Description

Book Synopsis
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. It has profound implications for the theory and practice of policy analysis and has already generated considerable debate in academia.

Trade Review
Patient, thorough, unfailingly lucid, the authors take apart, brick by brick, the edifice of the dominant school of modern moral and legal philosophy with its insistence that social policy as well as personal decision making be based on notions of fairness, right, and justice distinct from utility or welfare. They show that human welfare is a far better criterion, and that philosophers' (and many policy makers') fairness notions, rather than simply lying along a different track from welfare, would if implemented diminish it. They seek to reinterpret fairness, in line with its social and psychological roots, as compatible with rather than contradicting welfare. Their close and compelling engagement with the arguments of their opponents makes this a book that philosophers as well as policy analysts will find difficult to refute and impossible to ignore. -- Richard A. Posner
Normative economic analysis is dominated by the simple Pareto principle: what makes everyone better off should be preferred. The authors apply this principle to a great variety of policy issues and oppose it to considerations of fairness not derivable from individual well-being. They show in case after case that the welfare doctrine leads to superior and consistent implications. The book is a model of careful reasoning and illustrates the great value of a consistent viewpoint in evaluating public policy. -- Kenneth J. Arrow
This is an outstanding piece of analysis. Kaplow and Shavell have already established themselves as brilliant and imaginative scholars in the area of economic analysis of law. This work represents the systematic application of the principles of legal-economic thinking to the analysis of the basic policy justifications for legal rules. -- Geoffrey Miller, New York University School of Law
This is an extremely important book. It might have lasting influence on the law. If it did have such influence, people would be better off. It is an attempt to bring to bear on legal policy the perspective of welfare economics. It differs from most previous writing in the law-and-economics tradition, because it takes welfare economics as a normative theory, a criterion for evaluation, rather than a "positive" or empirical theory of how the law actually works. Because it takes the theory as normative, it must defend the theory on philosophical grounds. It does this in a sophisticated way, drawing on modern utilitarian philosophy, and inventing, when needed, new philosophical arguments. -- Jonathan Baron, University of Pennsylvania
[Kaplow and Shavell] challenge [the] conventional wisdom. They argue that what matters most is whether a particular policy promotes the general welfare, saying "we discover very little basis for the use of notions of fairness as independent evaluative principles"...Fairness Versus Welfare is academically rigorous and intellectually challenging. Kaplow and Shavell have rolled a philosophical hand grenade into the practical world of policy. -- Doug Bandow * Washington Times *
Kaplow and Shavell...coauthored this interdisciplinary and systematic study that addresses the issue of what philosophical standards are preferable in the formulation and assessment of public policy, particularly a legal system...Their work aims to identify key normative moral principles that may defensibly be used to assess legal policy and rules. The book's main thesis is that a welfare-based norm (how the overall well-being of individuals is effected) should be used both to justify the selection of legal rules and in normative legal analysis generally...The authors display a masterful command of the relevant scholarly literature...Highly recommended. -- A. S. Rosenbaum * Choice *
Fairness versus Welfare aspires to be the new manifesto for normative law and economics...This new brief for normative law and economics is, substantively, a genuine advance over the traditional commitment to wealth maximization. -- Matthew Adler * Ethics *
This is an extremely careful and complete analysis of issues relating to the proper norms for policy analysis. For those of us who use welfare economics in our analyses, this provides a well argued justification and a set of arguments we can use to defend our position. For those who do not, this book provides a serious challenge, and one which must be addressed. -- Paul H. Rubin * Public Choice *

