Inequality and Uncertainty: Theory and Legal Applications

Authors

Matthew D. Adler, Duke Law SchoolFollow
Chris William Sanchirico

Document Type

Article

Publication Date

2006

Keywords

wefarism, equity, well-being, empirical research, cost benefit analysis, social choice, Pigou–Dalton principle

Abstract

"Welfarism" is the principle that social policy should be based solely on individual well-being, with no reference to 'fairness" or "rights." The propriety of this approach has recently been the subject of extensive debate within legal scholarship. Rather than contributing (directly) to this debate, we identify and analyze a problem within welfarism that has received far too little attentioncall this the "ex ante/ex post" problem. The problem arises from the combination of uncertainty-an inevitable feature of real policy choice-and a social preference for equality. If the policymaker is not a utilitarian, but rather has a "social welfare function" that is equity regarding to some degree, then she faces a critical choice. Should she care about the equalization of expected well-being (the ex ante approach), or should she care about the expected equalization of actual well-being (the ex post approach)? Should she focus on the equality of prospects or the prospects for equality?

In this Article, we bring the ex ante/ex post problem to the attention of legal academics, provide novel insight into when and why the problem arises, and highlight legal applications where the problem figures prominently. We ultimately conclude that welfarism requires an ex post approach. This is a counterintuitive conclusion, because the ex post approach can conflict with ex ante Pareto superiority. Indeed, this Article demonstrates that the ex post application of every equity-regarding social welfare function-whatever its particular form-must conflict with ex ante Pareto superiority in specific situations. Among other things, then, this Article shows that legal academics who care about equity must abandon either their commitment to welfarism or their commitment to ex ante Pareto superiority

Citation

Matthew D. Adler & Chris William Sanchirico, Inequality and Uncertainty: Theory and Legal Applications, 155 University of Pennsylvania Law Review 279-377 (2006)