Kenneth Anderson asks
What should I tell my 1L students tomorrow as to why they should study law and economics — or not?
The context is that his students are increasingly dissatisfied with his previous explanation that economic “consequences matter”:
As one of them put it, that might be fine for students at the top ten schools, but students at my school are not going to become judges or people who create the rules. They are going to become, if they are lucky, lawyers doing much more modest tasks that take the existence of the rules — including their efficiency or inefficiency, and their consequences — pretty much for granted. They are, after all, the rules of the game.
I would respond that every lawyer who drafts a contract is one of the “people who create the rules.” And lest you think that this excludes litigators, remember that settlements are contracts too, and that most lawsuits end in settlement. A divorce lawyer putting together a separation agreement with an alimony component needs to know something about varying tolerance for risk. A real-estate lawyer negotiating a newsstand’s lease needs to know something about incentive compatibility. Many, indeed most, divorce and real-estate lawyers understand these concepts implicitly; a course in law and economics helps build that intuition by making the issues explicit and given them names.
Beyond that, persuasive arguments are the stock-in-trade of every practicing lawyer, and microeconomic analysis is nothing if not a fruitful source of arguments. Economic thought provides rhetorical topics that work in a tremendous range of situations. A lawyer who can explain why the other side’s proposed wording for an injunction gives the defendant the “wrong incentives” has an advantage over a lawyer who hasn’t mastered incentive-talk. In the last half century, only the deconstructive genius of critical legal studies has offered lawyers anything like the rhetorical cornucopia that law and economics does.
Thinking like an economist is not thinking like a lawyer. Neither is thinking like a philosopher, literary critic, programmer, psychologist, poet, historian, bench scientist, anthropologist, statistician, or theologian. But being able to think like one — or better, like several — is a way of thinking like a more effective lawyer. These insights of these fields are not substitutes for long and close practice with law’s primary materials. But, as an economist might say, they can be excellent complements for it.