Economic Analysis in Judicial Decision Making - An Assessment Based on Judge Posner's Tax Decisions

Abstract:     
In recent years, many of the most vocal proponents of law and economics have been appointed to the bench, including Richard Posner, Guido Calabresi, and Frank Easterbrook. They have been strong advocates of the judicial use of economic analysis as a tool to help decide cases. This paper explores the ways in which Judge Posner has used economic analysis in his tax decisions, with the goal of identifying the ways in which he has used such analysis and then assessing its effectiveness.

I focus on Judge Posner's tax jurisprudence for three reasons. First, he is a leading proponent of the law and economics approach. Second, he has authored over 60 opinions in tax cases. Finally, few question the appropriateness of applying economic reasoning to tax questions. Accordingly, these cases provide a rich and substantial body of material with which to work.

In highlighting and evaluating the ways in which Judge Posner has used economic analysis to decide tax cases, I hope to provide insights and guidance on the strengths and limitations of this approach to others who may be urged or tempted to follow suit.

Number of Pages in PDF File: 67

Keywords: Law and economics, tax

JEL Classification: K34, K40, K00, K10

Accepted Paper Series