Logic is a harsh mistress: welfare economics for economists. Issue 2 (15th April 2020)

• Record Type: Journal Article
• Authors: Leeson, Peter T.
• Editors: Candela, Rosolino A.; Piano, Ennio E.
• Is Part Of: Journal of institutional economics. Volume 16:Issue 2(2020)
• Page Start: 145
• Page End: 150
• Publication Date: 2020-04-15
• Subjects: Property rights, -- Panglossian, -- Yoram Barzel, -- institutional efficiency, -- maximization, -- welfare economics; Institutional economics -- Periodicals; 330.1552
• DOI: 10.1017/S1744137419000109
• Languages: English
• ISSNs: 1744-1374

Abstract

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.