Judgment: Balancing Principle and Policy

Mark D. White

(Pre-production manuscript of article forthcoming in Review of Social Economy, 2015. Please cite published

version.)

1. INTRODUCTION

As social economists, we know how rare it is to find ethical motivations represented in economic

models. We see this problem in models of individual choice, in which agents are slaves to their

preferences and constraints and, at best, pursue an enlightened self-interest, with little mention of

virtue or duty. We see it also in models of policymaking and regulation, in which government

decision-makers are assumed to conduct cost-benefit analysis, or attempt to maximize a social

welfare function, neither with any regard for dignity or justice.

Many heterodox and mainstream economists have explored different ways to work ethics

into economic models in ways that challenge the status quo.1 In this paper, I will focus on one

particular approach, principle, by which I mean moral concepts that are not easily quantifiable,

matters of right and wrong rather than better and worse, and more important, not easily

comparable with quantitative concepts such as utility and cost.2 Because of this problem,

economics doesn’t work well with principles. Mainstream economists like to keep things

measurable: prices, output, income, utility, even happiness. But principles are abstract ideals,

such as justice, dignity, or honesty, which are sometimes embodied in rules or duties such as

“respect others” or “do not lie.” We normally think that principles have no price, or that they

1 For surveys, see Peil and van Staveren (2009) and Dutt and Wilber (2010). 2 See Knight (1951) and Sen (1977) for seminal treatments of principle and commitment in economics, and Minkler

(2008) and White (2011b) for more recent work.

transcend price—and this poses a serious problem for economists who think in terms of trade-

offs and marginal rates of substitution. They expect changes in prices and costs to be reflected in

changes in behavior and are skeptical when decision-making does not follow this pattern. But

what makes principles unique is precisely that they do not bend easily to cost: a promise is a

promise even if the cost of keeping that promise increases, at least by a small amount. The issue

may be more complex if the cost of maintaining a principle is high, as we shall discuss later, but

in the context of marginal changes, principles don’t budge.

Even in mainstream economics, however, principles have always been there, although

they are usually taken for granted. In the models of supply and demand that we teach our

introductory-level students, we implicitly assume that buyers do not steal goods from sellers and

that sellers do not take buyers’ money and run. We assume that market participants follow basic

rules of morality in their transactions, but we rarely acknowledge this, except in models of

corruption or crime. Those moral rules serve as constraints on market behavior and have a strong

effect on the outcomes—an effect that we see all too well when market actors in the real world

forget or ignore these constraints.

However, principles and rules are often too general and vague to apply to specific moral

choices, and it is not clear how to resolve conflicts between them. To deal with these problems,

we need to use judgment, which a component of the process of decision-making that is of critical

importance to both ethics and economics but remains underappreciated in both. In this paper I

will add to previous work by economists such as Adam Smith (1759) and Frank Knight (1951),

proposing a theory of judgment based on the moral philosophy of Immanuel Kant and the legal

philosophy of Ronald Dworkin. This theory of moral judgment based on principle stands to

inform economics in two ways. First, it can improve on models of economic choice that already

incorporate ethical decision-making while at the same time demonstrate the limits of those

models, given the quantitative nature of judgment that defies precise formulation. Second, it can

lead to a better understanding of policymaking and regulation, aspects of economic activity on

the part of government that require balancing of societal goals with core principles of those

societies. Finally, I will conclude with the suggestion that a focus on judgment can enable

economics to make a greater contribution to ethics itself.

2. KANTIAN ETHICS, ECONOMICS, AND JUDGMENT

Immanuel Kant’s moral philosophy is based on the belief that human beings have a capacity for

autonomy, the ability to make decisions independently of external influence and internal

desires—in other words, to do the right thing even it goes against authority, the crowd, or a

person’s own preferences. While this autonomy is never absolute, the potential (and

responsibility) for it lies within each person, granting persons a dignity, an incalculable and

incomparable value that distinguishes persons from mere things. Out of this recognition of the

equal moral status of all persons (including oneself), a rational agent must follow duties as

determined by the categorical imperative, a formulation of “the moral law.” If a person questions

the morality of an action, she must submit her plan of action, or maxim, to the categorical

imperative to determine if it is consistent with dignity. If not, the categorical imperative

generates a duty to avoid that course of action, a duty such as “do not lie” or “do not ignore the

suffering of others” (commonly phrased as a duty of beneficence), which must be followed in

order to confirm to the moral law. But this conformity is not sufficient to be a good person—for

that, a person must follow duty for the sake of duty itself, not for some other desired end (such as

acclaim, reward, or self-satisfaction). While an act may be ethical, a person is ethical only if that

act was performed for the right reason.3

The duties that result from the categorical imperative may be divided into perfect and

imperfect duties. Perfect duties are usually negative in nature, such as “do not steal” and “do not

lie,” and serve to foreclose certain actions that fail to respect the dignity and autonomy of

persons. They are also called strict duties because they admit of no exceptions in the interest of

inclinations (or preferences). Imperfect duties, on the other hand, are usually positive, such as

“help others” and “cultivate your talents,” and they merely mandate attitudes that must be

maintained rather than specific actions that must be taken or avoided. For this reason they are

also called wide duties, and as such their dictates can be balanced with other duties, including

duties of beneficence to oneself (as part of the humanity we are bound to treat as ends-in-

themselves).4 For example, the duty to help others does not specify exactly when or how to help

others, only that the agent should help others when it is not a significant burden (for instance, as

in Peter Singer’s famous example of pulling a drowning child out of a shallow pool of water).5

Note that imperfect duties require judgment on the part of the agent to decide on a specific action

to perform in satisfaction of them. In the same way, perfect duties also require judgment in their

performance because, while they prohibit certain actions, they do not indicate what to do instead;

one must not lie, for example, but one need not be forthright either.6

3 The basics of Kant’s ethics can be found in Kant (1785), with further elaboration in Kant (1788; 1797). For a

concise introduction, see Sullivan (1994); for a lengthier treatment, see Sullivan (1989). On the categorical

imperative in particular, see Paton (1947) and Gregor (1963). 4 See Kant (1797: 451) on the duty of beneficence to oneself. In response to the caricature of Kant that demonizes

any pursuit of self-interest, Herman (1996: 52) explains that “the Kantian charge against self-interest is not that it is

inherently contrary to morality; it need not be. The problem lies in its tendency to be presumptive.” 5 Technically, imperfect duties are still negative; as indicated above, the duty to help others is literally a duty not to

be blind to their suffering. This explains the wide nature of the resulting obligation, since one can do very little to

help others and satisfy the duty to not ignore suffering entirely. 6 This unexpected flexibility in Kant’s presumably strict ethics contrasts with attempts to use it to address collective

action problems such as the prisoners’ dilemma of game theory (White 2009b).

As it happens, perfect and imperfect duties in Kantian ethics correspond to constraints

and preferences (respectively) in the traditional economic model of choice. Since perfect duties

forbid certain actions, they limit agents’ choices in much the same way that resource constraints

do (albeit more specifically). Because imperfect duties specify certain ends that must be held, but

at the same time can be balanced with other ends the agent values (including self-interest), they

can be included among standard preferences. When perfect and imperfect duties are wrapped

into the model in this way—and assuming the agent adopts and follows those duties for their

own sake—she makes decisions to satisfy her “preferences” within her “constraints” and thereby

effectively satisfies the basic tenets of Kantian ethics. This method shows how Kant’s duty-based

ethics can be made consistent with standard economic models of choice by modifying the agent’s

means and ends to correspond to the moral law and respect for the dignity of persons, which

allows economists to explain and predict more accurately a broader range of ethically-motivated

behavior.7

While identifying duties and incorporating them into an economic model of choice is

easily done in the abstract, it is far from clear exactly how these general, negative duties are

translated into specific, positive action in specific choice contexts. (Simply understood, Kant is

very good at telling us what not to do but offers little guidance regarding what to do instead.)

This is not a shortcoming only of Kantian ethics or even deontology in general, but with all basic

systems of ethics that provide simple guidelines or rules of thumb—do not lie, maximize

happiness, be a courageous person—which cannot be applied directly and conclusively to

7 For more detail, see White (2011b, ch. 1). Even if we acknowledge the flexibility in Kant’s ethics that I claim in

the next section of the paper, this model nonetheless paints a perfectionist picture of the moral economic agent in

which she always acts in accordance with duty. However, Kant was very aware that human beings, as physical

beings as well as rational ones, are imperfect, and wrote at some length about moral imperfection (Kant 1793; 1797;

1798). See White (2011b: ch. 2) for one way this moral imperfection may be incorporated into the Kantian-

economic model of choice.

specific moral dilemmas. At best, what Deirdre McCloskey (2006: 263) calls the “3x5 card”

approach to ethics provides merely a framework with which to assess the most salient aspects of

a moral situation, not provide a precise or definite response to it. For that, we need judgment.

