Cost-benefit analysis outside of welfarism

Abstract

Welfarism is the principle that the goodness of a social state is an increasing function of individual welfare and does not depend on anything else. As Gregory Keating argues in the lead article for this symposium, welfarism cannot account for important normative differences between physical security and liberty, leading him to conclude that liberal egalitarian principles rule out cost-benefit analysis for setting health and safety standards. Despite its apparent logic, the idea that economic analysis is incompatible with or irrelevant to a rights-based principle of fairness is mistaken. Tort law shows why a legal system that protects the individual right to physical security can be usefully guided by the methodology of cost-benefit analysis. Welfare does not have to be the master value in order to be relevant, creating an integral role for cost-benefit analysis outside of welfarism.