Public policy and inequalities: lessons for policymakers from the IFS Deaton Review

We also suggest two practical considerations.First, it may not be possible to design and implement a good policy and there can be risks of government failure.Political, technical, informational or administrative constraints may exist that mean that while a policy is theoretically beneficial, in practice it is not.Second, a rationale for a type of policy intervention (such as a minimum wage) does not necessarily imply a rationale for a specific policy (such as a minimum wage at a particular level).It is therefore key to consider costs and benefits of specific policy interventions.Applying this toolkit, we discuss policy with respect to educational inequalities, 'good jobs', geographical inequalities and wealth inequalities, examining the potential perceived problems and policy options. Educational inequalitiesDiagnosing the problem Education generally boosts people's employment, earnings, health and life satisfaction, motivating concern that inequalities in educational attainment will translate into inequalities in wider outcomes.Attainment is affected by both children's innate abilities and the resources available to them and their families (in terms of not only money and material goods, but also the characteristics of their parents and wider environments).Market failures mean that -in a pure free market -society would invest too little in education.And early investments can be efficient, since they can compound over time (if skills beget skills) and since there is a longer horizon for them to pay off.But it is also possible for families and children to over-invest in education, competing to be at the top of the educational pile rather than to build the right set of skills.This 'arms race' can be perfectly rational behaviour for individual families but, added up across society, it can leave the amount of time and money spent on education too high (to the detriment of other things, such as leisure, sleep or other consumption).This complicates assessments of equity-efficiency trade-offs.Both of these risks (under-and over-investment) are sharpened when pre-existing inequalities are higher, both because families are more unequal in what they can invest and because greater inequalities raise the stakes for success.