Virtue ethics, which avoids specific rules and formulas in favor of endorsing general

dispositions or character traits, has long emphasized the importance of practical judgment or

wisdom, which Aristotle (350 BCE) called phronēsis, in putting virtues into action.8 In general,

however, utilitarians and deontologists have not emphasized the crucial role of judgment in

applying their respective rules or formulas. At first glance, utilitarianism would seem immune to

the need for judgment. Utilitarian decision-making appears to be little more than a math problem,

but that is merely the final step in a lengthy process that requires judgment at every turn, not only

when assigning utilities to outcomes, but also when determining how broadly in space and time

the probabilities and effects of actions will be estimated. It makes no sense to compute every

effect on every person possibly affected in every state of the world, so the utilitarian needs to use

judgment to determine at what point to stop computing. In short, the simplicity of the final

calculation belies the enormous amount of ambiguity in the utilitarian decision-making process.

Deontologists too (with one prominent exception) can be overconfident in their rules and duties,

often presuming that if one toes the line of absolute right and wrong, any ambiguity in moral

action will be eliminated. Compared to utilitarianism, the place of judgment in deontological

decision-making is reversed: the early process of decision-making may be a relatively simple

matter of identifying the relevant duties and principles, but the later step, the weighing and

balancing of various rules, duties, and obligations, is extremely fraught, and depends just as

heavily on judgment as do the earlier stages of utilitarian deliberation.

8 For an application of Aristotle’s practical wisdom to economics, see Yuengert (2012); for a more general

application of Aristotelean thought to economics, see van Staveren (2001). Also, on regarding Adam Smith as a

virtue ethicist, see McCloskey (2008).

The exception to the general neglect of judgment in deontology that I mentioned above

is, of course, Kant, who acknowledged and indeed stressed the need for judgment to apply

general duties to specific circumstances. As he wrote, “to be sure, these laws require… a power

of judgment sharpened by experience, partly in order to distinguish in what cases they are

applicable, and partly to gain for them access to the human will as well as influence for putting

them into practice” (1785: 389). Despite his reputation, he had harsh words for those who would

try to rely on simple rules alone: “Dogmas and formulas, those mechanical instruments for

rational use (or rather misuse) of [man’s] natural endowments, are the ball and chain of his

permanent immaturity” (1784: 54-55). As philosopher Onora O’Neill (2004: 104) recognizes,

“Discussions of judgment… are ubiquitous in Kant’s writings. He never assumes agents can

move from principles of duty, or from other principles of action, to selecting a highly specific act

in particular circumstances without any process of judgment. He is as firm as any devotee of

Aristotelian phronēsis in maintaining that principles of action are not algorithms and do not

entail their own applications.”

While Kant knew full well that judgment was necessary to bridge the gap between

negative duties and positive action, he was silent regarding exactly how this was to be done.

Instead, he emphasized the intuitive nature of judgment: “though understanding is capable of

being instructed… judgment is a peculiar talent which can be practiced only, and cannot be

taught. It is the specific quality of so-called mother-wit; and its lack no school can make good”

(1781/1787: A133/B172). Appropriately, therefore, he said nothing specific about what form

such judgment must take. As philosopher Roger Sullivan (1994: 40) writes, “Through simply

living, facing ordinary moral problems day by day, we all accumulate a store of moral

experience to help us judge how to act; we all develop some sensitivity to the features to which

we should attend. Moreover, most of the situations in which we find ourselves are familiar ones,

and we do not need to deliberate over how to act. We simply act on maxims that reflect our long-

standing commitments and values.”9

Kant was silent about something else too: what agents should do when facing conflicting

obligations. Imagine that you promised your friend you would celebrate his promotion with him,

but, just before leaving for his house, your mother calls, asking for your help. You then have two

obligations, each based on a general duty—promise-keeping and beneficence, respectively—but

in the end there can only be one duty that you are bound to follow. How to decide? Kant (1797:

