Working Paper No. 14-25:
Learning Law and Economics
Date Posted: June 2014
Abstract (below) | Full text (most recent) on SSRN
The purpose of this book is to provide an elementary introduction to the body of thought known as “law and economics,” or alternatively as “economic analysis of law.” As is implied by its alternative name of economic analysis of law, the field of law and economics is concerned primarily with applying the methods of economic analysis to law and legal problems. Thus, law and economics primarily is a method of analysis; it is not a philosophy, political, moral, or otherwise; it is a tool. As such, it has achieved application across a spectrum of topics in law, and is used by people holding widely divergent perspectives on the legal process. Because of its increasing success in application, law and economics also can be viewed as a chapter in intellectual history, and one that is continuing today.
My aim in writing this book is two-fold. First, I seek to bring the essentials of law and economics to a wider audience, including those who are not professionally involved or previously trained in either law or economics. Second, the treatment here emphasizes an important aspect of economic analysis that too often is overlooked or de-emphasized in other introductory treatments, which is the economics of information production.
There are several excellent existing works on law and economics, including some introductory treatments, but these tend to be aimed at relatively specialized audiences, such as American law students or graduate economics students. My objective is to make law and economics accessible to the interested general reader, whether in the United States or elsewhere. As such, the book can be used as a text in undergraduate or graduate University courses, as well as law schools and economics graduate courses, or for self-study by others interested in the subject, whatever their prior background. Of necessity, my objective leads me to neglect certain topics and simplify others. However, simplicity need not produce a lack of sophistication. Overall, my aim is to show the broad usefulness of the few simple ideas that make up the law-and-economics paradigm. Detailed refinements or leading-edge critiques of the analysis, and debates over the normative implications of law and economics, largely are left to other works.
Who should be interested in learning law and economics? In my opinion, nearly everyone should be interested in learning something about law and economics, because its subject matter affects everyone who lives in society. Economics studies the conditions and consequences of human choice, and law is concerned with the conditions for human cooperation within a social group. Taken together, law and economics focus on the conditions for successful human cooperation within a society. Members of a society, which is most of us, all have an interest in meeting our own personal objectives within the social group, which may bring us into conflict with others. Economic analysis of law addresses the question of how those individual interests can be reconciled with one another.