In economics, allocative harm describes the negative effects arising from the misallocation of the resources of production and unfair distribution of these resources within an economy. It results in discernible and quantifiable impacts on economic inequality. It encompasses instances where resources of production, like labor, capital, and natural capital, are unevenly distributed, leading to diminished societal well-being, economic inefficiency, and social inequality.
 Allocative harm is contrasted with economic efficiency, delineating a scenario where resources are not optimally distributed, leading to diminished societal well-being. When resources are misallocated, a loss of well-being occurs, impeding the maximization of societal welfare.[citation needed]
 Allocative harm in government policy surfaces when resources and benefits are unfairly or unevenly distributed, resulting in adverse impacts on particular individuals or groups within society. Disparities in access to critical services or opportunities stemming from government policies contribute to social and economic imbalances.
 Within technology, allocative harm emerges when biases even affect algorithms and systems, causing unjust and unequal outcomes for diverse user groups. This bias can originate from societal biases reflected in artificial intelligence training data sets, leading to disparities in access and opportunities.
 Allocative harm in health care typically refers to health inequity; rather, the unequal distribution of medical resources and services. This disparity arises from access to the social determinants of health. It may include differences in the "presence of disease, health outcomes, or access to health care" between populations with a different race, ethnicity, gender, sexual orientation, disability, or socioeconomic status.
 It is important to distinguish between health inequity and health inequality. Health inequality is the term used in several countries to refer to those instances whereby the health of two demographic groups (not necessarily ethnic or racial groups) differs despite similar access to healthcare services.
 Allocativе harm in еducation manifеsts as an unеvеn playing fiеld across schools and communitiеs, significantly impacting studеnts' lеarning opportunitiеs and outcomеs. It arisеs from disparitiеs in rеsourcе allocation, lеading to somе schools having abundant еducational rеsourcеs whilе othеrs strugglе with shortagеs. This imbalancе not only affеcts thе quality of еducation but also limits futurе opportunitiеs for studеnts from undеr-rеsourcеd arеas. In addrеssing this issuе, thе goal is to еnsurе еquitablе accеss to high-quality еducation for all studеnts, irrеspеctivе of thеir socioеconomic background or gеographic location, paving thе way for a fairеr and morе inclusivе еducational landscapе.
 Market failures can be a primary driver of allocative harm. These failures can occur due to factors such as asymmetric information, external market players, or the presence of monopoly power. For instance, firms with a lot of market influence, such as monopolies, may set high prices for their products, leading to allocative harm as low-income consumers lose access to previously available products.[citation needed]
 Government interventions in the economy can also contribute to allocative harm. High regulations leading to price ceilings, floors, and subsidies can distort market forces, causing resources to be misallocated. For example, agricultural subsidies may lead to overproduction of specific crops, resulting in market inefficiency.[citation needed]
 Markets with imperfect competition can lead to allocative harm. Firms with significant market power may not produce goods and services at optimal levels, resulting in inefficiency in the economy. Often the firms will counter their below-optimal performance with higher prices.[citation needed]
 Allocative harm can be exacerbated by feedback loops by perpetuating and amplifying existing biases or inequalities within a system. This occurs when biased decisions are used as data for future decisions, leading to an increasingly unfair distribution of resources or opportunities over time.
 Potential consequences of allocative harm tend to mimic consequences of inefficient markets. The following are all potential consequences:
 To address allocative harm and enhance economic efficiency, several strategies can be employed: