Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law. The field emerged in the United States during the early 1960s, primarily from the work of scholars from the Chicago school of economics such as Aaron Director, George Stigler, and Ronald Coase. The field uses economics concepts to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated.[1] There are two major branches of law and economics;[2] one based on the application of the methods and theories of neoclassical economics to the positive and normative analysis of the law, and a second branch which focuses on an institutional analysis of law and legal institutions, with a broader focus on economic, political, and social outcomes, and overlapping with analyses of the institutions of politics and governance.
The historical antecedents of law and economics can be traced back to the classical economists, who are credited with the foundations of modern economic thought. As early as the 18th century, Adam Smith discussed the economic effects of mercantilist legislation; later, David Ricardo opposed the British Corn Laws on the grounds that they hindered agricultural productivity; and Frédéric Bastiat, in his influential book The Law, examined the unintended consequences of legislation. However, to apply economics to analyze the law regulating nonmarket activities is relatively new. A European law & economics movement around 1900 did not have any lasting influence.[3]
Historians Robert van Horn and Philip Mirowski described the development of modern economic concepts in "The Rise of the Chicago School of Economics", a chapter of The Road from Mont Pelerin (2009); and historian Bruce Caldwell (a great admirer of von Hayek) filled in more details of the account in his chapter, "The Chicago School, Hayek, and Neoliberalism", in Building Chicago Economics (2011). The field began with Gary Becker's 1968 paper on crime (Becker also received a Nobel Prize). In 1972, Richard Posner, a law and economics scholar and the major advocate of the positive theory of efficiency, published the first edition of Economic Analysis of Law and founded The Journal of Legal Studies, both are regarded as important events. Gordon Tullock and Friedrich Hayek also wrote intensively in the area and influenced to spread of law and economics.
Founding
In 1958, Director founded TheJournal of Law & Economics, which he co-edited with Nobel laureate Ronald Coase, and which helped to unite the fields of law and economics with far-reaching influence.[5] In 1960 and 1961, Ronald Coase and Guido Calabresi independently published two groundbreaking articles, "The Problem of Social Cost"[6] and "Some Thoughts on Risk Distribution and the Law of Torts".[7] This can be seen as the starting point for the modern school of law and economics.[8]
In 1962, Aaron Director helped to found the Committee on a Free Society. Director's appointment to the faculty of the University of Chicago Law School in 1946 began a half-century of intellectual productivity, although his reluctance about publishing left few writings behind.[9] He taught antitrust courses at the law school with Edward Levi, who eventually would serve as Dean of Chicago's Law School, President of the University of Chicago, and as U.S. Attorney General in the Ford administration. After retiring from the University of Chicago Law School in 1965, Director relocated to California and took a position at Stanford University'sHoover Institution. He died September 11, 2004, at his home in Los Altos Hills, California, ten days before his 103rd birthday.
Later development
In the early 1970s, Henry Manne (a former student of Coase) set out to build a center for law and economics at a major law school.[10] Ultimately, Manne established a center at George Mason, which became a center for the education of judges — many never previously exposed to the concepts of law and economics. Manne also attracted the support of the John M. Olin Foundation; Olin centers (or programs) for Law and Economics now exist at many universities.
Guido Calabresi, Yale University.[15][16] Calabresi, judge for the U.S. Court of Appeals for the Second Circuit, wrote in depth on this subject; his book The Costs of Accidents: A Legal and Economic Analysis (1970) has been cited as influential in its extensive treatment of the proper incentives and compensation required in accident situations.[17] Calabresi took a different approach in Ideals, Beliefs, Attitudes, and the Law (1985), where he argued, "who is the cheapest avoider of a cost, depends on the valuations put on acts, activities and beliefs by the whole of our law and not on some objective or scientific notion" (69).
Economic analysis of law is usually divided into two subfields: positive and normative.
Positive law and economics
'Positive law and economics' uses economic analysis to predict the effects of various legal rules. So, for example, a positive economic analysis of tort law would predict the effects of a strict liability rule as opposed to the effects of a negligence rule. Positive law and economics has also at times purported to explain the development of legal rules, for example the common law of torts, in terms of their economic efficiency.
Normative law and economics
Normative law and economics goes one step further and makes policy recommendations based on the economic consequences of various policies. The key concept for normative economic analysis is efficiency, in particular, allocative efficiency.
A common concept of efficiency used by law and economics scholars is Pareto efficiency. A legal rule is Pareto efficient if it could not be changed so as to make one person better off without making another person worse off. A weaker conception of efficiency is Kaldor–Hicks efficiency. A legal rule is Kaldor–Hicks efficient if it could be made Pareto efficient by some parties compensating others as to offset their loss.
