72 Fla. L. Rev. 1211 (2020)
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EconomicsFirst Amendment


Externalities caused by religious exemptions have been getting the
spotlight again in light of a case the U.S. Supreme Court will hear this
term: Fulton v. City of Philadelphia. Some argue that religious
individuals should be required to internalize the costs they impose on
third parties and thus should be denied the right to practice that harmful
behavior. These new progressive theories about harm trade on rhetoric
and normative intuitions regarding externalities and costs. But curiously,
these theories also largely ignore an influential theoretical movement that
has studied externalities and costs for the last fifty years: law and

This Article thus poses a thought experiment: How would normative
rhetoric and doctrinal assessments change if one viewed religious
externalities through the lens of economic theory? Such a perspective
offers three novel normative insights. First, the mere existence of a
religiously caused externality does not provide a sufficient justification
for government restriction of religious rights, because externalities are
always reciprocal. Second, the government should be cautious about
coercing involuntary transactions where idiosyncratic valuation or high
transaction costs are involved. And third, exploring outcomes that
decrease net harm can highlight government policies that are themselves
creating harm. In other contexts, this analysis can force decision-makers
to confront more candidly problems of incommensurability, particularly
when it comes to dueling claims of dignitary harms.

An economic lens can also provide a positivist account of multiple
aspects of a religious exemption doctrinal framework in the context of
strict scrutiny. These include balancing competing harms in recognition
of reciprocal externalities, requiring the government to have a
justification for coercing involuntary transactions in a similar way that
property rules would, and assessing carefully whether alternatives exist
to avoid harm altogether. Indeed, this latter inquiry closely resembles the type of analysis courts engage in under the “less restrictive alternatives”
element of the strict scrutiny analysis.

While economic theory does not provide answers to all of the difficult
questions in these religious exemption debates, it can provide a clinical
method of analyzing hot-button issues involving seemingly intractable
conflicts. And to the extent that harm is a relevant normative
consideration, this Article asserts that an under-theorized reliance on
harm on just one side of the ledger, advocated under the current third-party harm theories, is a normatively unpersuasive approach.