Absolute Preferences and Relative Preferences in Property Law

The dominant form of legal discourse in contemporary America is welfarist. Though there are important alternatives, welfarism also largely prevails in property theory: most property scholars presume that maximizing social welfare is the primary goal of a property system and then analyze particular legal rules or institutions based on how well they achieve that objective.

Given that so many property theorists consider ourselves to be welfarists, it is perhaps surprising that property scholars have largely ignored developments in behavioral economics suggesting that people derive utility in divergent ways. I am not referring to the fact that peoples’ preferences differ with respect to, say, the best flavor of ice cream. A growing experimental literature suggests that, among the population of those who prefer chocolate ice cream to vanilla ice cream, there are two distinct camps: absolutists and relativists. Those in the first camp will prefer four scoops of chocolate to three, three to two, two to one, and one to none. This set of preferences is easy for classically trained economists to understand. Those in the second camp are more puzzling because they prefer a situation in which they receive one scoop of ice cream, but those around them receive none, to a situation in which they receive two scoops of ice cream, but those around them receive three.

In the pages that follow, I will try to show how this finding—that some people tend to care more about absolute wealth, while others tend to care more about relative wealth—might help us better understand several mysterious developments in property doctrine and may explain why certain seemingly low-stakes property disputes prove stubbornly unamenable to informal dispute resolution. Along the way, I will suggest that because of this heterogeneity, difficult questions lurk just under the surface in aspects of property doctrine that have long been thought uncontroversial, at least among welfarists.

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