There are a number of disputes in contemporary times that form the basis of a number of profound arguments: is the law more important than the economy, or vice versa? Should the law only be applied after the economical impacts of a ruling are studied? Unfortunately the economic outcomes of legal rulings are often left a mystery, and even if we tried to figure out the end results–is such a determination even possible? 2018 doesn’t seem like it will shed much light on the analysis of economics and law as they connect with one another.
Law and economics is sometimes referred to as the economic analysis of law. When you hear either phrase, you’re hearing about a “microeconomic” theory that originated from the Chicago school of economics. These theories try to explain some of the likely impacts of law on economics in order to find out whether our legal realities are efficient or not. Naturally, law and economics is a complicated mess of theories, most of which are difficult to prove.
Many people find the idea of studying these concepts together a waste of time and effort, as law is meant to be applied in the realm of justice, and justice alone. It’s about individual rights, societal rights, human rights, etc. It’s not about economic impact. That said, is too much information about a given subject a bad thing?
Today, law and economics is becoming something wholly different.
Now more than ever, our legal quandaries are discussed in the context of game theory. Applying mathematical models to these complex relationships is a way to put them in greater context for the people who strive to understand them. In line with game theory, econometrics is used to further study these concepts using statistics.
In addition to game theory, you might hear about behavioral economics as it applies to economics and law. This is the study of all our decisions and the various effects they have, whether those decisions are purely cognitive and psychological or cultural and social.
These new methods of application for these old theories represent an attempt to use empirical, scientific data to prove or disprove new and old conclusions alike. Will the law ever change based on economic outcomes? Perhaps we’ll only know the answer if it actually does. Perhaps we’ll always wonder. For now, we continue to study the relationship between law and economics.