Economics Dictionary of Arguments

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Efficiency: Economic efficiency is the optimal allocation of resources to produce the greatest possible output. It is a state where resources are used in a way that maximizes the satisfaction of human wants and needs.
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Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

 
Author Concept Summary/Quotes Sources

Constitutional Economics on Efficiency - Dictionary of Arguments

Parisi I 205
Efficiency/constitutional economics/Voigt: Normative constitutional economics (…) reinterprets the >Pareto criterion
in a twofold way: It is not outcomes but rules or procedures that lead to outcomes that are evaluated using the criterion. The evaluation is not carried out by an omniscient scientist or politician but by the concerned individuals themselves: "In a sense, the political economist is concerned with 'what people want' " (Buchanan, 1959(1), p. 137). In order to find out what people want, Buchanan proposes to carry out a consensus test. The specification of this test will be crucial as to which rules can be considered legitimate. In 1959, Buchanan had actual unanimity in mind and those citizens that expect to be worse off due to some rule changes would have to be compensated. This test would thus be equivalent to a modified Kaldor-Hicks criterion. Later in life, Buchanan seems to have changed his position: hypothetical consent deduced by an economist will do in order to legitimize some rule (see, e.g., Buchanan, 1977(2), 1978(3), 1986(4)). VsBuchanan: This position can be criticized because a large variety of rules seem to be legitimizable depending on the assumptions of the scientist who does the process. Scientists arguing in favor of an extensive welfare state will most likely assume risk-averse individuals, while scientists who argue for cuts in the welfare budgets will assume people to be risk-neutral.
>Constitutional economics, >Costs/Buchanan, >Constitutions/constitutional economics, >Governmental structures/Constitutional economics, cf. >Judiciary/Constitutional economics, >Federalism/Constitutional Economics.

1. Buchanan, J. M. (1959). "Positive Economics, Welfare Economics, and Political Economy."
Journal of Law and Economics 2: 124-138.
2. Buchanan, J. M. (1977). Freedom in Constitutional Contract - Perspectives of a Political Economist. College Station, TX/London: Texas A&M University Press.
3. Buchanan, J. M.(1978). "A Contractarian Perspective on Anarchy," Nomos 19: 29-42
4. Buchanan, J. M. (1986). "Political Economy and Social Philosophy," in: J. M. Buchanan; Liberty, Market and State—political Economy in the 1980s, 261—274. New York: Wheatsheaf Books.

Voigt, Stefan. “Constitutional Economics and the Law”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University

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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Constitutional Economics
Parisi I
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017


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