This class explores two worldviews: Law and Economics, and the Christian Worldview.
Key questions:
Law and Economics: Is it efficient?
Christian Worldview: Does it lead to evildoing, thus requiring civil magistrate intervention?
Goal: Understand and critique Law and Economics from a Christian perspective (as taught by Professor Chrisman).
Introduction to Law and Economics
Philosophy = The love of wisdom.
Law and Economics: Originally focused on antitrust and economic law but now is a tool to view the world.
Three Branches of Philosophy:
Metaphysics
Definition: Explores the fundamental nature of reality, principles of being, identity, change, space, time, causality, necessity, and possibility.
Example: \"Does God exist? Is there an ultimate source of truth?\"
Posner's View: Metaphysical questions are unhelpful and uninteresting; he believes there is no ultimate source of truth.
Epistemology
Definition: The branch of philosophy concerned with knowledge, its nature, origin, scope, justification, and rationality of belief.
Example: \"What is knowledge, how is knowing possible?\"
Posner's View: He is a weak moral relativist believing society operates without absolutes, justifying actions based on cost (\"it's too costly\").
Ethics
Definition: Moral philosophy that systematizes, defends, and recommends concepts of right and wrong behavior; the study of value.
Example: The problem of evil.
Posner's View: There is no good or evil, only societal wealth; morality is an efficient societal agreement.
Posner’s view of the law:
Power/Politics
Law is merely the battle of those in power.
Prediction
Lawyers merely try to influence that power by attempting to predict the outcome of the battles for power.
Profession
Therefore, there is an entire profession built around predicting the swings in power and politics. i.e. Lawyers.
Posner ultimately believes that we are walking away from the law.
Posner believes the only advantage for legal rule is for the social advantage that it provides. Therefore, growing societal wealth (not individual wealth) is the goal that all lawyers should pursue.
Chrisman has no issue with “counting the costs” in society. The only issue is when it becomes “the thing.”
Personal morality and societal morality are two different questions, frequently implicating the jurisdiction of the civil magistrate.
Wells L&E Outline: Week 2
Hypothetical Scenario: Pituitary Extract
A scarce pituitary extract is expensive.
A poor family needs it to prevent their child from becoming a dwarf, but cannot afford it, even borrowing against future earnings.
A rich family wants it to add a few inches to their child's height for athletic advantage and can afford it.
Law and Economics Perspective:
The rich family should receive the extract because they can afford it, maximizing societal wealth through voluntary transactions.
This allocation occurs even if the poor family would derive greater happiness from it (utilitarian perspective).
Moral objection can be addressed by outbidding the rich family and donating the extract to the poor family.
Christian Worldview Perspective:
Creator's Right: The creator of the extract has a God-given right to it; the civil magistrate taking it would be stealing.
Personal Ethics: The creator should be charitable but must also care for his family; giving to the poor family is a complicated decision.
Wealth and Value
Happiness Pill: Would you take a pill for blissful happiness or incredible wealth?
Definition of Wealth: Determined by voluntary transactions.
Law and Economics: Wealth is what people voluntarily value the most.
Christian Perspective: Wealth comes from glorifying God.
Job Choice Example: People take lower-paying jobs for freedom, indicating that they value freedom more than money. Society is still wealthier since individual freedom is maximized.
Rationality in Law and Economics
Posner: Law and economics is the science of rational choice.
Rational Maximization:
Animals: Are animals rational maximizers? Yes, they can connect means to ends.
Humans: Are people always rational? No.
Examples: Being scared by horror movies or being unable to eat a pig after seeing it are irrational.
General Rule: Humans are generally rational maximizers, with exceptions; assumptions are based on general rules, not exceptions.
Reasoning Fallacies: Other indications that humans are not rational beings:
Humans are not good at calculating low probability events (see the lottery).
Humans fixate on the first digit.
The sunk cost fallacy.
People feel loss events heavier than they feel gain events.
Mirror imaging fallacy (people are NOT actually exactly like you despite what people think.)
