Eyal Zamir and Barak Medina (Faculty of Law, Hebrew University of Jerusalem and Hebrew University of Jerusalem - Law Faculty) has posted Incorporating Moral Constraints into Economic Analysis on SSRN. Here is the abstract:
Economic analysis of law is a powerful analytical methodology. At the same time, as a purely consequentialist approach, which determines the desirability of acts and rules solely by assessing the goodness of their outcomes, standard cost-benefit analysis (CBA) is normatively objectionable. This Article proposes to overcome this deficiency by incorporating moral constraints into CBA.
Threshold deontology differs from welfare economics and other consequentialist moral theories in recognizing the priority of such things as autonomy, human dignity, basic liberties, truth telling, and keeping one's promises over the promotion of good outcomes. It holds that there are constraints to promoting the good, such as the constraints against harming other people and lying. Unlike absolutist deontology, however, threshold deontology holds that such constraints may be overridden if enough good (or, more commonly, enough bad) is at stake. For instance, while standard CBA is likely to justify the killing of one person to save the lives of two, or the coercive harvesting of one's kidney to save the live of another person, threshold deontology would find killing a person or harvesting her organs against her will impermissible unless much more good (e.g., the lives of many more people) is at stake. The analysis demonstrates that not only foundational deontology, but also the more sophisticated defenses of consequentialism, endorse such constraints.
While conceding that the incorporation of threshold constraints into economic analysis raises principled and methodological concerns (particularly with respect to the monetization of constraints), the Article demonstrates that these concerns can all be met. The Article discusses various substantive and methodological choices involved in modeling deontological constraints. It proposes to determine the permissibility of any act or rule infringing a deontological constraint by means of mathematical threshold functions. The Article presents the general structure of threshold functions, and analyzes their elements. It then illustrates the implementation of constrained CBA in several contexts, including discrimination in the marketplace, legal paternalism, and risking innocent people while fighting terrorism.
The Article argues that adding threshold constraints to economic analysis would make it not only normatively more acceptable, but also descriptively more valid, without significantly compromising its methodological rigor. Such incorporation can contribute to bridging the gap between economic analysis of law and the prevailing moral and legal norms, as well as to narrowing the increasing gulf between economic analysis and other approaches to law and legal theory.
And here is a bit more from the paper itself:
We thus arrive at the argument that deontological constraints are incommensurable with money. To put this argument in perspective, recall that money commensurability is a standard feature of CBA. Arguments of incomparability and incommensurability are thus often intertwined with critiques of consequentialism and economic analysis, whereas objections to the notion of incommensurability are frequently made by proponents of the economic methodology.235 Drawing the battle lines in this way can be misleading, however. Although economists regularly monetize such things as human lives and body integrity, the method they use to that end—aggregation of WTP or WTA—is inapplicable to deontological constraints, which rest on a normative judgment and not on aggregation of preferences. An economist may thus hold that there is no acceptable way to monetize deontological constraints. At the same time, the moderate deontologist’s objection to consequentialism need not entail a belief in the incommensurability of constraints with money. To be sure, many deontologists object not only to consequentialism but also to a theory of the good based on preferences satisfaction, and all the more so to quantifying preferences by a monetary scale. Yet, as far as we can see there is no necessary connection between these positions.
The following arguments are meant to convince the economist and the deontologist that monetizing deontological constraints is both feasible and worthwhile, at least sometimes. As regards the economist, it is not inconceivable to attribute money value to a deontological constraint. First, when it comes to issues such as the monetary value of freedom of speech or truth telling, the supposedly strict division between factual identification and aggregation of preferences, and between normative determinations, is rather illusive. The methodological difficulties of identifying people’s preferences almost inevitably entail the exercise of discretion, and such discretion may well reflect normative choices. In any event, we have already addressed—and rejected—the idea that economic analysis can ever be value-free. Just as it regularly monetizes such things as human lives, personal injuries, and the existence value of wild ecosystems, economic analysis should also be able determine the money value of deontological constraints based on a normative judgment. On a higher level of abstraction, economists should feel more comfortable with monetization of deontological constraints if threshold constraints on the factoral level are conceived of as resting on consequentialism on the foundational evel.
From a different angle, the scope of any threshold constraint in a given legal system may (at least theoretically) be derived from a comparison between the existing rules and the rules that would have been set on a purely consequentialist basis. For example, assume (counterfactually) that standard CBA unequivocally calls for breaching contracts whenever performance is inefficient (the “efficient breach doctrine”). The extent to which existing contract law deviates from the efficient breach doctrine by “excessively” deterring breaches may reflect a deontological constraint against promise breaking. If all other variables are monetized, then one should be able (at least in theory) to extract the money value of the legally imposed constraint as well.
This is a fascinating paper. The idea that formal models and formal techniques of policy evaluation can be made sensitive to deontological constraints is intriguing. And the appeal to threshold deontology at the conceptual heart of the paper seems like a sensible move for implementing this project.
On the other hand, there is a lot of foundational work to do before I can be convinced that this ambitious project can be executed. In particular, the slide from threshold deontology to the conclusion that deontological constraints can be monetized is either confused on insufficiently theorized. Deontological conceptions of morality are focused on action. Some actions are permitted and some are forbidden--to put it crudely. Threhshold deontology maintains that catastrophic consequences can provide a justification for an otherwise forbidden action. There are complex debates about whether threshold deontology works, but if it does, it seems quite unlikely that the explanation will involve some formula that permits the balancing of a deontological constraint against the catastrophic costs. Deontic constraints are moral rules for action--they aren't costs and benefits. Failure to recognize this fundamental difference involves a serious category mistake--a deep conceptual confusion.
Even though I have serious reservations, I want to end with applause. Highly recommended.
