Fairness Versus Welfare

by Kaplow, Louis

• ISBN13: 9780674023642
• ISBN10: 0674023641
• Format: Paperback
• Copyright: 2006-09-01
• Publisher: Harvard Univ Pr

Summary

By what criteria should public policy be evaluated? Fairness and justice? Or the welfare of individuals? Debate over this fundamental question has spanned the ages. Fairness versus Welfare poses a bold challenge to contemporary moral philosophy by showing that most moral principles conflict more sharply with welfare than is generally recognized. In particular, the authors demonstrate that all principles that are not based exclusively on welfare will sometimes favor policies under which literally everyone would be worse off. The book draws on the work of moral philosophers, economists, evolutionary and cognitive psychologists, and legal academics to scrutinize a number of particular subjects that have engaged legal scholars and moral philosophers. How can the deeply problematic nature of all nonwelfarist principles be reconciled with our moral instincts and intuitions that support them? The authors offer a fascinating explanation of the origins of our moral instincts and intuitions, developing ideas originally advanced by Hume and Sidgwick and more recently explored by psychologists and evolutionary theorists. Their analysis indicates that most moral principles that seem appealing, upon examination, have a functional explanation, one that does not justify their being accorded independent weight in the assessment of public policy. Fairness versus Welfare has profound implications for the theory and practice of policy analysis and has already generated considerable debate in academia.

Author Biography

Louis Kaplow is Caspersen and Household International Professor of Law and Economics at Harvard Law School Steven Shavell is Rosenthal Professor of Law at Harvard Law School

