Do Economists Make Better Lawyers?
September 30, 2013,
Many undergraduates considering law school believe that political science, history, or criminology and criminal justice can best prepare them. However, law schools are increasingly admitting economics majors as economic issues are becoming more important in legal circles. In fact, economics is the second most popular major among law school entrants. Law schools realize that a strong background in these areas is extremely helpful for the success of their students.
One reason for the great interest that law schools have for people with a solid economics background is the tremendous crossover of the two disciplines. Contract law, torts, and assigning property rights all consider how legal decisions impact economic outcomes.
For example, both economists and legal scholars examine how different arrangements of property rights determine how efficiently (or inefficiently) resources are used to promote societal welfare. Patent law provides one instance of this as it considers how protecting the rights of the inventor to solely market her product affects decisions to undertake research and development while at the same time recognizing that the inventor will be, at least temporarily, a monopolist. Other examples include governments appropriating private property for public use and the effects that this potential appropriation has on how property owners use their property.
Tort law recognizes that injured parties need to have some recourse to attain compensation for wrongful injury while at the same time recognizing that firms or producers will close shop if they are too susceptible to lawsuits. How does the law try to ensure a reasonable balance?
In contract law, many exigencies arise that the original contract did not consider. Courts not only use fairness to resolve these disputes but also appeal to arguments on grounds of economic efficiency.
In a nutshell, economics examines what choices people make given the various constraints they face. As the constraints change, behavior often changes as well. Some of the most important constraints are legal ones. Therefore, changes in the law whether enacted by a legislative body or determined by a court will alter people's behavior. Economics has even been applied to criminal law as society tries to develop laws and punishments that deter deviant behavior. Judges want their decisions to benefit society by promoting behavior and environments that raise societal welfare. In many cases, legal decisions are made on grounds of economic efficiency. Hence, a strong background in economics can help understand how legal decisions stem from economic considerations thereby providing a better indication as to how courts will likely rule.
The discussion above is general in that it applies to broad fields of law. But for lawyers wanting to enter specific areas, a strong economics background can help lawyers in these areas:
- Finance, by better understanding how stock, bond, and other financial markets work
- Industrial organization, by examining how corporations and smaller firms structure themselves to maximize profits. These issues can be further specified by studying particular types of industries such as the healthcare industry.
- Union contracting and negotiation, by having greater insight into labor markets
- Environmental issues, by better understanding the tradeoffs between environmental concerns and business interests
- International law and treaties, through studying international trade, financial flows, and globalization
- And lots more! For further ideas and to see what courses best fit your needs, we invite you to see one of the undergraduate advisors in the economics department (main office in 4121 Faner Hall).
In fact, Law and Economics already enjoys a solid foundation which will continue far into the future:
- Appointees to the federal bench specializing in law and economics include United States Supreme Court Justices Stephen Breyer and Antonin Scalia. Other notable judges include Richard Posner, Frank Easterbrook, and Robert Bork.
- The University of Chicago, Harvard University, Columbia University, George Mason University, the University of Pennsylvania, and the University of California-Berkeley have "Law and Economics" programs.
- In state, Northwestern University and the University of Illinois Law Schools both have seminar series in Law and Economics. Many other programs outside of Illinois have similar colloquiums.
- There is an American Law and Economics Association.
- Journals such as The Journal of Law and Economics; The Journal of Legal Studies; The Journal of Law, Economics, and Organization; and The International Review of Law and Economics show that economic aspects of the law enjoy a wide audience.
- Further information and examples can be found at:
The lawyer with a strong economics background will not be the exception but will be part of an exciting subfield in law. And perhaps more importantly, the new lawyer will be a more attractive candidate for prospective employers looking to find people who can apply legal principles to the business world.