Inequality Snowballing

29 Pages Posted: 12 Feb 2019

See all articles by Zachary D. Liscow

Zachary D. Liscow

Yale University - Law School

Daniel Giraldo Paez

Yale University - Yale

Date Written: January 24, 2019

Abstract

The underpinning of economic analysis of the law has long been the goal of efficiency. This Article shows how efficient legal rules can sow the seeds of their own vicious cycles: repeated application over time of statically efficient legal rules can lead to rules that become increasingly adverse to the poor, which the Article calls "snowballing." Snowballing can occur where efficient legal rules distribute more legal entitlements to the rich than to the poor. That disproportionate allocation can then make subsequent application of the legal rule allocate a yet more disproportionate amount to the rich than the poor, since efficiency is based on willingness to pay, and greater income tends to increase willingness to pay. The Article raises the intriguing prospect that this foundational tenet of economics in the law could be an important contributing factor to increasing income inequality.

Keywords: economic inequality; torts; dynamics; efficiency

Suggested Citation

Liscow, Zachary D. and Giraldo Paez, Daniel, Inequality Snowballing (January 24, 2019). Available at SSRN: https://ssrn.com/abstract=3327460 or http://dx.doi.org/10.2139/ssrn.3327460

Zachary D. Liscow (Contact Author)

Yale University - Law School ( email )

127 Wall St.
New Haven, CT 06511
United States

Daniel Giraldo Paez

Yale University - Yale ( email )

127 Wall Street
New Haven, CT 06511
United States

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