Fairness Versus Welfare: Notes On The Pareto Principle, Preferences, and Distributive Justice

331
Journal of Legal Studies 32 (January 2003)

2003 by The University of Chicago. All rights reserved. 0047-2530/2003/3201-0012$01.50
Fairness versus Welfare: Notes on the Pareto
Principle, Preferences, and Distributive Justice
Louis Kaplow and Steven Shavell
ABSTRACT
In Fairness versus Welfare, we advance the thesis that social policies should be assessed entirely
on the basis of their effects on individuals well-being. This thesis implies that no independent
weight should be accorded to notions of fairness (other than many purely distributive notions).
We support our thesis in three ways: by demonstrating how notions of fairness perversely
reduce welfare, indeed, sometimes everyones well-being; by revealing numerous other de-
ciencies in the notions, including their lack of sound rationales; and by providing an account
of notions of fairness that explains their intuitive appeal in a manner that reinforces the
conclusion that they should not be treated as independent principles in policy assessment.
In this essay, we discuss these three themes and comment on issues raised by Richard Craswell,
Lewis Kornhauser, and Jeremy Waldron.
In Fairness versus Welfare (Kaplow and Shavell 2002, hereinafter FVW),
we advance the thesis that social policies, notably, legal rules, should be
selected entirely with regard to their effects on the well-being of indi-
viduals. Accordingly, notions of fairness, such as corrective and retrib-
utive justice, should receive no independent weight in policy assessment.
Our argument is based on the perverse effects on welfare of pursuing
notions of fairness, other problematic aspects of the notions, notably,
their lack of rationale, and a reconciliation of our thesis with the ex-
istence of moral intuitions that seem to favor the notions. Each of these
LOUIS KAPLOW and STEVEN SHAVELL are Professors at Harvard Law School and Research
Associates at the National Bureau of Economic Research. We thank the John M. Olin
Center for Law, Economics, and Business at Harvard Law School for nancial support.
We have beneted from exchanges with Richard Craswell concerning his comment and
from the research assistance of Zachary Price.
332 / T HE J OURNAL OF L E GAL S T UDI E S / VOL UME 32 ( 1) / J ANUARY 2003
themes is developed in general terms and in detailed analyses of leading
notions of fairness in the areas of torts, contracts, legal procedure, and
law enforcement.
In this symposium, Richard Craswell questions our demonstration
that endorsement of any notion of fairness sometimes reduces every
individuals well-being (that is, violates the Pareto principle). Jeremy
Waldron, while commending our incorporation of distributive concerns
in the concept of welfare that we defend, voices some disagreement with
our treatment of the subject of distributive justice. And Lewis Korn-
hauser presents arguments concerning our inclusive denition of well-
being.
In Section 1, we review the terminology and the main themes of our
book. Then, in Sections 24, we address the main points of Craswell,
Waldron, and Kornhauser, explaining that none of their claims pose
signicant challenges to our thesis even if they are valid and also that
their arguments reect misinterpretations of our views or are otherwise
mistaken. In Section 5, we offer concluding remarks.
1. FAIRNESS VERSUS WELFARE
In this section, we begin by dening what we mean by welfare and
notions of fairness because these terms are central to understanding our
thesis that policy assessment should be based only on welfare, with no
independent weight given to notions of fairness. Then we summarize the
three central claims that we offer in support of our thesis.
1.1. Welfare and Fairness
Welfare.
1
Under a welfarist approach to policy assessment, one rst
determines how a policy affects each individuals well-being and then
makes an aggregate (distributive) judgment based exclusively on this
information pertaining to individuals welfare.
The conception of individuals well-being that we consider, in the
tradition of welfare economics, is a comprehensive one. It encompasses
not only the direct benets that individuals obtain from the consumption
of goods and services, but also individuals degrees of aesthetic fulllment,
their feelings for others, and anything else that they value. What factors are
included in well-beingand with what weightis understood subjectively,
1. See FVW, chap. 2, sec. A; and chap. 8, sec. B.
FAI RNE S S VE RS US WE L FARE / 333
in terms of what actually matters to individuals. An implication of our
broad denition is that even tastes for fairness are included: Just as an
individual might derive pleasure from art, nature, or ne wine, so might
an individual feel better with the knowledge, for example, that vicious
criminals receive their just deserts. This view, under which tastes for
fairness are counted with a weight to be determined empirically, based on
the actual weight, if any, that individuals place on such tastes, must be
sharply distinguished from the view of notions of fairness as independent
evaluative principles, which is the subject of our critique.
2
Given this denition of well-being, our advocating that policy assess-
ment be based exclusively on welfare is equivalent to embracing the moral
position that policy choice should depend solely on concerns for human
welfare. Furthermore, this characterization of our thesis suggests why we
choose the inclusive denition of well-being that we do. Ultimately, the
moral force of welfarism is grounded in what matters to individuals, and
what really matters to individuals is not to be determined on the basis of
an analysts personal judgment, however derived, of what others should
or should not value. Nevertheless, little of our analysis depends on this
specication of individuals well-being; as we emphasize in our book, if
one favors a different view of well-being, our main arguments imply that
policy assessments should be made solely with regard to how policies
affect well-being thus construed, with no independent weight given to
notions of fairness (see, for example, FVW, pp. 2324 and n. 14, p. 409).
As we noted at the outset, welfare-based policy assessments alsorequire
a distributive judgment. We offer a number of remarks on the subject in
our book, the most important being that our thesis is independent of how
such judgments should be made (see, for example, FVW, chap. 2, secs.
A.2 and A.3; chap. 3, sec. C.2.e; chap. 4, sec. D.1; and chap. 8, sec. C).
The reason is that our thesis is addressed to a prior question, whether
policy assessments (including distributive judgments) should be based
exclusively on individuals well-being or also (or instead) on factors that
are independent of individuals well-being.
Fairness.
3
By notions of fairness we include all principleswhether
stated in terms of justice (such as corrective or retributive justice), rights
(such as a right to a day in court), or cognate concepts (such as the
2. For discussions of issunes concerning possible differences between individuals pref-
erences and their actual well-being as well as matters involving possible changes in pref-
erences, objectionable preferences, and tastes for fairness, see FVW, chap. 8, sec. B.
3. See FVW, chap. 2, sec. B.
sanctity of promises)that may be employed to assess the desirability
of policy and that have the following characteristic: At least some weight
is given to factors independent of individuals well-being. That is, we
dene notions of fairness to include all independent evaluative principles
that are not purely welfarist.
4
Our purpose in adopting this denition is one of convenience. Each
of our three main themes, as well as the particular arguments relating
to them, distinguishes between approaches that are based solely on
individuals well-being and those that are not. Hence, we nd it useful
to employ a single, familiar term (one that seems to have no precise,
canonical meaning) to refer to all principles that are, in some respect,
other than welfarist.
Four points deserve emphasis. First, most notions of fairness are
nonconsequentialist: Characteristically, one examines particular features
of situations to determine what outcome is most tting according to a
given principle of fairness. For example, if A wrongfully injured B, then
B should be compensated by A; if As action toward B would break a
promise, then it is impermissible; if the true nature of the crime was X,
then the punishment should be . In particular, whether A should P(X)
compensate B, A may break a promise, or the punishment should be
does not depend exclusively (or at all) on an assessment of the P(X)
consequences of doing these things, such as the deterrence of undesirable
behavior.
Second, most fairness proponents, including most modern policy
analysts who grant importance to notions of fairness, hold mixed
normative views, under which some weight is accorded to conceptions
of fairness and some to welfare. (At a minimum, most who endorse
various nonconsequentialist fairness principles would not adhere to them
if the adverse consequences would be extreme.) Our denition of fairness
includes such mixed views, and our objections apply to them to the
extent that weight is given to considerations other than welfare.
Third, sometimes notions of fairness may be invoked without
meaning to contradict a purely welfarist view: A notion of fairness
(perhaps a purely distributive notion) might refer exclusively to effects
on individuals well-being, and some notions of fairness may be used as
proxy criteria when the concern really is welfarist (requiring that
wrongdoers pay for harmcould be favored solely on deterrence grounds).
4. For a formal statement of the difference between welfare and fairness, as we dene
the terms, see FVW, p. 24 n. 15, and p. 39 n. 52; and Kaplow and Shavell (2001, p. 283).
We have no per se objection to the use of notions of fairness as stand-
ins for welfare since our concern is not semantic (although as a practical
matter it is often best for policy analysis to address our actual objectives
directly and explicitly). We observe, however, that all of the leading
notions of fairness that we analyze in our book are generally offered
not as proxy criteria for welfare but rather as independent principles of
evaluation.
Fourth, although we object to the use of notions of fairness as
independent evaluative principles, we do not necessarily object to
arguments for one or another normative principle that happen to be
couched in the language of fairness. Accordingly, our analysis makes no
claim about whether an argument that may sound in fairness (or justice
or related terms) is thereby untenable. Rather, our claim is that the
ultimate criterion for policy assessment should be one that is based
exclusively on welfare. To be sure, claims that one or another outcome
is unfair are often unhelpful because they convey little information
beyond the fact of the authors condemnation. Nevertheless, the object
of our book is to show that arguments, however articulated, favoring
policy assessment based on fairness principles are decient, whereas
arguments favoring welfare-based assessment are compelling, whether
or not phrased as such.
