impact on economic development over the long run. 

Examples of Balances between Efficiency and Equity

It is widely believed that more equity can only be achieved at the expense of increased economic inefficiency. However, it is not always the case, as the Nordic States have achieved this balance. Considering efficiency and equity, the Nordic model is a set of economic standards broadly pursued by Sweden, Norway, Finland, Denmark, and Iceland. It has provided the rest of the world with an example of how a free-market capitalist economy and a generous welfare system can co-exist harmoniously. 

Nevertheless, the primary reason such a system is successful in these nations is that there is a culture of collectivism, and the money collected from taxpayers is spent in a manner that benefits the whole population.

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