New Horizons in Law and Economics series
Chapter 6: The Problem of Missing Values in Normative Law and Economic Analysis
6.1 INTRODUCTION I have suggested, as a matter of logic and consistency, that all goods must be included in a welfare analysis for which there is a WTP or WTA. The acceptance of axiom 5 – which deals with missing values – would improve the consistency and logic of beneﬁt–cost analysis. It vitiates the most widespread and persistent criticism of normative economic analysis. That criticism is that, even in principle, beneﬁt–cost analysis ignores certain values (Anderson 1993; pp. 194f; Kelman 1981; and Sagoff 1988). Here, the term ‘missing values’ refers to goods ignored in normative evaluation.1 I propose to show that missing values are not missing in principle, but have been overlooked in practice. That is, they may be missing from the analyst’s discussion or from the critics critique, but are not missing, in principle, as a logical part of beneﬁt–cost analysis, and, by deﬁnition, are not missing in KHZ analysis. Sometimes the missing-values criticism is made explicitly, as when Kelman (1981) and Williams (Smart and Williams 1973, pp. 97–98) complain about the neglect of the value of integrity, or of moral positions, by normative economic analysis. Other complaints focus on undesirable results from normative economic analysis (Parﬁt 1992). These usually turn out to be, at root, implicit complaints about missing values.2 For example, some complain about the reduced weight given to future generations as a result of the discounting process in beneﬁt–cost calculations, and conclude that the foundations of analysis...
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