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What Is Forensic Economics?

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Economics in Legal Reasoning

Part of the book series: Palgrave Studies in Institutions, Economics and Law ((PSIEL))

Abstract

This chapter provides an overview of forensic economics by discussing four questions about its domain. The first question asks whether forensic economics is a practical or academic enterprise, or both. The second one concerns the types of legal decisions that forensic economics informs, including three separate stages of law enforcement and the distinction between questions of fact and law. The third question relates to the fields of law to which forensic economics applies with special attention to tort damages and antitrust. And the fourth one considers the position of the people who carry out the forensic-economic analyses outside of or within an enforcement body.

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Notes

  1. 1.

    An analysis may inform legal decision-making through guiding other analyses, which, in turn, inform legal decisions; see the following section.

  2. 2.

    See Danziger and Katz (2019) as an example of such scholarship.

  3. 3.

    A notable exception to the idea that forensic economics relates to legal decision-making is presented by Zitzewitz (2012). Zitzewitz operates with the term “academic forensic economics” when referring to economic analyses “carried out in order to advance the general understanding” of a particular category of social phenomena, that is, not in order to—even vicariously—inform legal decision-making. He in particular focuses on economic detection and quantification of behavior which agents would prefer to conceal because of its unlawfulness and which is at the same time important to the functioning of the economy. He does not explain why economic analyses carried out in order to advance the general understanding of other law-related phenomena, such as economic consequences of traffic accidents, should not count as academic forensic economics. It is also far from clear what is to be gained by clustering this type of academic research under the rubric of forensic economics.

  4. 4.

    Note that the terminology is not settled in this context.

  5. 5.

    As explained by Hart and Sacks (1994, p. 351), the two steps in reality take place simultaneously: “[T]he law determines what facts are relevant while at the same time the facts determine what law is relevant.”

  6. 6.

    That is why those who associate forensic economics with determination of damages may define it as “the application of economics to the … quantification of harm from behavior that has become the subject of litigation” (Zitzewitz 2012, p. 731).

  7. 7.

    This applies also to vague statutory formulations that have been clarified by case law.

  8. 8.

    Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).

  9. 9.

    It should be noted that the commentary mostly does not differentiate between academic and practical economic inquiries into the content of the law (i.e. economic analysis of law).

  10. 10.

    In forensic antitrust economics, this gets often discussed as the problem of identification of the right economic model (see Giocoli 2020, p. 114).

  11. 11.

    Note that resolution of questions of fact tends to be much more heavily regulated than resolution of questions of law (see, for example, Cappalli 2002, p. 100).

  12. 12.

    This is reflected, for instance, by the JEL Code assigned to the said scholarship: “K13—Tort Law and Product Liability; Forensic Economics”.

  13. 13.

    It might be worth adding that a rather idiosyncratic definition of forensic economics has been advanced by Ireland (1997, p. 64), according to whom the discipline amounts to “economics of economists as economic experts in litigation”. While analyses of the incentives faced by practicing forensic economists and of their consequences may generate curious insights (see, for example, Froeb et al. 2009), they are not forensic unless they inform law enforcement.

  14. 14.

    It should be added that the services provided by the said industry include not only actual testifying but also economic analyses supporting an argument that the party wants to make within an enforcement proceeding (Mandel 1999, p. 114) or informing compliance (Schinkel 2008, pp. 9–10).

  15. 15.

    Compare this, for instance, with FBI’s scientists involved in crime investigation and prosecution, whose work is also considered forensic even though they are employed by the government.

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Authors and Affiliations

  1. Faculty of Law, University of Amsterdam, Amsterdam, The Netherlands

    Jan Broulík

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  1. Jan Broulík
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  1. University of Aberdeen, Aberdeen, UK

    Péter Cserne

  2. Université catholique de Louvain, Louvain-la-Neuve, Belgium

    Fabrizio Esposito

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Broulík, J. (2020). What Is Forensic Economics?. 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_6

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