Equity, or the idea that one should be compensated according to one’s respective contribution, is a fundamental principle for resource allocation. People tend to endorse equity in a wide range of contexts, from interpersonal relationships to public policy. However, at times, equity might come at the expense of efficiency. What do people do when they must waste resources to maintain equity? In this chapter, we adopt a behavioral perspective on such equity–efficiency trade-offs, reviewing the relevant findings from the social psychology, judgment and decision-making and behavioral economics literature. We show that whereas allocators will often choose to waste in the name of equity, this is not necessarily the case. We review various psychological aspects that affect the allocators’ decision.

When allocating resources, equity and efficiency may conflict. When resources are scarce and cannot be distributed equally, one may choose to destroy resources and reduce societal welfare to maintain equity among its members. We examined whether people are averse to inequitable outcomes per se or to being responsible for deciding how inequity should be implemented. Three scenario-based experiments and one incentivized experiment revealed that participants are inequity responsibility averse: when asked to decide which of the 2 equally deserving individuals should receive a reward, they rather discarded the reward than choosing who will get it. This tendency diminished significantly when participants had the possibility to use a random device to allocate the reward. The finding suggests that it is more difficult to be responsible for the way inequity is implemented than to create inequity per se.