Oliver Smithies Lecture - Normativity and Rationality in Economic Analysis of Law (Part One): Moral Consensus, Rights, and Efficiency in the Economic Analysis of Law
This is the first of a two part lecture series under the banner of ‘Normativity and Rationality in Economic Analysis of
Law: Two Critiques’. Information on the second talk can be found here: talks.ox.ac.uk/talks/id/b756e8e7-48e5-4c41-a491-9dc002c7e7fe

Normative prescriptions within economic analysis of law are typically based on Kaldor-Hicks
efficiency. However, a series of Kaldor-Hicks efficient contracts can make us all worse off,
i.e., violate the Pareto principle. Interestingly, the profile of individual preferences where
such a sequence of Kaldor-Hicks efficient contracts does make us all worse off is the same
profile of preferences that leads to analogous problematic results within social choice
theory more generally. This problematic preference profile can usefully be interpreted as a
kind of deficiency in a society’s moral consensus, the sort of thing that certain legal
theorists (e.g., Patrick Devlin in the Hart-Devlin debate on the legal enforcement of
morality) have argued is “destabilizing” for society and its decision-making. However, this
problematic and destabilizing preference profile should not be thought unusual in a world
where problems or social choices are (irreducibly) multi-dimensional in the values they
engage. One way to avoid the instability or the violation of the Pareto principle might be to
restrict the rights that individuals, or contracting coalitions of individuals, can exercise.
However, there will be situations in which, despite the instability or violations of the
Pareto principle that are thereby incurred, we will want to allow for the exercise of these
rights, either by individuals or by contracting coalitions of individuals. In this way attention
to the normativity of economic analysis of law provides us with a further illustration of the
basic tension between rights and welfare that Amartya Sen pointed out so many years ago
in his theorem on the “Pareto-impossible liberal”. It also reveals that converting his
account of rights into one where the rights can be contracted away, or exercised by the
rights-holders in a more sophisticated way, does nothing to solve the basic problem.

Professor Bruce Chapman is a Professor of Law at the Faculty of Law, University of
Toronto. Originally trained as an economist at Cambridge University before doing law at
the University of Toronto, he continues to be interested in how theories of rational and
normative decision-making vary across different academic disciplines.

The lectures are funded by a generous benefaction from Professor Oliver Smithies, which
enables Balliol to bring distinguished visitors to the University of Oxford.
Date: 19 November 2018, 17:00
Venue: Balliol College, Broad Street OX1 3BJ
Venue Details: Massey Room
Speaker: Prof Bruce Chapman (Balliol College)
Organising department: Balliol College
Organiser: Patrick Holmes (Balliol College)
Organiser contact email address: undergraduate@balliol.ox.ac.uk
Topics:
Booking required?: Not required
Cost: Free
Audience: Public
Editor: Patrick Holmes