Posner - Law and Econ
How does Posner say that the scope of economics has expanded? (1)
In the last 30 years, the scope of economics has expanded beyond its traditional domain of explicit market transactions to include nonmarket behavior. There are now economic theories of property rights, corporate and other organizations, government and politics, education, the family, crime and punishment, and even law.
What are some of the areas of law in which the use of economics is not controversial?(4)
Some areas of law in which the use of economics is not particularly controversial are antitrust law, the regulation of public utilities and common carriers, fraud and unfair competition, corporate bankruptcy, secured transactions, corporate law and securities regulation, and taxation. In these areas, participation by economists or economics-minded lawyers is now standard practice.
What are the three basic premises of the economic analysis of the law? (5)
The three basic premises of the economic analysis of law are: (1) people act as rational maximizers of their satisfaction when making nonmarket decisions, (2) rules of law operate to impose prices on these activities, and sometimes subsidize them, and (3) common law rules are often best explained as efforts to bring about efficient outcomes.
Explain fencing-out v. fencing in? (6)
Fencing-out is a system in which the owner of crops or other goods that could be damaged by straying cattle is only required to build a fence if they want to be able to sue the cattle owner for damages. Fencing-in is a system where cattle owners are required to build a fence to confine their cattle and prevent them from damaging other's property or else be liable for damages. Which system is more efficient depends on the ratio of crops to cattle: if the ratio of cattle to crops is high, fencing-in is more efficient, but if the ratio of crops to cattle is high, fencing-out is more efficient.
What is the difference between ex ante and ex post regulation? (7-8)
Ex ante regulation, such as censorship or speed limits, seeks to prevent harm before it occurs. Ex post regulation, like defamation suits, imposes penalties after harm has occurred.
What are the inefficiencies of a law that places onerous limitations on one’s ability to sue for defamation? (8)
Laws that place onerous limitations on one's ability to sue for defamation make it difficult to recover the costs of defamation. Because people cannot insure their reputations, victims of defamation cannot spread the costs of being defamed. Further, public service becomes less desirable because risk-averse people are less likely to serve, due to the risk of uncompensated defamation.
Why is the Supreme Court’s distinction between public and private figures in defamation law economically sensible? (8)
The distinction between public and private figures in defamation law makes economic sense because public figures generate greater external benefits, so there is a greater argument for reducing the costs to defamers, who produce information about public figures. Further, public figures have a substitute for legal action: they can tell their side of the story, which will likely be picked up by the news media.
Explain Posner’s school prayer argument. (9-10)
Posner argues that the economic justification for public education is that it produces positive externalities, since everyone benefits from living in a nation with an educated population. To justify school prayer on economic grounds, one would need to demonstrate that school prayer also produces positive externalities, such as by making students more moral. Because there is no evidence of this, Posner argues that allowing school prayer amounts to a public subsidy of religion.
How did the Supreme Court end up increasing demand for religion? (11)
Posner argues that the Supreme Court may have unintentionally increased demand for religion through its secularist stance, which might undermine traditional values. The Court’s decisions in areas like contraception, abortion, and obscenity, which tend to favor secular views, may have increased the demand for organized religion as a substitute institution for the regulation of morals.
How does Gary Becker approach the concept of the family? (lecture)
Gary Becker views the family as a "factory" that optimizes utility through the division of labor, with women often specializing in childcare and housework due to biological and efficiency factors. He argues that increased female employment disrupts this comparative advantage, reducing the economic gains from marriage and contributing to higher divorce rates and fewer marriages. Marriage-specific investments, like raising children and adapting to a partner, increase the value of enduring relationships and make divorce less likely over time.