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Backhaus, Jürgen G. --- "Towards an ideal economic analysis of a legal problem" [1999] ELECD 30; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics" (Edward Elgar Publishing, 1999)

Book Title: The Elgar Companion to Law and Economics

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781858985169

Section: Chapter 23

Section Title: Towards an ideal economic analysis of a legal problem

Author(s): Backhaus, Jürgen G.

Number of pages: 8

Extract:

23 Towards an ideal economic analysis of a
legal problem
Jiirgen 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 analy-
sis, a positive analysis of legal structures (economic reconstruction of legal
argument), 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 conse-
quences 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 principle testable and therefore need to be
presented in a testable form. Although it will not always be possible to run
empirical tests ...