Hyperbolic discounting: Valuing present value too much and not valuing future value enough. We are not good at forgoing pleasure now for future benefit.
Confirmation Bias.
Excessive Optimism: Ex. Raise hand if you are an “above average driver.”
Causes of Reasoning Fallacies:
Law and Economics: Evolution.
Biblical: The Fall.
Game Theory
Transcript Example: Can someone refuse to provide a transcript to your employer? Yes.
Rationality Assumption: Game theory assumes everyone acts rationally; therefore, everyone provides transcripts.
Real-Life Limitations: Not everyone has the same risk makeup (mirror image fallacy).
Conclusion: It is foolish to assume the world is hyper-rational.
Fundamental Economic Concepts:
Law of Demand (Supply and Demand):
Price increases with demand increase.
Price decreases with supply increase.
Market substitutes are also important.
Economic Costs:
Opportunity Cost: The cost of giving up another opportunity to pursue a current endeavor.
Social Cost vs. Private Cost (Externalities):
Private cost is individual winning vs. losing.
Social cost is what Law and Econ cares about i.e. growing societal wealth.
Marginal Cost: The cost added by producing one more unit.
Buffet Example: People overeat because they do not bear the marginal cost of one more plate.
Healthcare Example: Costs are high because Americans do not bear the increased cost due to insurance, inflating the market.
Externalities: An externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's activity.
Equilibrium:
Prices tend to increase or decrease and find equilibrium in the market.
Equilibrium is the point where supply and demand meet and the price is set.
Government interference can cause equilibrium fluctuations.
Tendency of Resources to Gravitate to Their Highest (Most Valuable) Use:
If people are free, they will tend to trade off what they value less for what they value more.
Wells L&E Outline: Week 3
Bribery and Government Wages
Question: Why does punishing bribery increase the need to pay government officials higher wages?
Explanation: Bribes are part of the payment structure; higher wages deter officials from taking bribes ('employer-sanctioned bribery').
Litigation Costs and Volume
Paradox: How can litigation cost too much and there be too much of it simultaneously without violating economic logic?
Too Much Litigation: Litigants do not bear all costs (judges, bailiffs), leading to overconsumption.
Optimal Litigation: Requires a market without excessive consumption that prices poorer people out.
Ford Motor Company Plant Relocation
Scenario: Ford moves a plant from South Bend, Indiana, to Birmingham, Alabama, affecting land values.
Question: Should Ford compensate the adversely affected landowners in South Bend?
Law and Economics Perspective:
Efficiency-Neutral: The transaction is efficiency-neutral from a societal perspective, depending on the definition of efficiency.
Pareto Superior: Impossible because it requires no losers.
Kaldor-Hicks: Aggregate societal wealth increases; winners could hypothetically compensate losers.
Government Intervention: Should only occur for problematic externalities or market failures, not paternalistically (unless children are involved).
Christian Worldview Perspective:
Civil Magistrate Jurisdiction: Limited to evil-doing, which is absent here.
Ford's Freedom: Ford should be free to \"worship God\" in its decision-making.
Positive vs. Normative Economic Analysis
Normative Analysis: What should be done; determined by efficiency.
Positive Analysis: What is currently being done; looks at facts and legal rules as they are.
Judges and Lawmaking
Do Judges Make Law?
Posner: Yes; law is a pretense masking core economic concepts.
Traditional View: Judges interpret statutes or discover/apply common law.
Christian Worldview Perspective:
Retroactivity Justice: Retroactivity is just if the law already existed in society (written on hearts).
Judicial Reasoning: Judges should use judicial reasoning to govern transfer payments, trusting that this makes future law just.
Law and Economics Perspective:
Retroactivity Efficiency: Retroactivity incentivizes claims to clarify the law.
Judge's Role: Every judge should make law using prudential reasoning.
Property Rights
Benefits of Private Property Rights
Law and Economics View:
Efficiency: Ensures people invest time and capital into the market.
