Types of Resource Allocation
We can begin by defining resource allocation. In a broad sense, it can be defined as how things can be distributed. This may include credit, blame, responsibility, money, time, and the like. In the science and engineering this translates to: money, consumables, time, space, and services. Naturally there needs to be a "fair" way to distribute these resources. This section outlines way to distribute these resources.
Allocation by Merit
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This can be seen as a rewards system of sorts. This view suggests that rewards should be distributed according to productivity, effort, or demonstrated ability.
- In the work place, this can be seen as salary increases, promotions, and even layoffs.
- In the college environment, this can be seen as the distribution of grades. As not everyone can receive an A for classes, the grades need to be distributed reflecting a students understanding of the subject.
In aspects where a necessity is involved, such as food, shelter, and water, this system breaks down. In impoverished countries, for example, few would argue for denying children food because they are not as productive as adults.
Allocation by Social Worth
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Allocation by social worth tends to take a practical view toward resources, directing them toward those who appear most likely to contribute to the common good. This view suggests that resources should move in directions that ultimately do the greatest good for the largest number of people. Criteria for social worth can include age, seniority, rank, and expertise.
- In the work place, this can be seen as layoffs. Generally speaking, a senior worker will not be fired over a new worker.
- In the college environment, this can be seen as the distribution of money to labs. Labs for graduate students and upperclassmen tend to be better than freshman labs.
Allocation by social worth breaks down when the criteria for worth ignores basic human rights. For example, wealth is sometimes used to measure social worth, especially in countries with market economies. This attitude can cause food, energy, education, medical attention, and social influence to "flow uphill," thereby making severe imbalances in essential resources even worse.
Allocation by Need
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Allocation by need tends to view resources in terms of basic human rights. This view suggests that every person has the same right to some minimal level of a given resource. Obvious examples include food, shelter, and clothes.
- In the work place, this can be seen when a company diverts funds to a division in that company who's equipment is outdated.
- In the college environment, this can be seen as scholarships given to students who otherwise would not be able to attend college.
Allocation by need breaks down when this criterion is applied so strictly that it removes the incentive to produce. It's usually true that people work hardest when they believe they will enjoy the fruits of their labors. This is also the same reason why socialism doesn't work.
Allocation by Equal or Random Assignment
- Allocation by equal or random assignment takes the view that no rational, unbiased way can be found to distribute resources. This is the default allocation method when no other allocation method works.
- The most obvious example of this is a lottery. When there is no obvious way to distribute resources, a simple lottery can prove to be the "fairest" way.
Allocation by random assignment breaks down when each portion of a resource is simply to small to do any good. For example, dividing antibiotics into small doses during an epidemic could make each dose so small that no one benefits.
No simple rules for allocation can guarantee fairness under all circumstances. The ultimate decision depends heavily on exactly what needs to be distributed and on the specific details of each situation. The Candy case study is a perfect example of resource allocation.