Judge Guido Calabresi : The Future of Law and Economics

I want to welcome everybody today to the National Constitution Center. As all of you, I'm sure immediately figured out I am not Jeff Rosen. I am Mike Gerhardt, the scholar of residence here at the National Constitution Center and I'm sorry that Jeff is not going to be here today. That leaves for me the extraordinary privilege of being the host for today's program. It also leaves me some obligation to do some of the logistics. So I want to just cover some of the basics for how we conduct programs like this. To begin with, and we all know this happens in movies, it happens here at two. So I'd appreciate everybody turning off their cell phones or silencing them. And at the same time, I want you all to be aware that we will be collecting questions from the audience. So please jot down your question on the note card you've been given and hand your question to a staff member maybe walking up or down the stairs and eventually I'll get those questions and hopefully we'll be able to ask a number of them. Following today's program, there'll be a book sale and signing down stairs in the main lobby and copies of the book are on sale in the museum store. I also want to let you know about some upcoming events real quickly. Next Monday, February 8th, Dean Rooter of the Federal Society and John Yu, former Justice Department official and Berkeley Law Professor, are joined by former White House Council aboard in Gray and Center for Equal Opportunity President Linda Chavez to discuss why the concentration of power in administrative agencies may be the greatest threat to our liberties today. Then on February 16th, celebrated constitutional scholars, Josh Blackman, Adam Cox, Christina Rodriguez, and Nicholas Quinn Rosencrantz joined the Center for a conversation around whether or not the president has gone too far in immigration. And for a full schedule of town hall programs, visit constitutioncenter.org slash debate or grab a winter brochure at the registration table. So now I want to take the enormous pleasure and great privilege of introducing our distinguished guest today. Judge Guido Calibration is, if I may say so, a national treasure. One of the most distinguished teachers, scholars, judges, and I would even say legal statesmen of our time. He was appointed in the United States Circuit Judge in July 1994 and entered into duty on September 16th, 1994. Prior to that appointment, he was Dean and Sterling Professor at Yale Law School, where he began teaching in 1959, and is now Sterling Professor Emeritus and Professor Soria lecturer in law. Judge Calibrecy received his BAS degree, Summa Cum Laude from Yale College in 1953, a BA degree with first class honors from Magdalen College, Oxford University in 1995, an LLB degree, Magna Cum Laude, in 1958 from Yale Law School and MA in Politics, Philosophy and Economics, from Oxford in 1959. A Rhodes Scholar, Judge Calibrecy served as the note editor of the Yale Law Journal in 1957-1958, while graduating first in his Law School class. And following graduation, he clerked for Justice Hugo Black of the United States Supreme Court. He has been awarded some 50 honorary degrees from universities in the United States and abroad and is the author of six books and more than 100 articles on law and related subjects. And that just is the tip of the iceberg. We are so lucky, we get many wonderful people here at the National Constitution Center, none more wonderful, erudite or thoughtful than my guest today. So without any further ado, Judge Calibrecy, I would like to actually begin our conversation by having you tell us which really came first for you, law or economics? So economics came first. I studied, when I went to college, I thought it would be a mathematician. That's what I was interested in. And I realized that before I was getting the answers better than other people, because I have a logical mind and quick, I didn't know where I was going. And there were people who were making mistakes, but knew where they were going. And they were mathematicians, I was not. So I turned to something I loved, history, and I thought it would be a historian. The problem was, I didn't like primary sources. I'm a consumer of history, it's still my hobby. I read biography, I read other people, but I'm not a person who wants to do. So I thought history, math, together, what does that mean, economics? So I majored in economics and in analytical economics, which had a lot of math. And I had the advantage of having, as a first teacher in economics, a guy who was to the right of Chicago, Warren Nutter, who started the Virginia school, a wonderful guy, died young. And he and I argued through the whole term, but he loved me and I loved him. And he made me make sure that I understood the whole thing of that way of doing things. And then I had Jim Tobin as a tutor, and a guy named Willie Felner, who was a classic great Viennese. He was a Viennese refugee, and he knew more about everything in any way. In England, I continued doing primarily economics. I did some philosophy and politics, but basically I played in economics. And again, I had his tutors, two Nobel laureates, Jim Tobin was one before, but Larry Lawrence Klein and their John Higgs as tutors. So I came back from England, really knowing economics. I didn't