Incentive: Creates incentive to work, increasing societal wealth.
Without private property: We would likely be reduced to hunters and gatherers.
Christian Worldview:
Dominion Mandate: God commands humans to exercise dominion over the earth.
Control and Ownership: Property rights are inherent in controlling and showing ownership.
Creation of Private Property Rights
Law and Economics: Civil magistrate grants property rights to incentivize eliminating \"the fox.\"
Christian Worldview: Property Rights derive from God.
Wells L&E Outline: Week 4
Continued Discussion on Property Rights
Natural Law vs. Positivist
Realist (chooses a right path even if it rejects the system) vs. Formalist (gives deference to the existing system)
Posner would agree with dissent per page 43. Further, he would agree with the approach of the dissent per pages 32-33.
Common Law Rules for Wild Animals (Law and Economics Reasoning):
Possession: Ownership incentivizes people to possess animals and reduce them to use.
Constructive Possession: Incentivizes setting traps and reducing to productive use.
Mere Pursuit: Not enough because anyone could lose ownership, lacking efficiency.
Trespass: Discourages trespass and incentivizes seeking permission.
Statute: Encourages compliance with the statute.
Loss of Title:
Escape: High costs due to uncertainty about ownership; inefficient rule.
Habit of Return: Considers effort to train the animal; may be efficient or inefficient.
Marked Animals: Efficiency based on cost; marking reduces court/societal costs to determine ownership; likely efficient.
Regulation of Property Rights:
Private Ordering.
Government Regulation.
Common Pasture Area Scenario
Town of Bedford sets aside a small area as a common pasture area to encourage residents of the town to get their own dairy cows or goats.
Over-Grazing Problem: Nobody bears the cost of the land, reducing incentives to purchase grass seed.
Law and Economics Solutions:
Individual Ownership: Allow property to be owned by individuals.
Government Mimicry: Government must mimic the market by charging for entrance.
Christian Worldview Perspective:
Private Property: Supports private property interests as a positive concept in scripture.
Work Ethic: Those who do not work should not eat.
Collective Action Problems:
Definition: A collective action problem or social dilemma is a situation in which all individuals would be better off cooperating but fail to do so because of conflicting interests between individuals that discourage joint action.
Free Rider Problem: In the social sciences, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods, or services of a communal nature do not pay for them or under-pay. Free riders are a problem because while not paying for the good, they may continue to access or use it.
Holdout Problem: Arises when sellers strategically refuse to sell, seeking higher prices, which prevents resources from flowing to more valued uses.
Moral Hazard Problem: Occurs when one party takes more risks because they are not responsible for the negative consequences.
Belling the Cat: Going to trial when you have a reasonable defense, but most companies avoid the risk.
Tragedy of the Commons: Individuals deplete a shared resource by acting in their own interest.
Rent-seeking behavior: Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality, and potential national decline.
Pollution and its Control:
Law and Economics Perspective:
Posner's Four Options:
Common Law Nuisance Action: Fails if the problem is too small (free-rider) or too large (bankruptcy).
Direct — Input control: Ex. Must go to all electric cars by 2046 (cars are the input making the pollution).
Direct — Output control: Ex. Put measurement devices on all those who drive and then calculate how much pollution people emit personal (controlling those who output the pollution rather than the actual input device itself i.e. the car).
Taxes — Cap and Trade: Creates a market for pollution (cap on pollution, trading of pollution credits).
Coase Theorem:
Definition: Under zero transaction costs, parties can bargain to reflect property rights, resulting in the most efficient outcome.
Reality: Transaction costs are never $0.
Railroad Example: A farmer will only invest $599 in the pig ($1k minus $400 for the risk +$1 of profit UNLESS you take into account opportunity cost, in which case there is a high chance the farmer will not find it worthwhile to invest in risk for the $1 profit) because that is what the risk allows for.
Pig Farming: Cost of raising pig is $1,000, but 40% risk due to railroad sparks, so farmer invests less due to risk.
