This paper has two purposes. First, it considers what the components of an “Austrian” law and economics might consist of. I argue that Ronald Coase’s conception of law and economics precludes the economic analysis of legal institutions and, in particular, the beliefs that support them. In doing so, Coase’s conception precludes an Austrian law and economics. In contrast, Richard Posner’s conception of law and economics makes such analysis the core of its study. In doing so, Posner’s conception provides a productive foundation for an Austrian law and economics. Second, to illustrate what some aspects of an Austrian law and economics might look like in practice, I consider several examples of the economic analysis of beliefs of import for the law. I focus on objectively false beliefs, or superstitions, and argue that some such beliefs are socially productive.
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On the importance of subjectivism, “meaning,” and thus individuals’ beliefs in the Austrian approach to economics, see Boettke (2010).
Or at least those “meanings” are determined by beliefs.
Though, admittedly, I find the fact that some people hold the exact opposite view about cigars impossible to understand. Perhaps they’re smoking the wrong cigars. As I write this note I smoke a 2008 San Cristobal. I can assure the reader that it’s divine.
I use the term “science” here broadly to also encompass purely logical propositions that have an objectively true or false element to them, such as 2 + 2 = 4. The belief that 2 + 2 = 3 lacks “scientific” support in the same way the witch’s-eye belief does in the sense that I’m using the word “science.”
As I point out below, beliefs may themselves sometimes constitute institutions as well. Thus I will at points distinguish between belief- and non-belief institutions.
On the differences between the Coasean and Posnerian branches of law and economics, see Harnay and Marciano (2009). See also the exchange between Coase (1993a) and Posner (1993a). Coase and Posner have both noted the differences in their respective branches elsewhere too. See, for instance, Coase (1993b) and Posner (1987, 1993c).
On the use of the logic of choice in applied work per the Austrian approach, see Mises (1957).
The Austrian approach to economic science is, in my view, the same one Becker (1976, 1993) articulates. It views economics as a method rather than a subject matter. On the importance of this approach to economics (and Becker more generally) for the development of the Posnerian branch of law and economics, see Posner (1993b).
That theory is based on the unflinching application of three combined assumptions: maximizing behavior, market equilibrium, and stable preferences. See Becker (1976).
See, for instance, North et al. (2006), who make this point. As these authors point out, not all beliefs have this feature. The ones this paper focuses on do.
The Austrian approach here is, in my view, the same one articulated by Stigler and Becker (1977).
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I thank Pete Boettke and Chris Coyne for helpful comments and discussion. I also thank the Mercatus Center at George Mason University for financial support.
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Leeson, P.T. An Austrian approach to law and economics, with special reference to superstition. Rev Austrian Econ 25, 185–198 (2012). https://doi.org/10.1007/s11138-012-0179-3
- Austrian-Chicago synthesis, law and economics
- Economic analysis of law