Common Myths in the Economic Analysis of Law

Abstract:     
This article discusses some reasons for the limited usefulness of economics and economic myths in legal analysis. This article further examines two economic myths that are popular with the conservative wing of law and economics, the myths of markets and cost-benefit analysis. These myths purport to provide clear answers to important legal issues.

This article concludes that these two myths downplay the overwhelming importance of human judgment and societal values in legal issues; they are used too theoretically, and too often as a substitute for careful analysis of real-world conditions; and they provide only preliminary, rather than ultimate, and possible rather than definitive, solutions to legal problems. As a consequence, two economic concepts that should have been used to generate insightful questions have instead developed into vehicles which can be used to promote the values of that analyst who applies economics to law. In the end, the common myths of markets and cost-benefit analysis are "just-so" stories, products of armchair speculation and fanciful theorizing.

Number of Pages in PDF File: 121

Accepted Paper Series