Friday, 10 July 2009

Counting a murder's utility (updated)

In the comments section to the posting Of externalities, elbows, and knowing one from the other over at Offsetting Behaviour, Brad Taylor tries to make sense of Adrian Slack's (in)famous 'Eric is comfortable with murder' comment:
Giving Slack the benefit of the doubt, maybe he was saying that you're likely to count the utility of the murderer as a benefit partially offsetting the cost to the murdered, whereas the BERL authors are not because society deems that sort of utility as inadmissible.
This does raise the question, Why do economists take into account a murder's utility? Or, more generally, why consider any criminals utility?

There are two basic reasons.

First, one of the reasons for taking a economic approach to the study of law is that it provides a framework for answering questions about what the law ought to be, what rights we ought to have. We begin with the premise that one should design legal rules to maximise the size of the pie and little else. In particular we assume nothing at all about the sorts of things we expect legal and ethical rules to be based on: desert, rights, justice, fairness. Starting with this premise, economic theory enables us to produce a long list of prescriptions as to what law should be like. They include things like: Theft and murder should be punished. Contracts should be enforced. The imposition of criminal penalties should require higher standards of proof than the imposition of civil penalties. And so on.

David Friedman has written,
We start with economic efficiency and end with conclusions that fit reasonably well both existing legal rules and our ethical intuitions. Somehow we get out quite a lot more than we put in. That is one of the reasons the project is interesting.
An alternative would be to not treat all benefits to everyone equally, but rather to first sort people into the deserving and the undeserving, the just and the unjust, the criminals and the victims, and count only the benefits of the "good" people-the deserving, the just, the victims. But this amounts to simply assuming our conclusions. Any benefits that my accrue to "bad" people don't count, so rules against "bad" people are automatically efficient. You cannot deduce moral conclusions from economics if you start the economics by assuming the moral conclusions.

What acts are or are not crimes is one of the things that the economic analysis of law is supposed to help us determine. Murder may be a simple case, but what about speeding? What about breaking into an empty house when you are lost and starving? What about slugging someone who has the presumption to suggest that Word is better Latex? Economic analysis provides a framework within which to answer questions such as these. On the other hand, if we treat it as an elaborate system for justifying the answers we already have, we will learn little that we do not already know.

The second reason that it makes sense to include the costs and benefits to criminals in our calculations, even if we agree that it is good to prevent crimes, is that we must still decide how good it is and hence how hard it is worth trying to do it. Compare the case of a poor man who shoplifts to survive with that of an arsonist who burns down buildings for the fun of it. In any given year each happens and imposes costs when it does. Let us assume that the two result in the same level of costs. Both people are, obviously, committing crimes we would like to prevent. But we are willing to go to a lot more trouble to stop the arsonist than to stop the shoplifter because his crime is such a waste.

So, economic analysis should give equal weight to the costs and benefits of murderer and victim. As Friedman writes
If doing so produces the conclusion we want-that murder is a bad thing-that is interesting. If it does not, that too is interesting.
Update: Eric the murdering economist comments on The murderer's utility over at Offsetting Behaviour and gives up murder for amateur moral philosophy. Or is he just trying to murder moral philosophy?
Now, if the conclusion of a serious study found that murderers' enjoyment of crime were greater than the cost imposed on victims, in other words that allowing murder is Kaldor-Hicks efficient, I'd then take off my economist's hat and put on my amateur moral philosopher's hat and say that murder should nevertheless be illegal because it infringes the victim's rights and because, as amateur moral philosopher, I really don't mind discounting the utility of rights-violators all the way down to zero. But I would be taking off my economist's hat when doing so. If economics gives us the efficiency-based case against murder, as I rather expect it would, so much the better. But if it doesn't, it's far better to present the economics straight up, and then present the value judgments separately, than to pervert the economic analysis by doing things like, oh, declaring at the outset that the murderer gets no utility and that a total discounting of the murderer's utility is consistent with good economic practice.

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