Ideas Have Consequences: Law & Economics Edition

A significant new study conducted by Elliot Ash of ETH Zurich, Daniel L Chen from the Toulouse School of Economics, and Suresh Naidu of Columbia University was recently published in the Quarterly Journal of Economics. This study delves into the effects of the Manne Economics Institute for Federal Judges on judicial decision-making titled, “Ideas Have Consequences: The Impact of Law and Economics on American Justice.” Below are some insightful points drawn from their abstract:

The findings indicate that judges who have participated in economics training show a marked increase in their use of economic terminology in legal opinions, frequently rule against regulatory agencies, and tend to impose harsher sentences in criminal cases. We propose that the rigorous nature of economics as a social science has significantly influenced judicial attitudes.

Established in 1976 by Henry Manne, the Manne Economics Institute for Federal Judges is renowned for its effort to impart economic reasoning to judges. The program remains active today, managed by the Law & Economics Center at the Antonin Scalia Law School. Notably, the selection of judges for participation is conducted in a non-partisan manner—judges appointed by both Republican and Democratic presidents have taken part based on first-come, first-served criteria.

Additionally, the institute features lectures from some of the most distinguished economists, including Milton Friedman, Paul Samuelson, Armen Alchian, Harold Demsetz, Orley Ashenfelter, and Martin Feldstein. The caliber of instruction is remarkable, with two Nobel laureates (Samuelson and Friedman), alongside two economists who are widely considered deserving of a Nobel Prize (Alchian and Demsetz), and two more who might still earn such distinction (Ashenfelter and Feldstein).

Manne’s initiative exemplifies the critical importance of interdisciplinary engagement, breaking barriers between distinct fields. Judges applying the insights gained from the program into their rulings have influenced contemporary legal perspectives. Furthermore, these classes have equipped judges with the tools needed to comprehend complex economic arguments more effectively. As highlighted by the late Supreme Court Justice Ruth Bader Ginsburg, these classes “lift[ed] the veil on such mysteries as regression analyses” (see page 7 of the aforementioned paper). When expert testimony is overly technical, it may fail to impact judicial decisions. The de-siloing of knowledge transformed leading economists into effective educators for judges, thereby enhancing the quality of court rulings and reducing reliance on extrajudicial factors.

The specialization of knowledge—a natural result of the division of labor—is undeniably beneficial. While specialization enhances our understanding, it is crucial to recognize the interconnectedness of various fields of knowledge. This empirical inquiry into the Manne program underscores the necessity of dissolving silos and challenging the “stay in your lane” mentality.

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[1] Note: The LEC also conducts a companion initiative called The Law Institute for Economics Professors, in which I had the pleasure of participating this past June.

[2] This metaphor is drawn from Roger Koppl and E. James Cowan’s 2010 paper titled “A Battle of Forensic Experts is not a Race to the Bottom.” (Review of Political Economy 22(2): 235-262).

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