The Efficiency-Equity Trade-off, Self-Interest, and Moral Principles in Health and Safety Valuation

Abstract

Policy makers try to take account of public preferences when making trade-offs between policy options. Yet most estimates of the value of health and safety reflect only individuals’ self-interested preferences, neglecting their preferences over the distribution of public resources. We conduct an experiment in which participants choose between policy options that differ in their efficiency (expected number of fatalities or cases of ill health they would prevent) and their equity (defined in terms of the balance of risk reductions for different sections of the population). The policy options were framed as interventions to improve a hypothetical city’s water supply that would reduce the risk of death or ill health for people in different areas of the city to varying degrees. In order to examine whether self-interest would affect the trade-offs, we asked half of the sample about scenarios where they would personally benefit from some options. Our results suggest that efficiency is the most important single factor determining preferences between policy options, but decisions were influenced almost as much by equity as by efficiency. The effect of self-interest was smaller than that of the general concern for efficiency. We also elicited participants’ stated moral principles regarding trade-offs between equity, efficiency and self-interest, and found that their expressed principles were well-aligned with their choices. Our findings contribute to the growing evidence that distributional concerns matter when evaluating health interventions.