1.2. Conict between Fairness and Welfare
The rst major theme of our book is that pursuit of notions of fairness
results in a needless and, at root, perverse reduction in individuals well-
being. That advancing notions of fairness reduces well-being is, as we
clearly state in our book (FVW, p. 7), a tautology on a general level:
Because we dene fairness principles as those that accord weight to
factors independent of well-being, whenever fairness and welfare as-
sessments differ, it must be that advancing fairness reduces overall well-
being.
We nevertheless emphasize this basic conict for two reasons. First,
the depth of the tension between fairness and welfare is not widely
appreciated; indeed, in policy analysis that rests on notions of fairness,
it usually is not even mentioned. Second, by examining in detail a variety
of concrete, paradigmatic settings that lie at the core of the domain of
fairness principles, the true nature of the conict is revealed. One is able
to see what it is about leading notions of fairness that makes individuals
worse off, and one is thereby better able to assess (see also Section 1.3)
what, if anything, may be said to justify sacricing human well-being.
Reinforcing the second point is that, in each of the situations that
we examine, we present the striking argument that promoting any of
the pertinent notions of fairness sometimes makes literally everyone
worse off, that is, violates the Pareto principle.
5
One way of demon-
strating this argument focuses on symmetric cases. For example, in the
tort setting, suppose that each individual is equally often an injurer and
a victim (and is identical in all other respects, such that the harm that
might be caused, the cost of precaution, and so forth are the same for
everyone). Further, suppose that there arises a situation in which a fa-
vored notion of fairness conicts with welfare. For instance, a notion
of corrective justice might be held to favor the negligence rule (because
the notion holds that wrongdoers, and only wrongdoers, should pay)
even though a rule of strict liability results in higher welfare (say, because
it better controls injurers activity levels).
Now it should be clear that, in a symmetric case, advancing any
notion of fairness will always make everyone worse off when it conicts
with welfare. After all, in a symmetric case, everyone is identically af-
fected, so in comparing two regimes, everyone must be better off under
one regime than under the other.
6
A welfare-based analysis, of course,
favors the regime under which everyone is better off. Hence, if a notion
of fairness conicts with welfare, it must be that it favors the regime in
which every individuals well-being is lower.
This generic symmetric-case demonstration is supplemented by con-
crete examples and by other demonstrations of the Pareto conict, some
specic to particular contexts and one formal, technical proof that is
quite general.
7
Even though as a practical matter it will rarely if ever be
the case that one of two policies under serious consideration will literally
make everyone better off than the othera point we have emphasized
from the outset of our work on the question (Kaplow and Shavell 1999,
pp. 7274; 2001, pp. 28485; FVW, pp. 5558 and n. 78)the result
5. We refer to the weak Pareto principle, which holds that if everyone is strictly better
off under one policy than under another, the former should be deemed superior.
6. We are ignoring the uninteresting case in which welfare is identical under the two
regimes.
7. We rst published the symmetric-case result in Kaplow and Shavell (1999). In FVW,
the symmetric-case argument appears in general terms in chap. 2, sec. C.1; in the tort
setting in chap. 3, sec. C.1.e; in the procedure setting in chap. 5, secs. A.5 and B.3B.4;
and at various other points. We use other demonstrations as well, such as in the contract
setting in chap. 4, secs. C.1.f and C.2.e. Our general, formal proof appears in Kaplow and
Shavell (2001). For further discussion, see FVW, chap. 2, sec. C.1 (especially the notes);
and Kaplow and Shavell (2000).
that all notions of fairness sometimes make everyone worse off is of
great signicance regarding the soundness of these notions as policy-
making criteria. This is true for a number of reasons.
First, even most proponents of notions of fairness will nd it deeply
troubling that adherence to their principles entails endorsing the prin-
ciple that sometimes it should be deemed socially desirable to make
everyone worse off. Indeed, one can ask to whom one is being fair if
every individual is made worse off. Furthermore, proponents of notions
of fairness who ground the notions in ideas of freedom and autonomy
should have particular difculty with our demonstration since individ-
uals would unanimously reject a fairness notion if it makes them all
worse off.
Second, there is an important matter of logical consistency. If indeed
a principle is shown to be decient, one cannot consistently adhere to
it on the ground that the case in which its deciency is glaringly apparent
is not the case one is considering at the moment. This point about logical
consistency, which is a staple of argument in moral philosophy, has all
the more force because the cases in which we demonstrate the Pareto
conict in our bookoften symmetric casesare simple, basic, para-
digmatic, clear cases in which notions of fairness apply. Our judgments
about such cases should carry more weight, decisive weight, compared
with our judgments in cases with many potentially conating factors, in
which it is difcult to reach conclusions with condence.
Third, as we elaborate in our book and elsewhere, our demonstration
that all notions of fairness always make everyone worse off in the sym-
metric case is especially signicant under many broadly endorsed nor-
mative frameworks (see, for example, Kaplow and Shavell 1999, pp.
7374; FVW, chap. 2, sec. C.1; chap. 3, sec. C.1.e.iii). We show that
the Golden Rule, Kants categorical imperative, and the veil-of-ignorance
construct each require that normative principles be tested as if one is in
a symmetric setting. (The reason, in brief, has to do with the need for
impartiality: One could, for example, favor might makes right as a
general rule if one were unusually mighty, but if one is forced to assume
that just as often someone else will be mightier, one would reject such
a rule.) Accordingly, if one adheres to any or all of these normative
frameworksas most fairness proponents in fact doone is forced ei-
ther to reject all nonwelfarist principles or to endorse the view that
making everyone worse off should be the core feature of any sound
normative principle.
Although we regard the conict between notions of fairness and the
Pareto principle as powerful, we also should emphasize that much of
our books analysis of the broader conict between fairness and welfare
does not focus on this particular argument. The second part of our
bookchapters 36, constituting nearly two-thirds of the to-
talexamines how fairness reduces welfare in detail and often without
regard to the Pareto principle. For example, chapter 3, which is on torts,
fully considers nonreciprocal cases in which Pareto conicts do not typ-
ically occur, and chapter 6, which is on law enforcement and retributive
justice, the longest chapter in our book, makes almost no reference to
the Pareto principle in arguing that notions of fairness are perverse with
regard to their implications for individuals well-being (for example, the
only beneciaries of a more fair system may be criminals who escape
punishment and thus prot from their crimes). That is, we rely not only
on an abstract, if extremely important, general argument, but also on
particular analysis of how leading notions of fairness play out in im-
portant legal settings.
1.3. Further Deciencies in Notions of Fairness
8
Our second central theme in FVW concerns largely internal deciencies
in notions of fairness themselves. Perhaps the most important is their
lack of rationale. We develop this theme by considering in great detail
justications that have been offered both by moral philosophers and by
legal scholars. In addition, with regard to the scenarios in each of the
legal contexts that we examine in depth, we further consider what war-
rant might be offered for giving weight to notions of fairness. We con-
sistently nd that none of the possible rationales is convincing.
For example, upon reviewing the literature supporting retributive
justice, from Aristotle to Kant and Hegel to moderns, it is difcult to
identify the afrmative case for the principle. Instead, one nds, for
example, reference to the need to restore some sort of moral balance in
the world, more a conclusory metaphor than anything else. When one
adds that even retributivists would not punish all wrongs (most lies, for
example) and that, more broadly, different theories with different met-
aphors are applied in different contexts (even though, on their face, many
of the theories and metaphors apply to the other contexts as well), it
becomes difcult to imagine how plausible justications could be offered
for these theories.
8. For a summary of many of our points, see FVW, chap. 2, secs. B.2 and C.2. Fuller
statements appear throughout chaps. 36.
We also identify a number of difculties that, although not necessarily
inherent in notions of fairness, seem to be endemic. There are matters
of denition, often so serious as to leave basic statements of fairness
notions highly incomplete if not entirely empty. Corrective justice pur-
ports to answer questions of tort law by holding that wrongdoers should
compensate victims, but then a theory of wrongdoing must be supplied
and it is that theory that ultimately indicates who should compensate
whom. Likewise for promise-keeping (because promises must be inter-
preted) and for retributive justice (because the wrongfulness of acts that
vary on many dimensions must be measured with a common denomi-
nator and equated, in some often unspecied proportion, to measures
of punishment). We further observe that such fundamental problems in
stating and applying the principles are probably related to their lack of
afrmative rationale; it is difcult to imagine that, if there were readily
identiable reasons for pursuing the principles, we would have so little
idea of what they mean.
In addition, many notions of fairness involve adopting an ex post per-
spective, asking, for example, what punishment is appropriate given that a
crime has been committed and the criminal apprehended and convicted.
This perspective tends to undervalue or ignore other outcomes, including
more likely ones, such as the fact that for many crimes most criminals go
scot-free. In a related way, behavioral effects, such as whether crimes are
committed, are downplayed if even considered at all. Principles that require
incomplete assessments of situations are unlikely to lead to sound policy
choices. (One of our subthemes is that notions of fairness often serve as
proxy indicators of welfare, which in turn helps to explain their appeal.
Indeed, in our analysis of leading fairness principles, we often nd that,
with regard to aspects of situations that the principles do lead one to con-
sider, they often point toward welfare-relevant effects; moreover, when the
principles conict with welfare, it is often precisely onaccount of the welfare-
relevant factors that the principles lead the analyst to ignore.)
