Ideas Have Consequences: The Effect of Law and Economics on American Justice

Abstract

This paper provides a quantitative analysis of the effects of the law and economics movement on the U.S. justice system using the universe of opinions in U.S. Circuit Courts from 1891 and 1 million District Court criminal sentencing decisions linked to judge identity. We use attendance in a controversial economics training program that 40% of federal judges attended by 1990, a policy change giving judges more sentencing discretion, random assignment of judges to control for court- and case-level factors, an exogenous seating network from random panel composition to trace the spread of economic reasoning in law, and ordering of cases within Circuit to identify memetic economic ideas that move across legal topics. We find that judges who use law and economics language vote for and author conservative verdicts in economics cases and are more opposed to government regulation and criminal appeals. After attending Henry Manne's economics training program, judges use more economics language and render conservative verdicts in economics cases and reject criminal appeals, and this result is robust to a large set of judge biographical controls. Manne economics training is more predictive of these decisions than political party. Manne judges render 20% harsher (10 months longer) criminal sentences after U.S. v. Booker allowed more sentencing discretion. They also impact criminal appeals verdicts when not authoring the opinion. Judges exposed to Manne peers increase their use of economics language in subsequent opinions. Ideas such as “optimal deterrence”, “capital”, and “law and economics” move across legal topics.

Keywords: Judicial Decision-Making, Ideology, Intellectual History

JEL Classification: D7, K0, Z1