ABSTRACT
Kaldor-Hicks efficiency is a fancy term that essentially conveys two ideas. The first idea is that all possible advantages and disadvantages of a legal rule need to be taken into account, people can't act as if some advantages or disadvantages do not exist. The second idea is that to the extent these advantages and disadvantages lead to conflicting recommendations, all of them should be balanced, and therefore require translation into a common unit of measurement; this can be dollars, utility, welfare, or happiness, but it has to be something. Kaldor-Hicks efficiency comes down to three imperatives: reveal all advantages and disadvantages you have in mind; reveal the meta-criterion you use for balancing them; and reveal all the empirical information and assumptions and make the best possible empirical guess of their magnitude. The Kaldor-Hicks criterion contains a balancing meta-norm; fairness maxim-based criteria contain one-sided meta-norms.
