Law's Order: What Economics Has to Do with Law and Why It Matters

Law's Order: What Economics Has to Do with Law and Why It Matters

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by David D. Friedman
     
 

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What does economics have to do with law? Suppose legislators propose that armed robbers receive life imprisonment. Editorial pages applaud them for getting tough on crime. Constitutional lawyers raise the issue of cruel and unusual punishment. Legal philosophers ponder questions of justness. An economist, on the other hand, observes that making the punishment for

Overview

What does economics have to do with law? Suppose legislators propose that armed robbers receive life imprisonment. Editorial pages applaud them for getting tough on crime. Constitutional lawyers raise the issue of cruel and unusual punishment. Legal philosophers ponder questions of justness. An economist, on the other hand, observes that making the punishment for armed robbery the same as that for murder encourages muggers to kill their victims. This is the cut-to-the-chase quality that makes economics not only applicable to the interpretation of law, but beneficial to its crafting.

Drawing on numerous commonsense examples, in addition to his extensive knowledge of Chicago-school economics, David D. Friedman offers a spirited defense of the economic view of law. He clarifies the relationship between law and economics in clear prose that is friendly to students, lawyers, and lay readers without sacrificing the intellectual heft of the ideas presented. Friedman is the ideal spokesman for an approach to law that is controversial not because it overturns the conclusions of traditional legal scholars--it can be used to advocate a surprising variety of political positions, including both sides of such contentious issues as capital punishment--but rather because it alters the very nature of their arguments. For example, rather than viewing landlord-tenant law as a matter of favoring landlords over tenants or tenants over landlords, an economic analysis makes clear that a bad law injures both groups in the long run. And unlike traditional legal doctrines, economics offers a unified approach, one that applies the same fundamental ideas to understand and evaluate legal rules in contract, property, crime, tort, and every other category of law, whether in modern day America or other times and places--and systems of non-legal rules, such as social norms, as well.

This book will undoubtedly raise the discourse on the increasingly important topic of the economics of law, giving both supporters and critics of the economic perspective a place to organize their ideas.

Editorial Reviews

Library Journal
Friedman, a professor at the University of Santa Clara School of Law who holds a Ph.D. in economics from the University of Chicago, advocates an economic analysis of law and further suggests that there is a strong correspondence between efficiency and justice. Since efficiency is the foundation of modern economics, he argues, economics can be used to explain and shape the law in ways that can benefit us all. Especially insightful is the author's application of this theory to tort and contract law, which impose obligations based upon law and mutual consent, respectively. Friedman delineates formulae for dispute resolution in these and other areas of the law. His approach is modeled upon the teachings of noted British economist Ronald Coase, whose theorem on transaction costs has formed the basis for analysis of economic problems arising from tort and contract litigation for the last 40 years. The book's specialized audience includes students of law and economics served by academic and law libraries and perhaps private firm libraries whose staff serve client needs in the two aforementioned areas of litigation.--Philip Y. Blue, New York State Supreme Court Criminal Branch Law Lib., New York Copyright 2000 Cahners Business Information.\
Choice
A thoroughly entertaining, creative, and provocative addition to the law and economics literature.
Times Literary Supplement
David Friedman is lively, cheerful, and a bit of a tease. . . . Friedman's book is, in the best sense of the word, extremely dense. . . . At the same time, he is cautious and does not try to prove too much. The evidence he provides is impressive and impressively presented.
— John Griffith
The Federal Lawyer
[Friedman] explains what economics has to do with law and why it matters. . . . Applying economics to law matters because it yields efficient outcomes. In a world of finite resources and a world in which the political process controls the distribution scheme, increasing the size of the societal pie will increase the size of the slice we all can expect.
— Dennis J. Callahan
From the Publisher
"An interesting and lively introduction to the economic analysis of law. . . It lays out the principles and values of economic analysis of law, and then proceeds to illustrate and defend that approach in a lively and competent manner. It may not convince every reader that economics provide the key to understanding law, but it makes the case competently and energetically."—Joseph L. Smith, The Law and Politics Book Review