Yet another problem arises from the nonconsequentialist nature of
most notions of fairness. A common repercussion is that a rule can be
deemed more fair even though it results in more unfair outcomes or a
greater incidence of the behavior whose wrongfulness underlies the mo-
tivation for the theory. For example, we show how insisting on the fair
punishment for, say, murder, can result in more actual instances of unfair
punishment of murderers and in a greater number of innocent people
mistakenly accused of murder, and also in more murder, which retrib-
utive theory deems to be a serious wrong such as to demand punishment
in the rst instance.
These pointsespecially that concerning the lack of afrmative ra-
tionale for notions of fairnessare difcult to capture well in this re-
capitulation. Their development occupies much of our book and a dis-
proportionate share of the extensive notes and references. The extent of
these deciencies is notable in view of the centuries of attention given
to the notions of fairness by scholars, the vast majority of whom are
proponents of the notions. In summary, notions of fairness are quite
difcult to defend even aside from the adverse, often perverse, impli-
cations of pursuing notions of fairness for human welfare.
1.4. Social Norms and the Reconciliation of Fairnesss Appeal with
Welfarism
The third major theme of our book involves providing an answer to the
question of how it can be that notions of fairness appeal to our moral
instincts and intuitions and yet should not be given any independent
weight in policy assessment. An important part of our answer, which is
social-scientic in nature, involves social norms.
9
First, we observe that principles of fairness tend to correspond to
internalized social norms, such as keeping promises and holding wrong-
doers accountable. These social norms are commands that people want
to obey because the maxims have been inculcated or are inborn. Thus,
one might feel guilty for telling a lie (and also may fear social disap-
probation). Social norms appeal to us both because of their internali-
zation and related social reinforcement and because they valuably guide
our behavior and curb opportunism in everyday life. Given their inter-
nalized character and instrumental value, it is not surprising that indi-
viduals who engage in policy analysis, themselves well-socialized mem-
bers of society who attach importance to these social norms, will be
inclined to accord weight to corresponding notions of fairness.
10
For
example, our attachment to the social norm that promises should be
9. See FVW, chap. 2, sec. D, for explanation of the argument in general terms; chap.
3, sec. E; chap. 4, sec. C.2.g; chap. 5, secs. A.6 and B.3.f; and chap. 6, sec. D, for devel-
opment of the argument in each of the legal contexts that we examine; and these sections
as well as chap. 2, sec. B.2.c, and chap. 7, sec. B.1, for additional explanations for the
appeal of fairness principles that are consistent with our thesis.
10. This explanation also indicates why individuals may have a taste for notions of
fairness in the sense discussed in Sec. 1.1.
kept naturally disposes us to favor the promise-keeping notion of fairness
when we assess contract law.
Second, we examine the implications of this phenomenon. Most im-
portant, it provides an explanation for the attraction of notions of fair-
ness, but an explanation that offers no justication for according the
notions independent evaluative weight. That individuals are in a sense
programmed to conduct their everyday lives in accordance with social
norms does not warrant elevating these norms to the status of indepen-
dent evaluative principles in the qualitatively different context of legal
policy design. Moreover, given that the raison de tre of social norms is
functional, to promote welfare, it would be an ironic mistake for the
analyst to treat them as if they were independent principles to be pursued
at the expense of well-being. Indeed, in our book we repeatedly show
that divergences between the prescriptions of notions of fairness and
those of welfare-based analysis can be traced to differences between the
realm of everyday life, the appropriate domain of social norms, and that
of regulation through the apparatus of control of the modern state,
where we argue that analysis should be based exclusively on welfare.
11
Thus, if we are self-conscious about the role of social norms and the
corresponding origins of our instincts and intuitions about notions of
fairness, we would not be led to attach independent weight to notions
of fairness when assessing policy.
12
This theme, like our other two prin-
cipal themes, is developed both in general terms (in this instance drawing
on a range of literatures in the social and natural sciences) and in great
detail in chapters 36 in each of the legal contexts that we examine and
with respect to each of the leading notions of fairness that we consider.
Our rst two themesinvolving how giving importance to notions
of fairness leads to needless sacrices in our well-being, and the lack of
afrmative rationale for (and other difculties with) notions of fair-
nessindicate why our normative thesis that policy assessment should
be based exclusively on considerations of individuals well-being is cor-
11. Relatedly, this relationship between functional social norms and notions of fairness
explains why notions of fairness tend to have the aforementioned proxy characteristic that
they tend to indicate some respects in which policies promote welfare (but they also tend
to be incomplete and sometimes misleading in large part because important context dif-
ferences render fairness principles imperfect proxies).
12. As should be clear from the text and as we emphasize in the book, this argument
demonstrates that policy analysts should not be guided by notions of fairness but in no
way indicates that individuals in everyday life should cast aside social norms. See chap. 7
of FVW for discussion of the differing implications of our analysis for ordinary individuals,
policy analysts, and government decision makers.
rect. Our third theme is complementary in that it reconciles our thesis
with widely held moral instincts and intuitions and, in a related way, it
shows why contrary moral arguments, substantially grounded in such
instincts and intuitions, should not be seen as posing a real challenge to
our thesis.
2. CONFLICT WITH THE PARETO PRINCIPLE
Richard Craswell (2003) suggests that our argument that pursuing all
notions of fairness sometimes makes everyone worse off might be
avoided under certain hybrid fairness theories of the following sort:
Apply the initial fairness theory in choosing between two regimes unless
this would make everyone worse off, in which case abandon the fairness
theory and instead use a purely welfare-based assessment, which of
course would favor the regime under which everyone is better off.
13
For
reasons given in our original articles on the subject, in FVW, and in our
reply to Howard Chang, who previously advanced a similar view,
14
this
attempt to circumvent our argument fails.
15
The possibility of such hy-
13. Craswell also cites to similar effect Chang (2000a) and an unpublished manuscript
by Barbara Fried, Can We Really Deduce Welfarism from the Pareto Principle (which
we have not read, although we have seen an earlier version). We do not address here most
of the second section of Craswells comment, which consists of his own version of aspects
of some of our arguments regarding our rst theme.
14. See Chang (2000a, especially secs. 3 and 4); see also Chang (2000b).
15. See, for example, Kaplow and Shavell (1999, pp. 7274, including nn. 20 and 23);
FVW, chap. 2, sec. C.1 (including nn. 7576 and 7880); FVW, chap. 3, sec. C.1.e; and
Kaplow and Shavell (2000) (replying to Chang). We observe that, although Craswell ad-
vances an argument very similar to Changs and makes numerous references to Changs
article, he refers to our reply to Chang only twice, both times with regard to points he
raises in footnotes. See Craswell (2003, p. 255 n. 13, and p. 259 n. 18). We also do not
understand why Craswell asserts that in our initial presentation of our Pareto argument,
we do not even address hybrid theories, but rather limit [our] initial argument to fairness
theories in which unfairness is given a constant weight or a weight that is independent of
whether any victims of the alleged unfairness are made worse off (Craswell 2003, p. 253).
To be sure, we occasionally, for ease of exposition, offered examples with the latter quality,
but virtually all of our analysis, including our particular discussion of mixed views (under
which both fairness and welfare may receive weight), is quite general. Thus, our rst
published paper, Kaplow and Shavell (1999), never makes the posited restriction and spe-
cically addresses hybrid theories. See Kaplow and Shavell (1999, p. 72 n. 20) (which
Craswell himself later quotes, at p. 255). Our formal article, Kaplow and Shavell (2001),
explicitly considers any consistent notion of fairness, allowing weight to vary in any manner
as long as it is not discontinuous (which intentionally rules out hybrid theories on the
ground that they are incoherent). FVW denes fairness in a general manner that includes
both hybrid theories and theories under which the weight given to fairness may vary, even
brid fairness theories does not, upon reection, fundamentally challenge
our thesis. Moreover, as moral theories, the hybrid schemes are inco-
herent because of what turns out to be their inability to make consistent
choices among alternative regimes and also on account of their discon-
tinuous nature.
Consider rst the relationship between the hybrid fairness theories
and our thesis. As we explain in Section 1, the Pareto argumentdespite
its importancerelates to but one of three themes in FVW, and with
regard to that theme actually occupies only a part, often a small part,
of our analysis.
16
(As noted in Section 1.2, for example, in our longest
chapter, on law enforcement and retributive justice, we give extensive
attention to how adherence to retributive justice leads to perverse sac-
rices of welfare, while we make virtually no reference to the Pareto
argument.)
More directly, our elaboration of the signicance of the Pareto con-
ict, as summarized in Section 1.2, makes clear that Craswells suggested
hybrid theory is largely nonresponsive. As we explained there and em-
phasized in our book, the import of the Pareto conict has nothing
whatsoever to do with it arising frequently in practice (it does not) or
in any particular case under consideration. Rather, all of our arguments
have to do with the implications of the conict for choosing normative
criteria. That most proponents of notions of fairness should nd the
conict with the Pareto principle disturbing Craswell concedes; indeed,
this motivates his consideration of hybrid theories under which fairness
is trumped by welfare in those rare cases in which Pareto conicts arise.
But if the initial fairness theory is such that it would indeed sometimes
deem making everyone worse off to be socially desirable (morally cor-
rect), does this not suggest that there is something fundamentally wrong
with the theory, rather than merely signify a trivial blemish to be cured
through a bit of ne-tuning?
discontinuously (see, for example, FVW, chap. 2, sec. B.1), and explicitly addresses hybrid
theories (see, for example, FVW, pp. 5355 and n. 76, which Craswell also cites later, at
p. 257 n. 16).