Wells L&E Outline: Week 5
Pollution Control (Continued)
Regulation Options: Posner’s four options & p. 496 of Posner text.
Attractive Nuisance Doctrine
Conflict of Uses: Balancing the right to have a turntable or swimming pool with the danger to children.
Market Failure: High transaction costs prevent contracts between landowners and parents.
Solution: Require fencing off the attractive nuisance ex ante (before harm).
Christian Perspective: Supports the attractive nuisance doctrine; see the parapet on the roof.
Property Disagreement: Backyard Chickens
One family wants chickens; the other does not.
Solutions:
Nuisance Actions: May work if there is substantial, unreasonable interference.
Private Ordering: Subdivision covenants.
Posner and Chrisman = ok/like this.
Factory Polluter Problem
Scenario: Factory pollutes, ruining water.
Law and Economics Perspective:
Common law and market unlikely to fix this due to high transaction costs and free-rider problems.
Ex Ante Regulation: Necessary because ex post regulation will not work.
Christian Worldview Perspective:
Civil Magistrate Jurisdiction: Should preemptive vengeance be allowed?
Biblical Solutions: Punish severely, especially murderers, to deter risky behavior of companies.
Alternative Models: Consider restitution, corporal punishment, and indentured servitude.
Personal Liability: Easier ways of piercing the corporate veil to encourage more cautious actions by CEOs (a biblical model).
Eminent Domain
Law and Economics: Justified when the holdout problem becomes particularly acute, such as with railroads.
Christian Worldview: Limited evidence that eminent domain is justified; it is still taking another’s land.
Wells L&E Outline: Week 6
National Parks and Endangered Species Preservation
Question: From a law and economic perspective, has the setting aside and management of national parks and public lands (Yellowstone Park for example) been efficient? What about federal and state efforts to preserve endangered species? What about from a Christian worldview perspective?
Law and Economics Perspective:
Preference for Private Ordering: Someone owning something motivates them to take care of it.
Inefficiency of Government Preservation: The way the government has gone about preserving lands has not been efficient.
Aesthetic vs. Economic Reasons: The main reason for preserving land is aesthetic, not economic.
Public Subsidization: The public, through the government, is subsidizing the parks in favor of those who want to enjoy the benefits of them, but do not enjoy them enough to buy a slice of it. Incidentally, many of these people are fairly wealthy.
No Compelling Argument: There is no compelling economic argument for government ownership of parks.
Contract Rights
Posner's View vs. Christian View:
Law and Economics:
Basic Aim: To impose contractual liability only where it creates the right incentives for the conduct that maximizes the value in the future.
Goal: To encourage people into fulfilling their contracts in a timely manner (maximum efficiency).
Christian Worldview:
Purpose: To create or define promises that are enforceable by the civil magistrate.
Economic Purposes of Contract Law:
Prevent Opportunism: Example, Alaskan Packers.
Interpolate an Efficient Term (Gap Filling):
Default Terms: Terms that people can contract out of if the desire. Ideally, these are efficient, but the ability to contract out make them more efficient. Economists view default terms as better.
Mandatory Terms: Terms that people must follow with no ability to contract around. From a law and econ perspective, these MUST be efficient!
Punish Avoidable Mistakes: If the mistake was avoidable, you must bear the cost.
Allocate Risk to Superior Risk Bearer: Who was in the best position to bear that risk?
Reduce Costs of Resolving Contractual Disputes: Example, Statute of Frauds.
Christian Purposes of Contract Law:
Preserve Sanctity of Promises: See the story of Jephthah in the Bible. He makes a tragic vow. Should have sacrificed himself in place of his daughter.
Preserve Voluntariness of Contract: This speaks to the jurisdictional question of the civil magistrate.
Freedom of or Right to Contract: This speaks to the fact that nobody must make a vow, but when you do, it is something that should be respected.
