Utilitarian As Economic Policymaker:
The Political Economy Of Sir Edwin Chadwick

Sir Edwin Chadwick Biography

There is some disagreement about the extent to which J. S. Mill was a collectivist, but it is clear that he was greatly influenced by the political thought of Jeremy Ben­tham. He defended private property, personal liberty, and decentralized government, even though he sometimes seemed willing to compromise these ends to the utilitar­ian ethic of the greatest good for the greatest number. His friend and ally, Edwin Chadwick, bowed more deeply at the utilitarian altar, and his persistence as the quin­tessential bureaucrat produced many far-reaching effects on British social and eco­nomic policy. In a phrase, Chadwick had his insistent fingers in practically every in­terventionist pie during his administrative career.

Chadwick's domineering personality made him hated by many and feared by some, but one could hardly question his boundless energy. Actively involved in the design and implementation of English social and economic legislation for over thirty years, Chadwick is credited as the driving force behind improvements in the Poor Laws, water supply, drainage, sewage treatment, public health, civil service, school architecture, education of pauper children, and many other programs. With Bentham, he was also the leading proponent of a "competitive principle" that has enjoyed a resurgence in our own day. Unlike Mill, however, he had few credentials as a "se­rious economist." In keeping with this, his biographers have approached him as a lawyer and civil servant. Be that as it may, it would be almost impossible to find any­one in the nineteenth century who saw more clearly the variety and kinds of eco­nomic problems that confront the modern policymaker.

Edwin Chadwick Law and Economics Theory

Chadwick was trained in law, but he forsook the life of a barrister for a career in the civil service. He was sympathetic to Bentham's "world view" and, in particular, to his theory of legislation that was grounded in utilitarianism. He was also versed in Ricardian economics. This intellectual heritage reinforced Chadwick's conviction that individual initiative is the mainspring of social progress. Throughout his life he remained a vocal defender of this principle and often advocated change in the ex­isting social structure in order to preserve the free play of individual initiative.

What Chadwick brought to Benthamism was an administrative genius that bridged the gap between utilitarian theory and bureaucratic practice. Bentham's theory of leg­islation was based on a rejection of Adam Smith's doctrine of the natural identity of private and public interests and its replacement with institutional devices to bring about an artificial identity of interests. His idea was to arrange obligations and pun­ishments in such a way that the incentive to effect public harm through private ac­tion or enterprise was removed, or at least, diminished. But the practical implemen­tation of this idea required a clear conception of the public interest. Bentham's personal view that the public interest is the summation of individual interests was fraught with analytical difficulties because it involved interpersonal-utility compar­isons (see Chapter 6). By contrast, Chadwick defined the public interest in terms of economic efficiency: Anything that reduced economic waste was found to be in the public interest. Under this banner, Chadwick advocated sweeping administrative re­forms in the provision of both private and public goods.

Perhaps an example will serve to illustrate Chadwick's approach to institutional reforms through incentive-manipulation. Put in charge of improving sanitation and thereby reducing the mortality of British criminals transported to Australia, Chad­wick noted that the British govenment paid a flat fee to the ship's captain for each convict who embarked from a British port. The captains, of course, found that they could maximize profits by taking on as many prisoners as could be safely carried without endangering the ship and by minimizing expenses (food and drink, etc.) on the prisoners en route. Survival rates among the prisoners under this incentive sys­tem were as low as 40 percent, humanitarian pleas for improved sanitation notwith­standing. After a quick assessment of the situation, Chadwick changed the payment system so that the ship's captain received a fee for each live convict that disembarked in Australia. Within a short time the survival rate increased dramatically to 98 ]A per­cent ("Opening Address"). All that was needed was to give the ship's captains an in­centive to protect the health of their cargo—thus creating an artificial identity be­tween the public interest (i.e., the safety of the prisoners) and the private interests (i.e., the profit of the shipper).

Economics of Crime, Courts, and Police Bentham's utilitarianism also pro­vided the psychological foundation for Chadwick's theory of human behavior, which surfaced in his 1829 proposal that a municipal police force be established in the city of London. Chadwick's report on police, prepared for Sir Robert Peel's7 Select Com­mittee, was a brilliant tour de force of Benthamite principles and an effective vehi­cle for showcasing Chadwick's "preventive principle," which was to become the base for so many of his later reforms. According to this principle, the surest way to re­duce waste is not to alleviate inefficiencies after the fact but to keep them from oc­curring in the first place. Chadwick was a fanatic on the principle of prevention, and he always implied that preventive measures were generally accompanied by large pecuniary economies.

