Course:ECON371/UBCO2024WT1/Reflections/Ananya Singh/Reflection 1

Reflection 1

Tradeoffs Between Efficiency and Equity

Through the concepts we have covered in this course, I have come to perceive the complexities that lay behind seemingly straightforward concepts in economics, like safety and efficiency. A profound realization I have had is that there is a constant trade-off between the standard of living and environmental quality. Moreover, achieving economic efficiency often comes at a significant cost, particularly for minorities or the less privileged, as they don’t always have the privilege to choose their level of safety. Coming from two developing countries, India and Nigeria, these insights have been both eye-opening and emotionally challenging, as they are easily witnessed and hit close to home. Through this reflection I hope to share my experience and how these limitations have deepened my appreciation for my circumstances.

In my opinion, economic models often assume that all individuals can make their own decisions about choosing their level of safety. However, the reality for many people, especially in developing countries, is starkly different. Many lack the financial resources to ensure even basic levels of safety. This concept resonated with me deeply because, in India, I have seen firsthand how difficult it is for people to prioritize safety when they are just trying to survive. For example, several homeless folks often work in factories or construction sites with extremely unsafe conditions to earn a daily living that is way below the minimum wage level assumed in a developed country.

Throughout the course, it was evident that welfare was achieved through the pursuit of efficiency, however, this concept often sacrificed equity, resulting in inequalities that disproportionately impact those already facing hardships. An example we discussed in class was when developed countries dumped their trash in third-world countries and compensated them for it. The benefits of the rich offset the damage caused, leading to overall efficiency. This has been a difficult truth for me to process because, on the one hand, I understand the value of efficiency in driving growth and improving the standard of living. On the other hand, I see how efficient solutions often leave some people behind.

Being from a developing country, I’ve witnessed how economic policies can favor growth at the expense of the poor and vulnerable. For example, in Nigeria, the 2023 fuel subsidy removal caused a significant increase in the price of petrol, leading to a sharp rise in transportation and food costs. Since many Nigerians, particularly those in lower-income brackets, heavily rely on affordable fuel for their daily needs, they were negatively impacted, and the rate of crime also increased. The Nigerian government to improve fiscal stability and attract foreign investment, has often eliminated subsidies on petroleum products, citing the need to free up funds for development. These funds have either then gone into the pockets of government officials or funded businesses. While this move is aimed at fostering economic growth, it has always ended up disproportionately impacting the poor.

This realization has made me more grateful for the opportunities I have, but also more aware of the structural inequities that persist in our society. I believe it is crucial to address the issue of unequal access to safety and the trade-offs between efficiency and equity. I think that there needs to be a stronger focus on inclusive economic policies that prioritize the well-being of all individuals, especially the most vulnerable. This can be done if governments and policymakers incorporate frameworks that ensure basic safety and equitable distribution of resources along with the pursuit of economic growth, and do not engage in corruptive practices. For instance, stricter regulations around labor safety standards, access to affordable healthcare, and environmental protections should be non-negotiable, regardless of the efficiency or monetary gains that might be sacrificed.

In conclusion, this course has made me aware of the fact that not everyone can choose safety or benefit from economic efficiency and strengthened my resolve to advocate for a more equitable approach to economics. Especially because having seen these inequalities play out in real life, I think a more compassionate, human-centered approach to economics; one that acknowledges and addresses the disparities in access to safety and opportunity, is essential for fostering a fairer and more just global economy.