Equity in Theory and Practice

by H. Peyton Young

Governments and institutions, perhaps even more than markets, determine who gets what in our society. They make the crucial choices about who pays the taxes, who gets into college, who gets medical care, who gets drafted, where the hazardous waste dump is sited, and how much we pay for public services. Debate about these issues inevitably centers on the question of whether the solution is "fair." In this book, H. Peyton Young offers a systematic explanation of what we mean by fairness in distributing public resources and burdens, and applies the theory to actual cases.

Genres: Economics

238 pages, Paperback

First published January 10, 1994

Reviews

[Lobstergirl]

This book is about distributive problems and looks at seven cases:

➼ the demobilization of soldiers from the U.S. Army at the end of World War II (who was released first?)
➼ the allocation of kidneys among transplant patients (which patient is first in line?)
➼ the apportionment of representation among political parties and states (how many seats does one state receive compared to another?)
➼ the adjudication of conflicting property claims
➼ the allocation of costs and benefits among participants in joint enterprises (e.g., how much does a municipality charge for connecting a new house to the water supply?)
➼ the distribution of the tax burden (on what theory is one person taxed at 33%, another at 15%, etc.)
➼ the division of inheritances

For my purposes I was only interested in the demobilization of World War II soldiers, so I didn't read the whole book. Surprisingly, this wasn't merely a top-down decision. Beginning in 1943, thousands of American soldiers (a "cross-section") were surveyed about whom should be released first. Soldiers mentioned four factors: length of time in the Army, age, amount of overseas service, and number of dependents. They were further questioned to determine which factors ranked higher. The results were that amount of overseas service ranked first, followed by number of dependents, longevity in the Army, and age.

The survey permitted write-in responses, and many soldiers wrote in "exposure to combat." Both soldiers who had seen overseas combat, and those who hadn't, felt that combat exposure should rank higher in allowing soldiers to return home.

Based on the survey responses, the Army adopted a points system under which soldiers with 85 points or more were demobilized first. The points accrued as follows:

Length of time in the Army: 1 point per month
Length of time overseas: 1 point per month
Combat: 5 points per campaign star or combat decoration
Dependents: 12 points per child under 18, up to three

The book notes, "One might wonder why a more natural criterion of combat duty was not used, such as length of time in combat. The explanation is that reliable records were unavailable for the length of time that each soldier actually had spent in combat. Furthermore, there was the difficulty of defining the term "in combat" unambiguously. The substitute measure adopted (number of campaign stars) was not entirely satisfactory either, since many noncombatants were awarded these stars also. It also discriminated in favor of the Air Force, which was in the habit of awarding numerous decorations to its fliers. In spite of these faults, the campaign-stars criterion had the virtue of being simple, well documented, and defensible, which are desirable features of any bureaucratically administered formula." (p. 26)

"The point system also had another important benefit. Immediately after it was announced, the Army command was deluged with calls and letters from members of Congress requesting special treatment for this or that category of men. To these requests the Army responded that they were merely following the state preferences of the soldiers themselves, and that to modify the system after the fact would only generate resentment. This argument provided a solid defense against attempts to manipulate the system." (p. 27)

The book's discussion of the points system was drawn largely from Stouffer, S. S. et al, 1949. The American Soldier. Princeton: Princeton University Press.

[Ian · Rating 5 out of 5]

This book discusses techniques that can be applied in solving problems of dividing economic "goods" and "bads" between a number of parties. It gives clear historical examples that illustrate the principles clearly and make them easy to conceptualize. Very useful in a Game Theory course.