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Why the shadow of the law is important for economists


  • Stuart Birks


The shadow of the law is essentially an umbrella term for the law's possible indirect influence on behaviour. It refers to the way laws can affect people's actions even when there is no direct legal involvement. Often the law is used to ‘send a signal’. This paper presents an economics perspective on this concept. Anassessment is made of the implications in terms of the suitability of the signals given and various responses that may be observed. In summary, the law is a central component of policy. In its implementation signals are given. These may not be clear or suitable for cases in general, and there may be a variety of responses to the same signal. The paper draws attention to an important dimension of policy implementation and its implications.

Suggested Citation

  • Stuart Birks, 2012. "Why the shadow of the law is important for economists," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 79-90, August.
  • Handle: RePEc:taf:nzecpp:v:46:y:2012:i:1:p:79-90
    DOI: 10.1080/00779954.2011.613147

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