16. Craswell suggests otherwise. For example, he asserts that our argument about
conict with the Pareto principle receives most of the emphasis in our work (Craswell
2003, p. 245; see also pp. 246 and 273). He further states that we do not make . . . [the
substantive problems] the focus of our critique (Craswell 2003, p. 257, brackets and
words therein in original). Yet substantive problems are his words, not ours. As the
prominence of chap. 2, secs. C.2 and D, in FVW indicates (as well as our preface, pp.
xviiixx), we regard all three themes to be central; indeed, what Craswell says we do not
emphasize in fact constitutes the substantial majority of our book.
Furthermore, we emphasize that the cases in which we identify con-
icts with the Pareto principle are simple, basic, paradigmatic, clear
casesones in which we can be condent of our normative judg-
mentsin contrast to more complex settings where possibly confound-
ing factors make normative assessment more difcult, contestable, and
prone to error. Given that this is so, the idea embedded in Craswells
hybrid theories, that we should virtually always follow the questionable
guidance derived from more opaque cases while only rarely following
the contrary condent lesson from the clear cases, seems backwards. As
John Rawls (1980, p. 546) has stated, [A] theory that fails for the
fundamental case is of no use at all.
Another, related problem is the matter of logical consistency, which
has long been a primary ingredient of moral argument.
17
Craswells
proposed hybrid schemes would have the entire basis for normative
assessment shift depending on whether a Pareto conict happens to arise.
Additionally, as we examine further below, whether or not a Pareto
conict arises can be a matter of a 1-cent (indeed, one-billionth of 1
cent) difference in outcome to a single person. It is as if Craswell were
proposing a moral theory that applied entirely different principles on
Tuesdays, requiring engineers to develop ever more precise recording
devices for all human activity, linked to atomic clocks, because whether
an event occurs a nanosecond before or after the stroke of midnight
could fundamentally alter how the social response should be deter-
mined.
18
Additionally, our demonstration of the Pareto conict in all sym-
metric cases is telling for hybrid theories. Craswell dismisses the signif-
icance of this demonstration because fully symmetric cases rarely arise
in practice.
19
But, once again, our point was never that Pareto conicts
or symmetric cases occur frequently; we clearly stated that they do not
(as noted in Section 1.2). Instead, we explained that prominent moral
17. See, for example, FVW, pp. 5657 n. 78; and Kaplow and Shavell (2000, p. 244).
18. One could argue that this hybrid approach is not a melding of two inconsistent
theories but a single, conditional theory. That is, one could have a single apply X except
when it is Tuesday in which case apply not-X moral theory. Yet the underlying inconsis-
tency of the criteria for normative assessment would remain despite calling it one theory
rather than an admixture of two conicting theories.
19. After briey stating our argument in the symmetric case, he refers to it as a special
case of rules that affect everyone in society identically. Most rules, however, do not affect
everyone in society identically. Then, he proceeds without further comment to consider
our more general argument outside the symmetric context (Craswell 2003, p. 247).
frameworksthe Golden Rule, categorical imperative, veil of igno-
ranceall require that every moral principle be tested as if one is in the
symmetric case; it is usually a hypothetical case, but one that is ideally
suited for discerning which moral principles are correct. Hence, for those
not ready to discard, indeed reverse, all of these teachings, every notion
of fairness must be rejected.
20
In sum, Craswells hybrid theory does not avoid the force of our
arguments based on the conict between notions of fairness and the
Pareto principle. Independently, we now explain how the sort of hybrid
schemes that Craswell proffers are internally incoherent as moral the-
ories.
21
With regard to this part of our argument, we observe that Cra-
swell (like Chang) is really responding not to FVW, but rather to a short,
technical, economics journal article containing our general demonstra-
tion (that is, without regard to symmetric settings) of the conict between
all notions of fairness and the Pareto principle. Furthermore, Craswell
(like Chang) offers an informal, not entirely specic or consistent coun-
terexample to our formal analysis and proof (the validity of which is
not contested). For present purposes, we will focus on our two most
pertinent objections that, although technical, are of decisive impor-
tance.
22
20. To elaborate, Craswells hybrid theories give no weight to their underlying fairness
principles whenever they would conict with the Pareto principle, and we demonstrate that
such conicts always arise when fairness is decisive in a symmetric setting. Therefore, in
symmetric settings, Craswells hybrid theories can never give any weight to fairness. Ac-
cordingly, if principles for all asymmetric settings are to be derived from what principles
should govern in symmetric ones, it follows that one should never give decisive weight to
a notion of fairness in any asymmetric setting either.
21. It is unclear the extent to which Craswell disagrees with us regarding these ar-
guments. Often, he merely seems to suggest that various views are plausible and that our
particular position really involves substantive arguments (Craswell 2003, pp. 25657).
We see the arguments to follow in the text as going more to whether a hybrid moral theory
is coherent or even can be said to exist in any meaningful sense rather than to what is
ordinarily meant by substantive moral argument between competing theories, but ulti-
mately the question of categorization is purely semantic.
22. A third problem is that it is unclear whether Craswells hybrid theories, whatever
their other inrmities, even count as nonwelfarist theories. He refers to our observation in
our technical article (Kaplow and Shavell 2001, p. 283) to the effect that under any non-
welfarist theory it must sometimes be true that there will exist two regimes that are judged
differently even though every individuals level of well-being is identical under each regime.
Craswell states that this description does not include any hybrid fairness theo-
ries(Craswell 2003, p. 254 and n. 11). In other words, if welfare levels are identical in
two regimes and one regime is in all possible respects grossly unfair compared to the other,
under Craswells hybrid fairness theories he is implicitly asserting that he requires a
judgment of indifference. However, some reection reveals that such a theory really is a
First, if any hybrid fairness theory (or any other theory) is even to
be considered as a candidate for an ideal normative criterion for policy
assessment, it must be capable in principle of making consistent choices
among possible regimes. As it turns out, the sorts of hybrid theories that
Craswell offers to circumvent our Pareto argument do not meet this
basic requirement. In our reply to Chang, we emphasized that none of
the informal examples that Chang had offered us over the course of a
yearincluding Changs hybrid theory, which is essentially the same as
Craswellsin fact succeeded in providing a logically coherent construct
that both accorded some decisive weight to a notion of fairness and
avoided conict with the Pareto principle (Kaplow and Shavell 2000,
p. 246 and n. 24). Craswells comment, in essence, offers an informal
restatement of one of Changs unsuccessful examples.
To illustrate the difculty, suppose that there are three regimes, A,
B, and C. Under a posited notion of fairness, A is perfectly fair, B is
moderately unfair (say ve individuals are treated somewhat unfairly),
and C is signicantly unfair (an additional 10 individuals are treated
quite unfairly). Under a pure version of the notion of fairness, the regimes
would be ranked A, best; B, second; and C, worst. But now suppose
that the welfare of every individual in regime C is somewhat greater
than it is in regime A (because some other aspect of the regime sufciently
benets those treated unfairly in C). Under the hybrid approach, one is
therefore compelled to hold that regime C is denitely morally superior
to A. The problem, however, is that the same hybrid theory insists that
regime A is denitely morally superior to regime B and that regime B is
denitely morally superior to regime C.
23
And if one adheres to basic
logic, it follows a fortiori from these two judgments that regime A is
denitely morally superior to regime C. But a moment ago we noted
purely welfarist theory, as we explain (Kaplow and Shavell 2000, p. 241 n. 10). (Briey,
under a purely welfarist theory, it is sufcient to know every individuals welfare level to
choose among policies, and Craswells statement means that, for any conguration of
individuals welfare levels, there corresponds a unique social assessment that is independent
of any nonwelfare factor, notably, any pertaining to a notion of fairness.) As we explain
in note 24, however, the scheme that Craswell articulates in subsequent correspondence
does not yield coherent choices among possible regimes; since it is thus a nontheory, it
really cannot be classied under our welfarist-nonwelfarist dichotomy, which was meant
to apply only to theories capable of yielding consistent normative choices.
23. We are assuming that there is no Pareto relationship between regimes A and B or
between regimes B and C. It is obviously easy to construct such cases (simply have equal
distributions in A and C but a somewhat unequal distribution in B such that at least one
individual is better off than in A and C and another individual is worse off than in A
and C).
that the hybrid theory necessarily deems regime Cto be denitely morally
superior to regime A, in order to avoid the Pareto conict.
This failure of logical consistencywhich is almost identical to one of
the aws we emphasized in our reply to Chang (Kaplow and Shavell 2000,
pp. 24345) and which Craswell does not address inhis comment
24
renders
Craswells hybrid theory a nontheory. One cannot determine what it favors
even in principle. Once contradiction in normative analysis is em-
bracedsomething can be both morally superior and morally inferior, all
depending on the order in which one chooses to think about the possibil-
itiesit is really the case that anything goes.
Second, Craswell acknowledges that his proposed hybrid scheme is
discontinuous in that it switches assessment criteria in response to small
shifts in outcome. (This acknowledgment, as Craswell recognizes, is im-
portant because our proof shows that if an assessment method is con-
tinuous, it necessarily follows that it conicts with the Pareto principle
if weight is ever given to fairness, and this is so however much one might
attempt to modify the notion of fairness, as long as there remains even
a single case in which fairness receives any weight.) Craswell suggests
that fairness proponents should not be bothered by such discontinuity,
but we believe that once its meaning is fully grasped, this feature will
be recognized to be wholly unacceptable.
