"Economic Regulation and Social Regulation". A long-
standing book project, in the style of my JLS Desecration paper.
``Health, safety, morals, and the general welfare,'' are the traditional
subjects of the police power of the state. When we think of government
regulation, we usually think of economic regulation. This is generally
efficient only for a narrow range of activities and is subject to abuse
by private parties who can profit from it. Social regulation is another
area of government regulation, however, and one where the presumptive
efficiency of laissez faire disappears, because market imperfections are
more common and capture by special interests is less profitable. This
does not immediately imply that the government should engage in social
engineering, because our current knowledge of social processes is
primitive. It does imply that courts should be reluctant to strike down
social regulation on the grounds that it is irrational.
The latest draft is divided up into different files. You can see them by clicking the directory,
http://rasmusen.org/social/.
01social-intro.tex and 01social-intro.pdf
02social-surplus.tex and 02social-surplus.pdf
and so forth (I haven't copied all the web addresses here yet)
The old 2000
draft is available in Ascii-Latex (*.tex)
and Acrobat
PDF (
Http://www.rasmusen.org/social/social.pdf).
NOTES ON BOOKS:
- "Creating and Enforcing Norms, With Special Reference to
Sanctions," (with Richard Posner), International Review
of Law and Economics, 19: 369-382 (September 1999). Two
central
puzzles about social norms are how they are enforced and how they are
created or modified. The sanctions for violation of a norm can be
categorized as automatic, guilt, shame, informational, bilateral-
costly, and multilateral-costly. Problems in creating and enforcing
norms are related to which sanctions are employed. We use our analysis
of enforcement and creation of norms to analyze the scope of feasible
government action either to promote desirable norms or to repress
undesirable ones. In
Ascii txt and
Acrobat pdf (
http://Pacioli.bus.indiana.edu/erasmuse/published/99.IRLE.norms.pdf )
- "The Economics of Desecration: Flag Burning and Related
Activities." Journal of Legal Studies (June 1998) 27:
245-270 (lead article). When a symbol is desecrated, the desecrator
obtains benefits while those who venerate the symbol incur costs. The
approach to policy used in this paper is to ask whether the benefits are
likely to exceed the costs. I conclude that they usually do not.
Desecration is often motivated by a desire to reduce the utility of
others, which generally is inefficient. Also, if desecration occurs,
people have less incentive to create and maintain symbols. Symbols, like
other produced goods, need property-rights protection if the outcome is
to be efficient. Laws against desecration are a good way to provide this
protection, given the likely failure of the Coase Theorem and the
possibility of efficient breaking of the laws. In
Ascii-Latex or
Acrobat pdf (
http://Pacioli.bus.indiana.edu/erasmuse/published/98JLS.flag.pdf)
- ``Of Sex and Drugs and Rock'n Roll: Law and Economics and
Social
Regulation,'' Harvard Journal of Law and Public Policy
21: 71-81 (Fall 1997). Economists tend to be libertarians,
because laissez faire is indeed the efficient policy in most monetized
interactions, though there are well- known exceptions because of such
things as poor information and externalities. Although the economic
approach is also perfectly appropriate for non-monetized social
interactions such as marriage or politics, the policy presumption does
not follow. The reason such markets are non- monetized is that such
things as poor information and externalities are the norm, not the
exception. This means that laissez faire is not a safe default
prescription for social regulation. In
Ascii txt (21K) or
Html (*.htm,32K,
http://Pacioli.bus.indiana.edu/erasmuse/published/97.HJLPP.Feder.htm).
- Stigma and Self-Fulfilling Expectations of Criminality ,
Journal of Law and Economics 39: 519-544 (October 1996).
In modelling crime, economists have focussed on the expected cost of
government sanctions to the criminal, but private sanctions--- notably
economic or social stigma--- may be just as important. In the model
here, workers decide whether to commit crimes and employers decide how
much to pay ex- convicts. In one equilibrium, individuals refrain from
crime and economic stigma--- the wage loss from conviction--- is high.
In a second, pareto- inferior equilibrium, individuals commit crimes and
stigma is low, because employers realize that nonconviction does not
imply noncriminality. The model may help to explain large shifts in
crime, such as that between 1960 and 1980, in which decreases and
increases in government sanctions seem to have asymmetric effects. In
Ascii-Latex (75K) or
Acrobat pdf ( 210K,
http://Pacioli.bus.indiana.edu/erasmuse/published/96JLE.stigma.pdf) .
- ``Managerial Conservatism and Rational Information Acquisition,
'' Journal of Economics and Management Strategy
(Spring 1992), 1: 175-202. Conservative managerial behavior can be
rational and profit-maximizing. If the valuation of innovations
contains white noise and the status quo would be preferred to random
innovation, then any innovation that does not appear to be substantially
better than the status quo should be rejected. The more successful the
firm, the higher the threshold for accepting innovation should be, and
the greater the conservative bias. Other things equal, more successful
firms will spend less on research, adopt fewer innovations, and be less
likely to advance the industry 's best practice. In
Ascii txt- Latex (76K) or
Acrobat pdf ( 278K, http:
//Pacioli.bus.indiana.edu/erasmuse/published/92JEMS.conservatism.pdf).
Figure 1 is available in JPG.
- ``The Economics of Gratitude: An Objection to ``The Principle
of Fairness' ''. Suppose an elf repairs my shoes at night without
my consent. Am I morally obligated to pay him for the repairs? Rawls
and Nozick say ``no''. Economic efficiency and the Golden Rule suggest
``yes''. In
Ascii-
Latex and
Acrobat PDF ( Http://www.rasmusen.org/papers/elves.pdf).
- ``The Objectives of Sexual Harassment Law, with Application to
1998's Ellerth, Oncale, and Faragher Decisions.'' Imposing
liability on a company for sexual harassment by supervisors cannot be
justified as promoting equality between the sexes, protection of
workers, or protection of the owners of the company. Such liability
might be justified to prevent breach of contract or behavior offensive
to the general public-- a "civility code". The recent Supreme Court
ruling in Oncale that same-sex harassment is illegal can be justified on
these grounds. The ruling in Ellerth and Faragher concerning employer
liability for sexual harassment by supervisors contrary to the
employer's interest is less satisfactory because the Court's rule will
encourage litigation and defensive bureaucratic complexity. In Ascii and Acrobat PDF (
Http://www.rasmusen.org/papers/harass.pdf).
- An Economic Approach to Adultery Law,'' forthcoming,
Marriage and Divorce: An Economic Perspective, edited by
Anthony Dnes and Robert Rowthorn, Cambridge: Cambridge University
Press.
A long-term relationship such as marriage will not operate efficiently
without sanctions for misconduct. One form of misconduct in marriage is
adultery. Possible remedies for adultery differ in who initiates
punishment, whether punishment is just a transfer or has real costs, who
gets the transfer or pays the costs, whether the penalty is determine
ex ante or ex post, whether spousal rights are alienable, and who is
punished-the adulterous spouse, the third party, or both. Traditional
penalties can be seen as different combinations of these features. Three
typical penalties, criminal penalties for adultery, the tort of
alienation of affections, and the self-help remedy of excuse for murder
are formally modelled. The penalties are then discussed in a variety of
specific applications to Indiana law past and present. In Ascii
and
Acrobat
PDF ( Http://www.rasmusen.org/papers/01.BOOK.adultery.pdf).
http://www.rasmusen.org/social/social.htm. Eric Rasmusen, Indiana
University, Dept. of Business Economics and Public Policy, Kelley
School of Business, Room 456, 1309 East Tenth Street, Bloomington,
Indiana 47405-1701, (812)855-9219. [email protected] .
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