Tuesday, May 8, 2018
Mark Geistfeld has posted to SSRN Cost-Benefit Analysis Outside of Welfarism. The abstract provides:
Welfarism is the principle that the goodness of a social state is an increasing function of individual welfare and does not depend on anything else. As Gregory Keating convincingly argues in the lead article for this symposium, welfarism cannot account for important normative differences among different types of welfare losses or costs. Welfarism entails that all welfare losses and gains — regardless of their source — are to be rendered fungible and then compared within a cost-benefit analysis (CBA) of the welfare changes. According to Keating, liberal egalitarian principles such as equal freedom or self-determination normatively distinguish bodily injuries from harms to liberty and economic interests. Bodily integrity and related forms of security are necessary conditions for the meaningful exercise of liberty, and that normative difference must be fairly accounted for by legal standards that govern significant risks threatening human health and safety. Hence Keating concludes that liberal egalitarian principles rule out CBA for setting such safety standards.
Despite its apparent logic, the idea that economic analysis is incompatible with or irrelevant to a rights-based principle of fairness is mistaken. Tort law shows why a legal system that protects the individual right to physical security can be usefully guided by the methodology of CBA and distributive economic analysis more generally. The governing principle of substantive equality determines the appropriate use of CBA, thereby framing the issues that can be usefully addressed by distributive economic analysis. Welfare does not have to be the master value in order to be relevant. As fully illustrated by the normative framework that Keating otherwise persuasively defends, CBA has an integral role outside of welfarism.