improving equity and efficiency. On the one hand, policies might be desirable from an equity perspective.1 Equity, which refers to a distribution of outcomes that is based on some notion or principle of justice, does not necessarily and naturally improve as overall outcomes do and may thus require some degree of public intervention. On the other hand, a government intervention may be justified from an efficiency perspective when resource allocation resulting from the private market produces less than optimal (and hence “inefficient”) outcomes, referred to as “market failure”. The following sections discuss first, the efficiency argument as it applies to issues relevant to the social determinants of health; and second, the equity argument. Subsequently the relationship between the two objectives is discussed. Most economists probably hold the view that the two typically cannot be achieved simultaneously and that a decision therefore has to be made at the societal and political level on how to trade off the two objectives. More recently, however, some research has shown that there may well be more than a few cases in which equity and efficiency can mutually enhance each other. In this case policy-makers do not face the dilemma of having to choose between the two and can have the best of both worlds, thereby minimizing political resistance.