1 What Does Economics Have to Do with Law?Read more at location 160
Note: 1@@@@@@@@@@@@@@@@@ XCHÈ UN DOPPIO STANDARD NEL CIVILE ECNEL PENALE DETERRENZA COSSE CAMBIA LE ESTERNALITÁ: DA RESP. CON RISARCIMENTO A PROPRIETÀ COMMERCIALIZZABILI POSNER E LA COMMON LAW Edit
Someone proposes that since armed robbery is a very serious crime, armed robbers should get a life sentence. A constitutional lawyer asks whether that is consistent with the prohibition on cruel and unusual punishment. A legal philosopher asks whether it is just. An economist points out that if the punishments for armed robbery and for armed robbery plus murder are the same, the additional punishment for the murder is zero—and asks whether you really want to make it in the interest of robbers to murder their victims. That is what economics has to do with law.Read more at location 163
A mugger is a mugger for the same reason I am an economist: Given his tastes, opportunities, and abilities, it is the most attractive profession open to him.Read more at location 170
people are not always rational. I, for example, occasionally take a third helping of spaghetti when a careful calculation of my own long-run interests would lead me to abstain.Read more at location 176
It is tempting to reply that nobody should be punished unless we are certain he is guilty. But by that standard nobody would ever be punished; the strongest evidence establishes only a probability. Even a confession is not absolute proof: While our legal system no longer permits torture, it does permit plea bargaining, and an innocent defendant may prefer a guilty plea on a minor charge to risking a long prison term on a major one.Read more at location 185
If we are to convict anyone at all, we must do it on evidence short of absolute proof. How far short? Raising the standard of proof reduces the chance of convicting an innocent defendant but increases the chance of acquitting a guilty one.Read more at location 190
If, as Blackstone wrote more than two hundred years ago, it is better that ten guilty men go free than that one innocent be convicted, we should keep raising our standard of proof as long as doing so saves one more innocent defendantRead more at location 192
law in the United States and similar systems requires a high standard of proof (“beyond a reasonable doubt”) in a criminal case but only a low standard (“preponderance of the evidence”) in a civil case. Why? The answer cannot simply be that we are more careful with criminal convictions because the penalties are bigger. A damage judgment of a million dollars, after all, is a considerably more severe punishment for most of us than a week in jail.Read more at location 195
Economics suggests a simple explanation. The typical result of losing a lawsuit is a cash payment from the defendant to the plaintiff. The result of being convicted of a crime may well be imprisonment or execution. A high error rate in civil cases means that sometimes I lose a case I should have won and pay you some money and sometimes you lose a case you should have won and pay me some money. On average, the punishment itself imposes no net cost; it is simply a transfer. A high error rate in criminal cases means that sometimes I get hanged for a murder I didn’t commit and sometimes you get hanged for a murder you didn’t commit. In the criminal case, unlike the civil case, one man’s loss is not another man’s gain. Punishment is mostly net cost rather than transfer, so it makes sense to be a good deal more careful about imposing it.Read more at location 198
Suppose, for example, that I take advantage of a particularly good opportunity to push my rich uncle off a cliff. By extraordinary bad fortune a birdwatcher happens to have his camera pointed in my direction at just the wrong time, with the result that I am caught, tried, and convicted. During the sentencing phase of the trial my attorney points out that my crime was due to the conjunction of extraordinary temptation (he was very rich, I was very poor) and an improbably good opportunity—and I had only one rich uncle. Besides, once I have been convicted of this crime, potential future victims are unlikely to go rock climbing with me. Hence, he argues, the court should convict me and then let me go. Whatever they do, I will never kill again, and hanging or imprisoning me will not, he points out, bring my uncle back to life. The conclusion is bizarre, but the argument seems logical.Read more at location 230
The reply many legal scholars would probably offer is that the law is concerned not only with consequences but also with justice. Letting me go may do no damage, but it is still wrong.Read more at location 236
By letting me off unpunished, the court is announcing a legal rule that lowers the risk of punishment confronting other nephews faced, in the future, by similar temptations. Executing this murderer will not bring his victim back to life, but the legal rule it establishes may deter future murderers and so save those who would have been their victims.Read more at location 239
Legal rules are to be judged by the structure of incentives they establish and the consequences of people altering their behavior in response to those incentives.Read more at location 242
