Volume 20, Issue 2

In State of the Netherlands v. Urgenda Foundation (the Urgenda verdict), the Dutch Supreme Court ordered the Dutch Government to pursue a goal of a 25 % rather than a 20 % decrease in CO 2 emissions. The present article discusses the verdict and climate litigation of this kind more generally from a functional perspective rather than from the perspective of democratic legitimacy. It argues that the premises of the Court were inapplicable from an economic perspective and that the faulty reasoning is indicative of reasons why judicial restraint is socially desirable in the area of climate policies. From the viewpoint of social welfare, it may be desirable that a court overrides climate policy if the policy neglects the interests of future generations, i.e. if it is unsustainable. However, the Court did not consult the economic literature on sustainable climate policies. It relied on a consensus among climate scientists, on the European Convention of Human Rights, and on the precautionary principle. We argue that if the Court had consulted the economic literature, it would have found disagreement about how quickly emissions should be lowered, and it would have had to address many complex sources of disagreement that cannot be eliminated by recourse to human rights or the precautionary principle. The Court would have had to subjectively assess different economic theories. However, the litigation process is not set up for and judges are not trained for this complex assessment.

This is a response to Henrik Lando’s article on courts and climate policies. Lando’s argument can be summarized in two propositions. The first is that EU courts have adopted a suboptimal legal standard for evaluating climate policies. Lando’s second proposition is that courts are not a good forum for the evaluation of climate policies because of the need to focus on the narrow interests of the litigants before the courts. I agree with Lando’s first proposition, but I disagree somewhat with his second proposition. It is pitched too broadly in my view.

The economic approach to crime and punishment began to be applied to a research program based on a rigorous and mathematically structured theoretical model by Becker (1968. “Crime and Punishment: An Economic Approach.” Journal of Political Economy 76 (2): 169–217) in his paper Crime and punishment: An economic approach . However, only brief mentions regarding the historical origins of the “economic” thought on crime and punishment can be found in the field’s pioneering modern texts. Thus, our main objective is to rebuild this history. In this paper, we do this by reviewing the thoughts of Adam Smith and Cesare Beccaria (1759–1776). In section one, we show how Smith’s position, despite being different from that of the utilitarian outlook, actually hides passages where the author comes very close to employing an economic rationale to reflect on criminality. In section two, we revisit Beccaria’s arguments and find surprising nuances and exceptions, even though he is a thinker explicitly recognized as influential by Becker and other authors linked to the Law and Economics movement. We conclude by highlighting key insights and looking for a broader history where the economic rationale on crimes and punishments can be traced back from centuries ago to modern times.

In this paper, we analyze the impact of past accident experiences on individual care choices. By relying on standard economic theory and evidence of behavioral economics and psychology, we posit that individuals’ care investments should be affected by their past accidents as injurers or victims (accident-history effect hypothesis), or by their prior exposure to accident risks in the opposite role (role-reversal effect hypothesis). We test these two hypotheses using experimental data. We find that individuals’ accident history has no statistically significant effect on their care investments, but that care decisions vary with changes in the parties’ roles. Specifically, injurers with prior experience as victims invest statistically more in care than injurers without prior victim experience. By contrast, care investments are not sensitive to victims’ prior experience as injurers. Our research can be regarded as a preliminary study toward the understanding of the role of past accident experiences on individuals’ care behavior, and calls for both replication efforts and reconsideration of traditional economic models of torts.

We study the optimal penalty scheme for an expert firm and a layman client against shirking in their costly interaction that helps the firm discover the unsuitable transaction, i.e. one that yields a loss for the client. The market solution to the bilateral hidden action problem fails to incentivize sufficient effort and leads to an inefficient outcome, which creates scope for government action. By contrast, private contracts obtain efficiency in an alternative framework with just the firm’s unilateral effort, highlighting the role of the client’s effort in rationalizing legal intervention. Under the unique first-best policy, the firm not only refunds the client but also pays the client’s loss to the government if the firm fails to stop a transaction that ends up being unsuitable. The client receives the refund but submits the firm’s production cost to the government. The optimal punitive penalty is their total contingent loss and is robust to private contracts. The optimal penalty generalizes to a multi-agent team by making each agent internalize all others’ contingent losses.

The impartiality and apolitical nature of the American judiciary are key to its legitimacy and the liberal constitutional legal system it supports. Though less than 1 % of U.S. Federal judges admit to political motivations for retirement or resignation, our research suggests these influences are more widespread. Examining data from 1802 to 2019, we found 11 % of retirements and 23 % of resignations from the U.S. Courts of Appeals may be linked to political cycles. Judges are less likely to retire before a Presidential election when the President is from a different party than their appointing party, and more likely to resign after the election if the President is from their appointing party. These politically motivated exits have grown, accounting for 14 % of retirements since 1975, which points to a more politically charged and polarized judiciary. Previous studies relying on self-reports or annual analyses have missed these political dynamics in judges’ departure timing. Our quarter-to-election level analysis reveals that significant decisions by Federal judges may often be influenced by unconscious bias or conscious partisan loyalty, both of which challenge the idea of judicial neutrality and the common law precedents judges must uphold. Our findings support growing concerns about undemocratic political power being exercised through the courts, giving rise to juristocracy – the practice of engaging in politics under the guise of legal proceedings.