Comparative institutional law and economics: reclaiming economics for socio-legal research
| DOI | 10.1177/1023263X19840522 |
| Author | Lyubomira Gramcheva |
| Published date | 01 June 2019 |
| Date | 01 June 2019 |
| Subject Matter | Articles |
Article
Comparative institutional
law and economics:
reclaiming economics
for socio-legal research
Lyubomira Gramcheva*
Abstract
Law and economics is a controversial method of legal research, increasingly popular among
some legal scholars but disliked by many others. The author discusses some of the objections
raised by lawyers (as well as some economists) and argues that most of these are caused by
the employment of the wrong economics on the respective side of the conjoined field. She
contrasts neoclassical economics, made extremely popular by the Chicago school and Pro-
fessor Richard P osner in particu lar, with New Institutional Economics and argues that the
latter can overcome the difficulties presented by the former. While neoclassical economics
seems to introduce additional problems to legal scholarship, New Institutional Economics
neatly matches law’s own methodological tenets. However, the analysis will remain incom-
plete unless a third element is added to the mix: comparative law. Thus, the author calls for
the developmen t of Comparative I nstitutional Law and Economics, which provides an
improved explanatory methodology.
Keywords
Neoclassical economics, New Institutional Economics, comparative law and economics,
methodology
1. Introduction
Law and economics is an eclectic field. Lawyer-economists compare it to a marketplace of ideas to
which competing schools of thought, themselves not homogeneous, bring an astonishing variety of
* Research Fellow, School of Law, University of Nottingham
Corresponding author:
Lyubomira Gramcheva, University of Nottingham, University Park, Nottingham NG7 2RD, UK.
E-mail: lyubomira.gramcheva@eui.eu
Maastricht Journal of European and
Comparative Law
2019, Vol. 26(3) 372–393
ªThe Author(s) 2019
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/1023263X19840522
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perspectives.
1
Indeed, from the early 1980s the hegemony of the until then dominant Chicago
school of law and economics was undermined by the rise of new approaches, critical of neoclas-
sical economics.
2
Law and economics branched out. Besides Chicago Law and Economics, the
most comprehensive overview of the field discerns Public Choice Theory, Institutional Law and
Economics, New Institutional Economics, New Haven school, M odern Civic Republican and
Austrian approaches to law and economics.
3
In addition, Behavioural Law and Economics took
off during the 1990s. Each of these discordant viewpoints defines itself partly in opposition to the
Chicago-style law and economics and aims to correct some of its assumptions. Some see the
absence of a distilled straightforward method for applying economic principles to legal institutions
as an obstacle to convincing lawyers and judges of the trustworthiness and potential of the
discipline.
4
Others view this cacophony of voices as a strength, pointing out that legal-
economic issues are too complex to be resolved with one singular approach.
5
Still others empha-
size that the question is rather which approach is best suited to address a particular problem.
6
Yet, this is a conversation among insiders. The great reliance on mathematical theory in law and
economics has made it increasingly difficult for legal scholars to cross the boundari es of the
discipline,
7
turning the question ‘Law and economics of what stripe?’ into a secondary one.
Paradoxically, this works towards maintaining the popularity of Chicago-style contributions which
are not too technical. The first point of entry for anyone interested to learn the basic concepts are
introductory accounts such as Posner’s Economic Analysis of Law (already in its ninth edition)
8
or
Polinsky’s An Introduction to Law and Economics, which present the mainstream.
9
Their great
attraction is that they are user-friend ly. The most important alternative to Posner’ s textbook,
Cooter and Ulen’s Law and Economics,
10
aims to be more balanced and pays tribute to behavioural
economics and social norms, but due to its introductory nature, again does not really draw a picture
of debate and competition but of a rather cohesive field in which the strict neoclassical paradigm
remains largely unchallenged. The degree of mathematical sophistication needed to progress in the
discipline also puts off many early career researchers who find the methodological language of
socio-legal studies much more accessible. Consequently, for many outsiders (or somewhat out-
siders), law and economics still implies primarily the Chicago appro ach and its early leading
proponent, Judge Posner.
1. N. Mercuro and S.G. Medema, Economics and the Law. From Posner to Post-Modernism and Beyond (2nd edition,
Princeton University Press, 2006), p. 59; M. Richardson, ‘The Second Wave in Context’, in M. Richardson and
G. Hadfield (eds.), The Second Wave of Law and Economics (1st edition, The Federation Press, 1999), p. 2.
2. E. Mackaay, ‘History of Law and Economics (0200)’, in G. De Geest and B. Bouckaert (eds.), Encyclopedia of Law
and Economics vol I (1st edition, Edward Elgar, 2000), p. 80.
3. N. Mercuro and S.G. Medema, Economics and the Law. From Posner to Post-Modernism and Beyond.
4. E. Mackaay, in G. De Geest and B. Bouckaert (eds.), Encyclopedia of Law and Economics vol I, p. 80, 93.
5. N. Mercuro and S.G. Medema, Economics and the Law. From Posner to Post-Modernism and Beyond, p. 341.
6. M. Richardson, in M. Richardson and G. Hadfield (eds.), The Second Wave of Law and Economics,p.2.
7. 62.6%of the authors who published in the Journal of Legal Studies between 2004 and 2010 are economists as opposed
to only 27.5%of legal scholars. T. Eisenberg, ‘The Origins, Nature, and Promise of Empirical Legal Studies and a
Response to Concerns’, 2011 University of Illinois Law Review (2011), p. 1723; G. Hay, ‘The Past, Present and Future
of Law and Economics’, 3 Agenda (1996), p. 78.
8. R. Posner, Economic Analysis of Law (9th edition, Wolters Kluwer, 2014).
9. A. Mitchell Polinsky, An Introduction to Law and Economics (3rd edition, Aspen Publishers, 2003).
10. R. Cooter and T. Ulen, Law and Economics (6th edition, Pearson Education, 2012).
Gramcheva 373
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