Table of Contents

Prologue	xvii
Acknowledgments	xxi
PART ONE FRAMEWORK
I. Introduction	3	(12)
II. Welfare Economics and Notions of Fairness	15	(70)
A. Welfare Economics	15	(23)
1. Individuals' Well-Being	18	(6)
2. Social Welfare and Individuals' Well-Being	24	(4)
3. Comments on Social Welfare and the Distribution of Income	28	(10)
4. Concluding Remark	38	(1)
B. Notions of Fairness	38	(14)
1. The Basic Nature of Notions of Fairness	38	(7)
2. Further Comments on Notions of Fairness	45	(7)
(a) Meaning	45	(2)
(b) Nonconsequentialist Character	47	(1)
(c) Ex Post Character	48	(3)
(d) Concluding Remark	51	(1)
C. Overview of Our Argument	52	(10)
1. The Argument for Welfare Economics and against Notions of Fairness	52	(7)
2. On the Rationale for Notions of Fairness	59	(3)
D. Notions of Fairness and Social Norms	62	(23)
1. The Nature of Social Norms	63	(6)
2. Implications for the Role of Notions of Fairness in Legal Policy Analysis	69	(16)
PART TWO ANALYSIS
III. Torts	85	(70)
A. Welfare Economics and Tort Law	86	(1)
B. Notions of Fairness and Tort Law	86	(13)
1. Notions of Fairness	87	(4)
2. Comments on the Literature	91	(8)
C. Welfare Economics versus Fairness in Paradigmatic Accident Situations	99	(24)
1. Reciprocal Accidents	100	(18)
(a) Description	100	(1)
(b) Effects of the Legal Rules	101	(1)
(c) Choice of Legal Rules Using Welfare Economics	102	(1)
(d) Choice of Legal Rules Using Notions of Fairness	103	(1)
(e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	104	(1)
(i) The Argument for Welfare Economics and against Notions of Fairness	104	(1)
(ii) Comments on the Literature	106	(1)
(iii) The Significance of the Possibility That All Individuals May Be Made Worse Off under Any Notion of Fairness	110	(3)
(f) The Apparent Mootness of Concerns for Fairness	113	(5)
2. Nonreciprocal Accidents	118	(5)
(a) Description	118	(1)
(b) Effects of the Legal Rules	118	(1)
(c) Choice of Legal Rules Using Welfare Economics	118	(1)
(d) Choice of Legal Rules Using Notions of Fairness	119	(1)
(e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	120	(3)
D. Welfare Economics versus Fairness in Paradigmatic Accident Situations: The Case in Which Harm Is Uncertain	123	(11)
1. Reciprocal Accidents	124	(8)
(a) Description	124	(1)
(b) Effects of the Legal Rules	124	(1)
(c) Choice of Legal Rules Using Welfare Economics	125	(1)
(d) Choice of Legal Rules Using Notions of Fairness	125	(1)
(e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	126	(1)
(f) The Foregoing Reconsidered When Insurance Is Not Purchased	126	(1)
(i) Victims Uninsured	126	(1)
(ii) Injurers Uninsured	129	(3)
2. Nonreciprocal Accidents	132	(2)
E. The Appeal of Notions of Fairness and Its Implications	134	(14)
1. Social Norms and Notions of Fairness	134	(4)
2. Implications for the Role of Notions of Fairness in Legal Policy Analysis	138	(5)
3. Remark on the Concepts of Injurer and Victim	143	(4)
4. Remark on the Ex Post Character of Notions of Fairness	147	(1)
F. The Extent to Which the Use of Notions of Fairness Has Led Us Astray	148	(7)
IV. Contracts	155	(70)
A. Welfare Economics and the Enforcement of Contracts	155	(1)
B. Notions of Fairness and the Enforcement of Contracts	156	(16)
1. Promise-Keeping	157	(9)
2. The View That Breach Is Akin to a Tort	166	(3)
3. Further Comments on the Literature	169	(3)
C. Welfare Economics versus Fairness and the Enforcement of Contracts	172	(41)
1. Complete Contracts	174	(12)
(a) Description	174	(1)
(b) Examination of Different Contracts	175	(2)
(c) Effects of the Legal Rules	177	(4)
(d) Choice of Legal Rules Using Welfare Economics	181	(1)
(e) Choice of Legal Rules Using Notions of Fairness	181	(1)
(f) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	182	(1)
(i) In Relation to Promise-Keeping	182	(1)
(ii) In Relation to the View That Breach Is Akin to a Tort	184	(1)
(iii) Summary	185	(1)
2. Incomplete Contracts	186	(27)
(a) Description	186	(1)
(b) Effects of the Legal Rules	187	(2)
(c) Choice of Legal Rules Using Welfare Economics	189	(1)
(d) Choice of Legal Rules Using Notions of Fairness	189	(1)
(e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	189	(1)
(i) In Relation to Promise-Keeping	190	(1)
(ii) In Relation to the View That Breach Is Akin to a Tort	197	(4)
(f) The Apparent Mootness and Arbitrariness of Concerns for Fairness	201	(2)
(g) The Appeal of Notions of Fairness and Its Implications	203	(10)
D. Additional Considerations	213	(12)
1. Distribution of Income	213	(2)
2. Advantage-Taking	215	(6)
3. The Extent to Which the Use of Notions of Fairness Has Led Us Astray	221	(4)
V. Legal Procedure	225	(66)
A. Ability to Bring Suit	227	(21)
1. Welfare Economics and the Ability to Bring Suit	227	(1)
2. Notions of Fairness and the Ability to Bring Suit	228	(4)
3. Description of a Basic Case	232	(1)
4. Effects of the Legal Rules	233	(2)
5. Normative Assessment	235	(6)
