Efficiency, Equality And Public Policy

Efficiency, Equality and Public Policy provides compelling arguments for the exclusive concern with efficiency in all specific areas of public economic policy, leaving the objective of equality to be achieved through the general tax/transfer system. Public policies, the author argues, should ultimately maximize the sum of individual welfares which should be individual happiness rather than preferences. The flip side is that relative-income and environmental disruption effects cause a bias in favor of private spending which is no longer conducive to social happiness.

Ng (economics, Monash U., Australia) offers a significantly simplified approach to forming economic policies, especially in cost-benefit analysis. He argues for the exclusive concern of efficiency in all specific areas of public economic policy, leaving the general tax and transfer system to achieve equality. In other words, public policies should ultimately maximize the total sum of individual welfares, which should be measured by happiness rather than preferences. He says relative-income effects privilege private consumption over public, which is no longer conducive to social happiness. Annotation c. Book News, Inc., Portland, OR

Yew-Kwang Ng is Professor of Economics at Monash University, Australia.