Table of Contents
Prologue Acknowledgments PART ONE: FRAMEWORK I. Introduction II. Welfare Economics and Notions of Fairness A. Welfare Economics 1. Individuals' Well-Being 2. Social Welfare and Individuals' Well-Being 3. Comments on Social Welfare and the Distribution of Income 4. Concluding Remark B. Notions of Fairness 1. The Basic Nature of Notions of Fairness 2. Further Comments on Notions of Fairness (a) Meaning (b) Nonconsequentialist Character (c) Ex Post Character (d) Concluding Remark C. Overview of Our Argument 1. The Argument for Welfare Economics and against Notions of Fairness 2. On the Rationale for Notions of Fairness D. Notions of Fairness and Social Norms 1. The Nature of Social Norms 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis PART TWO: ANALYSIS III. Torts A. Welfare Economics and Tort Law B. Notions of Fairness and Tort Law 1. Notions of Fairness 2. Comments on the Literature C. Welfare Economics versus Fairness in Paradigmatic Accident Situations 1. Reciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) The Argument for Welfare Economics and against Notions of Fairness (ii) Comments on the Literature (iii) The Significance of the Possibility That All Individuals May Be Made Worse Off under Any Notion of Fairness (f) The Apparent Mootness of Concerns for Fairness 2. Nonreciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being D. Welfare Economics versus Fairness in Paradigmatic Accident Situations: The Case in Which Harm Is Uncertain 1. Reciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (f) The Foregoing Reconsidered When Insurance Is Not Purchased (i) Victims Uninsured (ii) Injurers Uninsured 2. Nonreciprocal Accidents E. The Appeal of Notions of Fairness and Its Implications 1. Social Norms and Notions of Fairness 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis 3. Remark on the Concepts of Injurer and Victim 4. Remark on the Ex Post Character of Notions of Fairness F. The Extent to Which the Use of Notions of Fairness Has Led Us Astray IV. Contracts A. Welfare Economics and the Enforcement of Contracts B. Notions of Fairness and the Enforcement of Contracts 1. Promise-Keeping 2. The View That Breach Is Akin to a Tort 3. Further Comments on the Literature C. Welfare Economics versus Fairness and the Enforcement of Contracts 1. Complete Contracts (a) Description (b) Examination of Different Contracts (c) Effects of the Legal Rules (d) Choice of Legal Rules Using Welfare Economics (e) Choice of Legal Rules Using Notions of Fairness (f) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) In Relation to Promise-Keeping (ii) In Relation to the View That Breach Is Akin to a Tort (iii) Summary 2. Incomplete Contracts (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) In Relation to Promise-Keeping (ii) In Relation to the View That Breach Is Akin to a Tort (f) The Apparent Mootness and Arbitrariness of Concerns for Fairness (g) The Appeal of Notions of Fairness and Its Implications D. Additional Considerations 1. Distribution of Income 2. Advantage-Taking 3. The Extent to Which the Use of Notions of Fairness Has Led Us Astray V. Legal Procedure A. Ability to Bring Suit 1. Welfare Economics and the Ability to Bring Suit 2. Notions of Fairness and the Ability to Bring Suit 3. Description of a Basic Case 4. Effects of the Legal Rules 5. Normative Assessment (a) Choice of Legal Rules Using Welfare Economics (b) Choice of Legal Rules Using Notions of Fairness (c) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being 6. The Appeal of Notions of Fairness and Its Implications 7. Remarks on the Generality of Our Results 8. The Extent to Which the Use of Notions of Fairness Has Led Us Astray B. Accuracy in Adjudication 1. Welfare Economics and Accuracy in Adjudication 2. Notions of Fairness and Accuracy in Adjudication 3. Basic Case: Accuracy in Assessing Damages and the Benefit of Inducing Behavior in Accordance with Legal Rules (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (f) The Appeal of Notions of Fairness and Its Implications 4. Variations: Accuracy in Determining Damages (a) Case in Which Injurers Do Not Know in Advance How Much Harm Victims Will Suffer (b) Case in Which Victims Are Risk Averse and Injurers Do Not Know in Advance How Much Harm Victims Will Suffer 5. Variations: Accuracy in Determining Liability 6. Remarks (a) The Generality of Our Results (b) Parties' Excessive Incentives to Invoke Procedures in Litigation 7. The Extent to Which the Use of Notions of Fairness Has Led Us Astray C. Additional Reasons Why Legal Procedures May Be Valued 1. Possible Tastes for Procedural Fairness 2. Other Ways in Which Procedures May Enhance Individuals' Well-Being VI. Law Enforcement A. Welfare Economics and Law Enforcement B. Notions of Fairness and Law Enforcement 1. Notions of Fairness 2. Comments on the Literature C. Welfare Economics versus Fairness and Law Enforcement 1. Fair Punishment and Deterrence in a Paradigm Case (a) Description (b) Behavior of Individuals under Different Sanctions (c) Choice of Sanction Using Welfare Economics (d) Choice of Sanction Using Notions of Fairness (e) Why the Choice of Sanction Should Be Based Only on Individuals' Well-Being (i) Effects on the Well-Being of Different Groups (ii) Actual Imposition of Unfair Punishment under the Two Approaches (iii) Comments on the Literature 2. Variation of the Paradigm Case: Different Crimes 3. Variation of the Paradigm Case: Imperfect Deterrence 4. Variation of the Paradigm Case: Punishment of the Innocent (a) Analysis of a Basic Situation (b) Comments on the Literature D. The Appeal of Notions of Fairness and Its Implications 1. The Origins and Functions of Notions of Fairness 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis 3. Remark on the Ex Post Character of Notions of Fairness E. The Extent to Which the Use of Notions of Fairness Has Led Us Astray PART THREE: EXTENSIONS VII. On the Use of Notions of Fairness and Welfare Economics by Different Types of Actors A. Ordinary Individuals B. Legal Academics 1. The Appeal of Notions of Fairness to Legal Academics 2. Why Legal Academics Should Be Guided by Welfare Economics 3. Reminder of the Ways in Which Notions of Fairness Are Relevant for Legal Policy Analysis under Welfare Economics C. Government Decisionmakers VIII. Comments on the Breadth and Soundness of Welfare Economics A. Design of Legal Institutions 1. Accuracy 2. Controlling Government Officials' Behavior 3. Legitimacy of Legal Institutions 4. Administrative Costs B. Preferences and Individuals' Well-Being 1. Imperfect Information and Other Limitations on Individuals' Decisionmaking 2. The Effect of the Law on Preferences 3. Trumping Objectionable Preferences 4. Tastes for Notions of Fairness C. Bad Luck and Inequality 1. Bad Luck: Ex Ante versus Ex Post Evaluation 2. Equality and Equal Treatment D. Additional Concerns about the Application of Welfare Economics 1. Difficulty in Valuing Life, Pain and Suffering, and Other Nonpecuniary Factors 2. Omission of "Soft" Variables 3. Possible Costs of Permitting Market Trade 4. Indeterminacy (a) Indeterminacy Due to Empirical Uncertainty (b) Conceptual Indeterminacy 5. The Difficulty of Predicting the Behavior of Individuals, Who Are Not Always Rational Maximizers of Their Own Well-Being IX. Conclusion References Index

