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

Leland Yeager’s utilitarianism as a guide to public policy 209government, and government is the result of human design. If people are going todesign the public policies that guide government activities, advocates of policiesmust have some method of determining which policies are desirable. While one cananalyze just the effects of public policies, as Alchian and Allen claim to do with rentcontrols, normative analysis of those policies is almost inseparable from the positiveanalysis. Samuelson (1956) derives social indifference curves to answer normativequestions, mathematically weighing the utility of some against the utility of othersto find a social optimum, but this mathematical formulation, while it gives a positiveappearance to normative analysis, does little in the way of actually answering anynormative questions. Yeager’s utilitarianism goes beyond Samuelson’s in a numberof ways, but both offer a utilitarian argument for determining the desirability ofpublic policies.Yeager’s utilitarianismYeager’s utilitarianism is considerably more sophisticated than simply summing upthe utilities of individuals to try to maximize some measure of social welfare. Yeager(2001) offers a detailed discussion and defense of his ideas on utilitarianism, and Icould not hope to give a good summary of his ideas in so limited a space, so thissection merely identifies some features of it that are relevant to the discussion thatfollows. Yeager says,Utilitarianism as I conceive of it is a doctrine whose test of ethical precepts,character traits, legal and economic systems, and other institutions, practices,and policies is conduciveness to the success of individuals as they strive to makegood lives for themselves in their own diverse ways. Its fundamental valuejudgment is approval of happiness and disapproval of misery.(2001: 13)He notes, “The happiness criterion, being a fundamental value judgment, cannotbe proved valid” (2001: 83). Yet Yeager’s value judgment is not unreasonable, andhis utilitarianism begins from this foundation.Yeager advocates rules-utilitarianism over act-utilitarianism, which means thathe does not want to apply utilitarian judgments to specific acts, but rather to thelarger social framework of formal and informal rules. Appealing to argumentsmade by Hayek, Yeager says,In rejecting act-utilitarianism for rules-utilitarianism – but in terms that are nothis – Hayek explains . . . why it may be rational to disregard known particularcircumstances when making decisions. Accidental and partial bits of informationmight not change the probability that if we knew and could process allinformation about the circumstances, the net advantage would lie on the side offollowing the applicable rule. We should not decide each case on the basis of thelimited number of individual facts we happen to know. . . . Rules-utilitarianism. . . perceives the rationality of acting, in certain cases and aspects of life, on