Law Commons^™

Fair Innings? The Utilitarian And Prioritarian Value Of Risk Reduction Over A Whole Lifetime, Matthew D. Adler, Maddalena Ferranna, James K. Hammitt, Nicolas Treich

Faculty Scholarship

The social value of risk reduction (SVRR) is the marginal social value of reducing an individual’s fatality risk, as measured by some social welfare function (SWF). This Article investigates SVRR, using a lifetime utility model in which individuals are differentiated by age, lifetime income profile, and lifetime risk profile. We consider both the utilitarian SWF and a “prioritarian” SWF, which applies a strictly increasing and strictly concave transformation to individual utility.

We show that the prioritarian SVRR provides a rigorous basis in economic theory for the “fair innings” concept, proposed in the public health literature: as between an older individual …

Pobreza Multidimensional En El Pacífico Colombiano 2010 - 2016, Lizeth Dayana Manzano Murillo, Laura Antonia Maturana Cifuentes

Economía

La pobreza es un fenómeno presente en muchos países de mundo, y un problema prioritario en las políticas de desarrollo económico y social, por lo que se hace pertinente estudiarla de manera rigurosa, analizando sus determinantes, y sus vínculos con los diferentes factores socioeconómicos de la población. Como bien se sabe, el Pacífico Colombiano es la región más pobre del país; cuenta con el menor ingreso per cápita, y elevadas tasas de pobreza monetaria y multidimensional. El objetivo de esta monografía de grado es analizar la pobreza en el Pacífico Colombiano, considerando la aproximación multidimensional, implementando de manera detallada la …

Why Autonomy Must Be Contract's Ultimate Value, Hanoch Dagan, Michael A. Heller

Faculty Scholarship

In “The Choice Theory of Contracts”, we develop a liberal theory of contract law. One core task of the book was to persuade advocates of economic analysis that they must situate their enterprise within our liberal framework. Autonomy, rightly understood, is the telos of contract.

Oren Bar-Gill pushes back strongly in “Choice Theory and the Economic Analysis of Contracts”. He offers a penetrating – perhaps devastating – critique of our approach. Bar-Gill notes the substantial convergence between choice theory and a welfarist view. If he is right, then what does choice theory add?

Our task in Part I of this …

The Separation Of Corporate Law And Social Welfare, William W. Bratton

All Faculty Scholarship

A half century ago, corporate legal theory pursued an institutional vision in which corporations and the law that creates them protect people from the ravages of volatile free markets. That vision was challenged on the ground during the 1980s, when corporate legal institutions and market forces came to blows over questions concerning hostile takeovers. By 1990, it seemed like the institutions had won. But a different picture has emerged as the years have gone by. It is now clear that the market side really won the battle of the 1980s, succeeding in entering a wedge between corporate law and social …

Priority For The Worse Off And The Social Cost Of Carbon, Matthew D. Adler, David Anthoff, Valentina Bosetti, Greg Garner, Klaus Keller, Nicolas Treich

Faculty Scholarship

The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. …

Distributive Justice And Consumer Welfare In Antitrust, Herbert J. Hovenkamp

All Faculty Scholarship

The dominant view of antitrust policy in the United States is that it is intended to promote some version of economic welfare. More specifically, antitrust promotes allocative efficiency by ensuring that markets are as competitive as they can practicably be, and that firms do not face unreasonable roadblocks to attaining productive efficiency, which refers to both cost minimization and innovation.

The distribution concern that has dominated debates over United States antitrust policy over the last several decades is whether antitrust should adopt a “consumer welfare” principle rather than a more general neoclassical “total welfare” principle. In The Antitrust Paradox Robert …

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

All 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 three benchmark social welfare functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL …

Harsanyi 2.0, Matthew D. Adler

All Faculty Scholarship

How should we make interpersonal comparisons of well-being levels and differences? One branch of welfare economics eschews such comparisons, which are seen as impossible or unknowable; normative evaluation is based upon criteria such as Pareto or Kaldor-Hicks efficiency that require no interpersonal comparability. A different branch of welfare economics, for example optimal tax theory, uses “social welfare functions” (SWFs) to compare social states and governmental policies. Interpersonally comparable utility numbers provide the input for SWFs. But this scholarly tradition has never adequately explained the basis for these numbers.