25
24. In private correspondence after we received Craswells comment, we pressed this
point, and he responded by offering a more precisely articulated (and subtly different)
version of the hybrid theory, accompanied by careful analysis that itself demonstrated a
similar sort of intransitivity. In particular, it had cases in which regime A is denitely
morally superior to regime B, B denitely morally superior to C, but not having A denitely
morally superior to C. (Specically, moving from A to C may be immoral, even though it
would be commanded to move from A to B if given that choice, and from B to C if given
that choice.) In addition, this version had cases in which moving from A to B would be a
denite moral improvement, and so would be moving from A to C, but B and C cannot
be morally compared, rendering the theory conceptually indeterminate. (More precisely,
whichever regime one moves to rst, B or C, there one must stay; yet these moves are
mere mental exercises, so it is as if whichever regime rst comes to mind is on that account
deemed to be the morally best regime.) For yet another example of inconsistency generated
by Craswells hybrid approach, see note 30.
25. Craswell (2003, p. 258) seeks to cast doubt on our objection to discontinuity on
the ground that the objection applies to nearly any theory involving individual rights.
However, that an otherwise sound argument also applies to other theories is hardly a
response to the argument. Furthermore, his claim is incorrect, for it has long been true
that many philosophers (and even more so, their fellow travelers) who accept individual
rights or other principles would allow them to be smoothly traded off in a manner that
does not imply any discontinuity, both in cases of conicts between competing rights and
in cases of conicts between rights and welfare. A prominent example is Ross (1930).
Additionally, it is entirely familiar that the use of knife-edge distinctions in formulating
Craswell (2003, pp. 24950) asks the reader to accept both of the
following two features of his hybrid scheme:
First, if anyone suffering from unfairness under a regime is in some
(possibly unrelated and indirect) manner better off than under an-
other, fair regime, the former regimes unfairness receives no weight
whatsoever. Thus, if everyone is treated unfairly under regime A
compared to regime B, and if each person thereby suffers in
an amount that he regards as indifferent to losing $1,000,
then the unfairness is entirely ignored if each individual has
$1,000.00000000001 more under A than under B.
Second, if the compensation instead leaves a single individual merely
as well off, giving himexactly $1,000, so no longer is everyone strictly
better off under regime A, then unfairness receives full weight and
hence regime B would be favored.
26
But if one indeed accepts the rst feature (as is required under Craswells
scheme to avoid the Pareto conict),
27
it seems ridiculous to accept the
second. Rather, if unfairness dissolves entirely when individuals each re-
legal rules (see Craswell 2003, p. 258) hardly implies that the underlying principles, viewed
from an ideal perspective, have radical discontinuities. (Consider setting an age oor for
driving or voting.) And, as we emphasize in our book (see, for example, FVW, pp. 6669,
7677), similar points hold true for moral intuitions, including Craswells, Changs, or a
readers, that may seem to favor a discontinuous system of rights even though the true,
ideal theory behind it would not. These ideas, which fully rationalize our intuitions yet
lend no support to taking them as real indicators of the correct normative theory, are
aspects of one of the main themes of our book (see Sec. 1.4, above), one not addressed by
Craswell.
26. The example in the text, following Craswell, uses the weak Pareto principle, which
is decisive only when every individual is strictly better off. If instead, one required only a
single individual to be strictly better off (and the others merely at least as well off) or if
one ignored fairness if everyone was equally well off, a slightly different illustration could
be used to make the same point.
27. Craswell (2003, pp. 25152) acknowledges that some fairness theorists would balk
at his rst premise, but he suggests that not all would and that they need not. We are much
more skeptical, which is to say that it seems to us that most who endorse notions of fairness
could not accept this premise. For example, Craswell (2003, p. 257) points out that under
the required assumption nothing can ever be viewed as intrinsically evilor, we would
add, intrinsically wrong, unfair, or unjust. Craswell is not ruling out only the extreme view
that intrinsic evil trumps all other considerations, including welfare, but also far more
modest views that simply hold that certain acts, rules, or situations are viewed negatively
from a normative point of view independent of the welfare levels of those involved and
how these welfare levels may be inuenced by aspects of the regime that have nothing to
do with what makes something intrinsically evil. See also note 22 (suggesting related im-
plications of his rst premise that we suspect most fairness proponents would reject).
Nevertheless, our argument only aims to show that, for any who do accept the rst premise,
the second premise is implausible.
ceive an additional $1,000.00000000001, then surely it dissolves sub-
stantially if one of them merely receives an additional $1,000. Put another
way, if regime A is clearly and nontrivially normatively inferior to regime
B if the one individual under A receives exactly $1,000 more than under
B, then if he instead receives exactly $1,000 for sure and an additional
one-billionth of 1 cent as well if lightning strikes 100 consecutive times
at a given point within a predetermined 1-second interval, surely no co-
herent moral theory would reverse its verdict on account of such a dif-
ference. If individuals well-being is decisively important when the amount
individuals each receive is $1,000.00000000001, can it really make sense
that consideration of individuals well-being is radically less important or
wholly unimportant when a single individuals receipt is ever so slightly
less?
28
We acknowledge that the reader may have some difculty accepting
the last set of points regarding incoherence and discontinuity. Why is it
that, in order to avoid the Pareto conict, Craswell (like Chang) offers
modied theories that are so bizarre and incoherent? Why did he not
suggest more plausible variations of notions of fairness instead? The
answer lies in our proof, which demonstrates that under minimal as-
sumptions of logical coherence and continuity, avoiding the Pareto con-
ict while still giving weight to notions of fairness is impossible. Hence,
those seeking to avoid the proofs implications (the Pareto conict) are
forced to propose schemes having such unacceptable properties.
The proof itself appears in our original technical paper (Kaplow and
Shavell 2001, p. 284) and in a prose version in our reply to Chang
(Kaplow and Shavell 2000, pp. 24041). One way to express the in-
tuition underlying it is as follows: As long as a notion of fairness some-
times receives nontrivial weight, it follows that one would sometimes
favor a fair regime over an unfair regime where the latter has greater
welfare (but not by so much as to outweigh whatever weight was given
28. Craswells hybrid theories can be described as ones involving waivers of rights,
but this way of describing the theories does not evade the substance of our argument. If
waiver is automatic (as under Craswells theory) when an individual gains by
$1,000.00000000001, then the degree of moral offense from a lack of waiver when the
individual instead gains by $1,000 can hardly be signicant. Indeed, it can hardly be worth
an individualsor a policy analysts or government decision makerseffort even to de-
termine a regimes effects with such precision, if such were possible. We remind the reader
that Craswell needs this discontinuity to avoid our proof of the conict with the Pareto
principle; hence, the obvious x to his hybrid scheme, under which the degree of un-
fairness rises as the extent of compensation for the unfairness falls short of full compen-
sation, is unavailable to him.
to fairness). Now one can also imagine a regime like the latter onejust
as unfair and for the same reason (say, unfair punishment is applied
equally often and to the same extent), but where the overall level of
social welfare is distributed the same as it is in the rst regime, implying
that the excess welfare relative to the rst regime is shared pro rata. In
that case, the modied second regime is viewed as inferior to the rst
regime (because the modied second regime is no better than the original
second regime, which itself is inferior to the rst regime according to
the notion of fairness). Nevertheless, this modied second regime has
higher total welfare with the surplus divided evenly, necessarily making
everyone better off than under the rst regime. To avoid this sort of
conict with the Pareto principle, Craswell (like Chang) must have the
weight given to fairness change dramaticallyin fact, at a literally in-
nite ratein response to possibly tiny changes in the level or distri-
bution of welfare. This explains why their circumvention schemes need
to be discontinuous.
29
In addition, the presence of such a discontinuity helps to understand
why attempts to evade the reach of our proof also tend to display in-
transitivity (A denitely superior to B, B denitely superior to C, but A
not superior to C). In essence, discontinuity in the present context means
that qualitatively different evaluative principles are used depending on
which comparisons are being made (under the Craswell/Chang hybrid,
fairness ordinarily, but welfare alone when Pareto conicts arise). But
when the criteria used to compare A with B, to compare B with C, and
to compare A with C can and sometimes do differ, it should not be
surprising that inconsistent judgments are possible.
30
29. It has been suggested to us that discontinuity is not problematic as long as the
absolute amount sacriced is not innite; that is, there is no difculty per se with the rate
of change (in a sense, the price per unit) being innite. But consider a simple example: A
person enters a chocolate shop and asks to buy a pound of elegant trufes. The shopkeeper
responds, You misunderstand, sir. You have only $1,000 in your pocket, and the price is
$1 trillion a pound. This suggestion about discontinuity is tantamount to saying, O.K.
then, Ill take $1,000 worth. The idea seems to be that this answer cannot be crazy if the
customer pays only $1,000. But if indeed the $1 trillion price is ridiculous, then so is
purchasing $1,000 worth, which in this case might amount to a few molecules (we have
not performed the calculations). And since the person literally would purchase at an innite
price, even if one imagines that it is possible to taste such a minute morsel, this would not
sufce to rescue the sanity of the approach because the customer must be willing to buy
even if the price were $1 trillion per electron and so on ad innitum.
