Beyond Efficiency and Procedure: A Welfarist Theory of Regulation
103 Pages Posted: 18 Oct 2000
Date Written: February 2000
Normative scholarship about regulation has been dominated by two types of theories, which I term "Neoclassical" and "Proceduralist." A Neoclassical theory has the following features: it adopts a simple preference-based view of well-being, and it counts Kaldor-Hicks efficiency as one of the basic normative criteria relevant to the evaluation of regulatory programs. A Proceduralist theory is concerned, not solely with the quality of regulatory outcomes, but also with the governmental procedures that produce these outcomes: it gives intrinsic significance to the procedures that regulatory bodies follow. (One example of a Proceduralist theory is the civic republican theory of regulation advanced by Mark Seidenfeld; another is the collaborative governance theory advanced by Jody Freeman.)
In this article, I criticize both Proceduralist and Neoclassical theories of regulation and then defend a different kind of theory, "Welfarism." Welfarism is close in its spirit to Neoclassicism, but significantly different in its details. Welfarism rejects the simple preference-based view of well-being ? which makes preference-satisfaction both necessary and sufficient for welfare-enhancement ? and adopts instead a novel view, Sophisticated Preferentialism, that makes preference-satisfaction necessary but insufficient. Welfarism also rejects the normative significance of Kaldor-Hicks efficiency, and claims instead that overall well-being is relevant to the evaluation of regulatory programs and projects. (Note that an inefficient project can increase well-being, and that an efficient project can decrease it.) Finally ? and by contrast with Proceduralism ? the Welfarist accords only instrumental, not intrinsic, significance to regulatory procedures. Civic-republican style deliberation, "collaborative governance," participatory procedures, and other approaches to regulatory decisionmaking defended by Proceduralists are valuable only insofar as they produce good regulatory outcomes. A "good regulatory outcome" need not be a welfare-maximizing outcome ? distributive and perhaps perfectionist criteria are also relevant here ? but welfare-maximization is a significant part of what matters, normatively speaking, about regulatory outcomes.
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