Abstract
Economic analysis has contributed to a better understanding and a better functioning of law at different levels of generality. As far as legal reasoning is concerned, these contributions fall into two large groups. Economics in legal reasoning concerns arguments about the purposes and consequences of legal rules and principles that are acceptable in court as legally relevant, including (1) predictions of the likely consequences of alternative legal decisions; (2) technical normative arguments about the best means to achieve a legally determined purpose; and (3) welfarist normative arguments about the desirable goals of specific laws. Economics of legal reasoning, in turn, includes (1) explanatory models of legal processes in terms of rational activity of individuals, corporate entities as well as legal officials, and (2) normative proposals concerning the design of legal processes, that is the structure of law as institutional practice.
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Notes
- 1.
More recently, decision-theoretical models aiming at integrating preferences and reasons have been put forward (Dietrich and List 2013).
- 2.
Rubin (2007) provides a representative selection. As these positive theories do not assume that judges are motivated by, let alone argue in terms of, efficiency, and as they are not addressed to judges, they represent an external economic perspective on legal reasoning, to be discussed in Sect. 3.3.
- 3.
Thus, he remarked that the proposal was made in his academic rather than judicial capacity, as “speculation rather than a blueprint for social action” (Posner 1983, p. vi), and acknowledged that “there is more to justice than efficiency ” (Posner 2007b, p. 27). For the last 30 years, he has advocated a broader stance of “pragmatic adjudication” (Posner 1990, chapter 15) which assigns a limited role to economic arguments . Posner’s version of pragmatic adjudication seems capable of encompassing the broadest possible set of considerations, including rule-consequentialist arguments for formalist decision-making in certain areas of law or ranks of the judicial hierarchy. A later round of foundational debates on normative law and economics, initiated by Kaplow and Shavell (2002), had little direct impact on theories of legal reasoning.
- 4.
The rest of this section relies on and updates Cserne (2011).
- 5.
While the consequences of a legal decision can be related to the decision in several ways, not all figure consequence-based reasoning. Courts, especially higher or constitutional courts, often take decisions with large-scale social consequences. This does not mean that judges are necessarily aware of these consequences or that, if they are, their decisions will be motivated by what they expect to result from their decision. Even if, as a matter of psychology, they are influenced by the expected consequences, they are not always willing or allowed to publicly refer to them as reasons for their decision.
- 6.
- 7.
Here, we disregard complications of sequential and strategic decision-making—for these, as well as for a formal model of consequential reasoning, see Kornhauser (2018a).
- 8.
On the identification of the goal of particular laws, with special reference to different conceptions of social welfare, see Esposito (2020).
- 9.
Some of these issues are discussed in Hubková (2020).
- 10.
As Cane (2000, p. 43) put it, “to the extent that sound empirical support is lacking for arguments about the likely impact of legal rules on human behaviour (i.e. we are ignorant about the likely behavioural consequences of legal rules), we need to develop criteria of good decision-making which do not depend upon knowledge of likely consequences”.
- 11.
In this simple example, error means “false negatives”, that is mistakenly not finding the injurer liable.
- 12.
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Cserne, P. (2020). Economic Approaches to Legal Reasoning: An Overview. In: Cserne, P., Esposito, F. (eds) Economics in Legal Reasoning. Palgrave Studies in Institutions, Economics and Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-40168-9_3
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