More than fifty years after the inception of “law and economics” (LE), very few scholars deny its vast influence on legal academia. Despite this prominence, however, LE still triggers objections and criticisms. Many people regard it as, at best, capturing only a subset of the relevant concerns and, at worst, irrelevant to the study of law. Some of the most persistent flawed objections include arguments that LE focuses exclusively on wealth maximization and consequently it fails to account for other values; that LE assumes (unjustifiably) that individuals are rational, and that LE fails to acknowledge motivations that are not purely self-interested (such as altruism).
In this Essay, we focus our attention on two challenges that—as far as we understand—LE scholars so far have not satisfactorily addressed. The first challenge relates to commensurability, and the second focuses on agency and its significance. Both concerns are central to LE. The first concern questions the dominant method of making substantive decisions—the method founded on cost-benefit analysis. The second concern challenges the assumption that the choice of an agent to perform an act is based solely on instrumental considerations, e.g., considerations such as the agent’s accuracy and efficacy in executing the state’s decisions.
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