224) merely said that “the stronger ground of obligation prevails,” and left it at that. Did he

neglect to elaborate further, believing the specific meaning of this would be obvious? Perhaps,

but it may also have been that he had no specific meaning in mind and instead meant to imply

that, at such a point, judgment must take over. After all, he never compared duties or

characterized some as more important than others, but rather treated them as qualitative matters

of right and wrong. But at the same time he was not immune to trade-offs, as evidenced by the

flexibility of imperfect duties. He acknowledged implicitly that hard choices need to be made

but, at the same time, denied that there was any clear, formulaic way for doing so. As the various

philosophers I quoted wrote, duties and rules only get us so far, and then the choice is ours, and

we can make such choice only by using our judgment.10

Although somewhat controversial in a Kantian setting, I maintain that judgment between

conflicting obligations opens the door for the relevance of consequences as a secondary

consideration. Consider a police officer chasing two thieves down an alley. The alley ends at a

9 From more on Kant and judgment, see Sullivan (1989: 54-57), Herman (1993), Munzel (1999), Louden (2000),

and O’Neill (2013). 10 As Knight (1951: 6) wrote, “The right principle is to respect all the principles, take them fully into account, and

then use good judgment as to how far to follow one or another in the case in hand.”

“T” and the thieves run in opposite directions. The officer has an equal obligation to apprehend

each but can only follow one. How is she to choose? There is no obvious argument based on

duty or principle for following one rather than the other, so the officer must consider the

consequences of each. Perhaps one has the stolen goods; perhaps one is the leader or is wanted

for other crimes; or perhaps one is simply slower and more easily apprehended. The point is that,

when there is no way to choose between obligations based on duty or principle, an agent must

use judgment and whatever moral factors are left—including, possibly, consequences, although

this is done only after the matter of duty and principle has been settled.

To be clear, circumstances, context, and the vagaries of human nature are not anathema

to Kant, although some of his rhetoric would seem to imply this, especially his infamous claim

that his moral philosophy applies a priori to all autonomous beings, whether found in

Manchester, Marrakech, or Mars.11 However, this applies only to the formal or logical aspects of

his ethics, such as the categorical imperative itself, not the duties that result from it, much less

how those duties are applied in specific contexts. As Kant wrote, “all morals . . . require

anthropology in order to be applied to humans” (1785: 412), and later, “a metaphysics of morals

cannot dispense with principles of application, and we shall often have to take as our object the

particular nature of human beings, which is cognized only be experience, in order to show in it

what can be inferred from universal moral principles” (1797: 216-217). Kant’s position on the

moral relevance of consequences is also widely misunderstood, for which he is to a large extent

responsible; as Paton (1947: 46) wrote, “if Kant had said merely that we must not allow our

desires for particular consequences to determine our judgment of what our duty is, he would

11 “Everyone must admit that if a law is to be morally valid, i.e., is to be valid as a ground of obligation, then it must

carry with it absolute necessity. … And he must concede that the ground of obligation here must therefore be sought

not in the nature of man nor in the circumstances of the world in which man is placed, but must be sought a priori

solely in the concepts of pure reason” (Kant 1785: 389).

have avoided a great deal of misunderstanding.” Not only can consequences influence our choice

between conflicting obligations, they can also play a role in determining what those obligations

are—just not whether we have to follow our obligation when we obviously have only one.

Finally, when the possibility—perhaps even inevitability—of conflicts among obligations

are acknowledged, the use of judgment to determine one’s “true” duty renders Kant’s ethics

much more flexible than often regarded. Both his perfect and imperfect duties effectively

become pro tanto in nature, providing contributory but not conclusive reasons for action, similar

to the deontological ethics of W.D. Ross (1930). As the importance of individual duties fades,

the agent’s moral character and deeper values become more important to determining her choices

in situation of moral conflict.12 Interpreted this way, Kant’s ethics begins to resemble virtue

ethics with its traditional focus on character and judgment, and appropriately, the literature

exploring this intersection has exploded of late.13 Kant’s emphasis on both duty and character

synthesizes the best of deontology and virtue ethics, providing a solid foundation for the core

principles of morality while emphasizing the moral qualities of the agent who puts them into

action.14

3. DWORKIN’S JURISPRUDENCE

Is there any conception of judgment available that provides more guidance on how to reconcile

conflicting obligations or principles without going too far into determinism and formalism? I

12 On the reflexive nature of choice of character in such a model, see White (2011b: 92-105), based on the work

Korsgaard (2009) and recalling John Rawls’ (1971) process of reflexive equilibrium. 13 For instance, see Louden (1986); O’Neill (1989); Engstrom and Whiting (1996); Sherman (1997); Betzler, (2008);

Baxley (2010); and Jost and Wuerth (2011). For a debate over virtue and Kant in terms of economics, see van

Staveren (2007) and White (2009a). 14 For more on Kant and virtue with respect to economics, see White (2016); for an application of this Kantian

synthesis of deontology and virtue ethics to a fictional character, see White (2014).

propose that we consider the work of another philosopher who wrote about making nonformulaic

judgments in difficult choice situations, Ronald Dworkin. Although the specific context of his

work was the decision-making of judges, his theories of jurisprudence fit very well into the

lacuna left in Kant’s description of judgment, offering a framework in which to make hard

choices without reducing them to numbers, formulas, or yet more rules.