Lying vs. Failure to Disclose:
Hypothetical: Bloodied woman and man with an ax. Is it a sin to lie? See Rahab. She lies to protect the spies. She can lie to people because, according to Chrisman, lying is an act of war. And it is ok to declare war in certain situations that are inherently unjust..
Biblical Perspective: \"Thou shalt not bear false witness\" (perjury).
Moral Theory of Contract (Chrisman) vs. Option Theory (Posner):
Moral (Chrisman):
Voluntariness: Includes the ability not to contract.
Option (Posner):
Binding: We are better off binding ourselves than not binding ourselves.
Wells L&E Outline: Week 7
Consideration and the Seal
Posner and Chrisman: Consideration feels a bit like a “rough and ready” solution to aid in:
Minimizing the number of phony contract suits (evidentiary function).
Minimizing inadvertent contractual obligations made in the heat of the moment (consideration can act like a cooling off period).
Sparing Courts from enforcing promises made in family or social settings.
Deterring opportunism or vagueness.
Both Posner and Chrisman like the seal.
Lying vs. Failure to Disclose (Continued)
Lying is active, failure to disclose is passive.
Posner: The liar makes a positive investment in the deception. Information is very valuable, so lying disincentives people from entering the information market. This means that you are costing society resources because it is costly to rearrange that information correctly. Whereas failing to disclose is not a positive investment.
Does one truly need to disclose why someone values something in the market more/less than another? When does that duty to disclose end? It is difficult to know where to draw that line.
Chrisman has a tendency to be persuaded by this.
Rationality of Paying Debts
Why isn’t it rational to never pay one’s debts and instead always put the creditor to the cost of collection proceedings, on the theory that he will compromise the debt rather than incur those costs?
Market Discipline: Think the old principle of branding thieves, the modern principle of credit reports, etc. The only issue is “the last actor” problem. What happens when the person knows they never want to buy via credit again?
Civil Government and Product Bans
Should the civil government be able to ban products or limit their sale? If so, under what circumstances?
Economist Perspective: Economists do not want to ban products. However, the most efficient way of removing a product from the market is through a ban. So if that is the goal, that is the preferred way.
Posner’s Concerns:
Paternalism: Ok when there are kids or large externalities.
Incorrectness: The government/science frequently get things wrong. Therefore, a ban ends up frequently being an incorrect ban based on the research.
Christian Worldview Perspective: No evidence to show that the civil magistrate possesses the authority to ban products. To find that authority, there has to be something so dangerous that just selling it rises to evilness. It is difficult to find evidence of this.
Limits on Freedom of Contract
Organ Transplantation.
Posner: There is no reason not to allow people to sell their organs.
Christian Worldview: There is nothing that shows that the civil magistrate
Civil Government and Forced Contracts
Should the civil government be able to force people into contracts they don’t want to enter? What about force them to accept certain terms in contracts that they do not want?
Unconscionability
Is unconscionability a just doctrine?
Wells L&E Outline: Week 8
Government-Forced Contracts (Continued)
Law and economics perspective on forcing people to enter into contracts selling tomatoes. This is wrong. It forces people to spend money inefficiently because it takes resources out of the hands of people who value them the most.
Freedom TO and FROM contracts is a critical right to protect economic liberty.
Contracts Clause:
It is no longer a common area to make a constitutional challenge.
Forced Auto Insurance:
One of the less controversial concepts, it protects people from uncompensated car accidents.
Posner may say that it’s “such a cheap product to protect such a big risk that has dramatic effects on the market.”
Health Insurance vs. Car Insurance:
Differentiating Argument: The argument is that “the government pays for such large portion of healthcare that they have an interest in forcing people to carry insurance to save money.” The question really is “should the government have an interest in healthcare?”
Health insurance is tied to employment because in WWII, following the wage cap, it was an incentive to convince people to come and work for x-company vs. y-company.
Differentiating Argument: “Driving a car on the government’s roads is a privilege and that means that the government can require a license and insurance.” The government entered into the marketplace, meaning it has some kind of property interest in the land.
