However, to change from Statute X to Statute Y there will be changeover
costs and benefits. In the nature of things the costs are likely to exceed the
benefits although this is not inevitable. In other words the net benefit of the
changeover will be negative so that it is a net changeover cost.
In the light of this we can formulate the rule for deciding whether to replace
one statute, Statute X, with another statute, Statute Y. In practical terms a
legislature should make the change only when the gain from enacting Statute Y
(that is, the increase in the net benefit of operating Statute Y instead of Statute
X) is greater than the net changeover costs.
This practical statement of the rule is useful because it incorporates a common
reality –
that the second statue will be better than the first in terms of its
operating net benefit but there will be costs in making the change. However, it
is necessary to state the rule in its abstract form. Stated in this way, the rule
says that a legislature should not change from State X to Statute Y unless there
is some net gain to society taking into account the benefits and costs of
operating Statute X and Statute Y and in changing from Statute X to Statute Y.
Determining Net Benefit
Any effect of a law or interpretation of a law, Effect X, is composed of a
number of specific effects or components that can be labelled Effects X.1-
X.n. Each of these individual effects will generate costs or benefits. In
addition, changing from one law or interpretation to another will cause effects
that generate costs and benefits. To determine the net benefit of an effect such
as Effect X it is necessary to take a number of steps. These are as follows:
(1)
Identify each and every component of the effect.
(2)
Determine whether each component is a cost or benefit.
(3)
Determine the value of the cost or benefit assuming that it actually is
incurred or gained.
(4)
Total the value of all the components that are costs and the value of all
the components that are benefits. This yields the value of total costs and the
value of total benefits.
(5)
Subtract the value of total costs from the value of total benefits. This
yields the net benefit of the particular effect. For Effect X this would be
labelled effect Net Benefit X.
Problem of Measurement
The objects of society are of the greatest possible complexity.
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In principle the method described above is the way to proceed. To resolve a
conflict between options a decision maker such as a legislature or court
chooses the effect whose net
benefit has the highest value. In practice,
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Edmund Burke Reflections on the Revolution in France (1790)
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