A very interesting group of essays on the future of law and economics by ten University of Chicago professors. It is especially interesting in light of the attempt to revitalize law and economics in Chicago. The essays exhibit a great diversity in views of what lies in store for the future of law and economics — a topic I’ve written about frequently at TOTM (and along with Henry Manne available here on SSRN). Its an interesting discussion. Here’s my quick, rough and ready guide to the 10 essays — which comes with a recommendation to check them all out in their entirety of course — followed by a few comments and reactions at the end of this post.
- Douglas Baird: Law and economics will return to its Chicago-born empirical roots, though the return is complicated by the reduced cost of empirical tools and access to data which give rise to the possibility of an “empirical bubble” (as Larry Ribstein has described it) and a tendency to settle into reliance upon those tools as a substitute for finding new and interesting questions to answer.
- Omri Ben-Sharar: The view that law and economics will follow “technical” trend in economics is wrong. One need not worry about law and economics losing its “retail value” — a concern I’ve raised on the blog a number of times — Omri argues, because law and economics has “maintained a stronghold on American legal academia for over 30 years by being relevant, accessible, and relentless in luring new audiences.” I’m a bit confused by this essay; Ben-Shahar argues that the view that the trend towards the technical trend in economics and law and economics scholarship is no concern, but cites considerable evidence that the trend is real and be explained by the reduction in the return from traditional L&E scholarship. However, Ben-Sharar is optimistic that higher return opportunities present themselves in exporting law and economic analysis across international boundaries and into new subject matter domestically.
- Anu Bradford: international law and economics analysis, and public choice, have become incredibly complex in the modern world and are a growth area for future scholarship.
- Eric Posner: This is my favorite of the essays. Posner contemplates a strong form of the divergence between economists doing law and economics (ELE) and lawyers doing law and economics (LLE); he goes on to discuss an area in which there is indeed a significant gap between economic theorists and law and economics scholars: contracts. Posner discusses a variety of reasons for why this specialization is troubling for both fields.
- Saul Levmore: The current empirical “bubble” will burst and increase the turns to greater theoretical work — primarily using economic insights to explain cases and doctrine (rather than modeling). Empirical work is less valuable in law than other disciplines, argues Levmore, and while law and economics’ influence will increase in law schools, a question remains as to whether the work will shift away from technical empirics and toward scholarship more “useful” to the practice of law.
- Anup Malani: Malani’s first line sums his position up nicely: “The future of law and economics is no different than the future of other applied microeconomics fields such as labor, health, and public economics: better identified empirical work with a solid connection to economic theory.” Its an odd comparison for me; after all, law and economics is quite different in that it is the only of those applied microeconomic fields in which the producers of scholarship are in law schools and not economics departments. Malani goes on to make some really interesting points about empirical methods in law and economics compared to labor economics and other applied fields, and some suggestions for improving those methods. But why should law schools have the comparative advantage in this sort of scholarship?
- Thomas J. Miles: More on the shift from law and economic theory to empirical work in the last decade. Miles argues, consistent with others, that the returns to empirical work in law and economics (and the reduced cost of producing it) increased as the theoretical space became saturated. empirical scholarship in law and economics has surged. Miles predicts that empirical work is likely “compose a greater share of law and economics scholarship in the future,” and holds out hope that the increase in the supply of JD/PhD’s along with reduced cost of coordinating between JD’s and PhD’s will reduce the trends towards specialization.
- David A. Weisbach: “We will see more integration with economics departments, more professionalization of the field, better econometric techniques, and expansion into new areas and new legal problems. But things will pretty much continue as they are.” Weisbach’s essay complements Miles in that it emphasizes the key of coordinating between disciplines (for Weisbach, perhaps broader than just law and economics) to solve increasingly complex problems.
- Richard Posner: Posner points to a strong trend towards increased specialization sacrificing the practical application of law and economics scholarship and is skeptical of the notion that the costs of coordination between disciplines has fallen. “The increased formalization of economics makes it difficult for lawyers who do not have training in economics to collaborate with economists or lawyer-economists. Increasingly, economic analysts of law write for each other, in specialized journals, rather than for the larger profession. Increasingly, indeed, they write not for economic analysts of law as a whole but for economic analysts of the writer’s subspecialty. The expansion of a field leads to the multiplication of its subspecialties.” Like Ben-Sharar and Bradford, Posner describes law and economics as a mature discipline whose future lies in exporting its insights across boundaries and to new problems. Posner largely subscribes to the view that the future of law and economics may continue to lose its “retail” and practical value as it becomes less connected to legal institutions. He also uses a rather odd and, in my view, misplaced example about macroeconomics and the financial crisis as evidence of the gap between law and economic theory and practice.
- Gary Becker: Becker continues the theme of arguing that the future lies in coordination between specialist theorists and econometricians, Becker also argues that a robust area for future law and economics research lies at the “macro” level, i.e. how legal institutions and rules impact economic growth and how macroeconomic developments influence legal institutions. No doubt these are interesting questions. But why, again, is there an argument that law schools have a comparative advantage in producing this scholarship rather than remaining the province of economists? Or teaching law students?
All interesting reads. There is a good amount of discussion about coordinating theoretical and empirical work, and overcoming the problem of scholarship that is too formal and too technical for “retail application,” which are no doubt a key to ensuring a bright future for law and economic work. There are some obvious omissions in the discussion. Judicial education is one obvious role for law and economics scholars in harnessing the insights of economics for practical application in the law. There is little discussion about the future of law and economics in the classroom, or the relationship between the role of economics in the law school classroom and the challenging facing law and economic scholarship discussed by the authors.