(a) Choice of Legal Rules Using Welfare Economics	235	(1)
(b) Choice of Legal Rules Using Notions of Fairness	236	(1)
(c) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	236	(5)
6. The Appeal of Notions of Fairness and Its Implications	241	(4)
7. Remarks on the Generality of Our Results	245	(1)
8. The Extent to Which the Use of Notions of Fairness Has Led Us Astray	246	(2)
B. Accuracy in Adjudication	248	(27)
1. Welfare Economics and Accuracy in Adjudication	249	(1)
2. Notions of Fairness and Accuracy in Adjudication	250	(4)
3. Basic Case: Accuracy in Assessing Damages and the Benefit of Inducing Behavior in Accordance with Legal Rules	254	(10)
(a) Description	254	(2)
(b) Effects of the Legal Rules	256	(1)
(c) Choice of Legal Rules Using Welfare Economics	257	(1)
(d) Choice of Legal Rules Using Notions of Fairness	258	(1)
(e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being	259	(3)
(f) The Appeal of Notions of Fairness and Its Implications	262	(2)
4. Variations: Accuracy in Determining Damages	264	(5)
(a) Case in Which Injurers Do Not Know in Advance How Much Harm Victims Will Suffer	264	(2)
(b) Case in Which Victims Are Risk Averse and Injurers Do Not Know in Advance How Much Harm Victims Will Suffer	266	(3)
5. Variations: Accuracy in Determining Liability	269	(3)
6. Remarks	272	(1)
(a) The Generality of Our Results	272	(1)
(b) Parties' Excessive Incentives to Invoke Procedures in Litigation	272	(1)
7. The Extent to Which the Use of Notions of Fairness Has Led Us Astray	273	(2)
C. Additional Reasons Why Legal Procedures May Be Valued	275	(16)
1. Possible Tastes for Procedural Fairness	275	(6)
2. Other Ways in Which Procedures May Enhance Individuals' Well-Being	281	(10)
VI. Law Enforcement	291	(90)
A. Welfare Economics and Law Enforcement	292	(2)
B. Notions of Fairness and Law Enforcement	294	(23)
1. Notions of Fairness	294	(9)
2. Comments on the Literature	303	(14)
C. Welfare Economics versus Fairness and Law Enforcement	317	(35)
1. Fair Punishment and Deterrence in a Paradigm Case	318	(11)
(a) Description	318	(1)
(b) Behavior of Individuals under Different Sanctions	318	(1)
(c) Choice of Sanction Using Welfare Economics	319	(1)
(d) Choice of Sanction Using Notions of Fairness	320	(1)
(e) Why the Choice of Sanction Should Be Based Only on Individuals' Well-Being	320	(1)
(i) Effects on the Well-Being of Different Groups	322	(1)
(ii) Actual Imposition of Unfair Punishment under the Two Approaches	324	(1)
(iii) Comments on the Literature	326	(3)
2. Variation of the Paradigm Case: Different Crimes	329	(2)
3. Variation of the Paradigm Case: Imperfect Deterrence	331	(5)
4. Variation of the Paradigm Case: Punishment of the Innocent	336	(16)
(a) Analysis of a Basic Situation	336	(3)
(b) Comments on the Literature	339	(13)
D. The Appeal of Notions of Fairness and Its Implications	352	(21)
1. The Origins and Functions of Notions of Fairness	353	(6)
2. Implications for the Role of Notions of Fairness in Legal Policy Analysis	359	(13)
3. Remark on the Ex Post Character of Notions of Fairness	372	(1)
E. The Extent to Which the Use of Notions of Fairness Has Led Us Astray	373	(8)
PART THREE D EXTENSIONS
VII On the Use of Notions of Fairness and Welfare Economics by Different Types of Actors	381	(22)
A. Ordinary Individuals	382	(1)
B. Legal Academics	383	(13)
1. The Appeal of Notions of Fairness to Legal Academics	383	(6)
2. Why Legal Academics Should Be Guided by Welfare Economics	389	(5)
3. Reminder of the Ways in Which Notions of Fairness Are Relevant for Legal Policy Analysis under Welfare Economics	394	(2)
C. Government Decisionmakers	396	(7)
VIII. Comments on the Breadth and Soundness of Welfare Economics	403	(62)
A. Design of Legal Institutions	404	(5)
1. Accuracy	405	(1)
2. Controlling Government Officials' Behavior	406	(1)
3. Legitimacy of Legal Institutions	407	(1)
4. Administrative Costs	408	(1)
B. Preferences and Individuals' Well-Being	409	(27)
1. Imperfect Information and Other Limitations on Individuals' Decisionmaking	410	(3)
2. The Effect of the Law on Preferences	413	(5)
3. Trumping Objectionable Preferences	418	(13)
4. Tastes for Notions of Fairness	431	(5)
C. Bad Luck and Inequality	436	(13)
1. Bad Luck: Ex Ante versus Ex Post Evaluation	437	(7)
2. Equality and Equal Treatment	444	(5)
D. Additional Concerns about the Application of Welfare Economics	449	(16)
1. Difficulty in Valuing Life, Pain and Suffering, and Other Nonpecuniary Factors	450	(4)
2. Omission of "Soft" Variables	454	(1)
3. Possible Costs of Permitting Market Trade	455	(2)
4. Indeterminacy	457	(4)
(a) Indeterminacy Due to Empirical Uncertainty	457	(1)
(b) Conceptual Indeterminacy	458	(3)
5. The Difficulty of Predicting the Behavior of Individuals, Who Are Not Always Rational Maximizers of Their Own Well-Being	461	(4)
IX. Conclusion	465	(10)
References	475	(36)
Index	511