30. Yet another manner in which a hybrid theorys discontinuity can generate incon-
sistency involves uncertainty. Suppose, for example, that a reform would otherwise be
unfair to a large group of individuals, that each of them ex ante expects to gain from the
In sum, Craswells suggestion that a hybrid theory might circumvent
our Pareto argument, although supercially appealing, fails to respond
to the thrust of our substantive claimssuch as those about what the
Pareto conict reveals about the initial notion of fairness or about the
implications of our symmetric-case demonstrationand his scheme does
not, upon examination, constitute a logically coherent system of nor-
mative assessment. We are quite sympathetic to Craswell and others
intuitive conviction that there must be some way to circumvent our
demonstrations regarding the Pareto principle. In fact, when writing
FVW, we had substantially completed our detailed analysis before we
realized the generality of the phenomenon that notions of fairness some-
times make everyone worse off. Had we been asked about the matter
5 years ago, we would have been inclined to agree with Craswell and
others suspicion that there must be some way around the claim for at
least certain principles of fairness. But, after much reection and sub-
sequent formal analysis, we have been forced by the power of logic to
change our minds. However counterintuitive at rst (and second) glance,
the deep conict between notions of fairness and the Pareto principle is
quite general, robust, and powerful in its implications for normative
analysis.
3. DISTRIBUTIVE JUSTICE
Jeremy Waldron (2003) addresses matters of distributive justice. As we
explain in Section 1.1, the welfare economic approach, which we en-
dorse, incorporates general distributive concerns. However, because of
the nature of our thesis, consideration of distributive justice is not central
in our book. Our claim, after all, is that policy assessment should be
based exclusively on a policys effects on individuals well-being and
reform, but that exactly one of them will in fact end up being the slightest bit worse off
ex post (say 1 million people each have a one-in-a-million chance of being that person).
Craswells theory would favor the reform, viewed ex ante, because the unfairness is deemed
to be waived by everyone. But if the decision maker (or moral analyst) had brief access to
a crystal ball that revealed the identity of the loser, then if he happened to see the losers
name in the crystal ball an instant before reaching the mental conclusion in favor of the
reform, the reform would have to be scrapped because that one loser could not be deemed
to waive his right not to be subject to unfairness. This result must hold even though knowing
the name of the person really is morally irrelevant information because it was already
known that precisely one person would end up slightly worse off, and under the moral
theory it is presumably immaterial whether that person, selected essentially randomly,
happens to turn out to be Smith or Jones.
thus that no independent weight should be accorded to notions of fair-
ness that are not concerned exclusively with individuals well-being. Be-
cause principles of distributive justice often are (and, when not, can
often be reformulated to be) based exclusively on individuals well-being,
the merits of our thesis do not bear very directly on what is the correct
general distributive theory.
31
As we state early in FVW (and as Waldron
quotes), [W]e argue, in essence, that legal policy analysis should be
guided by reference to some coherent way of aggregating individuals
well-being, in contrast to the view that policy analysis should be guided
by notions of fairness and thus, at least in part, without regard to in-
dividuals well-being (FVW, p. 27; quoted in Waldron 2003, p. 287).
Waldron, although applauding our acceptance of the importance of
incorporating distributive justice in our normative framework,
32
nev-
ertheless offers three objections to our treatment of distributive issues.
First, he is bothered by our idiosyncratic or odd denition of fair-
ness because it excludes many distributive principles (classifying them
instead as welfarist when they are based exclusively on individuals well-
being).
33
We have some sympathy for this point but do not regard it as
signicant for a number of reasons.
Most important, we make our denition clear in our introduction,
31. Our thesis does imply, as the text suggests, that distributive theories should address
themselves to individuals well-being rather than other measures of individuals situations.
See FVW, pp. 2930 n. 27.
32. We observe that we feel unworthy of any applause, for in FVW all we did was
state the standard normative paradigm of welfare economics, which, as widely taught in
graduate schools, takes distribution into account (although as we there acknowledge, see
FVW, pp. 5, 2829 and n. 26, this standard view of economists is not widely disseminated
in legal scholarship).
33. See Waldron (2003, pp. 279, 282, for use of the quoted terms; and pp. 27981
for the more general claim). In the course of making this point, Waldron also advances a
more substantive objection, one that we nd difcult to understand. See Waldron (2003,
pp. 28386). In essence, he states our thesis or claimthat policy assessment should be
based exclusively on well-beingas a premise and nds our conclusionthat non-
welfare-based principles, notions of fairness, should receive no weightto be nearly a
tautology, whereas we understand our claim as something that the body of our book was
meant to demonstrate rather than as something to be taken as given. (As we note in Sec.
1.2, part of one of our arguments in support of our rst main theme is a tautology, but
that is another matter.) In this regard, Waldron does not here (or, to a very substantial
extent, elsewhere in his comment) make reference to our extensive, detailed development
of our three main themes in chapters 36. He also questions the signicance of the Pareto
conict given that actual instances of conict seem unlikely (Waldron 2003, pp. 28485)
and wonders what we would say about arguments such as those based on desert
(p. 286). Hopefully, our summary in Sec. 1 (and, regarding the Pareto point, our further
elaboration in Sec. 2) helps to clarify our enterprise in these respects.
in chapter 2, section B.1 (which is devoted entirely to our denition of
fairness), and throughout the book. (We also offer a formal, mathe-
matical statement of the denition, which should avoid any possibility
of confusion. See FVW, pp. 3940 n. 52.) In a related way, it seems
unlikely that those who get past our title would misinterpret our thesis
as a frontal assault on distributive justice, for we emphasize our contrary
view of overall distributive matters in the text early in our introduction,
in our conclusion, and in chapter 2, sections A.2 and A.3, which are
devoted expressly to the subject.
34
We also consider distributive effects
at a number of points throughout the body of the book. Indeed, the
many quotations and citations in Waldrons comment testify if anything
to an excess of concern on our part in communicating our meaning with
regard to this issue.
Our denition of notions of fairness was not chosen arbitrarily, but
rather for a very simple reason: [W]e dene notions of fairness as we
doto include all principles that give weight to factors independent of
individuals well-being but only such principlesbecause the substance
of our argument depends precisely on this characteristic (FVW, p. 44).
35
Thus, our denition neatly states the domain of our thesis and of our
analysis. Furthermore, as we note, all of the leading notions of fairness
that we address in the book are covered by this denition. We needed
a simple term to refer to this crucial demarcation. Something like no-
tions of fairness other than those that are distributive in a purely welfarist
manner seemed far too clumsy (not to mention how it would have
ruined our title), and we were unable to come up with anything better
than fairness (which had the advantage over some alternatives in that
it has no generally accepted canonical meaning).
Second, Waldron (2003, pp. 28793) objects to our decision not to
take up the substance of distributive justice in our book, having instead
set it aside as a separate matter for inquiry.
36
Among other things, Wald-
34. Moreover, in the abstract of the earlier law review version (FVW 2001, p. 966)
of our book, we also make clear that distributive concerns are not generally included in
our critique of notions of fairness.
35. Waldron (2003, pp. 27980) also quotes us (FVW, p. 39) to similar effect.
36. He also expresses the concern that our analysis makes unavailable the use of the
language of fairness for addressing distributive questions. See, for example, Waldron (2003,
p. 290). As we explain in Sec. 1.1, however, our argument concerns the proper criteria for
policy assessment and not at all the language in which arguments relating to such criteria
are expressed. Indeed, following the very quotation that Waldron offers to demonstrate
the basis for his concern, we state, And, as we elaborate in the next subsection, distribution
can play an important role even under a system of evaluation that is concerned exclusively
ron (2003, p. 290) criticizes our professed agnosticism and our reli-
ance on an appeal to the division of academic labor. To a large extent,
we plead guilty, but we fail to understand in what sense this claim
amounts to a criticism.
37
Distributive justice is a subject unto itself, the topic of countless
books, indeed of many scholars life work. As it stands, our book is
quite long, and in advancing our thesis about notions of fairness, we
are directly challenging central tenets held by a substantial majority of
moral philosophers and legal scholars who have addressed our subject
over the past century. Many warned us that we were taking on far too
much already. Attempting as well to offer a comprehensive account of
all important aspects of distributive justice in the same enterprise would
have been imprudent.
It is also the case that dividing analysis of nonwelfarist notions of
fairness that are not concerned with global distributive questions and
analysis within a welfarist framework of purely distributive questions
makes a good deal of sense as a logical matter since the subjects are
largely separable.
38
In any event, FVW does offer a number of remarks
concerning distributive matters.
39
And it so happens that we have ad-
dressed issues of income distribution in some of our other work.
40
Finally,
one of us (L.K.) is currently writing a series of articles and possibly two
books on distributive justice and government policy.
Third, Waldron (2003, pp. 29399) argues that we fail to appreciate
how situational distributive judgments (that is, those concerned with
who should pay or be paid in a given legal dispute) entailed by the
notions of fairness that we address might be provisionally help-
fulpending construction of a full distributive theorybecause they
may constitute fragments of, or constraints on, an overall theory of
distributive justice within a welfarist framework. Because FVW does not
with individuals well-being. Moreover, the criticisms of notions of fairness that we offer
are not criticisms of the language that analysts use or of the need to make value judgments
in assessing legal policy (FVW, p. 28).