A law student who has learned to understand tort law has the basic equipment to understand tort law. If he wants to understand criminal law, he must start over again. Economics changes that.Read more at location 256
As you will see, once you understand property, or contract, or tort from the point of view of economics, you have done most of the work toward understanding any of the others.Read more at location 258
This is one explanation for the controversial nature of economics within the legal academy. On the one hand, it offers the possibility of making sense out of what legal academics do. On the other hand, it asserts that in order for legal academics to fully understand what they are doing, they must first learn economics.Read more at location 260
A second reason economic analysis is controversial is that it sometimes produces conclusions with which many legal academics disagree—for example, that laws “protecting” tenants are quite likely to make tenants worse off.Read more at location 263
Scholars who apply economic analysis to law are routinely charged with conservatism,Read more at location 265
There is some truth to this claim—more if “conservative” is changed to “libertarian.”Read more at location 267
the economist’s underlying assumption that individuals are rational. While that assumption does not, as we will see, eliminate all reasons for wanting to interfere with market outcomes, it does eliminate many. And while rationality is an optimistic assumption when applied to individuals who are supposed to be acting for their own interest—buying and selling, signing contracts, getting married or divorced—it can be a pessimistic assumption when applied to people who are supposed to be acting in someone else’s interests, such as judges or legislators.Read more at location 268
the principal effect of economic analysis is to change not the conclusions but the arguments—for both sides of any controversial issue.Read more at location 274
An economist can talk about someone owning a piece of land and assume that that is the end of it. A lawyer dealing with property is brought face to face with the fact that ownership of land is not a simple concept. How does my ownership of a piece of land apply to someone else who wants to fly over my land, dig a hole next to it that my house might slide into, permit his cattle to wander onto my land and eat my vegetables, erect a structure on his land that shades my swimming pool?Read more at location 285
The more you think about them, the clearer it becomes that what you own is not a piece of land but a bundle of rights related to a piece of land.Read more at location 290
Someone builds a new hotel in Florida that shades the swimming pool of the next hotel down the beach. The owners of the old hotel sue for damages. Conventional economic analysis holds that they should win. The new hotel imposes a cost on the old; making its builder liable forces him to include that cost—what economists call an external cost or externality—in deciding whether or not the new hotel is worth building. But, as Ronald Coase pointed out in an article that laid an important part of the foundation for the economic analysis of law, that answer is too simple. It may be true that if the builder of the new hotel is not liable he need not consider the cost he imposes by locating his building where it will shade his neighbor’s pool. But if he is liable, the neighbor at an earlier stage need not consider the cost he imposes by locating his swimming pool where a building on the adjacent lot will shade it—and thus forcing the owner of that lot to either leave it empty or build and pay damages. What we have are not costs imposed by one person on another but costs jointly produced by decisions made by both parties. Part of Coase’s solution to this problem is to restate it in terms not of external costs but of property rights.Read more at location 292
The solution suggested by Coase was not liability but trade. Define the relevant legal rules so that one of the parties has a clear right to the stream of sunlight.Read more at location 306
There is, however, one conjecture about law that has played a central role in the development of law and economics. This is the thesis, due to Judge Richard Posner, that the common law, that part of the law that comes not from legislatures but from the precedents created by judges in deciding cases, tends to be economically efficient.Read more at location 324
there is also the empirical argument, the claim that the common law legal rules we observe are, in most although not all cases, the rules we would get if we were trying to design an economically efficient legal system. Posner’s immensely productive career as a legal theorist has largely consisted of piling up evidence for that argument.Read more at location 339
As a matter of simple logic, the claim that legal rules are efficient is entirely separate from the claim that they ought to be efficient.Read more at location 347
Economic efficiency can most usefully be thought of as the economist’s attempt to put some clear meaning into the metaphor “size of the pie.”Read more at location 354
