Why Welfare Depends on Fairness : A Reply to Kaplow & Shavell

Louis Kaplow and Steven Shavell recently argued in their article, "Fairness Versus Welfare" that legal decision-makers should exclusively apply welfare economics when determining policy, ignoring what they term "fairness" theories (that is, everything other than welfare economics). This paper argues that Kaplow and Shavell's goal of eliminating non-economic discourse from policy debates is not achievable. Because the choice of a social welfare function rests on philosophical (fairness) justifications, and because this choice also determines the policy recommendations produced by welfare economics, I argue that fairness theories are inevitably at the heart of economic analysis. It is therefore impossible to separate the fairness debate from policy analysis and to apply welfare analysis exclusively