John Harsanyi, in his work on so-called “extended preferences,” advanced a fruitful …

Regulatory Theory, Matthew D. Adler

All Faculty Scholarship

This chapter reviews a range of topics connected to the justification of government regulation, including: the definition of “regulation”; welfarism, Kaldor-Hicks efficiency, and the Pareto principles; the fundamental theorems of welfare economics and the “market failure” framework for justifying regulation, which identifies different ways in which the conditions for those theorems may fail to hold true (such as externalities, public goods, monopoly power, and imperfect information); the Coase theorem; and the different forms of regulation.

Choice, Consent, And Cycling: The Hidden Limitations Of Consent, Leo Katz

Michigan Law Review

Most legal scholars assume that if V consents to allow D to do something to him, such consent makes D's actions legally and morally acceptable. To be sure, they are willing to make an exception when consent is given under a specified list of conditions: Force, fraud, incompetence, third-party effects, unequal bargaining power, commodification, paternalism - all of these may be grounds for rejecting the validity of V's consent. We might call scholars who take this view of consent quasi-libertarians. In this Article, I argue against the quasi-libertarian view of consent. My central claim is that the validity of consent …

Does Falling Smoking Lead To Rising Obesity?, Jonathan Gruber, Michael D. Frakes

Faculty Scholarship

The strong negative correlation over time between smoking rates and obesity have led some to suggest that reduced smoking is increasing weight gain in the U.S.. This conclusion is supported by the findings of Chou et al. (2004), who conclude that higher cigarette prices lead to increased body weight. We investigate this issue and find no evidence that reduced smoking leads to weight gain. Using the cigarette tax rather than the cigarette price and controlling for non-linear time effects, we find a negative effect of cigarette taxes on body weight, implying that reduced smoking leads to lower body weights. Yet …

Digital Wars -- Legal Battles And Economic Bottlenecks In The Digital Information Industries, Curt A. Hessler

ExpressO

The Digital Age has spawned major legal battles over the fundamental principles of intellectual property law and antitrust law. These diverse struggles can best be analyzed using the basic norm of "value added" from neo-classical normative economics. This analysis suggests that current intellectual property doctirnes provide excessive protection and current antitrust doctrines remain awkward in dealing with the cross-market leveraging of monopoly power in the presence of "natural monopolies" created by network effects.

Should We All Be Welfare Economists?, Richard H. Fallon Jr.

Michigan Law Review

On what normative foundation should the edifice of law and public policy be built? What are proper grounds for claims of individual right, and how, generally, do those grounds relate to considerations of individual well-being and social welfare? In this Essay, I argue that individual well-being and a related concept of social welfare should be important considerations in the design of legal rules, but not the exclusive ones. When the notion of well-being receives substantive content, the most plausible and attractive definitions all allow a distinction between what will best promote a person's well-being and what that person might rationally …

Redistributing Optimally: Of Tax Rules, Legal Rules, And Insurance, Kyle D. Logue, Ronen Avraham

Articles

From the beginning of the law and economics movement, normative legal economists have focused almost exclusively on evaluating the efficiency of alternative legal rules. The distributional consequences of legal rules, therefore, have largely been ignored. It is tempting to conclude that legal economists are hostile or indifferent to concerns of distributional fairness. In fact, however, the discipline of economics has a great deal to say about distributional policy. The normative branch of economics, known as welfare economics, has always been deeply concerned with distributional issues. It is not that welfare economists purport to know a priori the "right" or "optimal" …

Dangers Of Monetary Commensurability: A Psychological Game Model Of Contagion, Peter H. Huang

Publications

No abstract provided.

The Limits Of Preference-Based Legal Policy, Herbert J. Hovenkamp

All Faculty Scholarship

America's political institutions are built on the principle that individual preferences are central to the formation of policy. The two most important institutions in our system, democracy and the market, make individual preference decisive in the formation of policy and the allocation of resources. American legal traditions have always reflected the centrality of preference in policy determination. In private law, the importance of preference is reflected mainly in the development and persistence of common-law rules, which are intended to facilitate private transactions over legal entitlements. In constitutional law, the centrality of preference is reflected in the high position we assign …

An Appreciative Comment On Coase's The Problem Of Social Cost: A View From The Left, Pierre Schlag

Publications

Professor Coase's article, The Problem of Social Cost, played a significant role in launching the law and economics movement. Coase's insights have been used extensively by the law and economics movement as authority and inspiration for the development of an essentially right-leaning approach to law. In this Article, Professor Schlag undertakes to reexamine the original article. He shows that Coase's deconstructive moves opened up a series of volatile and radical inquiries. He then argues that the law and economics movement, in general, and Judge Posner, in particular, shut down the dangerous radicalism of these inquiries by hypostasizing Coase's insights …