Shaping Tastes and Values Through the Law: Law and Economics Meets Cultural Economics

Abstract

In this article, I propose a theoretical framework for systematically including the discussion of tastes and values in the economic analysis of the law. I argue that Cultural Economics offers a welfaristic argument for including the promotion of welfare-enhancing tastes and values as one of the elements that the Law and Economics analyst needs to consider. My main argument is that recent empirical findings in Economics support Guido Calabresi’s (2016) invitation to normatively engage in shaping cultural traits – at least for a specific set of tastes and values. In the next section, I will start my exposition by reviewing recent empirical findings in the field of Cultural Economics, a branch of Economics that uses state-of-the-art empirical techniques to investigate the relationship between people’s tastes, values, and economic outcomes. A growing body of literature demonstrates two important results. First, it is possible to identify a set of tastes and values which are key determinants of a society’s economic performance. Second, the design of legal institutions has direct consequences – which can be predicted and empirically estimated – for the formation and persistence of these economically-relevant tastes and values. I hold that, taking as a starting point the fact that cultural traits have an impact on economic outcomes, the effects of a hypothetical legal change on tastes and values can be treated as an (expected) cost or benefit in a welfare analytical framework, or used it as a “tie-breaker” in case of mixed evidence and uncertain evaluations. On this basis, and assuming that in the upcoming years the discipline will develop a systematic exploration of which tastes and values matter for economic choices, the Law and Economics analyst can engage in normative arguments regarding which values and tastes should be promoted by the lawmaking process. Another way to state the concept is that the analyst will be able to inform policy and law-makers regarding how to design reforms and institutions that ceteris paribus promote welfare-enhancing cultural traits. Indeed, the field of Law and Economics is particularly suited to produce sophisticated analysis of a society’s institutional setting and to generate systematic and testable predictions regarding the effects of changes in legal institutions.

Keywords: Culture, Legal Intervention, Norms, Preferences, Tastes, Values

JEL Classification: D04; K10