Scales balanced with diverse hands reaching for essential resources.

Fair Allocation: Can Equity and Efficiency Coexist in Government Programs?

Rhea Morgan in Politics & Policy September 2025 • 4 min read.

"Explore the challenges and innovative solutions for designing equitable screening processes in public programs, ensuring fair access to vital resources like vaccines and housing."

In 2017, French President Emmanuel Macron introduced environmental policies to cut carbon emissions, including fuel tax increases. However, the proposed tax hike led to widespread protests by the 'Yellow Vest' movement, mainly from rural and less affluent areas. The protesters argued that the policy unfairly burdened those financially vulnerable and dependent on driving, who couldn't switch to greener alternatives. Mounting unrest eventually led the French government to suspend the planned fuel tax hike.

This situation highlights a fundamental challenge: How can governments fairly distribute essential goods and services—such as vaccines, affordable housing, basic food items, or emission rights—while also ensuring efficient allocation? Often, there's a perceived tension between equity (fairness) and efficiency (maximizing benefit).

This article examines the complexities of equitable screening in public programs. It explores policy designs that balance the need to direct resources efficiently with the imperative to treat equally deserving individuals fairly. By considering societal perceptions of merit and entitlement, we delve into innovative screening approaches that promote both equity and efficiency in resource allocation.

The Equity Dilemma: Balancing Needs and Merit

Scales balanced with diverse hands reaching for essential resources.

Standard economic logic suggests that public programs can be made more efficient through screening. If people need to pay or go through ordeals to get a benefit, only those who truly need it will do so. However, screening can lead to inequitable outcomes. People with the same level of need may find waiting or paying burdensome to different extents. Consider the distribution of COVID-19 vaccines; prioritizing based on willingness to pay may improve targeting but could disadvantage poorer individuals with severe health conditions.

Equity concerns often lead governments to forgo screening in favor of mechanisms based on observables or lotteries. Examples include school placements, public housing, and US green cards. While lotteries avoid direct discrimination, they may not efficiently allocate resources to those who need them most.

Payments: Disproportionately affect poorer individuals, potentially excluding them from essential resources.
Waiting Times: Can be more burdensome for wealthier individuals, creating a different form of inequity.
Lotteries: While seemingly fair, they may not allocate resources to those who need them most, sacrificing efficiency.

The challenge lies in designing policies that incorporate equity considerations without sacrificing efficiency. This requires understanding societal perceptions of merit and entitlement, and crafting screening processes that align with these perceptions.

Innovative Solutions: Combining Instruments for Equitable Outcomes

The key to achieving both equity and efficiency lies in combining multiple screening instruments that, on their own, favor different social groups. By using a mix of payments and waiting times, governments can fine-tune resource allocation to align with societal values and perceptions of merit. This approach requires careful consideration of the merit function, reflecting societal perceptions of entitlement to the allocated good. For instance, in the case of emissions, rural households reliant on cars for transportation might be considered more deserving of a right to emit than urban ones. An equity constraint would then require that agents with equal merit receive the same allocation.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2402.08781,

Title: Equitable Screening

Subject: econ.th

Authors: Filip Tokarski

Published: 13-02-2024

Everything You Need To Know

What is the core challenge in distributing essential goods and services, and what factors contribute to it?

The core challenge lies in balancing equity (fairness) and efficiency (maximizing benefit) when distributing essential goods and services. This is complicated by the fact that different screening methods have different implications. For example, using Payments can disproportionately affect poorer individuals, while Waiting Times can be more burdensome for wealthier individuals. Lotteries, while seemingly fair, may not allocate resources to those who need them most. The case of the French fuel tax hike and the resulting 'Yellow Vest' protests perfectly exemplifies this dilemma, where a policy designed to cut carbon emissions was perceived as unfairly burdening financially vulnerable citizens dependent on driving.

How can governments balance equity and efficiency when using screening processes in public programs?

Governments can balance equity and efficiency by carefully designing screening processes that consider both. This involves understanding societal perceptions of merit and entitlement. By combining multiple screening instruments, such as Payments and Waiting Times, governments can fine-tune resource allocation. For instance, prioritizing based on willingness to pay may improve targeting but could disadvantage poorer individuals with severe health conditions. An approach using a mix of Payments and Waiting Times can allow governments to allocate resources to match societal values.

What are the potential drawbacks of using payments, waiting times, and lotteries as screening methods in public programs?

Each screening method has its drawbacks. Payments can disproportionately affect poorer individuals, potentially excluding them from essential resources. Waiting Times can be more burdensome for wealthier individuals, creating a different form of inequity. Lotteries, while seemingly fair, may not allocate resources to those who need them most, sacrificing efficiency. These methods on their own can lead to inequitable outcomes, so it's essential to consider their combined effects and how they align with societal values.

Can you explain the concept of a 'merit function' and how it relates to equitable resource allocation?

A merit function reflects societal perceptions of entitlement to the allocated good. This is essential for designing equitable screening processes. The merit function represents how society values different groups and their claims on resources. By understanding this, policymakers can tailor screening instruments to align with societal values. For instance, the merit function might recognize that rural households reliant on cars for transportation are more deserving of emission rights than urban ones, leading to an allocation that accounts for these differences.

How did the French fuel tax hike illustrate the complexities of equitable public policy design?

The French fuel tax hike exemplifies the complexities of equitable public policy design. The policy, intended to reduce carbon emissions, was perceived as unfairly burdening financially vulnerable individuals and those in rural areas who relied on cars. This triggered widespread protests by the 'Yellow Vest' movement. The government's experience demonstrated the importance of considering equity impacts when designing policies and screening processes. It highlighted the tension between efficiency goals (reducing emissions) and equity concerns (fairly distributing the burden of the policy), underscoring the need for screening mechanisms that account for varying needs and circumstances.