Money and Markets: Essays in Honor of Leland B. Yeager

14 Leland Yeager’s utilitarianismas a guide to public policyRandall G. HolcombeThe economics profession makes a sharp distinction between positive economics,which analyzes the facts, and normative economics, which is based on value judgments.Because positive analysis deals with the facts, it can be scientific, but there isno way to scientifically show that one set of values is any better than another, whichdistances normative economics from economic science, at least as most economistswould see it, and perhaps even relegates it to a matter of opinion. Much to hiscredit, Leland Yeager has not shied away from normative issues in economics: hehas tackled them head-on, and has consistently advocated a utilitarian approach topolicy espousal in economics. This paper offers a critical analysis of Yeager’s clearthinking and insightful analysis on normative issues. Yeager’s brand of utilitarianismhas much to recommend it. Ultimately, Yeager argues, policy decisions shouldbe judged by their effects on people’s well-being, which is his utilitarian criterion foradvocating public policies. Further, Yeager argues, utilitarian arguments underliemany of the alternatives to utilitarianism that others recommend. Perhaps withoutrealizing it, the critics of utilitarianism offer utilitarian arguments to support alternativenormative criteria. Yeager says that after careful analysis, people should notbe reticent about saying that they recommend particular policies because thosepolicies will increase the well-being of those who are affected by them.I am sympathetic with Yeager’s arguments, yet I do not completely accept them,for reasons that will become apparent by the end of this paper. There are inherentdifficulties with normative arguments precisely because there are value judgmentsinvolved, yet normative analysis is important, and ultimately necessary in the publicpolicy arena. I am writing this paper in honor of Leland Yeager, who was mycolleague at Auburn University for several years, so I want to make it clear to readersthat I have the highest respect for Leland as a person and a scholar, and for his ideas.Those who are fortunate enough to know Leland will have to agree with me that heis the epitome of a scholar, and a man of ideas. I have learned much from myconversations with him, and from reading his work. Also, I hope readers will indulgeme when I include some personal reminiscences that go along with the topic of mypaper, because Leland and I did have a number of discussions on this topic.Positive and normative economicsEver since Milton Friedman’s (1953) essay on the methodology of positive economics,the economic analysis that has appeared in the leading academic economics