Fairness Versus Welfare

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A Paperback by Louis Kaplow, Steven Shavell

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    Publisher: Harvard University Press
    Publication Date: 9/1/2006 12:00:00 AM
    ISBN13: 9780674023642, 978-0674023642
    ISBN10: 0674023641
    Also in:
    Law Social security and welfare law Philosophy Social and ethical issues

    Description

    Book Synopsis
    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. It has profound implications for the theory and practice of policy analysis and has already generated considerable debate in academia.

    Trade Review
    Patient, thorough, unfailingly lucid, the authors take apart, brick by brick, the edifice of the dominant school of modern moral and legal philosophy with its insistence that social policy as well as personal decision making be based on notions of fairness, right, and justice distinct from utility or welfare. They show that human welfare is a far better criterion, and that philosophers' (and many policy makers') fairness notions, rather than simply lying along a different track from welfare, would if implemented diminish it. They seek to reinterpret fairness, in line with its social and psychological roots, as compatible with rather than contradicting welfare. Their close and compelling engagement with the arguments of their opponents makes this a book that philosophers as well as policy analysts will find difficult to refute and impossible to ignore. -- Richard A. Posner
    Normative economic analysis is dominated by the simple Pareto principle: what makes everyone better off should be preferred. The authors apply this principle to a great variety of policy issues and oppose it to considerations of fairness not derivable from individual well-being. They show in case after case that the welfare doctrine leads to superior and consistent implications. The book is a model of careful reasoning and illustrates the great value of a consistent viewpoint in evaluating public policy. -- Kenneth J. Arrow
    This is an outstanding piece of analysis. Kaplow and Shavell have already established themselves as brilliant and imaginative scholars in the area of economic analysis of law. This work represents the systematic application of the principles of legal-economic thinking to the analysis of the basic policy justifications for legal rules. -- Geoffrey Miller, New York University School of Law
    This is an extremely important book. It might have lasting influence on the law. If it did have such influence, people would be better off. It is an attempt to bring to bear on legal policy the perspective of welfare economics. It differs from most previous writing in the law-and-economics tradition, because it takes welfare economics as a normative theory, a criterion for evaluation, rather than a "positive" or empirical theory of how the law actually works. Because it takes the theory as normative, it must defend the theory on philosophical grounds. It does this in a sophisticated way, drawing on modern utilitarian philosophy, and inventing, when needed, new philosophical arguments. -- Jonathan Baron, University of Pennsylvania
    [Kaplow and Shavell] challenge [the] conventional wisdom. They argue that what matters most is whether a particular policy promotes the general welfare, saying "we discover very little basis for the use of notions of fairness as independent evaluative principles"...Fairness Versus Welfare is academically rigorous and intellectually challenging. Kaplow and Shavell have rolled a philosophical hand grenade into the practical world of policy. -- Doug Bandow * Washington Times *
    Kaplow and Shavell...coauthored this interdisciplinary and systematic study that addresses the issue of what philosophical standards are preferable in the formulation and assessment of public policy, particularly a legal system...Their work aims to identify key normative moral principles that may defensibly be used to assess legal policy and rules. The book's main thesis is that a welfare-based norm (how the overall well-being of individuals is effected) should be used both to justify the selection of legal rules and in normative legal analysis generally...The authors display a masterful command of the relevant scholarly literature...Highly recommended. -- A. S. Rosenbaum * Choice *
    Fairness versus Welfare aspires to be the new manifesto for normative law and economics...This new brief for normative law and economics is, substantively, a genuine advance over the traditional commitment to wealth maximization. -- Matthew Adler * Ethics *
    This is an extremely careful and complete analysis of issues relating to the proper norms for policy analysis. For those of us who use welfare economics in our analyses, this provides a well argued justification and a set of arguments we can use to defend our position. For those who do not, this book provides a serious challenge, and one which must be addressed. -- Paul H. Rubin * Public Choice *

