Incorporating Moral Constraints into Economic Analysis

Economic analysis of law is a powerful analytical methodology. At the same time, as a purely consequentialist approach, which determines the desirability of acts and rules solely by assessing the goodness of their outcomes, standard cost-benefit analysis (CBA) is normatively objectionable. This Article proposes to overcome this deficiency by incorporating moral constraints into CBA. Threshold deontology differs from welfare economics and other consequentialist moral theories in recognizing the priority of such things as autonomy, human dignity, basic liberties, truth telling, and keeping one's promises over the promotion of good outcomes. It holds that there are constraints to promoting the good, such as the constraints against harming other people and lying. Unlike absolutist deontology, however, threshold deontology holds that such constraints may be overridden if enough good (or, more commonly, enough bad) is at stake. For instance, while standard CBA is likely to justify the killing of one person to save the lives of two, or the coercive harvesting of one's kidney to save the life of another person, threshold deontology would find killing a person or harvesting her organs against her will impermissible unless much more good (e.g., the lives of many more people) is at stake. The analysis demonstrates that not only foundational deontology, but also the more sophisticated defenses of consequentialism, endorse such constraints. While conceding that the incorporation of threshold constraints into economic analysis raises principled and methodological concerns (particularly with respect to the monetization of constraints), the Article demonstrates that these concerns can all be met. The Article discusses various substantive and methodological choices involved in modeling deontological constraints. It proposes to determine the permissibility of any act or rule infringing a deontological constraint by means of mathematical threshold functions. The Article presents the general structure of threshold functions, and analyzes their elements. It then illustrates the implementation of constrained CBA in several contexts, including discrimination in the marketplace, legal paternalism, and risking innocent people while fighting terrorism. The Article argues that adding threshold constraints to economic analysis would make it not only normatively more acceptable, but also descriptively more valid, without significantly compromising its methodological rigor. Such incorporation can contribute to bridging the gap between economic analysis of law and the prevailing moral and legal norms, as well as to narrowing the increasing gulf between economic analysis and other approaches to law and legal theory.