Defying Legal Formalism in Europe
About the author: Omar Vásquez Duque is a J.S.D. Candidate at Stanford Law School and recipient of an FSI Conference Grant, which he used in support of his travel to present his research at the 10th Annual Meeting of the Spanish Law and Economics Association.
Thanks to the generous support from the FSI, my doctoral program, and the Olin Program in Law and Economics, I had the chance of presenting my research at the 10th Annual Meeting of the Spanish Law and Economics Association. This conference took place in Porto, Portugal. Yes, I know it may look peculiar that a Spanish Association meets in Porto. But the Presidents of the Organization made it very clear at the inauguration that the Spanish Law and Economics Association intends to have visibility outside of Spain.
I had not been to Portugal, and I should say that, although I spent most of the time preparing my presentation, I also had the chance of having a quick look at the city, which is stunning — I will share some pictures I took at the end of this post. This was a great experience. I am very grateful to all the people who made this possible.
Law and Economics means different things to different people. But I would think that most people would agree that it is a methodology that aims at predicting the effects of the law as well as assessing the impact of the law with the help of a normative benchmark. This is still a relatively new movement that challenges the normative/formalistic theory of legal systems, which dominates legal scholarship in most countries of the world. This is certainly the case of Spain, Europe more generally, and Latin America, where I am originally from. The problem with the normative/formalistic view of the law is that it departs from an unrealistic assumption: that people just obey legal mandates. Also, it overlooks the political and social context in which legal decisions are made, assuming that judges merely interpret legal texts in a syllogistic fashion. This motivates people to base legal scholarship on textual analyses of different interpretations of rules, intending to find THE correct way to solve a legal problem. For lawyers interested in public policy, this view is not only boring, but also myopic. If the law is, after all, a means to achieving social ends, one should have a more realistic view of human motivation, as well as clear normative theories to appraise the effects of law on society. The traditional view of the law lacks both; and law and economics provide legal scholars with a useful theoretical framework to overcoming such a limitation. And today, behavioral science can complement neoclassical economics to analyze the law on the grounds of more realistic theories of human motivation and behavior.
The paper I discussed claims that jurisdictions should consider seriously pricing strategies that exploit consumers’ bounded rationality. In particular, I argued that when consumers compare different products and the latter have many relevant attributes, consumers will only consider a handful of them in their decision-making. This gives sellers the possibility to backload part of the real price of the goods into those attributes that people do not consider. Sometimes, sellers become monopolists after the initial purchase decision (imagine, for example, a printer and cartridges; or a house and the water supply). I claim that some of these practices may fall under what is known in many countries as “excessive pricing,” and illustrate my argument with a recent case that took place in Chile. You may find a draft here: https://papers-ssrn-com.stanford.idm.oclc.org/sol3/papers.cfm?abstract_id=3304169
The Spanish Law and Economics Association is doing a great job at exposing interdisciplinary legal research and should be commended for its work. More research that assesses legal doctrine from disciplinary perspectives and challenges legal formalism is especially valuable to determining how the law can, in reality, make societies better-off/happier.
Here you may find a couple of pictures I took in Porto:
