Download this Paper Open PDF in Browser

Is Efficiency Biased?

44 Pages Posted: 16 Aug 2017 Last revised: 6 Sep 2017

Zachary D. Liscow

Yale University - Law School

Date Written: August 14, 2017

Abstract

The most common underpinning of economic analysis of the law has long been the goal of efficiency (i.e., choosing policies that maximize people’s willingness to pay), as reflected in economic analysis of administrative rulemaking, judicial rules, and proposed legislation. Current thinking is divided on the question whether efficient policies are biased against the poor, which is remarkable given the question’s fundamental nature. Some say yes; others, no.

I show that both views are supportable and that the correct answer depends upon the political and economic context and upon the definition of neutrality. Across policies, efficiency-oriented analysis places a strong thumb on the scale in favor of distributing more legal entitlements to the rich than to the poor. Basing analysis on willingness to pay tilts policies toward benefitting the rich over the poor, since the rich tend to be willing to pay more due to their greater resources. But I also categorize different types of polices and show where vigilance against anti-poor bias is warranted and where it is not, with potentially far-reaching implications for the policies that judges, policymakers, and voters should support.

Keywords: law and economics, efficiency, inequality, tax policy, political economy

JEL Classification: H21, H41, K00

Suggested Citation

Liscow, Zachary D., Is Efficiency Biased? (August 14, 2017). Yale Law & Economics Research Paper No. 581. Available at SSRN: https://ssrn.com/abstract=3018796

Zachary Liscow (Contact Author)

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

Paper statistics

Downloads
500
Rank
47,014
Abstract Views
1,581