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8 Wm. Mitchell L. Rev. 675 (1982)
Efficiency as a Standard for Evaluating Legal Rules

handle is hein.journals/wmitch8 and id is 683 raw text is: EFFICIENCY AS A STANDARD FOR EVALUATING LEGAL RULES RUSSELL PANNIERt The application of economic principles to analyze and solve legal problems has become one of the most quickly expanding areas of legal thought. An often overlooked aspect of this discussion is the wisdom of using the crite- rion of economic efficiency to resolve legal issues. Professor Pannier ques- tions the judiciay's ability to make the necessary economic analyses and argues that judicial use of economic theory raises serious moral issues. Professor Pannier critically examines utilitarianism, Pareto eftienc, and Kaldor-Hicks eftiency to expose shortcomings in those concepts. Profes- sor Pannier concludes that economic eftciency is an inappropriate standard to evaluate legal rules and chooses a natural law theory of the good as a more principled standard allowing for greater human freedom. I. INTRODUCTION ..................................... 675 II. FIRST-ORDER EFFICIENCY NORMS .................. 677 III. SECOND-ORDER EFFICIENCY NORMS ............... 683 IV. THE UTILITARIAN CRITERION ...................... 687 V. PARETO EFFICIENCY ................................ 705 VI. KALDOR-HICKS EFFICIENCY ........................ 710 VII. EVALUATIVE AND NONEVALUATIVE STANDARDS IN ADJUDICATIVE CONTEXTS .......................... 719 VIII. CONCLUSION ........................................ 736 I. INTRODUCTION In this paper I shall try to state and assess some of the difficulties that arise from attempts to use certain technical analyses of the concept of efficiency to evaluate legal rules. I shall argue that the use of such analyses raises two main issues. First, there is the epis- temological problem of making the necessary calculations. In this regard, I shall argue that the judicial system is inherently inade- quate to the task. I shall further argue that the very obviousness of t Associate Professor of Law, William Mitchell College of Law. A.B., Olivet Col- lege; M.A., Harvard University; J.D., University of Minnesota. The author wishes to thank Professor David Haynes, Professor David Prince, Professor Jeremiah Reedy, Steven Rau, Irving Colacci, Stephen Setterberg and Steven Tillitt for reading an earlier version of this article and for making helpful suggestions. The author also wishes to acknowledge the research assistance of Alan Felix.

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