    Table of Contents
    Prologue Acknowledgments PART ONE: FRAMEWORK I. Introduction II. Welfare Economics and Notions of Fairness A. Welfare Economics 1. Individuals' Well-Being 2. Social Welfare and Individuals' Well-Being 3. Comments on Social Welfare and the Distribution of Income 4. Concluding Remark B. Notions of Fairness 1. The Basic Nature of Notions of Fairness 2. Further Comments on Notions of Fairness (a) Meaning (b) Nonconsequentialist Character (c) Ex Post Character (d) Concluding Remark C. Overview of Our Argument 1. The Argument for Welfare Economics and against Notions of Fairness 2. On the Rationale for Notions of Fairness D. Notions of Fairness and Social Norms 1. The Nature of Social Norms 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis PART TWO: ANALYSIS III. Torts A. Welfare Economics and Tort Law B. Notions of Fairness and Tort Law 1. Notions of Fairness 2. Comments on the Literature C. Welfare Economics versus Fairness in Paradigmatic Accident Situations 1. Reciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) The Argument for Welfare Economics and against Notions of Fairness (ii) Comments on the Literature (iii) The Significance of the Possibility That All Individuals May Be Made Worse Off under Any Notion of Fairness (f) The Apparent Mootness of Concerns for Fairness 2. Nonreciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being D. Welfare Economics versus Fairness in Paradigmatic Accident Situations: The Case in Which Harm Is Uncertain 1. Reciprocal Accidents (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (f) The Foregoing Reconsidered When Insurance Is Not Purchased (i) Victims Uninsured (ii) Injurers Uninsured 2. Nonreciprocal Accidents E. The Appeal of Notions of Fairness and Its Implications 1. Social Norms and Notions of Fairness 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis 3. Remark on the Concepts of Injurer and Victim 4. Remark on the Ex Post Character of Notions of Fairness F. The Extent to Which the Use of Notions of Fairness Has Led Us Astray IV. Contracts A. Welfare Economics and the Enforcement of Contracts B. Notions of Fairness and the Enforcement of Contracts 1. Promise-Keeping 2. The View That Breach Is Akin to a Tort 3. Further Comments on the Literature C. Welfare Economics versus Fairness and the Enforcement of Contracts 1. Complete Contracts (a) Description (b) Examination of Different Contracts (c) Effects of the Legal Rules (d) Choice of Legal Rules Using Welfare Economics (e) Choice of Legal Rules Using Notions of Fairness (f) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) In Relation to Promise-Keeping (ii) In Relation to the View That Breach Is Akin to a Tort (iii) Summary 2. Incomplete Contracts (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (i) In Relation to Promise-Keeping (ii) In Relation to the View That Breach Is Akin to a Tort (f) The Apparent Mootness and Arbitrariness of Concerns for Fairness (g) The Appeal of Notions of Fairness and Its Implications D. Additional Considerations 1. Distribution of Income 2. Advantage-Taking 3. The Extent to Which the Use of Notions of Fairness Has Led Us Astray V. Legal Procedure A. Ability to Bring Suit 1. Welfare Economics and the Ability to Bring Suit 2. Notions of Fairness and the Ability to Bring Suit 3. Description of a Basic Case 4. Effects of the Legal Rules 5. Normative Assessment (a) Choice of Legal Rules Using Welfare Economics (b) Choice of Legal Rules Using Notions of Fairness (c) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being 6. The Appeal of Notions of Fairness and Its Implications 7. Remarks on the Generality of Our Results 8. The Extent to Which the Use of Notions of Fairness Has Led Us Astray B. Accuracy in Adjudication 1. Welfare Economics and Accuracy in Adjudication 