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Logic is a harsh mistress: welfare economics for economists

Published online by Cambridge University Press:  15 April 2019

Peter T. Leeson
Peter T. Leeson*
Affiliation:
George Mason University, Fairfax, VA, USA
*
*Corresponding author. Email: pleeson@gmu.edu
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Abstract

Every economic explanation assumes maximization. How strange, then, that few economists accept one of maximization's most straightforward implications: every observed institution is efficient. My aim is to persuade economists of this fact and thus to dissuade them from making illogical claims about social welfare. To frame my argument, I consider the “property rights approach” to institutions developed by Yoram Barzel. I speculate that economists resist what maximization implies about institutional efficiency because they think that efficiency-always precludes them from improving the world, and hope of improving the world is what attracted them to economics in the first place. But, besides being inconsistent, resistance is unnecessary: efficiency-always does not preclude economists, or anyone else, from improving the world.

Keywords

Property rightsPanglossianYoram Barzelinstitutional efficiencymaximizationwelfare economics
Type
Research Article
Information
Journal of Institutional Economics , Volume 16 , Special Issue 2: Honour of Yoram Barzel , April 2020 , pp. 145 - 150
Copyright
Copyright © Millennium Economics Ltd 2019

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