Law and Economics 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 …

Patriotic Philanthropy? Financing The State With Gifts To Government, Margaret H. Lemos, Guy-Uriel Charles

Faculty Scholarship

Federal and state law prohibit government officials from accepting gifts or “emoluments” from outside sources. The purpose of gift bans, like restrictions on more explicit forms of bribery, is to protect the integrity of political processes and to ensure that decisions about public policy are made in the public interest — not to advance a private agenda. Similar considerations animate regulations on campaign funding and lobbying. Yet private entities remain free to offer gifts to government itself, to foot the bill for particular public projects they would like to see government pursue. Such gifts — dubbed “patriotic philanthropy” by one …

Elections, Ideology, And Turnover In The U.S. Federal Government, Alexander D. Bolton, John De Figueiredo, David E. Lewis

Faculty Scholarship

A defining feature of public sector employment is the regular change in elected leadership. Yet, we know little about how elections influence public sector careers. We describe how elections alter policy outputs and disrupt the influence of civil servants over agency decisions. These changes shape the career choices of employees motivated by policy, influence, and wages. Using new Office of Personnel Management data on the careers of millions of federal employees between 1988 and 2011, we evaluate how elections influence employee turnover decisions. We find that presidential elections increase departure rates of career senior employees, particularly in agencies with divergent …

Public Sector Personnel Economics: Wages, Promotions, And The Competence-Control Trade-Off, Charles M. Cameron, John De Figueiredo, David E. Lewis

Faculty Scholarship

We model personnel policies in public agencies, examining how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public sector employees to invest in expertise, seek promotion, remain in the public sector, and develop policy projects. However, doing so requires internal personnel policies that sort "slackers" from "zealots." Personnel policies that accomplish this task are quite different in agencies where acquired expertise has …

Neighborhoods By Assessment: An Analysis Of Non-Ad Valorem Financing In California, Mathew D. Mccubbins, Ellen C. Seljan

Faculty Scholarship

Non-ad valorem assessments on property are a fiscal innovation born from financial stress. Unable to raise property taxes due to limitations, many localities have turned to these charges as an alternative method to fund local services. In this paper, we seek to explain differential levels of non-ad valorem assessment financing through the analysis of property tax records of a large and diverse set of single family homes in California. We theorize that assessments, as opposed to other forms of taxation, will be used when residents hold anti-redistributive preferences. We show that assessment financing is most common in cities with high …

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. …

Happiness Research And Cost-Benefit Analysis, Matthew D. Adler, Eric A. Posner

Faculty Scholarship

A growing body of research on happiness or subjective well-being (SWB) shows, among other things, that people adapt to many injuries more rapidly than is commonly thought, fail to predict the degree of adaptation and hence overestimate the impact of those injuries on their SWB, and, similarly, enjoy small or moderate rather than significant changes in SWBg in response to significant changes in income. Some researchers believe that these findings pose a challenge to cost-benefit analysis, and argue that project evaluation decision-procedures based on economic premises should be replaced with procedures that directly maximize subjective well-being. This view turns out …

Public Choice And Environmental Policy: A Review Of The Literature, Christopher H. Schroeder

Faculty Scholarship

This paper is a draft of a chapter for a forthcoming book, Research Handbook in Public Law and Public Choice, edited by Daniel Farber and Anne Joseph O'Connell, to be published by Elgar. It reviews the public choice literature on environmental policy making, first generally and then with respect to four fundamental environmental policy questions: (1) whether or not government action is warranted; (2) if it is, the scope and stringency of the government action, including the manner in which a bureaucracy will implement and enforce any statutory standards; (3) the level of government that assumes responsibility; and (4) the …