Biblical perspective indicates that people have a right to travel. However, once the government builds the roads, then they can choose what is required to be able to use them.
Electric Cars:
Can the same logic be extended to require people to drive electric cars on the roads that the government built? Is this the way that the gov could finally push towards green energy? Maybe.
The poorest people generally need the cheapest energy. This means that legislation requiring all -electric cars hurts the poorest people the most.
How economists can justify being pro-global warming? Simply by saying that global warming poses such a large threat to the market that we cannot wait to address this issue, meaning a restriction on freedom of contract will actually be MORE efficient.
Pillage:
We have stewardship privilege. But we do not have dominion to pillage.
Refusal of Sale:
Is it a sin to refuse sale of things to a certain kind of people? Yes. Regardless of whether it’s a “green-eyed, red-haired” person, black person, homosexual person or any other kind of person.
Can to government compel contracting with these kinds of people? Chrisman says no…
Legal Rights:
Positive rights vs. natural rights.
Slavery in America:
Would America have been better off to have solved slavery through a method other than war? Probably… Did that justify a war anytime that states believe there is government-endorsed sin?
Good People Overreaching Jurisdiction:
It is a real problem at times when good people overreach jurisdiction, set a precedent, and then complain when that precedent allows for other people to do things they wouldn’t do. See civil rights act + then using that logic to require unisex bathrooms.
Civil Rights Act and the NFL:
“The sun and the moon are different. And then some idiot will come around and answer the question that was never asked: Which one’s better?”
Can women play in the NFL? Facially, yes. As applied, no.
Tying this back in, should the government be able to force the NFL to hire women? This jurisdictional question is one that is rooted at the core of Law and Econ and biblical worldview.
Wells L&E Outline: Week 9
Marriage: Posner's Perspective
Rational Maximization: All people are rational wealth maximizers in the marriage market.
Societal Facilitation: Society encourages marriage to maximize societal wealth.
Main Gains of Marriage:
Specialization through division of labor.
Production of Children.
Match Quality.
Marriage as Bargaining: The goal is to find equilibrium in the marriage market to maximize wealth production.
Decreasing Gains: Traditional gains from marriage have decreased, so match quality must increase.
Traditional Marriage Roles (Posner):
Opportunity Cost: Men traditionally have lower opportunity costs for working outside the house.
Role Specialization: Men specialize in bringing in wealth, while women specialize in maximizing that wealth input.
Marriage: Biblical Perspective
Purpose of Marriage:
Glorify God and enjoy Him forever.
Covenantal relationship reflecting Christ and His church.
Helpful companionship.
Godly offspring.
Children: Posner's Perspective
Children as a Commodity: Children are viewed as an input because:
They are a by-product of sexual activity.
They are an income producing investment (historically).
There is an instinct to preserve the species.
It is expected.
Biblical Perspective:
Purpose is to Glorify God and enjoy Him forever through population of the earth.
Comparison: Posner's view is \"me focused,\" while the biblical view is child focused.
Overpopulation:
Question: Do we have an overpopulation problem? What is the proper or maximum population for the earth or a particular nation?
Posner's Argument: Critique of China's one child only policy; suggests cap and trade as an intriguing policy.
Biblical Grounds for Divorce:
Yes.
Sexual immorality (definitely adultery).
Abandonment.
Violation of a Biblical law the penalty of which is the death penalty.
Abuse (this is a gray area), but likely proper grounds.
Selling Parental Rights:
Should We Allow the Sale of Parental Rights?
How Might This Impact the Number of Abortions Performed?
Regulation of Sexual Behavior:
Why Regulate Sexual Behavior at All?
To What Extent, If Any, Is This Within a Biblical Jurisdiction of the Civil Magistrate?
Wells L&E Outline: Week 10
Biblical Grounds for Divorce (Continued)
Posner’s Three Views:
Strict/Traditional: Needs cause for divorce.
Consensual: Allows a divorce for-cause but can also agree to divorce.
No-Fault: Either party can request a divorce with no fault and no agreement.