Nonetheless, the possibility of a clear distinction between positive and normative analysis has been questioned by Guido Calabresi who, in his book on "The future of Law and Economics" (2016: 21-22), believes that there is an "actual - and unavoidable - existence of value judgments underlying much economic analysis"[19]
Uri Weiss proposed this alternative: "It is common in law and economics to search for the law that will lead to the optimal outcome, providing the maximum size 'pie,' and to think about maximizing happiness instead of minimizing pain. We prefer another approach: We do not try to identify games that will lead to the optimal result but to prevent games in which it is in the best interests of the players to come to an unjust result".[20]
Criminal law
In 1968, Gary Becker, who would later win the Nobel prize for economics, published Crime and Punishment: An Economic Approach.[21] This work relied on the economic concept of utility as the basic unit of analysis. In 1985, in An Economic Theory of the Criminal Law, Posner set out an alternative approach that relied instead on wealth as the basic unit of analysis.[22]
Relationship to other disciplines and approaches
As used by lawyers and legal scholars, the phrase "law and economics" refers to the application of microeconomic analysis to legal problems. Because of the overlap between legal systems and political systems, some of the issues in law and economics are also raised in political economy, constitutional economics and political science.
Approaches to the same issues from Marxist and critical theory/Frankfurt School perspectives usually do not identify themselves as "law and economics". For example, research by members of the critical legal studies movement and the sociology of law considers many of the same fundamental issues as does work labeled "law and economics", though from a vastly different perspective. The law and political economy movement also analyzes similar concepts using an entirely different approach.[23]
The one wing that represents a non-neoclassical approach to "law and economics" is the Continental (mainly German) tradition that sees the concept starting out of the governance and public policy (Staatswissenschaften) approach and the German Historical school of economics; this view is represented in the Elgar Companion to Law and Economics (2nd ed. 2005) and—though not exclusively—in the European Journal of Law and Economics. Here, consciously non-neoclassical approaches to economics are used for the analysis of legal (and administrative/governance) problems.
The economic analysis of law has been influential in the United States as well as elsewhere. Judicial opinions use economic analysis and the theories of law and economics with some regularity, in the US but also, increasingly, in Commonwealth countries and in Europe. The influence of law and economics has also been felt in legal education, with graduate programs in the subject being offered in a number of countries. The influence of law and economics in civil law countries may be gauged from the availability of textbooks of law and economics, in English as well as in other European languages (Schäfer and Ott 2004; Mackaay 2013).
Many law schools in North America, Europe, and Asia have faculty members with a graduate degree in economics. In addition, many professional economists now study and write on the relationship between economics and legal doctrines. Anthony Kronman, former dean of Yale Law School, has written that "the intellectual movement that has had the greatest influence on American academic law in the past quarter-century [of the 20th Century]" is law and economics.[49]
Criticisms
Despite its influence, the law and economics movement has been criticized from a number of directions. This is especially true of normative law and economics. Because most law and economics scholarship operates within a neoclassical framework, fundamental criticisms of neoclassical economics have been drawn from other, competing frameworks, though there are numerous internal critiques as well.[50] Yet other schools of economic thought have emerged and have been applied to the work of law and economics in, for example, the work of Edgardo Buscaglia and Robert Cooter in the book "Law and Economics of Development".[51]
Rational choice theory
Critics of the economic analysis of legal questions have argued that normative economic analysis does not capture the importance of human rights and concerns for distributive justice. Some of the heaviest criticisms of law and economics come from the critical legal studies movement, in particular Duncan Kennedy[52] and Mark Kelman. Jon D. Hanson, of Harvard Law School, argues that our legal, economic, political, and social systems are unduly influenced by an individualistic model of behavior based on preferences, instead of a model that incorporates cognitive biases and social norms.[53]
Pareto efficiency
Additional criticism has been directed toward the assumed benefits of law and policy designed to increase allocative efficiency when such assumptions are modeled on "first-best" (Pareto optimal) general-equilibrium conditions. Under the theory of the second best, for example, if the fulfillment of a subset of optimal conditions cannot be met under any circumstances, it is incorrect to conclude that the fulfillment of any subset of optimal conditions will necessarily result in an increase in allocative efficiency.[54]
Consequently, any expression of public policy whose purported purpose is an unambiguous increase in allocative efficiency (for example, consolidation of research and development costs through increased mergers and acquisitions resulting from a systematic relaxation of antitrust laws) is, according to critics, fundamentally incorrect, as there is no general reason to conclude that an increase in allocative efficiency is more likely than a decrease.
