The most commonly used definition for equity in business relates to financial
investments, such as the value of shares in a company or the amount of mortgaged
property. The word “equity” is starting to be more widely used outside of finance
departments, but its meaning is not well understood. This white paper uses the ethical
meaning of equity.
Often equity and equality are confused and used interchangeably in conversations. Part
of that confusion can be traced back to both terms originating from the Latin word for
fair and even. 1 Equality is defined as a lack of difference. It is often considered the goal
for moral, judicial, economic, and political systems. Understanding what is equal in most
situations is much more straightforward than understanding what is equitable. However,
what is equal is not necessarily fair. Equity is defined as fairness and freedom from bias
or favoritism. An equity equation created by Aristotle specifies that the connection
between contribution and rewards should be the same for all people. In his writings on
Nicomachean Ethics, Aristotle suggested that equity is moral behavior that doesn't exist
without justice. He continues that equity with justice is better than justice without equity.