ABSTRACT
Many have argued that individuals should receive income in proportion to their contribution to society (i.e. their productivity). Others have believed that it would be fairer if people received income in proportion to the effort they expend in so contributing, since people have much greater control over their level of effort than their productivity. I argue that those who believe this are normally also committed, despite appearances, to increasing the social product — which undermines any sharp distinction between effort- and productivity-based distributive proposals. However, effort-based proposals do emphasise more the importance of people having control over factors affecting their income. The second set of problems I consider is how to implement policies which hold true to this emphasis. I show that there are major problems with the accuracy of using any objective criteria to measure the level of effort a person is expending. Moreover, once any such criteria are employed the problem of ‘moral hazard’ arises because people modify their behaviour in such a way as to maximise their income while minimising their effort. This violates the original motivation for using effort. Because of this and other empirical considerations, I argue that productivity may well be a better criterion on which to distribute income even if one is motivated by the same concerns which have prompted effort-based proposals.