"A thoroughly entertaining, creative, and provocative addition to the law and economics literature."Choice

"David Friedman is lively, cheerful, and a bit of a tease. . . . Friedman's book is, in the best sense of the word, extremely dense. . . . At the same time, he is cautious and does not try to prove too much. The evidence he provides is impressive and impressively presented."—John Griffith,Times Literary Supplement

"[Friedman] explains what economics has to do with law and why it matters. . . . Applying economics to law matters because it yields efficient outcomes. In a world of finite resources and a world in which the political process controls the distribution scheme, increasing the size of the societal pie will increase the size of the slice we all can expect."—Dennis J. Callahan, The Federal Lawyer

The Law and Politics Book Review
An interesting and lively introduction to the economic analysis of law. . . It lays out the principles and values of economic analysis of law, and then proceeds to illustrate and defend that approach in a lively and competent manner. It may not convince every reader that economics provide the key to understanding law, but it makes the case competently and energetically.
Times Literary Supplement - John Griffith
David Friedman is lively, cheerful, and a bit of a tease. . . . Friedman's book is, in the best sense of the word, extremely dense. . . . At the same time, he is cautious and does not try to prove too much. The evidence he provides is impressive and impressively presented.
The Federal Lawyer - Dennis J. Callahan
[Friedman] explains what economics has to do with law and why it matters. . . . Applying economics to law matters because it yields efficient outcomes. In a world of finite resources and a world in which the political process controls the distribution scheme, increasing the size of the societal pie will increase the size of the slice we all can expect.
"The Law and Politics Book Review eph L. Smith

An interesting and lively introduction to the economic analysis of law. . . It lays out the principles and values of economic analysis of law, and then proceeds to illustrate and defend that approach in a lively and competent manner. It may not convince every reader that economics provide the key to understanding law, but it makes the case competently and energetically.

Product Details

ISBN-13:
9781400823475
Publisher:
Princeton University Press
Publication date:
07/02/2001
Sold by:
Barnes & Noble
Format:
NOOK Book
Pages:
344
File size:
2 MB

What People are saying about this

Posner
David Friedman, a first-rate economist with a good deal of experience in applying economics to the law, has written a lucid, imaginative, entertaining, opinionated, and, on balance, a very fine introduction to the application of economics to law. The book is wide-ranging in scope, at once simple and highly sophisticated, consistently provocative, an excellent read, and a notable contribution to an exciting field of interdisciplinary studies.
Richard A. Posner, Chief Judge, United States Court of Appeals For the Seventh Circuit
Epstein
David Friedman explains in clear and accessible language what basic economic theory adds to the understanding of law, and how simple concepts of rationality, value, and transaction costs can go a long way to bring out the hidden unity among various diverse branches of law. Whether one speaks of the complexities of marginal deterrence, the resolution of disputes between farmers and railroads, or the social functions of copyright and patent law, Friedman's book provides the outsider to the field with a comprehensive but accessible account of his legal subject matter.
Richard A. Epstein, University of Chicago

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Law's Order - What Economics Has to Do with Law and Why It Matters 4 out of 5 based on 0 ratings. 1 reviews.
Guest More than 1 year ago
Friedman¿s primer on the law and economics field is well-received overall. Through many example legal scenarios, he illustrates the economic approach to legal analysis. Although the mini-cases are sometimes too exhaustive, they do serve the purpose of demonstrating that most, if not all, legal rules can be analyzed through the fundamental cost-benefit approach of economics. Efficiency, in the sense of maximizing the size of the economic ¿pie,¿ should be the central focus of legal systems, Friedman argues, and in particular of common law. Also very interesting, for a layperson in the field of law such as me, was the recurring distinction between property rules and liability rules, a distinction Friedman shows has its basis in economic considerations (namely, transactions costs). Not having read any other work of the law and economics literature, I found the brief introduction to its history and motivation useful, as well as the references to important texts and articles, such as the seminal works of Coase and Posner. Although bogged down at times by the very detailed examples, Friedman¿s work seems to be a fine introduction to law and economics.