Law Commons^™

The Law And Economics Of Redistribution, Matthew Dimick

Journal Articles

Should legal rules be used to redistribute income? Or should income taxation be the exclusive means for reducing income inequality? This article reviews the legal scholarship on this question. First, it traces how the most widely cited argument in favor of using taxes exclusively--Kaplow & Shavell's (1994) double-distortion argument--evolved from previous debates about whether legal rules could even be redistributive and whether law and economics should be concerned exclusively with efficiency or with distribution as well. Next, it surveys the responses to the double-distortion argument. These responses appear to have had only limited success in challenging the sturdy reputation of …

A Better Calculus For Regulators: From Cost-Benefit Analysis To The Social Welfare Function, Matthew D. Adler

Faculty Scholarship

The “social welfare function” (SWF) is a powerful tool that originates in theoretical welfare economics and has wide application in economic scholarship, for example in optimal tax theory and environmental economics. This Article provides a comprehensive introduction to the SWF framework. It then shows how the SWF framework can be used as the basis for regulatory policy analysis, and why it improves upon cost-benefit analysis (CBA).

Two types of SWFs are especially plausible: the utilitarian SWF, which sums individual well-being numbers, and the prioritarian SWF, which gives extra weight to the well-being of the worse off. Either one of these …

Equity By The Numbers: Measuring Poverty, Inequality, And Injustice, Matthew D. Adler

Faculty Scholarship

Can we measure inequity? Can we arrive at a number or numbers capturing the extent to which a given society is equitable or inequitable? Sometimes such questions are answered with a “no”: equity is a qualitative, non-numerical consideration.

This Article offers a different perspective. The difficulty with equity measurement is not the impossibility of quantification, but the overabundance of possible metrics. There currently exist at least four families of equity-measurement frameworks, used by scholars and, to some extent, governments: inequality metrics (such as the Gini coefficient), poverty metrics, social-gradient metrics (such as the concentration index), and equity-regarding social welfare functions. …

The Social Value Of Mortality Risk Reduction: Vsl Vs. The Social Welfare Function Approach, Matthew D. Adler, James K. Hammitt, Nicolas Treich

Faculty Scholarship

We examine how different welfarist frameworks evaluate the social value of mortality risk reduction. These frameworks include classical, distributively unweighted cost–benefit analysis—i.e., the “value per statistical life” (VSL) approach—and various social welfare functions (SWFs). The SWFs are either utilitarian or prioritarian, applied to policy choice under risk in either an “ex post” or “ex ante” manner. We examine the conditions on individual utility and on the SWF under which these frameworks display sensitivity to wealth and to baseline risk. Moreover, we discuss whether these frameworks satisfy related properties that have received some attention in the literature, namely equal value of …

Happiness Surveys And Public Policy: What’S The Use?, Matthew D. Adler

All Faculty Scholarship

This Article provides a comprehensive, critical overview of proposals to use happiness surveys for steering public policy. Happiness or “subjective well-being” surveys ask individuals to rate their present happiness, life-satisfaction, affective state, etc. A massive literature now engages in such surveys or correlates survey responses with individual attributes. And, increasingly, scholars argue for the policy relevance of happiness data: in particular, as a basis for calculating aggregates such as “gross national happiness,” or for calculating monetary equivalents for non-market goods based on coefficients in a happiness equation.

But is individual well-being equivalent to happiness? The happiness literature tends to blur …

The Law And Economics Of Liability Insurance: A Theoretical And Empirical Review, Tom Baker, Peter Siegelman

All Faculty Scholarship

We survey the theoretical and empirical literature on the law and economics of liability insurance. The canonical Shavell model predicts that, despite the presence of some ex ante moral hazard (care-reduction by insureds), liability insurance will generally raise welfare because its risk-spreading gains will likely be larger than its adverse effects on precautionary activities. We discuss the numerous features of liability insurance contracts that are designed to reduce ex ante moral hazard, and examine the evidence of their effects. Most studies conclude that these features work reasonably well, so that liability insurance probably does not generate substantial ex ante moral …

Income Inequality: Challenges In Bridging The Gap, Singapore Management University

Perspectives@SMU

Increase social spending. Fine-tune foreign labour policies. Create more job opportunities.

These were just a few of the suggestions made during a forum organized by the anti-poverty group, ONE (Singapore) and Singapore Management University's Wee Kim Wee Centre on how to bridge the income inequality gap in Singapore.

Halimah Yacob, the Minister of State for the Ministry of Social and Family Development, said in the forum that a concern with income inequality is its impact on social mobility, as people need to have “a sense of hope and optimism that they can aspire to a better life”. How each society …

Contingent Valuation Studies And Health Policy, Matthew D. Adler

Faculty Scholarship

No abstract provided.

Evolutionary Theory And Kinship Foster Care: An Initial Test Of Two Hypotheses, David J. Herring, Jeffrey J. Shook, Sara Goodkind, Kevin H. Kim

Articles

Public child welfare systems increasingly rely on kin to serve as foster parents. This study tests two hypotheses concerning kinship foster care that have been formulated based on evolutionary theory and behavioral biology research. The first hypothesis is that on average foster children are likely to benefit from higher levels of parental investment and realize better outcomes if placed with kin rather than non-kin foster parents. The second hypothesis is that on average children in kinship foster care placements are likely to benefit from higher levels of parental investment and realize better outcomes if placed with some types of kin …

Bounded Rationality And Legal Scholarship, Matthew D. Adler

All Faculty Scholarship

Decision theory seems to offer a very attractive normative framework for individual and social choice under uncertainty. The decisionmaker should think of her choice situation, at any given moment, in terms of a set of possible outcomes, that is, specifications of the possible consequences of choice, described in light of the decisionmaker’s goals; a set of possible actions; and a "state set" consisting of possible prior "states of the world." It is this framework for choice which provides the foundation for expected utility theory, as demonstrated in the work of Leonard Savage. Problems arise, however, when the decisionmaker is boundedly …

Economic Growth And The Interests Of Future (And Past And Present) Generations: A Comment On Tyler Cowen, Matthew D. Adler

Faculty Scholarship

No abstract provided.

Implementing Cost-Benefit Analysis When Preferences Are Distorted, Matthew D. Adler, Eric A. Posner

Faculty Scholarship

Cost-benefit analysis is routinely used by government agencies in order to evaluate projects, but it remains controversial among academics. This paper argues that cost-benefit analysis is best understood as a welfarist decision procedure and that use of cost-benefit analysis is more likely to maximize overall well-being than is use of alternative decision-procedures. The paper focuses on the problem of distorted preference. A person's preferences are distorted when his or her satisfaction does not enhance that person's well-being. Preferences typically thought to be distorted in this sense include disinterested preferences, uninformed preferences, adaptive preferences, and objectively bad preferences; further, preferences may …

Beyond Efficiency And Procedure: A Welfarist Theory Of Regulation, Matthew D. Adler

Faculty Scholarship

Normative scholarship about regulation has been dominated by two types of theories, which I term "Neoclassical" and "Proceduralist." A Neoclassical theory has the following features: it adopts a simple preference-based view of well-being, and it counts Kaldor-Hicks efficiency as one of the basic normative criteria relevant to the evaluation of regulatory programs. A Proceduralist theory is concerned, not solely with the quality of regulatory outcomes, but also with the governmental procedures that produce these outcomes: it gives intrinsic significance to the procedures that regulatory bodies follow. (One example of a Proceduralist theory is the civic republican theory of regulation advanced …

Suggested Revisions To The Polish Social Welfare Law, Christopher J. O'Leary, W.E. Upjohn Institute For Employment Research

Reports

No abstract provided.