This paper – a University of Chicago Public Law & Legal Theory Paper Series, No. 607 (2017) available here – focuses on the relationship between IP and welfare.

Broadly speaking, the paper is devoted to examining the various types of theories underpinning IP law (i.e. IP law’s deeper normative goals) in the US context. As the authors put it: “Most courts and scholars agree with the idea that IP law should provide incentives to creators, but there has been almost no analysis of why creativity and innovation are good. This is simply taken as given.” Their goal is to discuss the variety of ways in which one can understand the normative goals of IP regimes.

The basic argument is that the main goal of IP laws should be to maximize social welfare, where welfare is understood as subjective well-being. However, and although there is broad consensus that the law should promote good outcomes, there has been less discussion of the kinds of outcomes that the law should be promoting. In Part II, the authors address different ways in which IP law could be understood. to promote good outcomes. For example, IP law could be narrowly focused on promoting creativity and innovation, or it could be more broadly directed towards general social welfare. They argue that the latter, broader focus is more appropriate. They then consider three different accounts of human welfare and how the law can promote it: preferentist, objectivist, and hedonic theories – and choose the latter one, which is reviewed in Part III.

I have to admit I don’t know what they are putting in the water in Chicago (salt, if I had to guess) as detailed studies of what we mean by welfare are coming out of Chicago (by staff in cooperation with saltwater universities). While these studies remain grounded in personal preferences and empirical studies, this paper explicitly argues that more goods and material assets do not amount to greater welfare, and that more choice and variety do not really mean higher personal welfare (this is taken as a given in various fields of psychology, of course, and such insights already influence various areas of public policy – but their influence on antitrust is thin at most, if we are feeling generous).

Simplistic as such an argument may seem, this paper provides a different way of thinking about problems affecting competition law. For example, there is ample evidence that health is one of the primary drivers of well-being, unlike developments or increased quality in consumer electronics – so there may be an argument for prioritising arrangements that promote quality in healthcare or technological developments over strict price considerations, while adopting the opposite approach if we are dealing with consumer electronics.  Definitions of welfare are actually quite an important topic (not only theoretically, but also in practice). One need only think about a merger that raises prices but allows for a product bundle which quality is superior – there is no objective way of balancing increasing prices (bad!) and increasing quality (good!) other than in very stylised models.

This paper raises a number of possibilities (to think about) on how to deal with such issues. For example, it is argued that an account of welfare does not need to rely upon any theoretically difficult constructs, such as “fully informed preferences,” which are impossible to determine in practice. A policymaker or legal decision maker who wishes to assess whether some legal rule or project increases subjective well-being need not engage in complicated and normatively fraught laundering of individual preferences – it need only measure the happiness of an affected population before and after a policy intervention to know whether the intervention produced a positive effect on well-being. Policymakers would study which goods and activities improve overall cumulative individual subjective well-being over time and then promote or advance the development of those goods and activities.

Of course, I’m not suggesting this approach be adopted ‘as is’ – the literature on preferences is not well developed enough, prices are still the better gauge of welfare that we have, and it is unclear whether competition law should look at different dimensions of welfare at all. Yet, this may be an idea worth devoting some time to.

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