Sense and Nonsense of the Economic Analysis of Tort Law

Abstract

Economics applied to law is as old as Bentham, Ricardo, Smith and Marx. It is also as varied as these authors are from one another. However, when we talk today about the economic analysis of law, or simply law and economics (L&E), generally one version is meant: namely, the one born to the Chicago law and economics movement of the 1960s. In trying to make sense of how this version of the economic analysis of law became the dominant one, this article unpacks different versions of the economic analysis of tort law, while illustrating some of the critiques levied against its dominant version. A recurrent claim is that the economic analysis of tort law secured its ultimate prominence in the 1970s through the publication of several books and articles by Calabresi, Posner, Landes, Brown, and Shavell among others. An alternative take on this history is that an earlier – radically different – economic analysis of tort law took place. The earlier versions of the economic analysis of tort law were carried out by the “Legal Realists” and institutional, progressive, economists writing at the turn of the 19th century. In screening these earlier versions, alternative approaches to the economic analysis of tort law emerge, challenging the dominant theory of the economic analysis of tort law – a theory that emphasizes that the maximization of economic efficiency is, and has been, the best explanation of tort law. In the paper I outline some of the critical arguments that can be levied against the dominant version of the economic analysis of tort law to show how, in addressing some of these issues, a reconstructive project can be imagined. Some of the following critical positions have been postulated by scholars affiliated to the critical legal studies movement. Others are postulated by scholars who are considered to have played a role in defining the contours and alternative versions of law and economics. They are in that sense an amalgam of constructive and deconstructive critiques, that are not only external but also internal to the law and economics movement. They are chosen here to apply to the economic analysis of tort law, but can – and indeed are – extended to other application of the economic analysis of law, in both private and public law.

Keywords: Tort law, economic analysis of law, critical law and economics