Course:Law3020/2014WT1/Group P/Law As Efficiency

Eficiency and Law When assessing the validity of the law, it has not been a common approach to understand the mechanisms from an economics position. The economics theory to understanding law has developed greatly out of the United States and has been greatly influenced by Richard A. Posner. The over-arching premise of this theory is that there must be efficiency in the law for the law to be valid. The Wealth Maximizing Principle The application of economics to law requires us to view law through the concept of efficiencies – efficiency being understood as “wealth maximizing”. This is not to be equated necessarily as wealth in the monetary sense but also as “social wealth”. When approaching law through this lense, we understand “Efficient legal rules [as] rules that serve to bring about the efficient allocation of resources. ” Using the law of economics theory on this case makes it difficult to reconcile the judges’ decision. In tort law it is easy to see how the decisions of the court to make the accused party pay only if it the cost to prevent the harm is less then that of the probability and the cost of the accident. Also, in Contracts, allowing parties to breach their original deal for a more favourable one if the new deal is more than the amount it would take to compensate the original would be beneficial to voluntary market deals. Application to the Case These examples give deterrents and incentives if it is efficient to do so, assuming that all people are rational. Discriminating against same-sex marriage does not seem efficient by these standards. By limiting the benefits to only opposite-sex couples it deprives from one group without giving the ability to compensate to the other, which would fail both the Pareto-superior and Hicks tests. The only justification would fall on the decision of the legislation to redistribute wealth as they see fit without the need to be efficient. The fact that the majority gave same-sex couples recognition of being an analogous group under s. 15 could be related to the economics of property law where the enjoyment of the right would be most efficient when in the hands of those who enjoy it most and by allocating this group those rights the wealth is most efficient in their hands. However, as the critics posit “rights must be grounded in something more pertinent then the contingent fact that our enjoying them happens to be efficient”. The economists would find a way to justify the ruling in Egan and would most likely point to the cost to society in changing the definition of spouse under the legislation. At the time of the ruling, the state of affairs in which marriage is understood as a man and woman is higher than the state in which the definition of spouse allowed for same sex couples.