Special Workshop Abstract

In their recent book, Kaplow and Shavell (2002) ask the question of what criteria ought to guide social decisionmaking and maintain that the exclusive criterion should be the maximization of individual welfare. They show that other values, like fairness or justice, are either consistent with the maximization of individual welfare – and they may therefore be incorporated into it – or inconsistent with such goal as they yield to welfare-inferior states of the world, and should therefore be rejected. Their central claim is thus that welfare-maximizing social decisions – as attaining to questions whether and under what conditions injurers should pay for accident losses caused to victims, whether contract promises should be fulfilled, and similar issues – should be based on a unique criterion, namely, the concept of efficiency embedded in welfare economics.

The question that I wish to address in this study is not whether this claim is correct and defendable but rather whether any such claim is logically feasible. I ask the question of whether it is possible to construct a theory for social decisionmaking that be at the same time complete – i.e. yielding answers to any possible social decision problem – and consistent – i.e. yielding answers that do not contradict each other.

More precisely, the question is not whether the particular criterion employed in economics yields to such an outcome, but whether any such an attempt – the constructing of a complete and consistent theory for social decisionmaking – would ever be possibly successful.

* Address: Utrecht School of Economics, Vredenburg 138, 3511 BG Utrecht, the Netherlands; email: g.darimattiacci@econ.uu.nl; ssrn author page: http://ssrn.com/author=333631.