Is Efficiency Biased?

Are Court Orders Sticky? Evidence on Distributional Impacts from School Finance Litigation

“…The results also suggest that normative analysis of legal rules, either when assessing the welfare consequences of actual or potential rule changes, might want to consider more complex models of political economy (Eskridge & Ferejohn ; McNollgast ; Liscow ), which could provide guidance on when distributive consequences of court rulings are likely to “stick” and therefore matter for welfare analysis. At least in this case, welfare analysis of changes in legal rules should include distributional impacts, since those impacts stick.…”

“…The traditional welfarist law and economics argument is that legal rules should be efficient, since distributional concerns should be addressed through taxes (Kaplow & Shavell ). But, of course, for efficient legal rules to be generally optimal, the political economy assumption that distributional concerns in fact are addressed through taxes must be true; that is, the distribution of taxes and spending must, in the long run, reach the socially optimal level to justify the focus on efficiency (Liscow ). If that political economy assumption does not hold, then distributional objectives could in principle influence the optimal design of a policy, since even inefficient policies that improve distributional outcomes can improve welfare if they are adopted in the shadow of a suboptimal existing distribution of taxes and spending (and, of course, if the distributional impacts of those policies stick).…”

A Limited Defense of Efficiency Against Charges of Incoherency and Bias

“…Zachary Liscow advances another influential argument against efficiency by contending that it is generally "rich-biased" in a manner that will "give disproportionate legal entitlements to the rich for free, exacerbating inequality." 25 In Liscow's view, any analysis (like cost-benefit analysis) that uses willingness to pay as its measure of efficiency will generally favor the rich-the rich will generally be willing to pay more, because they have more money. (Other authors have made similar arguments, including Edwin Baker, Matthew Adler, and Eric Posner, 26 but Liscow's is a particularly recent and powerful rendition of the critique.…”

A Labor Theory of Negotiation: From Integration to Value Creation

“…Value creation, in other words, means summing differences among individual market valuations. When these valuations are shaped by individuals' social locations and material positions, then it follows that expanding the pie can mean arbitraging across class difference (see also Liscow 2018).…”