Hitting the Sweet Spot: 
Balancing Equity and Equality to Maximize Wealth and Happiness
PIERS STEEL
JOHN PELOZA

Equality and equity are two versions of justice, sometimes in conflict. As we try to bring more equality, we can also jeopardize equity, which essentially rewards outstanding behavior. This conflict is expressed in political debate, between liberal and conservative positions, which can degenerate into ideological moral posturing. We investigate whether there is a “sweet spot” between the extremes of equity and equality that helps to maximize a nation’s success. To operationalize success, we use observed GNP per capita and self-report subjective well-being. To operationalize equality-equity, we use observed wealth concentration (i.e., the Gini) and self-report power distance. In all cases, there seems to be a broad “sweet spot” where increases or decreases in equality or equity do not have substantive effects but beyond that indices of national success fail off rapidly. Of note, the United States appears to be at the very edge of this range, showing unusually high levels of wealth concentration. We review several major possible causes for this effect, from enabling negative externalities (i.e., reducing wealth) to excessive materialism (i.e., reducing happiness). Finally, we put forth several public policy suggestions that a government can use to keep their countries within the “sweet spot.”