Compare and contrast the two normative standards to income distribution discussed in the text: The productivity standard and the egalitarian principle.

What will be an ideal response?


The productivity standard is also called the contributive standard or the merit standard. People are rewarded according to merit, where merit is determined by one’s ability to produce what is considered useful by society. The egalitarian principle would distribute income equally. The two principles are very different since the former will generate an unequal distribution of income and the latter an equal distribution of income. They also differ greatly in incentive structure. The egalitarian principle provides no incentives for doing work that is unpleasant or for bearing risk.