37. Waldrons (2003, p. 290) complaint about our indifference and some of his
other statements, however, do not seem apt, as amply demonstrated by his extensive quo-
tations from our book indicating the contrary.
38. For a qualication, see note 31.
39. See especially chap. 2, secs. A.2 and A.3; chap. 3, secs. C.2 and D.2; chap. 4, sec.
D.1; and chap. 8, secs. C and D.4.b. Some other pertinent comments can be located using
our index.
40. Most obviously, Kaplow and Shavell (1994). Interested readers can also see our
other papers cited therein as well as a substantial portion of Kaplows writing on taxation.
purport to address what distributive theory is most compelling or how
that determination should be made, we also do not see this claim as a
criticism of our work. Nevertheless, drawing on our analysis, we do
offer two observations regarding Waldrons argument.
One is that we discuss explicitly the possibility that some fairness
principles that we criticize may nevertheless serve as proxy indicators
of overall distributive concerns. We make this point especially with re-
gard to notions of fairness in tort law.
41
However, we nd that the notions
are a poor proxy.
42
Also, examining a proxy notion is generally not a
promising way of achieving a rened understanding of whatever concept
underlies it.
43
Additionally, we suspect that Waldron is overly optimistic about any
direct role that situational notions of fairness could have in constructing
components of an overall theory of distributive justice. After all, these
notions are not welfarist, so if our thesis is accepted (and Waldron does
not challenge it in advancing his claim), it follows that the notions would
tend to push a distributive theory in normatively inappropriate direc-
tions. More broadly, we have trouble understanding howWaldron thinks
that a nonwelfarist principle can serve as a component of or constraint
on a social welfare assessment that is not supposed to give weight to
any factor other than welfare. Finally, given the many defects that we
identify in these fairness principles (see Sections 1.2 and 1.3), one should
be rather reluctant to take intuitions related to such notions (see Section
1.4) as reliable guides in formulating a sound distributive theory.
44
41. See, for example, FVW, p. 96 n. 20, p. 122 and n. 93, and p. 138 n. 127. For
example, We also observe that some notions of fairness might be viewed as providing
proxy tools for identifying opportunities to improve the distribution of wealth, rather than
as independent evaluative principles potentially opposed to it. For example, a principle
requiring that victims be compensated might have this feature if victims are typically poorer
than injurers (FVW, p. 122).
42. See, for example, FVW, p. 122 and n. 93.
43. Furthermore, as implied by our discussion in FVW, chap. 2, sec. A.3, notions of
fairnesseven if they were illuminating proxies for aspects of distributive justiceare
unlikely to be helpful in making actual policy choices in legal (and many other) settings
because distributive issues are usually best addressed more directly, through the tax and
transfer system. See also Kaplow and Shavell (1994).
44. We note that, in this section of Waldrons comment, he makes no reference to our
general arguments about the defects of these notions of fairness or to our detailed analysis
thereof in chaps. 36.
4. PREFERENCES AND WELL-BEING
Lewis Kornhauser (2003) raises some issues involving our broad notion
of well-being, in particular with regard to our including, among all the
intangibles that people may value, the possible tastes individuals might
have regarding notions of fairness themselves.
45
He insists that our ap-
proach is a strategy, one comparable to the legal strategy of con-
fession and avoidance Kornhauser (2003, p. 307). Yet this character-
ization is inapt. To begin, we fail to understand what we are confessing
to or avoiding.
46
Nor should our denition be viewed in this manner
when it is in fact standard (although often implicit) in economics not
to discriminate among different possible sources of well-being in the
assessment of individuals welfare. In addition, as explained in Section
1.1 and as is clear from our book (for example, FVW, chap. 2, sec. A.1;
and chap. 8, secs. B.3 and B.4), we adopt the position that we do because
we believe that one should be neutral regarding individuals well-being
rather than arbitrarily privilege some aspects over others.
45. In passing, Kornhauser makes various other claims and characterizations, but we
will conne our attention to his two main conclusions. We note, however, that many of
his statements are incomplete or otherwise misleading with regard to what we actually say
in our book. For example, Kornhauser (2003, p. 304) opens his comment with the state-
ment, In Fairness versus Welfare, Louis Kaplow and Steven Shavell reformulate an earlier
claim asserted in the legal literature that judges ought to maximize wealth. As is apparent
from the many quotations in Waldrons comment (see, for example, Waldron 2003,
p. 291), this characterization is inaccurate. At the outset of our introduction, we emphasize
that our thesis is emphatically not wealth maximization (see FVW, p. 5), and when we
discuss the matter directly, we state that wealth maximization is not a well-dened
concept and [m]ore importantly, and more obviously, . . . wealth would not constitute
a measure of social welfare under welfare economics because wealth is not dened in terms
of individuals well-being (FVW, pp. 3536). In addition, Kornhausers (2003, pp. 3058)
summary of our argument is both incomplete and somewhat inaccurate, as should be clear
if one compares it with our summary in Sec. 1 above or the summaries in FVW(for example,
the introduction and chap. 2). Likewise, he follows this summary with the statement, Three
of these four claims are controversial. A large literature in ethics debates the merits of
welfarism (Kornhauser 2003, p. 308). It is as if our book reected no awareness of such
debates, whereas in fact that the book is entirely devoted to engaging in that debate and,
in the process, cites and discusses in detail literally hundreds of books and articles by
philosophers holding views opposed to ours. As one last example, his conclusion
(pp. 32528) addresses a different subject from that in the rest of his paper, that is, the
relationship between the work of policy analysts and public ofcials. In so doing, he cites
only one of our many sections addressed directly to these matters (ignoring, for example,
FVW, chap. 5, sec. C.2; chap. 7, sec. B; and chap. 8, sec. A), and what he says about that
one section (chap. 7, sec. C) does not closely reect what is actually presented therein.
46. Our discussion below of Kornhausers apparent substantial misunderstanding of
our book may provide the explanation.
Moreover, as we emphasize in our book
47
(as others have noticed),
48
whether one adopts our view of individuals well-being or some other
is largely irrelevant to our enterprise, for neither our thesis nor the
arguments supporting it depend on the denition of well-being that is
chosen. We suspect that this is apparent from our summary in Section
1, and nowhere in Kornhausers comment does he explain otherwise.
Thus, neither of his two main conclusions really matter for our purposes.
Nevertheless, we now address each in turn.
First, Kornhauser (2003, pp. 31016) argues that taking an encom-
passing view of well-being, specically, one that includes any tastes
individuals might have for notions of fairness, does not obviously re-
solve conicts between rights and Pareto optimality or, as he puts it in
his conclusion, between morality and efciency (Kornhauser 2003,
pp. 316, 325). We would prefer to phrase the point as involving a failure
to resolve the conict between fairness and welfare. But how could he
imagine that we would think that it would? If a mere denition, rst
stated in the introduction of our book, resolved the basic conict, why
would we have written what we did? And why the versus in our title
Fairness versus Welfare? As explained, we chose our denition of well-
being for concreteness (as our analysis does not depend on it) and be-
cause we thought it the most compelling, not because we thought that
our denition would eliminate the need to offer substantive arguments
in establishing our thesis.
The actual content of this section of Kornhausers paper consists of
an extended discussion of an example of Amartya Sens, featuring a
demonstration of the point that, indeed, an encompassing denition of
well-being that includes tastes for fairness (for a certain notion of rights,
in the particular example) does not necessarily dissolve the underlying
conict. As stated, we are hardly bothered by this and fail to see the
relevance of the entire discussion. Part of our problem in making sense
of how this section relates to our arguments is that at no point in it does
Kornhauser cite anything in our book. In particular, he does not mention
any of our points directed to rights, the existence of our chapter 5 on
legal procedure, which contains a specic section (C.1) on the subject
47. See FVW, pp. 2324 n. 14, and p. 409. These statements appear, respectively, at
the close of our section Individuals Well-Being at the outset of our book and on the
rst page of our later section Preferences and Individuals Well-Being. Since these are
the two discussions in our book most pertinent to Kornhausers comment, it is surprising
that he ignores this central point.
48. See Craswell (2003, pp. 27273).
of tastes regarding procedures (a subject on which Kornhauser merely
speculates as to what we might think), or even of our specic discussion
of the very example of Sens that Kornhauser considers.
49
Second, Kornhauser (2003, pp. 31623) criticizes us for equating raw
preferences (Jill likes chocolate, I prefer vanilla, and theres no room for
dispute in matters of raw taste) with judgments (vanilla is more healthful
or eating chocolate is morally preferable because it is a worthy political
statement against exploitation of peasants involved in the harvesting of
vanilla beans). Kornhauser (2003, p. 325) summarizes his claim by stat-
ing that we conate[] judgments that individuals make with their pref-
erences, which are understood as a favorable attitude, such as a desire.
Throughout the section, he offers characterizations of our views on the
matter that range from admitted speculation to fairly condent asser-
tions, and he explains why he nds our alleged views incorrect, notably,
for failing to appreciate that judgments, unlike raw tastes, may reect
matters of fact or analysis about which individuals may be mistaken.
Kornhausers discussion, however, is disconnected from what we ac-
tually say. Like the preceding section of his comment, it contains not a
single reference to our book. The sections that he does not mention
include chapter 8, section B, which is entitled Preferences and Individ-
uals Well-Being, which includes a subsection B.1 on precisely how to
address the possibility that individuals preferences might be mistaken
and a subsection B.4, which is entitled Tastes for Notions of Fairness.
