Equity (economics)

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For "equity" as the value of an ownership interest in property, see ownership equity or shareholders' equity

Equity is the concept of idea of fairness or justice in economics, particularly in terms of taxation and welfare economics. It has been studied in experimental economics as inequity aversion.

Horizontal equity is the idea that people with a similar ability to pay taxes should pay the same or similar amounts. It is related to the concept of tax neutrality or the idea that the tax system should not discriminate between similar things or people, or unduly distort behavior.

Vertical equity is the idea that people with a greater ability to pay taxes should pay more. If they pay more strictly in proportion to their income, this is known as a proportional tax or flat tax; if they pay disproportionately more then this is a progressive tax, more associated with redistribution.

In a health care context

Horizontal equity means treating the same those who are the same in a relevant respect (such as having the same 'need'). Vertical equity means treating differently those who are different in relevant respects (such as having different 'need'), (Culyer, 1995).

Health studies of equity seek to identify whether particular social groups receive systematically different levels of care to other groups.

References

Culyer, A.J., 1995. Need — the idea won’t do — but we still need it. Social Science and Medicine 40, pp. 727–730.

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