What Is Economic Equity?

Economic fairness is an inherent requirement of a market economy, emphasizing that factor input and factor income are symmetric, and it is achieved by equivalent exchange under the condition of equal competition.

Economic equity

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Implications of Economic Equity as Value of Economic Law

Fairness is a multi-faceted, vague philosophy

Implications and Economic Basis

Harmony refers to the overall coordination formed in a system of diverse connections. Harmony means more than just

In summary, since its birth, economic law has shown that traditional legal values are undergoing major changes in the field of economic law adjustment, that is, the values of rights, efficiency, and freedom advocated by traditional law are gradually concentrated in civil and commercial law field. Economic law, as a method of regulating state intervention and managing the economy, is social-oriented and its value pursuit is concentrated in maintaining the harmony and fairness of the overall economic operation.

Economic fairness theory

Equity in Economics: The Characteristics of Fair Distribution of Economic Results among Members of Society. Adams in Economics: The Theory of Equity

Fairness refers to the relative equality of income distribution, that is, the income gap between members of society must not be excessively disparate, and the basic living needs of members of society are guaranteed.

Fairness theory was proposed by American psychologists in 1965. The basic point of the theory is that people's enthusiasm for work is not only related to how much the individual is actually paid, but also whether people feel that the distribution of compensation is fairer. People always consciously or unconsciously compare their labor costs and their remuneration with others, and judge whether it is fair or not. The sense of fairness directly affects employees' work motivation and behavior. Therefore, in a sense, the process of motivation is actually a process of comparing people, making a fair judgment, and guiding behavior.

Economic equity formula

Fairness theory can be expressed by fair relationship formula. Let a party a and the object b be compared, then when a feels fair, the following formula holds:

0p / ip = oc / ic

among them:

op-how you feel about being paid

oc-how you feel about others being paid

ip-how you feel about your personal investment

ic-how you feel about investing in others

When the above formula is an inequality, the following two situations may occur:

In this case, he may ask to increase his income or reduce his future efforts in order to make the left increase and become equal; the second method is that he may ask the organization to reduce the income of the comparison target or make it Increase the level of effort in the future so that the right is reduced and tends to be equal. In addition, he may find someone else to compare with in order to achieve psychological balance.

(2) op / ip> oc / ic

In this case, he may ask to reduce his salary or do more work automatically at the beginning, but over time, he will re-evaluate his technology and work situation, and finally feel that he really deserves such a high salary, so the output It will return to the level of the past.

(1) op / ip <oc / ic

In addition to horizontal comparisons, people also often make vertical comparisons, that is, comparing the ratio of their current efforts to the current rewards with the ratio of their past efforts to the previous rewards. He considers it fair only if they are equal, as shown in the following formula:

0p / ip = 0h / ih

Among them: 0p-how you feel about the reward you are getting now

oh-how you feel about being paid in the past

ip-how you feel about personal involvement now

ih-how you feel about your personal investment

When the above formula is an inequality, the following two situations may also occur:

(1) op / ip <oh / ih When this happens, people will also feel unfair, which may lead to reduced work motivation.

(2) op / ip> 0h / ih

When this happens, people will not feel unfair because of this, but they will not feel that they have paid more and take the initiative to do more work.

The results of surveys and experiments show that the overwhelming majority of injustices are caused by the comparison that they are currently underpaid; but in a few cases, they are also caused by the comparison that they are overpaid. .

We have seen that the basic ideas put forward by the fairness theory exist objectively, but fairness itself is a rather complicated issue, which is mainly due to the following reasons:

First, it has to do with personal subjective judgment. In the above formula, both the input and compensation of oneself or others are personal feelings, and the average person always overestimates his own investment and underestimates the investment of others.

Second, it has to do with the fairness standards held by individuals. The above fairness standards are based on the contribution rate, as well as the demand rate and average rate. For example, some people think that scholarships should be changed to scholarships to be reasonable, some people think that it should be evenly distributed to be fair, and some people think that it is appropriate to allocate according to the degree of economic difficulty.

Third, it is related to the evaluation of performance. We advocate payment based on performance, and each person should be relatively balanced. But how to measure performance? Is it the quantity and quality of work results, or the level of effort and labor involved? By the complexity and difficulty of the job, or by the ability, skills, qualifications and education? Different assessment methods will give different results. It is best to measure according to the quantity and quality of work results with clear, objective and easily verifiable standards, but this is often difficult to do in actual work, and sometimes other methods have to be adopted.

Fourth, it is related to the assessor. Who evaluates performance, whether it is leader evaluation, mass evaluation or self-evaluation, different evaluators will get different results. Because the same organization is often not evaluated by the same person, there will be slackness, avoidance of contradictions, accommodating accommodation, and stereotypes.

However, the fairness theory has important implications for us: First, not only the absolute value of rewards, but also the relative value of rewards, which affects the effectiveness of incentives. Secondly, we should strive for fairness in the incentive, so that the equation is objectively established, even if there is an error in subjective judgment, it will not cause a serious sense of injustice. Thirdly, in the incentive process, attention should be paid to the guidance of the fair psychology of the motivated people so that they can establish a correct concept of fairness. First, they must recognize that absolute fairness does not exist. Stopping remuneration is the main killer of a vicious circle on equity.

In order to prevent employees from feeling unfair, enterprises often take various measures to create a fair and reasonable atmosphere in the enterprise, so that employees have a subjective sense of fairness. If there is an enterprise adopting the method of confidential wages, the employees do not know each other's income and expenditure ratios, so as to prevent the employees from comparing each other and creating an unfair feeling.