Law and Economics

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Law and Economics is an approach to legal analysis associated with the University of Chicago, which pioneered the approach which applies economic theory to inform legal decision making. Some of the particular consequences of this theory are a reluctance to state that any price or set of contractual terms are "fair" or "not fair" in the absence of market involvement, the notion of an "efficient breach" of a contract when the benefit of that the non-breaching party has from a contract is worth less than the benefit the breaching party can obtain from breaching a contract, skepticism of the distinction between necessities and wants, and a greater awareness of matters like the time value of money. More generally, this approach is behind legislative solutions like voucher plans, free trade treaties and deregulation.

Critics of law and ecconomics theory often argue that the overly narrow analysis applied when standard economic theory is used, for example in free trade analysis or examining whether a contract is unconscionable, fails to adequately address hidden costs and issues like diminished abilities to fully consent to unfavorable bargains even when traditional legal tests of consent are met.

The Law and Economics approach to analysis is particularly favored by the activist right, which funds numerous Law and Economics programs at universities across the United States and even abroad. Several prominent right-wing charitable foundations are major financial backers of judicial training seminars in Law and Economics, sponsored by the leading institutional proponents of the theory. The seminars, offered at little or no cost to federal and state judges and often conducted at posh resorts, have been criticized as back-door method of influencing the judiciary. The Law and Economics Center at George Mason University brags that fully one-third of the federal Article III judiciary has attended one or more of its seminars.

All of that said, however, Law and Economics is not exclusively the province of the Right. There are liberals (such as the author of this paragraph) who believe that a modified Law and Economics approach is the best way to understand legal canons and achieve justice, so long as costs not easily quantifiable in dollar terms (pain, loss of reputation, etc.) are nonetheless understood as real costs to a transaction.

Universities with Law and Economics Programs:

Major Funding Sources for Law and Economics Programs:

External Links

  • Tipping the Anti-Trust Scales from Salon.com
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