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

Law and Economics

Law and Economics Theory

Efficiency

The underlying concept of law and economics is that law develops towards efficiency. Laws are created or die in regards to the efficiency they achieve and therefore we measure are laws with reference to efficiency. This is distinguishable from the Legal Positivist who measured laws with reference towards morality.

Maximization of Social Wealth

The goal of efficiency is the maximization of the social wealth. Law is seen as a tool to do this. For this to work human beings need to be rational and always need to make decision that are objectively in societies and their best interests. However, we are not rational beings and quite often we do not make decisions from a rational perspective. This aspect of the theory ignores social context and human behaviour.

Pareto Superiority

Pareto superiority is a theory that one sate of affairs is better than another. This is measured through seeing that at least one person is better off in one state (S1) than another (S2), and that no one in S1 is worse off than someone is S2. There is at least one winner and there are no losers. This can also be achieved if a winner compensates a loser for their loss, but they still win.

Externalities

Externalities are problems that involve third parties outside of a transaction. Costs arise to the third parties when really the cost should be fixed within the relationship of the transaction. The Kaldor-Hicks test measures if a transaction’s overall benefits outweigh the cost to third parties and if they leave profit for those within the transaction.

Applied to Mrs. E v Eve

Disclaimer

The theory of Law and Economics is difficult to apply to the case of Mrs. E v Eve as the prevalent issue in the case is one of morality. This theory, viewed in a strict sense, would critique the judgement, rather than affirm the findings of the Supreme Court. Although this is a controversial topic we will examine the issue of whether parens patriae can authorize a non-therapeutic hysterectomy through the lens of Law and Economics.