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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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