2. Notions of Fairness and Accuracy in Adjudication 3. Basic Case: Accuracy in Assessing Damages and the Benefit of Inducing Behavior in Accordance with Legal Rules (a) Description (b) Effects of the Legal Rules (c) Choice of Legal Rules Using Welfare Economics (d) Choice of Legal Rules Using Notions of Fairness (e) Why the Choice of Legal Rules Should Be Based Only on Individuals' Well-Being (f) The Appeal of Notions of Fairness and Its Implications 4. Variations: Accuracy in Determining Damages (a) Case in Which Injurers Do Not Know in Advance How Much Harm Victims Will Suffer (b) Case in Which Victims Are Risk Averse and Injurers Do Not Know in Advance How Much Harm Victims Will Suffer 5. Variations: Accuracy in Determining Liability 6. Remarks (a) The Generality of Our Results (b) Parties' Excessive Incentives to Invoke Procedures in Litigation 7. The Extent to Which the Use of Notions of Fairness Has Led Us Astray C. Additional Reasons Why Legal Procedures May Be Valued 1. Possible Tastes for Procedural Fairness 2. Other Ways in Which Procedures May Enhance Individuals' Well-Being VI. Law Enforcement A. Welfare Economics and Law Enforcement B. Notions of Fairness and Law Enforcement 1. Notions of Fairness 2. Comments on the Literature C. Welfare Economics versus Fairness and Law Enforcement 1. Fair Punishment and Deterrence in a Paradigm Case (a) Description (b) Behavior of Individuals under Different Sanctions (c) Choice of Sanction Using Welfare Economics (d) Choice of Sanction Using Notions of Fairness (e) Why the Choice of Sanction Should Be Based Only on Individuals' Well-Being (i) Effects on the Well-Being of Different Groups (ii) Actual Imposition of Unfair Punishment under the Two Approaches (iii) Comments on the Literature 2. Variation of the Paradigm Case: Different Crimes 3. Variation of the Paradigm Case: Imperfect Deterrence 4. Variation of the Paradigm Case: Punishment of the Innocent (a) Analysis of a Basic Situation (b) Comments on the Literature D. The Appeal of Notions of Fairness and Its Implications 1. The Origins and Functions of Notions of Fairness 2. Implications for the Role of Notions of Fairness in Legal Policy Analysis 3. Remark on the Ex Post Character of Notions of Fairness E. The Extent to Which the Use of Notions of Fairness Has Led Us Astray PART THREE: EXTENSIONS VII. On the Use of Notions of Fairness and Welfare Economics by Different Types of Actors A. Ordinary Individuals B. Legal Academics 1. The Appeal of Notions of Fairness to Legal Academics 2. Why Legal Academics Should Be Guided by Welfare Economics 3. Reminder of the Ways in Which Notions of Fairness Are Relevant for Legal Policy Analysis under Welfare Economics C. Government Decisionmakers VIII. Comments on the Breadth and Soundness of Welfare Economics A. Design of Legal Institutions 1. Accuracy 2. Controlling Government Officials' Behavior 3. Legitimacy of Legal Institutions 4. Administrative Costs B. Preferences and Individuals' Well-Being 1. Imperfect Information and Other Limitations on Individuals' Decisionmaking 2. The Effect of the Law on Preferences 3. Trumping Objectionable Preferences 4. Tastes for Notions of Fairness C. Bad Luck and Inequality 1. Bad Luck: Ex Ante versus Ex Post Evaluation 2. Equality and Equal Treatment D. Additional Concerns about the Application of Welfare Economics 1. Difficulty in Valuing Life, Pain and Suffering, and Other Nonpecuniary Factors 2. Omission of "Soft" Variables 3. Possible Costs of Permitting Market Trade 4. Indeterminacy (a) Indeterminacy Due to Empirical Uncertainty (b) Conceptual Indeterminacy 5. The Difficulty of Predicting the Behavior of Individuals, Who Are Not Always Rational Maximizers of Their Own Well-Being IX. Conclusion References Index

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