- afonso ramos
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efficiency criteria versus equity criteria, wich one of these should be considered first in matters of political finance?
In public finance there has been some controversy about wich criteria to give priority, being that sometimes one needs to be sacrificed over the other. It is my understanding that it is not that simple, the discussion shouldn't be narrowed down to such a simple question, but sometimes it is necessary to set priority's straight in order to aplly the necesary measures properly. Given a few examples of conflicts between these two criteria such as, the tax on tobacco, in one hand it is bad for the equity criteria, but on the other hand it serves efficiency by apllying a penalty on negative externalitie; other example is income taxes, they usualy are progressive taxes, wich serves equity very well but it does not suit the efficiency criteria. These are very particular examples of conflicts between those two, i'm looking for a more wide perspective on the apllication of these criteria.
Note that there is no right or wrong answer only well suported opinions, because this is a subjective choice and it depends on many personal factors and personal points of view.