Backhaus, Jürgen G. --- "Towards an Ideal Economic Analysis of a Legal Problem" [2005] ELECD 157; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics, Second Edition" (Edward Elgar Publishing, 2005)

Book Title: The Elgar Companion to Law and Economics, Second Edition

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845420321

Section: Chapter 33

Section Title: Towards an Ideal Economic Analysis of a Legal Problem

Author(s): Backhaus, Jürgen G.

Number of pages: 8

Extract:

33 Towards an ideal economic analysis of a
legal problem
Jürgen G. Backhaus


Introduction
Economic analyses are needed for a variety of different applications. Their
format will therefore differ according to the application for which they are
needed. In this `how-to' guide, a survey of the most important applications is
offered, followed by a discussion of the steps necessary for an economic
analysis of a legal problem at a professionally acceptable level.

Three types of analysis
In principle there are three different kinds of analysis: an evaluative analysis,
a positive analysis of legal structures (economic reconstruction of legal argu-
ment), and a normative (welfare) economic analysis. These three types differ
in the economic method and approach to the problem. An evaluative analysis
tries to analyse, on the basis of an economic model, the consequences of a
particular legal decision or set of decisions, or else an act. A positive analysis
aiming at reconstructing the structure of a legal argument or doctrine aims at
illuminating complex legal reasoning that cannot be reduced to one or a few
organizing principles of legal doctrine. Hence a legal theory is replaced by an
economic theory. While these first two types of analysis differ in their level of
abstraction, they both belong to the realm of positive (and therefore not
normative) analysis. This implies that the analytical conclusions are in prin-
ciple testable and therefore need to be presented in a testable form. Although
it will not always be possible to run empirical ...