Like Kant’s ethics, Dworkin’s jurisprudence is based on principle, which he considered

the proper domain of the judiciary. In his terms, principles are timeless ideals that ground a legal

system and are located in foundational documents, history, and traditions, as well as more

contemporary legal materials, especially judicial precedents. This is opposed to policy, which

ideally is based on the collective interests of members of society as deliberated by elected

representatives on behalf of their constituents, and therefore is the proper domain of the

legislature. While the goals of policy need not be consistent over time, changing with the

demographic make-up and specific concerns of the population, the principles of justice and

morality that ground legal and political decision-making should be consistent and insensitive to

political pressures. In fact, Dworkin conceives of a nation’s legal principles as forming a

“seamless web,” and when a judge makes a decision in a hard case, he or she must arrive at the

“right answer,” the one that fits into the seamless web, consistent with other legal principles as

that judge sees them, to maintain the integrity of the legal system.15

Just as Dworkin’s conception of jurisprudence is most useful in “hard cases,” it can also

work within Kantian decision-making in instances of conflicting obligations. Similar to

Dworkin’s judge, a person confronting a moral dilemma must weigh and balance the various

principles involved to arrive at what she considers to be the “right answer” that maintains the

integrity of her moral character. Consider the example from earlier in which a promise to a friend

15 For more detail, see Dworkin (1977), especially chapters 2 and 4.

stands in the way of helping your mother; you have an obligation (and presumptive duty) to both

but you can only fulfill one. According to Kant, the obligation with the “strongest ground” must

prevail and only judgment can settle the matter. You must decide which obligation is more

important to you, given your basic moral principles and values—and since different people may

recognize the same basic values but interpret and balance them differently, they may make

different choices in similar circumstances, each giving their own “right answer” to the moral

dilemma. (This also explains why we have split decisions among panels of equally informed and

knowledgeable judges in hard cases.)

Some would say, however, that the answer to this particular conflict is obvious: you must

keep the promise to your friend because perfect duties always take precedence over imperfect

duties. It is intuitive that flexible duties should bend to the inflexible ones, but unfortunately, the

matter is not that simple, because whether a duty is strict or wide has no bearing on its “ground”

or importance. Even though keeping your promise is a perfect duty, the substance of that promise

may be less important than helping your mother. If we make the promise to your friend more

trivial and your mother’s call for help more dire—you promised to return a DVD to your friend

while your mother needs to go to the hospital for surgery—the case for keeping the promise

becomes even weaker. Furthermore, perfect duties are strict only with respect to inclination or

preferences, not other duties, which therefore may take precedence, even if they are “only”

imperfect duties.

Looking at the substance rather than the form of an obligation also provides a response to

Kant’s infamous “murderer at the door” problem (Kant 1799). Imagine that your best friend

knocks franticly on your door and begs you to let her hide in your house from someone who

wishes to kill her. Minutes after you agree, the murderer knocks on your door and asks where

your friend is. Kant firmly maintained that your duty not to lie is paramount and you must tell

the murderer the truth; while your friend may die as a result, you will escape with clean hands.16

With all due respect to the ingenious attempts on the part of philosophers to reconcile this result

with Kant’s broader ethical system, I believe this is best judged a mistake or an inconsistency on

Kant’s part.17 Under a commonsense interpretation of “stronger ground of obligation,” protecting

your friend from a wrongful death would be more important than not lying to the person who

wants to kill her. Even though the duty not to lie is perfect and strict, the content of that duty

pales next to the duty of beneficence to your friend, which I believe Kant’s emphasis on

judgment makes clear.

