Do Good Citizens Need Good Laws? Economics and the Expressive Function

Abstract

We explore how adding prosocial preferences to the canonical precaution model of accidents changes either the efficient damages rule or the harm from accidents. For a utilitarian lawmaker, making the potential injurer sympathetic to the victim of harm has no effect on either outcome. On the other hand, making injurers averse to harming others reduces the harm from accidents but has no effect on efficient damages. For an atomistic lawmaker — one who excludes prosocial preferences from social welfare — cultivating a taste for either harm aversion or perfect sympathy can reduce efficient damages, though neither has any effect on the amount of harm from accidents. On the other hand, causing people to act as if they are averse to harm creation, such as out of habit or moral obligation, reduces both the efficient amount of damages and total harm. In general, encouraging either a distaste for, or moral commitment against, harm creation is useful while inculcating sympathy for victims of harm is not.

Keywords: altruism, social preferences

JEL Classification: K00, D03, D64