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Legal Realism for Economists


  • Matthew C. Stephenson


Economists have made great progress in understanding the incentives and behavior of actors who operate outside of traditional economic markets, including voters, legislators, and bureaucrats. The incentives and behavior of judges, however, remain largely opaque. Do judges act as neutral third-party enforcers of substantive decisions made by others? Are judges "ordinary" policymakers who advance whatever outcomes they favor without any special consideration for law as such? Emerging recent scholarship has started to explore more nuanced conceptions of how law, facts, and judicial preferences may interact to influence judicial decisions. This work develops a perspective on judging that can usefully be understood as the modern manifestation of American Legal Realism, a jurisprudential movement of lawyers, judges, and law professors that flourished in the early twentieth century. The purpose of this essay is to introduce, in simplified form, the Realist account of judicial decision making; to contrast this view with alternative theories about law and judging; and to sketch out how a more explicit integration of the Realists' conceptual insights about law and judicial behavior might enrich the rapidly expanding economic work in this field.

Suggested Citation

  • Matthew C. Stephenson, 2009. "Legal Realism for Economists," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 191-211, Spring.
  • Handle: RePEc:aea:jecper:v:23:y:2009:i:2:p:191-211 Note: DOI: 10.1257/jep.23.2.191

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    References listed on IDEAS

    1. Gennaioli, Nicola & Shleifer, Andrei, 2007. "Overruling and the instability of law," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 309-328, June.
    2. Nicola Gennaioli & Andrei Shleifer, 2007. "The Evolution of Common Law," Journal of Political Economy, University of Chicago Press, vol. 115, pages 43-68.
    3. Anthony Niblett & Richard A. Posner & Andrei Shleifer, 2010. "The Evolution of a Legal Rule," The Journal of Legal Studies, University of Chicago Press, vol. 39(2), pages 325-358.
    4. repec:cup:apsrev:v:96:y:2002:i:04:p:755-766_00 is not listed on IDEAS
    5. Gely, Rafael & Spiller, Pablo T., 1992. "The political economy of supreme court constitutional decisions: The case of Roosevelt's court-packing plan," International Review of Law and Economics, Elsevier, vol. 12(1), pages 45-67, March.
    6. Rasmusen, Eric, 1994. "Judicial Legitimacy as a Repeated Game," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 63-83, April.
    7. Nicola Gennaioli & Andrei Shleifer, 2008. "Judicial Fact Discretion," The Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 1-35, January.
    8. Charles M. Cameron, 2007. "Bargaining and Opinion Assignment on the US Supreme Court," Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(2), pages 276-302, June.
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    Cited by:

    1. Chen, Daniel L. & Frankenreiter, Jens & Yeh, Susan, 2016. "Judicial Compliance in District Courts," TSE Working Papers 16-715, Toulouse School of Economics (TSE).
    2. Samantha Bielen & Wim Marneffe & Peter Grajzl & Valentina Dimitrova-Grajzl, 2016. "The Duration of Judicial Deliberation: Evidence from Belgium," CESifo Working Paper Series 5947, CESifo Group Munich.
    3. Dimitrova-Grajzl, Valentina & Grajzl, Peter & Slavov, Atanas & Zajc, Katarina, 2016. "Courts in a transition economy: Case disposition and the quantity–quality tradeoff in Bulgaria," Economic Systems, Elsevier, vol. 40(1), pages 18-38.
    4. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo Group Munich.
    5. repec:kap:ejlwec:v:44:y:2017:i:3:d:10.1007_s10657-016-9551-2 is not listed on IDEAS
    6. repec:kap:ejlwec:v:44:y:2017:i:2:d:10.1007_s10657-015-9522-z is not listed on IDEAS
    7. Goerke, Laszlo & Neugart, Michael, 2015. "Lobbying and dismissal dispute resolution systems," International Review of Law and Economics, Elsevier, vol. 41(C), pages 50-62.
    8. Niblett, Anthony, 2013. "Tracking inconsistent judicial behavior," International Review of Law and Economics, Elsevier, vol. 34(C), pages 9-20.
    9. Sabine Frerichs, 2011. "False Promises? A Sociological Critique of the Behavioural Turn in Law and Economics," Journal of Consumer Policy, Springer, vol. 34(3), pages 289-314, September.
    10. Brian C Pinkham & Mike W Peng, 2017. "Overcoming institutional voids via arbitration," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(3), pages 344-359, April.
    11. Stringham, Edward Peter & Zywicki, Todd J., 2011. "Hayekian anarchism," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 290-301, May.
    12. Edward Stringham & Todd Zywicki, 2011. "Rivalry and superior dispatch: an analysis of competing courts in medieval and early modern England," Public Choice, Springer, vol. 147(3), pages 497-524, June.
    13. repec:eee:irlaec:v:52:y:2017:i:c:p:97-110 is not listed on IDEAS

    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General


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