Educating Homo Economicus: Cautionary Notes on the New Behavioral Law and Economics Movement

Article excerpt

Legal scholars have recently been extolling the explanatory potential of behavioral law and economics. This new scholarship seeks to marry insights from traditional microeconomics with findings from the behavioral sciences to produce a descriptively accurate and predictively powerful account of human motivation and decisionmaking to put in the service of legal policy. I examine the claims being made on behalf of this new approach. I argue that legal scholars cannot simply use behavioral science in the place of standard microeconomics. More specifically, I argue that once empirical findings are incorporated into legal policy analysis, it becomes necessary to forsake aspirations of broad generalizability and predictive determinacy. I conclude that legal policies and initiatives need to be informed by a modest conception of social science. Such a conception acknowledges the limitation of social science knowledge and recognizes that strong causal explanations of human behavior cannot be permitted to supplant normative debate.

In recent years, legal writers have heralded the advent of a new "behavioral law and economics" scholarly movement. As envisioned, this sweeping approach will marry microeconomic insights with empirical social science findings to yield an integrated sphere of economic and behavioral science serving larger social and legal policies. Fledgling work in this area has something to offer everyone: For law and economics scholars, it conserves an account of human agents as instrumentally rational maximizers. It also maintains explanatory commitments to methodological individualism and mathematical modeling. For legal thinkers with a communitarian bent, this new scholarship recognizes the importance of norms of cooperation in creating and sustaining public goods. It also acknowledges that people are motivated by considerations beyond the pursuit of material ends, such as cultural and social norms. All of a sudden, it is possible to talk about individual preferences and social norms in the same breath, to interweave discussions of efficiency and the expressive function of law. With this newly fused language, theorists of all predilections can converse across political divides while avoiding highly contested and intractable normative issues.

Legal scholars have been extolling the explanatory potential of a unified behavioral law and economics approach to address a host of questions. One strand of this scholarship has imported research from behavioral science-behavioral economics and cognitive and social psychology-to explain various aspects of law, including contract law (Korobkin 1998), tax law (McCaffery 1994), and jury decisionmaking (Dolls et al. 1998), among other areas. Scholars pursuing this approach have also not shied from drawing prescriptive suggestions, arguing that government should use the insights of behavioral science to induce people to engage in socially desirable behavior. Such prescriptions have been offered, for example, in the areas of criminal law and health and safety regulation, where scholars have proposed that regulatory authorities take advantage of human cognitive quirks to influence them to act in ways deemed socially optimal (Dolls et al. 1998; Korobkin & Ulen 2000).

A second strand of the new scholarship has been preoccupied with social processes and phenomena from within a game theoretic model. Legal scholars working in this vein have sought to expand microeconomic analysis to incorporate the functioning of social norms. This approach has been advanced to explain such widely diverse psychosocial phenomena as the dramatic nationwide shift in smoking norms (Lessig 1995:1025-34), the persistence of race discrimination, despite its inefficiencies (McAdams 1995), recycling by wealthy residents of the Hamptons (Sunstein 1996), inner city gang behavior (Kahan 1997), and sumo wrestling practices in Japan (West 1997). Although distinct from law and behavioral science, the law and social norms scholarship shares the goal of unifying microeconomics and empirical findings. …


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