Essentially, the "first-best" neoclassical analysis fails to properly account for various kinds of general-equilibrium feedback relationships that result from intrinsic Pareto imperfections.[54]
Another critique comes from the fact that there is no unique optimal result. Warren Samuels in his 2007 book, The Legal-Economic Nexus, argues, "efficiency in the Pareto sense cannot dispositively be applied to the definition and assignment of rights themselves, because efficiency requires an antecedent determination of the rights (23–4)".
"Internal" analytical criticisms
Relatedly, legal scholarship also has criticized the movement for allowing its framing of models to dictate its results, for over-emphasizing or under-emphasizing specific incentives and costs, and for building models that do not degrade "gracefully" (and therefore have difficulty modeling reality).[55]
In other words, the law and economics movement may not achieve "efficiency", even to the extent allocative efficiency is the goal of the law.[56]
Criminal methodology
Cullerne Bown has criticised Posner's approach on methodological grounds. He concludes that Posner's approach to evaluating policies in the criminal process is methodologically invalid and that "these failings in turn make the entirety of his conclusions on the criminal process unreliable".[57]
Responses to criticism
Law and economics has adapted to some of these criticisms and been developed in a variety of directions. One important trend has been the application of game theory to legal problems.[58] Other developments have been the incorporation of behavioral economics into economic analysis of law,[59] and the increasing use of statistical and econometrics techniques.[60] Within the legal academy, the term socio-economics has been applied to economic approaches that are self-consciously broader than the neoclassical tradition.
Property rights, which are analyzed using economic analysis, are seen as fundamental human rights by defenders of law and economics.[61]
^Ostrom, Elinor (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge, UK: Cambridge University Press. ISBN978-0-521-40599-7.
^Demsetz, Harold (1967). "Toward a Theory of Property Rights". The American Economic Review. 57 (2): 347–359. ISSN0002-8282. JSTOR1821637.
^Gostin, Lawrence (2006). "Public Health Strategies for Pandemic Influenza: Ethics and the Law". JAMA. 295 (14): 1700–1704. doi:10.1001/jama.295.14.1700. PMID16609092.
^Krueger, Anne O. (1974). "The Political Economy of the Rent-Seeking Society". The American Economic Review. 64 (3): 291–303. ISSN0002-8282. JSTOR1808883.
^Viscusi, W. Kip (1993). "The Value of Risks to Life and Health". Journal of Economic Literature. 31 (4): 1912–1946. ISSN0022-0515. JSTOR2728331.
^Viscusi, W. Kip; Aldy, Joseph E. (2003-08-01). "The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World". Journal of Risk and Uncertainty. 27 (1): 5–76. doi:10.1023/A:1025598106257. ISSN1573-0476. S2CID189928888.
^Johnson, Ronald N.; Gisser, Micha; Werner, Michael (1981). "The Definition of a Surface Water Right and Transferability". The Journal of Law and Economics. 24 (2): 273–288. doi:10.1086/466984. ISSN0022-2186. S2CID153338557.
^Schlag, Pierre (2013-09-17). "Coase Minus the Coase Theorem – Some Problems with Chicago Transaction Cost Analysis". Rochester, NY: Social Science Research Network. SSRN2320068. {{cite journal}}: Cite journal requires |journal= (help)
^The law and economics of development - Edgardo Buscaglia, William Ratliff and Robert Cooter Libraries, JAI Press, 1997, ISBN0762301074
Kai PurnhagenNever the Twain Shall Meet? – A Critical Perspective on Cultural Limits Between Internal Continental Dogmatism and Consequential US-Style Law and Economics Theory in Klaus MathisLaw and Economics in Europe (Springer Science), pp. 3–21, available at [1]
Kennedy, Duncan (1998). "Law-and-Economics from the Perspective of Critical Legal Studies" (from The New Palgrave Dictionary of Economics and the LawPDF
_____ (2006). "A Review of Steven Shavell's Foundations of Economic Analysis of Law," Journal of Economic Literature, 44(2), pp. 405–14[permanent dead link] (press +).
