Econ 522 Economics of LawI’m Dan Quint, this is Econ 522, Economics of LawPlan for todayWebsiteLogisticsGradingExamsReadingsBefore we get to what this class is about…Relatedly, a warning: THIS IS A HARD CLASSSlide 10What is Law and Economics?How do economists look at the law differently than lawyers?So what about the law is interesting to economists?Slide 15How economists think about the law differently – an exampleSo that will be our focus in this classBut of course, that’s not the whole storySlide 19TopicsSlide 21Plan for the rest of today…Slide 22A bit of historyThe Common LawThe Civil LawComparing the Common Law and Civil Law traditionsSlide 28Slide 28A nice example of how the common law responds to local norms and practicesWhat’s the problem?Robert Ellickson (1989), A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling IndustryOne norm: “fast fish/loose fish”A different norm: “iron holds the whale”Clear tradeoff between the two rulesA third norm developed where finback whales were huntedConclusions from EllicksonSo that’s whaling lawThe brief perfectly captures the essence of the common law system:So that’s a bit of lawEcon 522Economics of LawDan QuintSpring 2011Lecture 1Questions about enrollment or prerequisites? Please talk to me after lecture.2If you’re trying to get into the class but not yet registered, put your name and info on the yellow pad going aroundIf you haven’t taken Econ 301 (or the equivalent elsewhere), talk to me after classI’m Dan Quint, this is Econ 522,Economics of Law3Logistics/syllabusOverview: what is the semester going to be about?Some historyCommon law and civil law traditionsExample: dead whales and baseballsPlan for today4Course website:http://www.ssc.wisc.edu/~dquint/econ522(Or UW Econ “Undergraduate” “Course Information” “522”)(Or Google “Econ 522”)Website has…SyllabusMy slides and lecture notes (after, hopefully before each lecture)HomeworksSample exam problems from past yearsWebsite5Teaching Assistant: Fran FlanaganSections on Fridays, beginning next week (Jan 28)Questions about section – talk to FranOffice hoursMe: Tuesdays, 2 – 4 p.m. (other times by appointment)Fran: TBAAttending sectionAttending lectureLogistics6Grades are based onoccasional homeworks (probably 4 or 5) – 20%two midterms – 20% eachfinal exam – 40%Homeworkyou’re welcome to work together on homeworksI’m happy for you to discuss questions, ideas, answers togetherbut everyone should write up their own answers – copying someone else’s answers word-for-word is not OKif you do work with others, please note who you worked with on your homeworkGrading7Midterms tentatively scheduled for Feb 28 and Mar 30Final is May 12Please let me know EARLY if…you have an exam conflict, oryou’re a McBurney student and need special accommodationsExams8Textbook: R. Cooter and T. Ulen, Law and Economicsolder versions are fine (but…)copies on reserve at Memorial Library and SocialScience Library (8th floor of Social Sciences)Another book I like: D. Friedman, Law’s Orderavailable free online (link on syllabus)(or it’s a $24 paperback)Additional readings available online (links on syllabus)Readings9This class is not about the lawWell, OK, it’s sort of about the law, but…You’re not in law schoolI’m not a lawyer, I’m an economistIt’s not my job to make you a better lawyerIt is my job to make you a better economistEconomics is not a bunch of facts, it’s a set of toolsWe can point these tools at just about anythingIn this class, we’ll point them at laws and legal institutionsBut we’re more interested in the tools than in the answersBefore we get to what this class is about…10To do well, you’ll have to learn to think like an economistThis way of thinking comes naturally to some people……but not to othersIf you “don’t get it”, you can’t get by memorizing a bunch of factsSomeone in this class will get a C who’s never gotten a C beforeNot trying to scare everyone off – I’d just rather say this now than after the first midtermRelatedly, a warning:THIS IS A HARD CLASS11What is“Law and Economics”?12unsatisfying answer:“thinking about the law like an economist”microeconomics is about how people respond to incentiveswe’ll be using microeconomics (including a little bit of game theory) to analyze laws and legal systemsthe incentives they createand the actions and outcomes they lead toWhat is Law and Economics?13suppose something has happenedwhen a lawyer sees the case, the “damage is already done”what’s left?assign blamemaybe punish someonemaybe move money aroundthis is interesting to the people involved……but it’s not interesting to economists!How do economists look at the law differently than lawyers?14before the incident happened, lots of decisions were madeexpectations/beliefs about what will happen after the fact influence these decisionsthese decisions have an impact on outcomesand these decisions therefore affect how much value is created (or destroyed) by societywhich is very interesting to economistsSo what about the law is interesting to economists?15So what about the law is interesting to economists?LAWYERSECONOMISTS(you and me)LAWYERSSomethinghappensLitigationCompensationTHE LAWDecisions/ActionsCompensationLitigation16You live in a state where the most severe criminal punishment is life imprisonment. Someone proposes that since armed robbery is a very serious crime, armed robbers should get a life sentence.A constitutional lawyer asks whether that is consistent with the prohibition on cruel and unusual punishment.A legal philosopher asks whether it is just.An economist points out that if the punishments for armed robbery and for armed robbery plus murder are the same, the additional punishment for the murder is zero – and asks whether you really want to make it in the interest of robbers to murder their victims.Friedman, Law’s Order, p. 8How economists think about the law differently – an example17So that will be our focus in this class18But of course, that’s not the whole story19But of course, that’s not the whole story20Property lawwhat things can be owned?what can (and can’t) owners do with
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