Unveiling Fairness for the Consumer:The Law, Economics and Justice of Expanded Arbitration

In recent years, the US Supreme Court has rather controversially extended the ambit of the Federal Arbitration Act to extend arbitration’s reach into, inter alia¸ consumer matters, with the consequence that consumers are often (and unbeknownst to them) denied remedies which would otherwise be available. Such denied remedies include recourse to class action proceedings, effective denial of punitive damages, access to discovery and the ability to resolve the matter in a convenient forum.

The court’s extension of arbitration’s ambit is controversial. Attempts to overturn this extension have been made in Congress, but to no avail. In contrast to American law, European consumer law looks at pre-dispute agreements to arbitrate directed at consumers with extreme suspicion, and does so on the grounds of fairness. In contrast, some argue that pre-dispute agreements in consumer (and employment) matters are consumer welfare enhancing: they decrease the costs of doing business, which is then passed on to the consumer. This Article examines these latter claims from both an economic and normative perspective.

The economic analysis of these arguments shows that their assumptions do not hold. Rather than being productive of consumer surplus, the use of arbitration is likely to have the opposite effect. The industries from which the recent Supreme Court cases originated not only do not exhibit the industrial structure assumed by the proponents of expanded arbitration, but are also industries which exhibit features that facilitate consumer welfare reducing collusion.

The normative analysis addresses the fairness concerns. It is explicitly based upon John Rawls’ notion of “justice as fairness,” which can provide a lens to evaluate social institutions. This Rawlsian analysis considers the use of extended arbitration in consumer matters in the light of the earlier economic results. It suggests that the asymmetries present in the contractual allocation of rights serve as prima facie evidence that such arbitration–induced exclusions are prima facie unjust/unfair. However, as asymmetry is only a prima facie test, a generalized criticism of the arbitration exclusions (of the sort found in Congress and underlying the European regime) is overbroad.

The Economics of Total War and Reconstruction, 1914-1922

This chapter features a discussion of the economy and mobilization for the First World War. The authors analyse the implications and cost of total war, concluding with an examination of its contradictory legacies. In studying the war’s impact on Germany in particular, the chapter provides an in-depth look at the consequences of war on Europe’s strongest pre-war economy, without the complications of separating out the issues of a developing country, which can mimic those faced in wartime. The economic challenges that warring parties faced during the war included mobilization, warfare, labour shortage, impaired domestic economic activity, restricted international trade, a systematic redistribution of resources towards the war economy, food rationing, the predictable emergence of black markets, and a drop in living standards. The authors also discuss strategies to meet the significant financial demands associated with the war, and its tumultuous economic and political aftermath.

Demand response to improved walking infrastructure: A study into the economics of walking and health behaviour change

Walking is the most common form of moderate‐intensity physical activity among adults, is widely accessible and especially appealing to obese people. Most often policy makers are interested in valuing the effect on walking of changes in some characteristics of a neighbourhood, the demand response for walking, of infrastructure changes. A positive demand response to improvements in the walking environment could help meet the public health target of 150 minutes of at least moderate‐intensity physical activity per week. We model walking in an individual’s local neighbourhood as a ‘weak complement’ to the characteristics of the neighbourhood itself. Walking is affected by neighbourhood
characteristics, substitutes, and individual’s characteristics, including their opportunity cost of time.  Using compensating variation, we assess the economic benefits of walking and how walking behaviour is affected by improvements to the neighbourhood.  Using a sample of 1,209 respondents surveyed over a 12 month period (Feb 2010‐Jan 2011) in East Belfast, United Kingdom, we find that a policy that increased walkability and people’s perception of access to shops and facilities  would lead to an increase in walking of about 36 minutes/person/week, valued at £13.65/person/week. When focusing on inactive residents, a policy that improved the walkability of the area would lead to guidelines for physical activity being reached by only 12.8% of the population who are currently inactive. Additional interventions would therefore be needed to encourage inactive residents to
achieve the recommended levels of physical activity, as it appears that interventions that improve the walkability of an area are particularly effective in increasing walking among already active citizens, and, among the inactive ones, the best response is found among healthier, younger and wealthier citizens.

Economics of Non-Communicable Diseases in Indonesia

The Economics of Non-Communicable Diseases in Indonesia provides new data on the economic burden of NCDs in the country, and puts it in perspective by drawing a comparison with India and China. With this new addition to the series on the economics of NCDs, the World Economic Forum aims to advance the understanding of the expected economic output loss at the country level, particularly in countries in economic and epidemiological transition. The evidence presented provides a starting point in reorienting the dialogue on investing in healthy living and NCD prevention in Indonesia towards the view that a healthy population is an important factor for sustainable growth.

Finance, social economics and community development

The last three decades have seen social enterprises in the United Kingdom pushed to the forefront of welfare delivery, workfare and area-based regeneration. For critics, this is repositioning the sector around a neoliberal politics that privileges marketization, state roll-back and disciplining community groups to become more self-reliant. Successive governments have developed bespoke products, fiscal instruments and intermediaries to enable and extend the social finance market. Such assemblages are critical to roll-out tactics, but they are also necessary and useful for more reformist understandings of economic alterity. The issue is not social finance itself but how it is used, which inevitably entangles social enterprises in a form of legitimation crises between the need to satisfy financial returns and at the same time keep community interests on board. This paper argues that social finance, how it is used, politically domesticated and achieves re-distributional outcomes is a necessary component of counter-hegemonic strategies. Such assemblages are as important to radical community development as they are to neoliberalism and the analysis concludes by highlighting the need to develop a better understanding of finance, the ethics of its use and tactical compromises in scaling it as an alternative to public and private markets.

Calculus of variations on time scales and applications to economics

We consider some problems of the calculus of variations on time scales. On the beginning our attention is paid on two inverse extremal problems on arbitrary time scales. Firstly, using the Euler-Lagrange equation and the strengthened Legendre condition, we derive a general form for a variation functional that attains a local minimum at a given point of the vector space. Furthermore, we prove a necessary condition for a dynamic integro-differential equation to be an Euler-Lagrange equation. New and interesting results for the discrete and quantum calculus are obtained as particular cases. Afterwards, we prove Euler-Lagrange type equations and transversality conditions for generalized infinite horizon problems. Next we investigate the composition of a certain scalar function with delta and nabla integrals of a vector valued field. Euler-Lagrange equations in integral form, transversality conditions, and necessary optimality conditions for isoperimetric problems, on an arbitrary time scale, are proved. In the end, two main issues of application of time scales in economic, with interesting results, are presented. In the former case we consider a firm that wants to program its production and investment policies to reach a given production rate and to maximize its future market competitiveness. The model which describes firm activities is studied in two different ways: using classical discretizations; and applying discrete versions of our result on time scales. In the end we compare the cost functional values obtained from those two approaches. The latter problem is more complex and relates to rate of inflation, p, and rate of unemployment, u, which inflict a social loss. Using known relations between p, u, and the expected rate of inflation π, we rewrite the social loss function as a function of π. We present this model in the time scale framework and find an optimal path π that minimizes the total social loss over a given time interval.