This Article offers an economic analysis of the extent to which legal commands should be promulgated as rules or standards. Two dimensions of the problem are emphasized. First, the choice between rules and standards affects costs: Rules typically are more costly than standards to create, whereas standards tend to be more costly for individuals to interpret when deciding how to act and for an adjudicator to apply to past conduct. Second, when individuals can determine the application of rules to their contemplated acts more cheaply, conduct is more likely to reflect the content of previously promulgated rules than of standards that will be given content only after individuals act. The Article considers how these factors influence the manner in which rules and standards should be designed, and explores the circumstances in which rules or standards are likely to be preferable. The Article also addresses the level of detail with which laws should be formulated and applied, emphasizing how this question concerning the laws' relative simplicity or complexity can be distinguished from that of whether laws are given content ex ante (rules) or ex post (standards). In so doing, it illuminates concerns about the over-and underinclusiveness of rules relative to standards.
This working paper contains the table of contents and introductory chapter to The Theory of Taxation and Public Economics (Princeton University Press 2008). The book presents a unified conceptual framework for analyzing taxation and other fiscal instruments. Subjects include optimal income taxation, commodity taxation, government expenditures on transfer programs and on public goods, capital taxation, taxation of private voluntary transfers, social security, taxation of different family units, and the welfare economic underpinnings of redistributive taxation. By applying a common methodology to disparate subjects, the book produces significant cross-fertilization, yields solutions to previously intractable problems, and suggests an agenda for further theoretical investigation as well as empirical research.
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