stay with economics because of a part of economics that I liked most was the most theoretical, and I thought that that was really useless. And we're coming to the same sort of thing in the book. So I tried law, really fought demure. I didn't know what, and I loved it. From the first day, I got that sense of it there, I knew where things were going. The opposite about math. And I loved the fact that we had to be rigorous in law, but it always had to do with human beings and real situations. And then I took torts, the first term, with Fleming James, who didn't know any economics, was a great, great teacher, but was teaching out of materials that had been put together to a showman in James, but originally by a guy named Hamilton, who was an economist who had put them together with showman, and saw all of these questions were being asked in torts by James because they were there in the materials. And he didn't quite know what the answer is, but somebody who had the economics background that I had could say, but the answer is obvious. Here's what it is, or here's a problem, and that's how I got into law from economics. And of course, there's something else you've brought to the table in your academic career as well as your initial studying of both economics and law, and that is how you came into this country. Yes. I would describe that and talk about its importance for that. I often say that the most important part of my legal education is that I'm a refugee and an immigrant. My father, I mean, we were very well off in Italy, very, very well off, but my father and his father were fiercely anti-fascist. And my grandfather was an industrialist, my grandmother was a the largest land-owning family in Ferrara, the area between Bologna and Venice, and my grandfather was exiled from Ferrara because the fascists did not want somebody who with his wife was so powerful in a small town like that. They were exiled to wherever they could want it to go, so they went to Florence, not a bad exile. And that's where my father was going to school, and he became an active anti-fascist at the very beginning of his life. How? I asked him once, you know, it's easy to be anti-fascist, but how did you become actively anti-fascist? And he said, everybody talks about the banality of evil, very few people talk about the banality of good. Here's how I became an anti-fascist. The fascists had kicked out the president of our university because he was tough, and they had substituted a guy who was our teacher, anatomy teacher, physiology teacher, something, who was a nice man but weak. He was installed as president. We went to the installation because he was our teacher. And he gave a perfectly good speech. Then the fascist minister of education got up and gave a terrible speech, just an awful, awful speech. And in the middle he stopped his politician's will for applause. And he said, I didn't applaud. There was nothing to applaud. He said, I didn't hear sir, boo, I was much too well brought up to do anything like that. And some people tapped me on the shoulder and said, the next time he stops applaud because they're taking your name down. There were some thugs in the back who were doing it. He said, I was 22 years old. If they had told me that I'd get into trouble, if I went and didn't applaud, I would have stayed home. I might even have gone and applauded, but I hadn't applauded before. And now at 22, somebody tell me, you have to applaud or will beat you up. I couldn't do it. And so I didn't applaud the next time. And when we went out, two or three of us who did not applaud, they picked us up. They didn't beat us up. And there we were, all bloody. And I said, what did you do then? We washed. And I said, we're in the fountain in the middle of the square. And I said, why did you wash there? I said, well, we lived at home. We didn't want to go home all bloody and scare our parents. And I said, were you doing it to show that you had been beaten up? And he said, no, no, I don't think so. But the fascist did. So he picked us up again. And this time beat the tar out of us, and much more, and threw us in jail. Said, I then was an active antifascist, you know, I was marked. So he became part of a small group of people who were Democrats with a small D and helped distribute the first underground newspaper and so on. By the 1930s, he had decided to leave, but my grandfather said, one stays in fights. He was a real patriot. You don't leave your country. So my father said he'd stay. My grandfather died, if the end of 1937, the same time, the two people, my father's closest friends, brothers, who had become heads of this small group of antifascists, were murdered by the fascists. So my father said it's coming too close, and his father having died, he didn't feel the obligation to stay, and we decided to leave. Getting out wasn't easy. It's a long story how we got out and who helped us and so on, but the fact is that we finally were able to get out in the fall of 1939 and arrived in America after the war had broken out in Europe, but not yet with Italy, and arrived in New York on September 16, 1939. I was sworn in as a judge, 55 years to the day when I arrived. We arrived without a penny, having been very rich, outsiders, lucky to have gotten out because I have many Jewish ancestors, Italian Jewish ancestors, going