4. IMPLICATIONS OF JUDGMENT FOR ECONOMICS

4.1 Individual Choice

Recognition and appreciation of the role of judgment in decision-making—whether along the

lines I have described or another—stands to have important consequences for how economists

think about choice in situations involving ethics. If introducing any explicit conception of ethics

into the standard economic model of choice expands its explanatory power, then incorporating

judgment would do so to an even greater degree. It will enable us to describe behavior driven by

a mix of principle, preferences, and costs in ever-changing and context-sensitive ways, while

16 His position on lying can also be explained by acknowledging the supreme value Kant put on truth: “a lie always

harms another; if not some other human being, then it nevertheless does harm to humanity in general… To be

truthful (honest) in all declarations is, therefore, a sacred and unconditionally commanding law of reason that

admits of no expediency whatsoever” (1799: 426-427). 17 For instance, see Korsgaard (1986), who constructs an argument for universalizing a maxim to lie to the murderer-

at-the-door based on asymmetric information. On identifying mistakes in logical systems, whether a comprehensive

philosophy or a body of law, see (incidentally) Dworkin (1977: 118-123).

showing us the limitations of formal, mathematical modeling of behavior based on complex,

conflicting, and often hidden motivations.18

The model of judgment proposed above fills out the Kantian-economic model of choice

in several ways. At its most basic, judgment must be used to reconcile duties with the standard

constraints and preferences. An agent will not often need to rank perfect duties—in most cases

one can abstain from killing, stealing, and lying at the same time. These duties fit easily

alongside traditional resource constraints in limiting the pursuit of the agent’s goals; the agent

cannot spend more money (or credit) than she has, and neither can she, morally speaking, steal or

cheat to get more. Immorally speaking, of course, she can, which points out that many resource

constraints rely significantly on moral constraints: people are not as limited by legally available

income or credit if they are willing to steal to get more. This also serves to reinforce the point

made earlier about the pervasive but unspoken moral principles that ground many basic

economic models.

Judgment plays a more direct role in the ranking of imperfect duties among preferences.

For instance, an agent may need to rank the following: having a new $100 jacket, giving $100 to

feed the homeless, or spending $100 on a foreign language course (fulfilling the imperfect duty

to improve oneself). Economists have long included altruistic preferences in their models, of

course, but they have not often been clear on how these are ranked among self-interested ones,

usually relying on an inclusive, substantive, or bifurcated sense of utility that is incompatible

18 In some cases, including an explicit model of ethics into an economic model may compromise its generality and

predictive ability. Clearly, not all economic decisions are made in a significantly ethically laden context to justify

incorporating ethics into their modelling. If ethics play an important role in motivating general types of behavior, a

model that attempts to explain such behavior should include ethical factors, and those same factors would also

contribute to accurate predictions. Nonetheless, the impact of explicit ethically-based modelling on effectiveness, as

well as the appropriate trade-off between explanation and prediction, are important methodological questions that

are, alas, beyond the limits of the current paper.

with a Kantian model in which duties are performed for their own sake.19 A model of judgment

does not necessarily make this ranking process any clearer, but it does explain and justify the

lack of clarity while supplying a particular method of deliberation.

One of the most important and practical ways that judgment can add nuance to discussion

of economic choice in ethical circumstances is when principled action is very costly, whether to

the decision-maker or other people. For example, even if a person holds lying to be wrong and

maintains a strict principled stance against it, there could be circumstances in which adhering to

that principle may involve tremendous, unacceptable costs in terms of other valid ethical

principles or goals. One can imagine a parent lying about his college degree to get a job in order

to get premium medical insurance for his very ill child, or a business owner covering up

environmental offenses in order to save the jobs of her employees. A strict deontologist (or Kant

in his murderer-at-the-door mood) may cross his arms and say “absolutely not,” but a more

nuanced deontologist (such as Kant in the rest of his work) would say that the principle of not

lying might have to bend to the principle of beneficence toward one’s child or employees.

This approach also casts doubt on the apparently noble practice of standing on principle

despite enormous costs, especially when those costs are incurred by other people. Consider the

following example drawn from a television legal drama.20 A man is serving a lengthy prison term

for a crime he steadfastly claims he did not commit. He is a model prisoner and is encouraged by

the warden and his lawyer to apply for parole, but because he refuses to admit guilt, he cannot be

released. Our impression of him is of a fine man of principle, willing to sacrifice his own

livelihood for his good name, reputation, and integrity. But next we discover that he has a wife

and small son at home, and during one of their visits we see the son beg his father to say

19 See, for instance, Margolis (1982) and Etzioni (1988). 20 If memory serves (with the help of Google), the program was The Practice, “Killing Time” (season 6, episode 2),

from 2001.

whatever he has to say so he can return to his family. The father explains that he wants to set a

good example for his son, but the son cries that having his father at home is even more

important. Whether or not you agree with the man’s choice to maintain his innocence, his single-

minded focus on that one principle, albeit a very important one, to the exclusion of any other

considerations, is an example of an ethical myopia that seems noble on the surface but may

prevent consideration of other valuable principles and goals that are being sacrificed as a result.

To include considerations of opportunity cost along duty, philosopher Michael S. Moore

(1989) proposed threshold deontology, in which an agent operates under duties or principles until

the costs of doing so rises above a threshold level, at which point consequentialist considerations

take over. While other philosophers have questioned the internal logic of threshold deontology, I

wish only to make two points in comparing it to the more general model of judgment provided

here.21 First, threshold deontology makes the balancing process rigid and deterministic, creating

an abrupt shift in ethical reasoning at the threshold. Second, choosing the threshold itself requires

judgment, rendering the process more ambiguous than it would seem at first. Even if we changed

the discrete threshold level to a vague range, it would reduce the value of having a firm threshold

while bringing the model even closer to a flexible system like judgment. Similar to our earlier

discussion of utilitarian decision-making processes, threshold deontology may render decision-

making easier at the final stages on the process, but it cannot avoid the judgment that is

necessary to define the process itself.

Opening the door for opportunity cost to influence principled decision-making does not

imply, however, that moral behavior can simply be priced like other options in traditional

economic models. For one, remember that principles are distinguished by their resistance to

ordinary trade-offs; it is only extremely high costs that will lead an agent to consider

21 For criticism, see Alexander (2000) and White (2011a).

compromising a principle. If a person does judge in a particular case that maintaining a principle

is not worth the cost, this does not imply a fixed, general value for that principle, because

judgment is intensely contextual and the person may not make the same judgment in a different

situation. (Economic valuation of “normal” goods and services is contextual in the same way,

which is all too often ignored as well.) Furthermore, unlike the implication of threshold

deontology, the person who chooses cost over principle does not abandon the principle

altogether; as Dworkin (1977: 22-28) explains, principles are still valid even when another

consideration is judged more important in a particular case. The person who sets aside a principle

due to its opportunity cost does so with regret, not only for the choice made but also for having

to make the choice at all. Also, when a principle is set aside because of opportunity cost, we

would hope that that cost would be in terms of another morally relevant principle or goal.

Economists all too often think of costs in terms of money, a convenient shorthand that

nonetheless biases the more ethically-oriented among us against the idea of abandoning a

principle for “mere cost.”

4.2 Policymaking

In the same way that judgment can help economists model how people balance their duties,

principle, and preferences, it can also help model how policymakers balance their principles and

policy goals. Dworkin’s work on jurisprudence emphasizes judgment as the domain of the

judiciary, but policymakers do and should consider principles themselves when enacting

legislation and regulations. For example, legislators in the United States have to acknowledge the

limitations on their power according to the Bill of Rights and subsequent statutes such as the

Civil Rights Act. This is not to imply, of course, that these principles are absolute: the First

Amendment guarantee of free speech, for example, has exceptions, such as the “clear and present

danger” rule, in which considerations of safety take precedence over even such a treasured right

as free speech. But the existence of such exceptions do not limit the importance of the principles

themselves to policymaking, for any exception in favor of another principle or goal must

nonetheless be defended.

Judgment is particularly relevant when the policy itself is based on principle and its

pursuit is constrained by considerations of cost. Take, for instance, criminal justice, which is

motivated and justified by (at least) two primary concerns, deterrence and retributivism. To the

extent that the authorities pursue a deterrence goal, they optimize the difference between crimes

prevented or minimized and resources spent. As with any utilitarian procedure, judgment is still

required in estimating the amount and value of crimes that do or do not occur, but once this is

done, the rest is simple calculation, as is promoted by the literature in the economics of crime

(starting with Becker 1968).

However, to the extent the criminal justice system is motivated by considerations of

retributivist justice, which stresses punishing offenders for crimes committed, judgment is more

crucial. Retributivist justice is, at heart, a deontological system; although there are many versions

of it, retributivism at its core is based on the principle that wrongdoers must be punished as a

matter of right and justice. As such, it is an ideal system, one that cannot be practiced to

perfection in the real world of scarcity.22 Those responsible for designing and running such a

system must make sacrifices in this ideal mission, but strict retributivists would be loath to

recommend any specific compromises. Do we punish all wrongdoers to a lesser degree than

deserved, or punish less of them by reducing our efforts to apprehend and prosecute suspected

22 For a legal take, see Cahill (2007), and for an economic take, see White (2009c).

criminals? Do we cut deals with lesser offenders to help prosecute more important ones, or

simply to save on scarce resources? Retributivists would see any of these as unacceptable

compromises to the ideal of perfect justice, but if they are cast as necessary sacrifices in

recognition of other important principles, such as the system already does in terms of respecting

civil rights (with some tragic exceptions of late), then even the strictest of retributivists may be

comfortable with these compromises.23

In terms of regulation, such judgment is often needed because many regulatory initiatives

invoke monetary costs to achieve less quantifiable benefits. In his 2014 book Valuing Life, law

professor Cass Sunstein describes the thinking behind regulatory review during his time as

administrator of the Office of Information and Regulatory Affairs (from 2009 to 2012). He paints

a detailed picture of a nuanced, humane version of cost-benefit analysis in which financial costs

are compared to benefits such as improved wheelchair access to public restrooms and reductions

in the incidence of prison rape. These benefits cannot easily be stated in terms of dollars, of

course, but nonetheless, decisions involving expenditures have to be made, and some rough sort

of valuation must be conducted in order to make them. In the end, it comes down to a matter of

judgment whether the costs of each regulation are justified, not necessarily exceeded, by the

benefits. Formal versions of cost-benefit analysis that incorporate many of these elements have

been proposed—see, for instance, Adler and Posner (2006)—and increased recognition of the

role of judgment in these improved processes will further emphasize the importance of

qualitative and incommensurable aspects of proposed regulations.

Finally, national economic policy is called upon to further many incommensurable goals

at the same time, a task that demands judgment in its best execution. The Federal Reserve is

23 For more detail, see White (2011a); for an explicitly consequentialist method of reconciling principles in

retributivist criminal justice, see Cahill (2011).

required by law to control inflation and temper unemployment, as well as monitoring the

banking system, and increasingly there are calls for them to monitor inequality as well. Each of

these goals may be quantifiable in its own way, but the decision-makers within the Fed must (for

example) compare the value of lowering the unemployment rate by one percent with lowering

the inflation rate by the same amount. Various formulae reflecting different factors and

weightings have been proposed; for instance, both Milton Friedman’s k-percent rule and John

Taylor’s eponymous monetary policy rule involve summing weighted economic variables to

steer central bank action, but the weights given to the variables—as well as the choice of

variables itself—are implicitly or explicitly the result of judgment, as is the decision regarding

how much to weight the prescriptions of any rule in overall policy deliberations. As Dworkin

maintains with respect to judges, the Fed policymakers may use a process such as the one

described here, weighing the many variables and rulesagainst each other depending on particular

economic circumstances at any given time, while disagreeing amongst themselves (as judges do)

regarding exactly how to do this. The same goes for fiscal policy, in which decisions over

spending, borrowing, and taxing must balance many different considerations, both economic and

political (the latter much more important and influential than in the case of monetary policy).

Again, economists tend to think of these decisions as technical in nature, but I trust that those

closer to the process would assure us otherwise. From the scholarly economist’s point of view, a

deeper conception of judgment is essential to modeling the complex process of decision-making

that policymakers engage in every day on the ground.

5. CONCLUSION

My goal in this paper was to convince the reader that judgment plays an important role in

economics as well as ethics, to propose one way of thinking about judgment based on Immanuel

Kant’s ethics and Ronald Dworkin’s jurisprudence, and to argue that this conception of judgment

can improve modeling of complex decisions as well as show the limitations of formal modeling

itself. I will conclude by suggesting how this understanding of judgment can also allow

economics to contribute to the study of ethics. As I explained above in the discussion of

retributivism, many of the theories in contemporary moral and political philosophy are situated

in an ideal world, especially theories dealing with qualitative ideals and principles in terms of

right and wrong, rather than quantitative concepts such as utility, which deals with better and

worse. A model of judgment that bridges the two and allows considerations of cost to justify

compromises in principle will allow philosophers who favor such idealistic systems to explore

how they might be implemented in the real world. In this way, ethics and economics can

complement each other—which, in my judgment, can only be a good thing.24

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