Criminal Behavior Chadwick was an avid believer in the primacy of statisti­cal research, and he commonly conducted "field inquiries" on the nature of prob­lems that required administrative solutions. His direct questioning of criminal offenders produced the following behavioral profile: thieves, he learned, are impatient with steady labor, dislike physical exertion, enjoy leisure, are not easily deterred by the threat of punishment, and value the prospect of "uninterrupted" success. In sum, Chadwick believed criminals made rational choices based on pecuniary gain in re­gard to their "career" selection. Typical of the responses Chadwick got from his field inquiries was the retort of one Frenchman to the question of why he chose a life of crime. Reported the convict, "I keep myself within bounds of moderation: yet as a thief, I realise eighteen francs a day. But at my trade as a tailor I only earn three. I put it to you—would you be honest only on that?".

Chadwick concluded that individuals calculate the expected benefits and costs of committing illegal acts, and that for any given booty obtained, the expected gain will be smaller the higher the probabilities of apprehension and conviction. He did not reject the earlier claim by Bentham and others that there are tradeoffs between the severity of punishment and its certainty, but Chadwick's research denied the im­portance of severe punishment as a strong deterrent to crime. His empirical studies convinced him of two important facts: (1) that existing police administration and ju­risprudence placed the risk costs associated with crime at very low levels, although the punishments were very severe; and (2) that a high probability of capture and con­viction was the stronger deterrent to crime.

Police Effectiveness Chadwick consistently argued that crime prevention was the joint responsibility of police and the public, but he directed his attention to ad­ministrative reforms that would make the police a more efficient preventive force. His proposals confronted the subjects of police compensation and administrative economies.

Chadwick saw a close connection between the quality of law enforcement and the compensation of enforcers. He found that police wages were so low in Britain as to encourage as many thefts of high-valued property as possible, "in order that large rewards may be offered for its recovery". A solution to the wage problem was to base police wages on productivity, but Chadwick was unable to devise an operational procedure for doing so because of an inability to mea­sure the real services of prevention. As a second-best solution he suggested an ad­justment of wages based on the comparison of crimes committed in one police ju­risdiction with those committed in other jurisdictions where property was similarly situated. Distortions caused by discrepancies between actual and reported crimes or in the rate of reporting crimes would, of course, remain in such a system, and, as Chadwick recognized, only improvements in the collection and accuracy of crime data could correct these deficiencies.

On most matters of administrative economy Chadwick was a centralist. He con­sistently harped on the desirability of a centralized bureau for collecting and dis­seminating crime data, including descriptions of stolen property. Within the ranks of traditional police organization, he challenged specialization and division of labor as principles of preventive efficiency. Chadwick argued that where deterrence is the objective, maximum efficiency will be promoted by the geographical dispersion of preventive "inputs." It is physically easier to extinguish fires (and thereby reduce property loss) if detection and extinction occur soon after combustion. Consolidation of police and fire-preventive agents would therefore place more preventive agents in the field and consequently reduce the time lag in detecting and extin­guishing fires. Chadwick drove home his point with the force of a scientific rule: "The force of one man for fire service at half a mile is worth four men at three quarters of a mile, worth six men at a mile, and worth eight men at a mile and a half . An additional benefit of consolidation would be improved efficiency in the detection of arson. Chadwick viewed this as no small consequence, since reliable estimates put the number of intentional fires in the Lon­don metropolis at one-third of the total.

The Economics of Justice Among the costs imposed on lawbreakers is not only the probability of capture but also the probability of conviction. Chadwick recog­nized that the probability of punishment is not a single value in each case but rather is the compound result of a series of separate probabilities that arise at each stage of the judicial procedure. Besides the chance of being discovered, pursued, or detected (which is governed by the state of police), Chadwick cited:
1 The chance, if detected and apprehended, of being indicted
2 The chance of error in framing the indictment
3 The chance of dismissal of a bill of indictment by the grand jury
4 A number of contingent chances in the trial process, e.g., exclusion of evidence, the quality of witnesses, lawyers, judges, and juries

Chadwick's most vicious attack on existing institutions was on the grand jury sys­tem. He labeled it "the stronghold of perjury," a system that gives to delinquents "all the chances (of escape) arising from the ignorance and want of skill both in the ju­rymen and the witness". He estimated that criminals go free more often because of a lack of expertise among jurors than improper action taken by judges, and he called for the elimination of the grand jury system as one way of raising costs to the guilty without simultaneously raising the probability of convicting the innocent.

In addition to reforms that would streamline court procedures, Chadwick favored institutional arrangements that would lower the individual costs of prosecuting crimes or of providing information necessary to court proceedings. Streamlining of court procedures in itself lowers the cost of providing information, since the major cost to witnesses is the time spent in court testimony. Chadwick cited other costs to crime victims as well—delays caused by restricting judicial hearings to only one ju­risdiction or judge, and the mistreatment of some witnesses by judges. His overall approach to procedural reforms was in this, as in all cases, fundamentally economic. He declared: "We should bear in mind that simplicity, expedition, certainty, and free­dom from expense, are the most desirable qualities for penal as well as other proce­dure".