The Law and Economics of Animus
Andrew T. Hayashi - Professor of Scholarly Research in Law, University of Virginia School of Law and McDonald Distinguished Fellow, Center for the Study of Law and Religion, Emory University.
People sometimes want to harm other people. This truism points to a blind spot in law and economics scholarship, which generally assumes that people are indifferent to the effects of their actions on other people. Diverse areas of the law, such as hate-crime legislation and constitutional equal protection doctrine, reside in this blind spot because they are premised on the existence of animus. I argue that the assumption of indifference unnecessarily limits law and economics analysis and that it is both possible and fruitful to incorporate animus into law and economics. I show that doing so leads to new insights on criminal deterrence, including the underappreciated benefits of damages as a deterrent for hate crimes and the promise of community-based “solidarity” deterrence schemes. I also show that incorporating animus can extend law and economics into areas of constitutional law that it has neglected. I argue for an economic approach to equal protection analysis that is grounded in the motivations of government actors but that addresses some of the longstanding concerns with intent-based tests. The examples of criminal deterrence and equal protection analysis are illustrative of an agenda for law and economics analysis that more incorporates other-regarding motives more generally.
Regulation and Redistribution with Lives in the Balance
Daniel Hemel - Professor of Law and Ronald H. Coase Research Scholar, the University of Chicago Law School.
A central question in law and economics is whether nontax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion-dollar impacts on the U.S. economy and profound effects on millions of Americans’ lives. In the past, agencies’ cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: on his first day in office, President Joe Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into agencies’ cost-benefit analyses, thus bringing renewed relevance to a long-running law-and-economics debate.
This Article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis. It uses, as a case study, a 2014 rule promulgated by the National Highway Traffic Safety Administration (NHTSA) requiring new motor vehicles to have rearview cameras that reduce the risk of backover crashes. As with most major federal regulations that impose large dollar costs, the principal benefit of the rear-visibility rule is a reduction in premature mortality. Quantitative cost-benefit analysis typically translates mortality reductions into dollar terms based on the “value of a statistical life,” or VSL. Any distributive evaluation of the rule will depend critically on a parameter known as the “income elasticity of the VSL,” which reflects the relationship between an individual’s income and her willingness to pay for mortality risk reductions. Although agencies’ cost-benefit analyses use the same VSL for all individuals regardless of income, the Department of Transportation—of which NHTSA is a part—has issued guidance on the income elasticity of the VSL for other purposes. When this Article applies the Department of Transportation’s income-elasticity guidance in its distributive analysis, the rearvisibility rule appears to be regressive: it generates net costs for lower-income groups and net benefits for higher-income groups. Rerunning the distributive analysis with equal-dollar VSLs at all income levels, the rule appears to be progressive: lower-income individuals are the primary beneficiaries and higher-income individuals are the losers. This Article goes on to explain why assumptions about the relationship between income and the VSL will have important implications for distributive analyses of other lifesaving regulations.
This Article then asks what agencies ought to do: Should they incorporate distributive objectives into cost-benefit analysis by assigning greater weight to dollars in lower-income individuals’ hands, and should they assign different-dollar VSLs to individuals with different incomes? The two questions are closely linked. Incorporating distributive objectives into cost-benefit analysis of lifesaving regulations while maintaining equal-dollar VSLs for the rich and the poor will potentially produce perverse outcomes that—according to standard economic thinking—actually redistribute from poor to rich. After canvassing options, this Article concludes that the status quo approach—equal weights for low-income and high-income individuals’ dollars, equal-dollar VSLs for low-income and high-income individuals—makes practical sense in light of expressive concerns, informational burdens, and institutional constraints. This Article ends by reflecting on the case study’s lessons for broader debates over legal system design, and it explains why the issues that arise in the rear-visibility case study are likely to affect other efforts to redistribute through nontax legal rules.
Kevin Tobia - Associate Professor of Law, Georgetown University Law Center.
“Experimental jurisprudence” draws on empirical methods to inform questions typically associated with jurisprudence and legal theory. Scholars in this flourishing movement conduct empirical studies about a variety of legal language and concepts. Despite the movement’s growth, its justification is still opaque. Jurisprudence is the study of deep and longstanding theoretical questions about law’s nature, but “experimental jurisprudence,” it might seem, simply surveys laypeople. This Article elaborates on and defends experimental jurisprudence. Experimental jurisprudence, appropriately understood, is not only consistent with traditional jurisprudence; it is an essential branch of it.
Neither Here nor There: Wire Fraud and the False Binary of Territoriality Under Morrison
Jason Petty - B.S.F.S. 2017, Georgetown University; J.D. Candidate 2022, The University of Chicago Law School.
Fraudulent schemes increasingly rely on wire transmissions and the internet as the economy and communications digitize. To combat these schemes, prosecutors have applied the wire fraud statute, 18 U.S.C. § 1343, to defendants located domestically and abroad. Applying the current standard for extraterritoriality under Morrison v. National Australia Bank Ltd., circuit courts disagree as to whether the wire fraud statute applies extraterritorially. But courts consistently apply an easily met standard when determining if the wire fraud statute should apply domestically under Morrison. This reaches many defendants located abroad. This Comment argues that this broad domestic application of the wire fraud statute shields courts from asking whether the statute applies extraterritorially. Further, this Comment argues that courts’ domestic application of the wire fraud statute is sufficiently broad as to begin to resemble extraterritoriality because courts can almost always find sufficient domestic activity to apply the wire fraud statute. This Comment argues that wire transmissions are sufficiently geographically ambiguous that using a singular statutory focus under Morrison to evaluate whether wire fraud applies domestically is inadequate. In response to that inadequacy, this Comment proposes a new solution that incorporates additional statutory information in evaluating the statute’s domestic application. This solution would better protect defendants from arbitrary domestic application of the wire fraud statute and validate the tenets underlying the doctrine of extraterritoriality.