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Posner’s Wealth Maximization for Welfare Maximization: Separating Efficiency and Equality Considerations

Author

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  • Yew-Kwang Ng

    (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)

Abstract

Posner’s proposal for wealth maximization in judiciary decisions has not been widely accepted, but the influence of the economic analysis of law it propelled has increased tremendously. In the face of criticism, Posner himself has retreated into a pragmatism with wealth maximization not the only principle used. This leads to a lack of both moral justification and consistency. This paper argues that, if not used as the ultimate objective, but as an instrument for welfare maximization, wealth maximization is much more acceptable, if it is also supplemented by appropriate redistribution in the general equality policy. This is especially so as efficiency supremacy in specific issues including the judiciary (close to wealth maximization) would then make every income group better off. This is so despite the presence of disincentive effects in general redistribution. The separation of the judiciary and the legislative may then also be justified.

Suggested Citation

  • Yew-Kwang Ng, 2016. "Posner’s Wealth Maximization for Welfare Maximization: Separating Efficiency and Equality Considerations," Economic Growth Centre Working Paper Series 1611, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:1611
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    File URL: http://www3.ntu.edu.sg/hss2/egc/wp/2016/2016-11.pdf
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    References listed on IDEAS

    as
    1. Ng, Yew-Kwang, 1984. "Quasi-Pareto Social Improvements," American Economic Review, American Economic Association, vol. 74(5), pages 1033-1050, December.
    2. Ng, Yew-Kwang, 1990. "Welfarism and Utilitarianism: A Rehabilitation," Utilitas, Cambridge University Press, vol. 2(02), pages 171-193, November.
    3. Kaplow, Louis & Shavell, Steven, 1994. "Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 667-681, June.
    4. Yew-Kwang Ng, 1996. "Happiness surveys: Some comparability issues and an exploratory survey based on just perceivable increments," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 38(1), pages 1-27, May.
    5. Sen, Amartya K, 1973. "On Ignorance and Equal Distribution," American Economic Review, American Economic Association, vol. 63(5), pages 1022-1024, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Wealth maximization; efficiency; welfare; utilitarianism; judiciary.;

    JEL classification:

    • K0 - Law and Economics - - General
    • H0 - Public Economics - - General

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