Dari Sujud Ke SujudGenre Drama Roman Religi PembuatSinemArtBerdasarkanKetika Cinta Bertasbih oleh Habiburrahman El ShirazyDitulis olehHabiburrahman El ShirazySkenarioHabiburrahman El ShirazySutradaraChaerul UmamPemeran Marshanda Asmirandah Dude Harlino Riza Shahab Kholidi Asadil Alam Oki Setiana Dewi Meyda Sefira Andi Arsyil Rahman Winky Wiryawan Penggubah lagu temaMarshanda, Dude Harlino, Oki Setiana Dewi, Cholidi Asadil Alam, Andi Arsyil RahmanLagu pembukaDari Sujud ke Sujud oleh Marshanda, Du…
Flavius Julius NeposKaisar dari Kekaisaran Romawi BaratTremissis (uang logam) Julius NeposBerkuasaJuni 474 – 28 Agustus 475 (memerintah dari Italia) 475–480 (memerintah dari Dalmatia)PendahuluGlyceriusPenerusRomulus AugustusKelahirank. 430Kematian25 April, 9 Mei, atau 22 Juni 480 (umur 50)Spalatum, DalmatiaAyahNepotianusIbuSaudara perempuan dari MarcellinusIstriKeponakan dari istri Leo I Julius Nepos[1] (430 M – 480 M) merupakan seorang Kaisar Romawi Barat secara de facto dari 474 …
Sultan of Bengal (r. 1415–1416) (1418–1433) Jalaluddin Muhammad ShahSultanArabic silver coin with a lion inscription minted during Jalaluddin Muhammad Shah's reignSultan of BengalReign1415–1416PredecessorShihabuddin Bayazid ShahSuccessorRaja GaneshaReign1418–1433PredecessorRaja GaneshaSuccessorShamsuddin Ahmad ShahBornBhavaniganj, Bengal SultanateDiedc. 1433Pandua, Bengal SultanateSpousesAsmantara, daughter of Ghiyasuddin Azam Shah[1]IssueShamsuddin Ahmad ShahNamesJalaluddin Abul…
DillonPenemuanDitemukan olehA. LoweSitus penemuanPalomarTanggal penemuan8 Agustus 2002PenamaanPenamaan MPC78393Penamaan alternatif2002 PW165Ciri-ciri orbitEpos 14 Mei 2008Aphelion2.9212555Perihelion2.3543029Eksentrisitas0.1074678Periode orbit1564.7900675Anomali rata-rata135.35090Inklinasi2.19494Bujur node menaik15.31950Argumen perihelion297.43499Ciri-ciri fisikMagnitudo mutlak (H)15.8 78393 Dillon (2002 PW165) adalah sebuah asteroid yang terletak di sabuk utama. Ast…
Ini adalah nama Tionghoa; marganya adalah Li (李). Li XueruiLi Xuerui di AS Terbuka 2011Informasi pribadiNama lahir李雪芮Kebangsaan TiongkokLahir24 Januari 1991 (umur 33)Chongqing, ChinaTempat tinggalBeijing, ChinaTinggi174 m (570 ft 10+1⁄2 in)Tahun aktifSejak 2007PeganganKananPelatihChen JinWomen's singlesRekor319 Menang, 65 KalahPeringkat tertinggi1 (20 December 2012)Peringkat saat iniPensiun (di 2019) Rekam medali Tunggal Putri badminton Mewakili …
مصباح بخار الزئبق عن قرب مصباح بخار الزئبق هو مصباح تفريغ غازي يحوي فلز الزئبق في حالة مهيجة بحيث يساهم في إصدار الضوء.[1][2][3] يستخدم فلز الزئبق السائل في الإضاءة، حيث يتحول الزئبق إلى بخار الزئبق، ثم يتحول تحت تأثير درجة الحرارة وفرق الجهد من زئبق بحالته العادية …
Series of major battles between Italy and Austria-Hungary during WWIFor the Ostrogoth invasion of Italy, see Battle of Isonzo (489). This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed.Find sources: Battles of the Isonzo – news · newspapers · books · scholar · JSTOR (January 2014) (Learn how and when to remove this template mess…
الدوري البلجيكي الدرجة الأولى الموسم 1995–96 البلد بلجيكا المنظم الاتحاد الملكي البلجيكي لكرة القدم النسخة 93 عدد الفرق 18 الفائز كلوب بروج كيه في (اللقب العاشر) الوصيف نادي كلوب بروج الفرق الهابطة رويال كلوب سيراينكونينكليجك سبورتكرينغ بيفيرنكونينكليجك سبورتفرينغن…
