Analyzing Equity

When I was in graduate school, we had two semesters of econometrics, which can be understood as “effectiveness analysis.” We also had two semesters of microeconomics, which can be termed “efficiency analysis.” As for equity? Well, the third pillar of policy analysis often gets shorted in these discussions, treated differently for each policy question it is applied to, receiving a day here or a day there in different classes and providing little standardized guidance for the analyst.

Equity analysis poses some difficult questions for the analyst. What are the relevant social categories to analyze: income brackets? Racial? Gender? Geographic? How should costs and benefits to different groups be weighted? How can we approach problems in ways that ensure objectivity of the analyst while still giving relevant information to policymakers who have legitimate concerns about the distribution of social resources?

While in graduate school, I wrote a paper putting forth a framework for policy analysts interested in doing equity analysis better. This was based on the paucity of equity analysis guidance in standard policy analysis textbooks. Over the past few months, I have been digging into the cost-benefit analysis literature mainly with the goal of understanding efficiency analysis better, but have been pleasantly surprised at the attention the question of equity has received in the literature. Cost-benefit analysis, for all its focus on the goal of economic efficiency, actually has more tools for rigorous equity analysis than policy analysis textbooks do.

Last week I spoke to Dr. Zoe Plakias’s Benefit-Cost Analysis class at Ohio State’s Department of Agricultural, Environmental, and Development Economics on equity analysis in cost-benefit analysis sharing some of these takeaways. In short, I talked about how the analyst has the tools of description of projections, cost-effectiveness analysis, selective sensitivity analysis, and the controversial practice of distributional weighting at her disposal to analyze the equity impacts of a given policy alternative.

Overall, it’s important that policymakers have access to objective, rigorous analysis of the distributional impacts of their policy decisions. This Fall, Scioto Analysis will be beginning a project on the problem of poverty in Ohio to help get at how we can better understand that problem in this state. If you’re interested in talking about that or equity analysis in general, please feel free to get in touch. I am always excited to talk to other people who also believe we can understand equity better.

Rob Moore is the principal for Scioto Analysis. He can be reached at