Social Equity, Context-Dependence and Analytical Rigour: can they be brought together for better policy design?

Part of the Climate Change and Environment Seminar Series (LSE).

Until very recently in policy design and evaluation, economists have shied away from equity analysis – the distribution of benefits and costs across stakeholders – and have focused instead on economic efficiency as their primary performance criterion.

Speaker: Steven Schilizzi, School of Agricultural and Resource Economics, The University of Western Australia

Abstract of ‘Social Equity, Context-Dependence and Analytical Rigour’ seminar

November 2010 seminar by Steven Schilizzi

Until very recently in policy design and evaluation, economists have shied away from equity analysis – the distribution of benefits and costs across stakeholders – and have focused instead on economic efficiency as their primary performance criterion.

Yet it is well known that political constituencies place at least as great a weight on social equity (fairness, justice) as on efficiency, if not greater.

One reason for this discrepancy is that defining equity is context-dependent. It has thus been viewed as a slippery concept, unfit for rational analysis.

In this seminar, we show this is not the case.

Once the multidimensional nature of equity is acknowledged, field theory can be brought to bear to analyse how equity depends non-randomly on context. Equity-efficiency trade-offs can then also be analysed in a context-dependent way.

We tested this approach by generating equity judgment data through surveys and controlled lab experiments.

It was clear that:

• One can study equity both rationally and numerically, on a par with efficiency;
• Context-dependence is non-random and highly structured;
• Equity analysis can therefore complement benefit-cost analysis in such a way as to reduce the likelihood the policy will be rejected or face high implementation costs.

Biography of Steven Schilizzi

Steven Schilizzi was born in Canada, obtained his PhD in Paris in the field of energy analysis and economics, and worked for INRA in France for a number of years before moving to Australia in 1995.

Since then, Steven has taught and conducted research at the University of Western Australia in Perth. He has lectured in the areas of environmental and resource economics; business and the environment; policy analysis; agricultural economics; project and risk analysis.

Steven’s main research interests have been the economics and sustainability of agricultural systems, the economics of conservation tenders as a contract allocation mechanism, and, more recently, integrating social equity into economic and policy analysis.

In both these latter areas he has been using economic experiments as a research tool.

Steven has collaborated with colleagues in Germany, France and Canada, and has headed two research projects in Vietnam.

He is currently Deputy Head of the School of Agricultural and Resource Economics at the University of Western Australia.