By contrast, in a footnote in an earlier section of his comment, he does
cite a relevant passage, stating that Kaplow and Shavell would permit
the policy maker to revise the extended preferences of an individual to
accord with the preferences she would have given true beliefs and suf-
cient deliberation (Kornhauser 2003, p. 310 n. 12, emphasis added;
citing FVW, pp. 2324). This accurate representation clearly contradicts
the characterizations of us that Kornhauser offers, without citation, in
the section itself.
As noted above, our views on this subject are ultimately irrelevant
to our thesis and our main themes and arguments. Nevertheless, a brief
summary of our position might be helpful. We do not in fact believe
that all tastes, preferences, aspects of individuals well-beingranging
49. See FVW, p. 54 n. 75. (Lest the reader be misled, this is one of our long footnotes,
and it is readily located, both because it is in our main, fairly short section that rst discusses
our argument about the Pareto conict, to which Sens article pertains, and because it is
listed in at least three places in our index, under Pareto principle, rights, and Sen.)
from those concerning material satisfaction to relationships with others,
aesthetics, or fairnessare identical in every possible respect. Many
types differ in ways that are important for some purposes and yet also
have other features in common. Thus, as Kornhausers footnote state-
ment acknowledges, we do indeed think that a raw taste is different
from, say, a belief about states of the world, and we expressly discuss
the potential relevance to legal policy analysis, noting, for example, that
imperfect information may affect the assessment of legal rules related
to safety regulation.
50
More generally, we view all possible tastes as the
same in the sense that what is relevant for normative analysis is what
actually matters to individuals, but tastes may differ, for example, re-
garding ease of measurement, the likelihood that they may change over
time or in reaction to policy changes, variation across individuals, and
the possible importance of errors in individuals assessments.
Regarding tastes involving fairness in particular, we expressly raise
the possibility of mistaken preferences and suggest that analysts should
be willing to look behind such preferences (see, for example, FVW, chap.
8, sec. B.4, esp. pp. 43334). To take a concrete example, suppose that
shortly after a heinous crime, many individuals, in the heat of the mo-
ment, desire that the suspect be lynched (or rushed to trial without
procedural safeguards) out of a sense that the gross immorality of the
act demands, as a matter of justice, an extremely swift response. It is
obvious that such tastes could involve mistakes of various sorts; indeed,
it may even be likely that the same individuals would, once the tension
eases, deeply regret a prior hasty action and accordingly feel much worse
off. Thus, we would not consider the initial expression of individuals
tastes for fairness or justice to be indistinguishable from an ordinary
expression of a preference for chocolate or vanilla. (For various reasons,
we also believe that Kornhauser may overdraw the distinctions among
various types of tastes,
51
but the foregoing should be sufcient to indicate
50. See FVW, chap. 8, sec. B.1. In that section, we also note the case in which indi-
viduals may be misinformed about their own preferences.
51. First, although we are unsure of Kornhausers position in this regard, what he calls
preferences involving judgments do seem to also have an irreducible aspect of raw taste,
making his dichotomous categorization misleading. This is obvious with his examples
involving health but seems equally applicable to tastes regarding notions of fairness. Thus,
contemplation may affect ones tastes, but ultimately, if one does really care about fairness
in some manner, there must exist an underlying basis for the motivation. Perhaps a person
would feel guilty if he thought he was supporting an unfair institution. Without such an
underlying desire, a view about fairness would not really constitute a component of well-
being rather than an opinion on policy or ethics. Second, his analogy between matters of
that our viewsas reected in what we actually wroteare substantially
different from what Kornhauser imagines them to be and criticizes.)
5. CONCLUSION
In FVW, we argue that policy assessment should be based exclusively
on well-being and hence that no weight should be accorded to indepen-
dent notions of fairness. We advance our thesis by developing three
themes, both in general and abstract terms and in detailed analysis in a
range of legal policy contexts and with regard to numerous leading
notions of fairness.
Our rst theme concerns how pursuing notions of fairness often in-
volves perverse sacrices of human welfare, including the possibility that
everyone will be made worse off. Craswells claim that this latter pos-
sibility can be circumvented by resorting to hybrid notions of fairness
does not really address most of our argument and in any event is un-
successful. Waldrons objections regarding distributive justice suggest the
need for more work on the subject but do not call into question any of
our analysis. And Kornhausers comments on preferences and well-being
are essentially irrelevant to our arguments in this regard and also reect
misunderstandings of our views. Our second important theme, concern-
ing additional deciencies in notions of fairness, especially with regard
to their lack of rationale, and our third theme, which reconciles the
intuitive appeal of notions of fairness with our claim that they should
receive no independent weight in policy assessment, are not questioned
by these commentators.
Given these commentaries, the presence of other critiques of our work
both in print and forthcoming, and perhaps most importantly the almost
fairness and of health is incomplete in an important respect. Suppose that I feel good
because I did what I view to be the morally right thing. Even if the best analysis by moral
theorists reveals that I am mistaken, this does not deny my feeling, and if I never had
explained to me the error of my ways, I would never in fact feel regret. But if I mistakenly
eat poison, even if I never come to understand what hit me, I will nonetheless suffer. One
must keep in mind, as we emphasize throughout FVW, for example, pp. 1112, 2123;
chap. 5, sec. C.1; and chap. 8, sec. B.4, that when fairness is viewed as a taste rather than
as an evaluative principle to be given weight in policy assessment, the question of its
importance is entirely an empirical one, concerning what (and how strong) individuals
tastes actually are at various points in time and under various conditions, not the normative
question of what their tastes for fairness might (or should) be if only they were in fact
more reective. (Compare: Maybe I should like abstract art and in fact would do so if I
had the proper training, but if I have not, being forced to hear a 3-hour lecture on an
obscure modern artist will in fact bore me to tears rather than engender feelings of ecstasy.)
unshakable belief we all have in our own instincts and intuitions that
seem to support notions of fairness, we nd it useful to echo the con-
clusion of FVW by reminding the reader of what seems minimally nec-
essary, in light of our analysis, for a proposed notion of fairness to be
taken seriously.
52
1. The notion of fairness must be stated with some precision and in a
manner that is complete (unlike virtually all the leading notions of fairness
that we consider).
2. It must be explained how the notion can make sense given that the
consequences of pursuing it may well run counter to the notions underlying
motivations.
3. The manner in which the notion reduces individuals well-being,
including the possibility of its reducing everyones well-being, needs to
be clearly identied.
4. An explicit rationale for according weight to the notion must be
offered.
5. Contrary explanations for the notions seeming appeal have to be
ruled out; this is especially so regarding the possibility (which appears
to be realized with respect to every leading notion of fairness that we
examine) that the notions appeal may lie in its correspondence to social
norms that themselves are best understood functionally, as serving to
promote individuals well-being.
In our book, we developed each of these points in great detail, with
tremendous attention to the views of the many scholars over the ages
who advance notions of fairness. For those who advocate that analysts
should nevertheless be guided by notions of fairness, it would seem
incumbent on them to offer a direct response, addressing each of these
points with regard to whatever notion of fairness is being offered.
53
52. Brief, often familiar, and typically emotionally charged hit-and-run counterex-
amples to our position (many of which we examined, some in depth, in our book) are, we
would argue, insufcient to raise a serious challenge in light of our arguments and, in
many instances, the serious, thoughtful analyses of many scholars who have preceded us.
(We note that the commentators in the present symposium do not resort to this common
tactic.)
53. Furthermore, we suggest that an attack on our overall position would be more
plausible if it concentrates on one of the many leading notions of fairness that we consider
in FVW. After all, we take on a variety of fairness principles, and those that we examine
are among the most prominent ones developed over the ages, by the likes of Aristotle and
Kant as well as legions of contemporary moral philosophers (not obscure notions that have
received limited support). As we believe we have demonstrated, notions that have long
seemed persuasive can be shown to be fundamentally decient on many grounds if the
notions are scrutinized with sufcient care.
REFERENCES
Chang, Howard F. 2000a. A Liberal Theory of Social Welfare: Fairness, Utility,
and the Pareto Principle. Yale Law Journal 110: 173235.
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Craswell, Richard. 2003. Kaplow and Shavell on the Substance of Fairness.
Journal of Legal Studies 32:24575.
Kaplow, Louis, and Steven Shavell. 1994. Why the Legal System Is Less Efcient
Than the Income Tax in Redistributing Income. Journal of Legal Studies 23:
66781.
. 1999. The Conict between Notions of Fairness and the Pareto Principle.
American Law and Economics Review 1: 6377.
. 2000. Notions of Fairness versus the Pareto Principle: On the Role of
Logical Consistency. Yale Law Journal 110:23749.
. 2001. Any Non-welfarist Method of Policy Assessment Violates the
Pareto Principle. Journal of Political Economy 109: 28186.
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Press (FVW). (Version previously published in Harvard Law Review 114
(2001): 9611388.)
Kornhauser, Lewis A. 2003. Preferences, Well-Being, and Morality in Social
Decisions. Journal of Legal Studies 32:30329.
Rawls, John. 1980. Kantian Constructivism in Moral Theory. Journal of
Philosophy 77:51572.
Ross, W. D. 1930. The Right and the Good. Oxford: Clarendon Press.
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