"The Possibility of the Paretian Liberal in a Coasian World" (2008)

Undergraduate: Robert Butters

Faculty Advisor: Scott Baker
Department: Economics

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The conflict between two ideals, personal liberty and pareto optimality, first described in Sen’s work “The Impossibility of the Paretian Liberal”, has been the subject of much debate. Adhering to a weak notion of personal liberty demands that there exist “certain personal matters in which each person should be free to decide what should happen, and in choices over these things whatever he or she thinks is better must be taken to be better for the society as a whole”. The choices over which individuals are granted decisiveness “lie in what is sometimes referred to as a person’s “protected sphere”. These “protected spheres” seem vulnerable, however, to claims Pareto optimality, even its weakest form, mandates of society regarding the allocation of resources. Introducing a Coasian World, which guarantees efficiency, will permit a more detailed explanation of this conflict. This paper shows that the “Impossibility of the Paretian Liberal” does not result from a conflict between liberalism and Pareto optimality, but because one or more of the features of the Coasian World do not exist.