Sunday, January 13, 2013

Pareto Efficient

Here's my Alzheimer's problem of the day.

Which of the five items to the left infer Pareto efficiency?  Wikipedia partially define Pareto efficiency as: "In a Pareto efficient economic allocation, no one can be made better off without making at least one individual worse off.

My answers: 1, 2 and 3.

In truth five, the author of this piece, brings up the free rider problem--Why should I work when I get all of the benefits and none of the costs.

In truth four, this is a statistical joke.  If you take a piece of pie and divide it 8 times, it's still one pie.

The real questions behind the truths include fairness in the distribution of income, taxes, incentives to produce, and the role of the government.  I know that two children born to different parents don't start at the same line.  I also don't like the idea of taxing the wealthy and giving to the poor simply be they are poor.  I also believe that social change is inevitable when there's wealth inequality.

The questions along with the answers are deep.  There's not a singular right answer.  But workers who produce and contribute to society, should somehow be rewarded no matter what their job is.

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