51 Pages Posted: 22 Nov 2005
Date Written: November 2005
Empirical evidence shows, and theory suggests, that the common law tends toward economic efficiency. While various theories attempt to explain this phenomenon, no single one is well accepted. This article provides a simple explanation. It suggests that efficiency arises as a matter of justice. Justice is sought because justice-seeking is a social norm with its own sanctioning force. Justice is sought and efficiency achieved because they substantially overlap. Limitations in the traditional definition of efficiency, however, ensure that efficiency is not congruent with justice. This paper suggests that it can be: the congruence of justice and efficiency will be greater if the definition of efficiency is expanded to include moral sentiments.
Keywords: justice, efficiency, common law, evolution, moral, Kaldor Hicks, benefit, cost
JEL Classification: D60, K00, N00
Suggested Citation: Suggested Citation
By John Quiggin