back to before to Roman times, and so had things, had we stayed, it would have been much, much worse for other reasons, but we didn't leave for that reason. Many people did, but we left because we were antifascists, and when we came proud of both, we had that tradition, the ancient Jewish tradition, but also we had come because we were antifascists, and we came, and I knew three words of English, yes, no one briefcase, and there's a story about how it takes too long, and that's as important a part of my being a judge in what I do. Well, in this book, of course, which is focusing on law and economics, there are the strands of much of what you talk about reflected here, and I want to, of course, begin to zero in on the law and economics work that you've done, which begins quite early in your career. Your very first article entitled Some Thoughts on Ristus Distribution and the Law of Torts is probably the kind of article we law professors all would love to think we all kind of written, which is literally to have founded a movement in academia, but let's go back to that article and talk about what you were trying to argue there, and why it remains important. You know, the funny thing about that article is it was written for a law journal competition to become an officer. In those days to become an officer of a Yale Law Journal, you would write your wrote a note, and then you wrote what was called a comment, an article, and I had taken Torts with Jimmy James, and I thought that there were all sorts of things that people didn't understand about Tort Law, that could be explained in terms of economics, and some things which went beyond economics, the Tort Law explained of economics. And so I wrote this thing as a student piece for the larger. Funny thing, the editors, the year before me, didn't like it. They were a mighty powerful crew. Our four linemen was the brain of that, but they didn't like it because they didn't understand it. It was so new. And so instead of publishing it as a student piece which would have happened and it would have gotten lost, I said to them, do you mind if I don't publish it? They still made me an officer because they thought I was smart. But they said, no, no, don't power publishing. And so I put it to one side and I came back to it when I started teaching three years later. And I published it almost identically. I took out something that I should not have taken out because I got talked by one of my professors into taking it out, which was very reciprocity of causation. There's still a footnote on that, but there had been a much bigger discussion. And it came out and it came out actually a month before coast published, the problem of social cost. And these two things coming out together, his dated earlier, but the Journal of Law and Economics was late. So it came out essentially the same time. And at that point people read it and said, oh wow, the only thing that's sad is that having taken out this thing of you don't know when there's an accident, who causes it, because they both do, you know. It takes somebody who likes silence and somebody who likes noise to make noise difficult. If everybody likes noise, it's not a problem, if everybody likes silence, is it a pedestrian or a car? They both are involved in that. And that, when coast said it, and he said it brilliantly, and much more than ever I did, he was attacked for that because he was saying that at that point, from a conservative laissez-faire point of view, I was writing then, more than now, as a young liberal. And if it had come out from both sides, an awful lot of paper would have been saved, because a lot of people attacked coasts, saying that's right wing stupidity, when if it had come out from the left as well, they would have said it may be stupid, but it can't be ideological. So 1960, roughly speaking, is a very significant moment, of course, for both of you and Professor Coase. So, if you don't mind, I want to come back to your article and just tell us a little more about what's the argument you're making in that first piece. And then I want to link it up to what movements then develop over the 1960s? Well, the argument that I was making in that piece was that there were several things. One that taught law wasn't only something between an injurer and a victim, but was also public law. It decided how many accidents we had, what accidents we wanted to have because it cost too much to stop them, although we would never admit that, and who bore the cost of safety, and who bore the cost of the accident, so that you had a decision about which was the structure of society, how many accidents we will have, you had a question of who bears them, so that you had a question of distribution, and how we do best to try to spread that cost while keeping incentives for safety. And probably the thing that at least, Ken Abraham at Virginia has said, is the thing that now is taken totally for granted, which at the time of writing that article was really very new, was that because of the coming of insurance, people like Fleming James had said, torts has no more rule for deterrence, for deciding how to reduce accidents and do safety, because people are insured at the last minute. And so the whole 19th century view of torts as deterring, deciding something was out, and what my article tried to do was