Conclusion: Posner posits that the stricter the divorce laws, the better the marriage market because people, being rational maximizers, will enter into a cost benefit analysis and determine that they need to make their decision on a partner more carefully.
Bilateral Monopoly: A bilateral monopoly exists when a market has only one supplier and one buyer. The one supplier will tend to act as a monopoly power and look to charge high prices to the one buyer. The lone buyer will look towards paying a price that is as low as possible. In this case, there could be a risk of this if one person wants a divorce and the other does not.
Sale of Parental Rights (Continued)
Law and Economics Perspective:
Cost-Benefit Analysis: The goal is to move children to people who invest the most in their upbringing (essentially, who will invest in them the most).
Shortage of Parental Rights Market: Government regulation too much.
Solution remove barriers in the market to allow for the sale of parental rights.
Christian Worldview Perspective:
It would very likely reduce the number of abortions to legalize this. However, does the Bible say that you can sell your babies? Chrisman does not know.
Throughout human history, people have wanted their babies. However, you cannot sell people. Therefore, you cannot have babies just to sell them.
Regulation of Sexual Behavior (Continued)
Law and Economics Perspective:
Regulation Driven By Disease and Too Many Children.
Abortion: Law and Economics provides no ability to define “persons.” It has no way of determining who should be included in the “society” whose wealth we are trying to maximize.
Wells L&E Outline: Week 11
Tort Law
Goals and Purposes:
Law and Economics: The goal of law and econ is to set incentives through a tort system so that people will act efficiently. We know people will act efficiently because humans are rational maximizers.
The goal of Tort in economics is deterring uneconomical accidents in the future.
The formula we use to determine this is B<PL where:
B = the burden of preventing loss,
P = the probability of the loss, and
L is the magnitude of the loss.
If B<PL, then a person will spend that to avoid the loss.
Christian Worldview: The purpose is compensation—making whole whoever has been harmed.
Tort System:
Law and Economics: Deterrence of uneconomical activity.
Christian Worldview: Compensation.
Liability Standards:
Law and Economics: Negligence is the best weigh because it uses Learned Hand’s formula above to allow people to weigh costs and benefits. The best time to use strict liability is ultrahazardous activities through reducing an activity itself (rather than deterring uneconomic activity).
Christian Worldview: Possibly strict liability? Possibly negligence? It is difficult to say. But there are many instances in the Bible where, if you hurt a person at all, regardless of whether you were negligent or not, then you were liable. This looks more like strict liability.
Defense of Necessity:
Law and Economics: Okay to break into a cabin and take food because transaction costs are too high. Stealing to survive has no deterrent factor if liability is imposed, passed making restitution once you are able to/no longer in danger.
Christian Worldview: It is completely okay to steal to survive and then make whole later.
Assumption of Risk:
Law and Economics: When you get on the flopper, you assume the risk of flopping. Without this principle, it would unnecessarily deter people from offering anything that could be marginally risky. Additionally, sometimes you want to allow risk preferers to choose where they want to be riskier, because the only way they feel wealthier is if something is inherently risky. So society wealth may only increase through assumption of risk.
Airplane Crash Scenario:
Law and Economics: Since everyone was acting non-negligently, there is no reason to expect efficiency to increase by holding any of them liable.
Christian Worldview: Old common law would say that it should be C because of privity of contract. However, products liability undoes all of that. The Christian Worldview wants compensation, but it is difficult to determine where that compensation should come from here. Therefore, Chrisman would likely allow recovery from any of them, and then A, B, and C can try to show why one of the others is the most at fault.
Wealthy Injurers Scenario:
Law and Economics: No liability at all because in this scenario, societal wealth, in the aggregate, will not increase regardless. So the women, being rational maximizers, will always choose to take no precautions.
Products Liability:
Law and Economics: The purchaser can choose alternatives, whereas the bystander cannot. So yes, strict liability makes more sense for bystanders.
Christian Worldview: Maybe protect by imposing liability on who actually inj