Social Choice and Judicial Decision Making

Arrow's Impossibility Theorem

In a famous essay for which he received the Nobel Prize in Economics, Kenneth Arrow demonstrated the impossibility of developing rules for a decisionmaking body that would simultaneously guarantee transitive group outputs, meaning that the rules would prevent cycling, and ensure adherence to a set of norms that he considered fundamental to fair or democratic decision making. The fairness factors include independence (demanding sincere voting in direct binary comparisons), nondictatorship (not vindicating the preferences of one member against the contrary preferences of the group as a whole), unanimity (the Pareto criterion), and range (requiring that the outcome be consistent with the unrestricted ranking by all members of the three available options in any order). Arrow's Theorem ultimately establishes that the price for guaranteeing noncyclical outcomes is to violate at least one of Arrow's fairness norms.

Legislatures versus Appellate Courts

Several economists and legal scholars have suggested that because legislatures are collective decisionmaking bodies, Arrow's Impossibility Theorem demonstrates their incompetence or irrationality and thus justifies shifting substantial control over legal policy to appellate courts, and in particular the U.S. Supreme Court. Of course, appellate courts are also collective decision-making bodies, and this insight has led some scholars to claim that Arrow's Theorem leaves legal policy makers nowhere to turn. Because a critical feature of judicial decision-making rules involves when to leave the resolution of questions of public policy to the political branches, it is important to evaluate such claims. A rigorous appreciation of the [Page 1385]implications of social choice reveals the limits of these broad claims by demonstrating important synergies between legislatures and courts that together improve their overall rationality and fairness.

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