Rules vs Standards
Week 2: Rules vs Standards
An Economic Analysis
By Louis Kaplow
Overview
- Definition - what are rules and what are standards?
- How are they different?
- What affects the cost of rules and standards?
- A different debate: how detailed should laws be formulated and applied?
- Extensions
- Conclusion
When is the law given content?
before
after
individual acts
Rules
Standards
"Do not exceed 55 mph on the expressway"
"Do not drive at an excessive speed on the expressway"
ex ante
ex post
(context)
When is the law given content?
before
after
individual acts
Rules
Standards
ex ante
ex post
Note:
- Author assumes that only distinction is ex ante vs ex post law creation
- In reality, legal commands are often mixes
(context)
Framework
Law Promulgation
Law Promulgation
Law Promulgation
Legal Choice
Law Promulgation
Law Promulgation
Law Promulgation
Law Enforcement
Law Promulgation
The three stages cont'd
What affects the choice between rules and standards?
- legal cost
- extent to which individuals' behavior conform to the law
Where do costs come in?
💰 promulgation cost
💰 prediction cost
💰 enforcement cost
Example: disposal of hazardous substances
Dry cleaning; automative fluids?
- Rules
Radioactive water?
- Standards
What affects legal cost?
Frequency
and consequently, desirability?
What affects legal cost?
Rules
Frequent application in recurring fact scenarios:
- traffic laws
- federal income tax
- law of damages
Standards
laws that govern more heterogenous behavior
- law of negligence
→ depends on whether individuals choose to acquire legal advice before they act
Individuals' behavior conform to law?
- reduced cost to learn the law
- better legal compliance
A common suggestion
Rules tend to be over- and/or under-inclusive compared to standards.
- implicitly comparing a complex standard and a simple rule → not fair!
- should be comparing a standard to the rule equivalent to that standard
Two issues
ex post or ex ante law creation
(time of law creation)
=
appropriate degree of detail in law
(complexity)
A concrete example
Q: Who may pilot commercial aircrafts?
Rule
Standard
simple
complex
no one over age 60
No one who falls in any of a number of categories detailing combinations of values of variables that bear on accident risk.
No one who poses an unreasonable risk of accident
A concrete example
Q: Who may pilot commercial aircraft? 🛫
Rule
Standard
simple
complex
no one over age 60
No one who falls in any of a number of categories detailing combinations of values of variables that bear on accident risk.
No one who poses an unreasonable risk of accident
no one over age 60
→ de facto simple
no one over age 60
Main arguments from Part II
- There is no universal tendency for standards to be more complex than rules
- To prefer complex standards to simple rules implies
- complexity ≻ simplicity
- rule ≻ standard
- combination of both
Extension 1: Standards to Rules
precedent
💰
💰
💰
Frequency
Extension 2: Does the framework still hold now?
（1992）
individual acts
Rules
Standards
- "Micro-directives" - The Death of Rules and Standards, by Casey and Niblett
- "Dynamic rules" - Law's Algorithm, by McGinnis and Wasick
Does the framework still hold now?
（1992）
Does the framework still hold now?
（1992）
💰
Dynamic Rules
Law Promulgation
Law Promulgation
Law Promulgation
Individuals act
Law Promulgation
Law Promulgation
Law Promulgation
Law Enforcement
💰
Some questions I had...
- How does "rules vs standards" apply in emerging fields? (e.g. Tech regulation)
- Has rate of convergence (from standards to rules) changed throughout the years?
- ex post vs ex ante -- is this a good distinction to focus on? What else could we focus on?
- mixes - which aspects of a legal command should be resolved in advance? Which aspects should be left to the adjudicator?
Conclusion
- distinction between rules and standards
- ex ante vs ex post law creation
- relative desirability → legal costs → frequency
- complexity = time of law creation