Bandar Udara Saint JohnIATA: YSJICAO: CYSJInformasiJenisSipilPengelolaSaint John Airport Inc.LokasiSaint John, New BrunswickZona waktuUTC-Koordinat{{{coordinates}}} Bandar Udara Saint John (IATA: YSJ, ICAO: CYSJ) adalah sebuah bandar udara yang terletak 8 mil (14.8 km) timur-timur laut dari Saint John, New Brunswick, Kanada. Bandar udara ini merupakan bagian dari National Airports System, dimiliki oleh Transport Canada dan dioperasikan oleh Saint John Airport Inc. Bandar Udara Saint Jo…
Serie CBadan yang mengaturLega Italiana Calcio ProfessionisticoNegaraItaliaKonfederasiUEFADibentuk1935 as Serie C(refounded in 2014 as Lega Pro, then in 2017 again as Serie C)Divisi3Jumlah tim60Tingkat pada piramida3Promosi keSerie BDegradasi keSerie DPiala domestikCoppa ItaliaPiala ligaSupercoppa di Serie CCoppa Italia Serie CPiala internasionalUEFA Europa League(via winning Coppa Italia)Juara bertahan ligaVirtus Entella (Group A)Pordenone (Group B)Juve Stabia (Group C) (2018–19)Klub tersukse…
Elpida Memory, Inc.IndustriIndustri semikonduktorDidirikan1999KantorpusatYaesu, Chūō, Tokyo, JepangProdukDRAMKaryawan3196Situs webwww.elpida.com Elpida Memory, Inc. (エルピーダメモリ株式会社code: ja is deprecated , Erupīda Memori Kabushiki-gaisha) (TYO: 6665) adalah sebuah perusahaan yang didirikan tahun 1999 yang mengembangkan, merancang, merakit dan menjual produk memori akses acak dinamis (DRAM). Perusahaan ini juga merupakan sebauh pabrik semikonduktor. Dengan kantor pusat di …
Footballer (born 1991) In this Congolese name, the surname is Kakuta and the post-surname is Mambenga. Gaël Kakuta Kakuta with Lens in 2020Personal informationFull name Gaël Romeo Kakuta Mambenga[1]Date of birth (1991-06-21) 21 June 1991 (age 32)[2]Place of birth Lille, FranceHeight 1.73 m (5 ft 8 in)[3]Position(s) Winger[2]Team informationCurrent team AmiensNumber 10Youth career1998–1999 US Lille-Moulins1999–2007 Lens2007–2009 Chel…
Piala Super Italia 2018Kota Olahraga Raja Abdullah di Jeddah menjadi tuan rumah pertandinganTurnamenPiala Super Italia Juventus Milan Serie A Piala Italia 1 0 Tanggal16 Januari 2019StadionKota Olahraga Raja Abdullah, Jeddah, Arab SaudiWasitLuca BantiPenonton61,235← 2017 2019 → Piala Super Italia 2018 adalah edisi ke-31 dari Piala Super Italia, Piala super sepak bola Italia. Itu dimainkan pada 16 Januari 2019 di King Abdullah Sports City di Jeddah, Arab Saudi.[1] Dengan Juvent…
العلاقات الليبية الموريشيوسية ليبيا موريشيوس ليبيا موريشيوس تعديل مصدري - تعديل العلاقات الليبية الموريشيوسية هي العلاقات الثنائية التي تجمع بين ليبيا وموريشيوس.[1][2][3][4][5] مقارنة بين البلدين هذه مقارنة عامة ومرجعية للدولتين: وجه المقا…
HamtaroGenreKodomo AnimeSutradaraOsamu NabeshimaStudioShogakukan Productions Co., Ltd.TMS Portal anime dan manga Hamtaro (とっとこハム太郎code: ja is deprecated , Tottoko Hamutarō, lit. Trotting Hamtaro) adalah acara televisi untuk anak-anak. Watak utama ialah hamster bernama Hamtaro (Hamutaro dalam bahasa Jepang). Pranala luar (Jepang) Hamtaro Official Japanese site Diarsipkan 2018-07-31 di Wayback Machine. (Jepang) TV Tokyo Hamtaro Website Diarsipkan 2011-12-03 di Wayback Ma…
العلاقات المكسيكية الكندية كندا المكسيك تعديل مصدري - تعديل العلاقات المكسيكية الكندية هي العلاقات التي تجمع بين كندا والولايات المتحدة المكسيكية. تغيرت العلاقات بين المكسيك وكندا بشكل إيجابي في السنوات الأخيرة، وذلك على الرغم من خمول العلاقات التاريخية …
район / муниципальный районВытегорский район Флаг Герб 59°52′ с. ш. 38°23′ в. д.HGЯO Страна Россия Входит в Вологодскую область Адм. центр Вытегра Глава администрации Скресанов Александр Викторович Председатель Представительного Собрания Зимин Александр В…