to say, it's not out at all, it just has moved from the immediate last minute decision of people to what kind of cars we have, who drives them, who is what kind of categories are safer than others. All sorts of things that now have become so much taken for granted that one doesn't even bother to cite anybody for it. And by the way, that is the greatest compliment of all. If you've done something that has become so common sensical that people don't bother even attributing it to you, to go from the ridiculous me to the sublime, any of you who read John Locke, say, what's so new about it, you read Locke and you say, what's so new about it makes perfectly good sense. And at the time he wrote, it was radical. And at the trivial level of what I did, I've had that pleasure of having some things be taken now so much for granted that nobody even bothered. Is it fair to say, and I know this may be a bit over simplistic, but is it fair to say that when we start thinking about the 60s, beginning in that 1960 period, with your work, Professor Kos's work, and then the work that's going to soon follow, that we get more than one school of thought as it relates to law and economics. So is this the beginning of the Yale School, and the beginning of the Chicago School? Chicago School was really not yet there because Kos was not at Chicago. And one has to understand that Kos is a much more interesting person, theoretically, in many ways, than Chicago would be. Because Kos had written the same thing as the problem of social cause, but none of us had seen it 25 years before when he wrote the nature of the term. But at the time he wrote the nature of the term, Kos was a socialist. And he wrote it in terms of, there are times when command is more efficient, more effective than markets, and that's why we have things like firms which are command structures. He was writing in a way arguing that sometimes direct control is more effective than markets. By the time he wrote the problem of social cost, he'd become a total libertarian, and he wrote there how markets sometimes come in and correct command, but he was always saying the same thing. In that context, he then went to Chicago and some people there focused entirely on what they called then and called now efficiency. It's all a matter of reducing the sum of accident costs and of their avoidance, of getting the cheapest way. And that became Chicago. It already was Chicago, which is not a geographical place, it's a state of mind. For areas like anti-trust, which is, what, instead my writing was saying, but never forget that there are things which you can call efficiency or not, which is the fact that if you spread costs, they often are less burdensome, that's why we have insurance, that's why people are insured so that they can spread, but also that you always have to take into account the distribution of consequences. That among any number of things that may be efficient, there are some that for a given society are better because of how they choose to distribute, who bears what, and that that's always a part of it. But even more important, there will be things that do not seem to be efficient, but because they are distributionally better, are preferred by that society. And that people, a society often will prefer to do something that could be done better if they can do it well that way and distribute in a way that makes sense. Now, the problem with distribution is that people tend to think of distribution as being only one thing. Today, we tend to think of distribution in terms of rich and poor. And how much do the rich pay, how much do the poor pay, and that is a perfectly good, very important way of looking at distribution. But distributional notions were always there before, not necessarily between rich and poor, but the 19th century was full of distributional notions. Homes, who acted as Volvat was not there, was quite clear on the fact that doers should be richer because being doers was more moral. You know, there was this great Calvinist notion of the doers or the ones. And that was distribution. If you think of Rylens V. Fletcher, some of you may remember that case from, if you were tortsnicks from torts, there the distributional notion is that the landowners, the natural owners, that people who were the lords should do better than the mill owners for distributional reasons. Now, you can disagree with different distributional notions, but you always have to know that that is part of the discussion, too. The problem with distribution, and I wrote that in a little article later at the British Academy, is that people tend, either to ignore it and act as if it isn't there, which I called sophistry, and many people in Chicago do, they act as if it makes no difference who is richer or poorer, or they simply announce what is distributionally correct as if they were saying scholarly things about it when they are actually just giving their preferences. And I called that self-indulgence, and I said that I was guilty of it. And I learned that when I proposed a reform of accident law in the only state that I wanted to do that in, because it was the only state where it made sense for it to have its own accident law. It makes no sense for Pennsylvania and Delaware to have different accident laws, because you are driving across borders, and if you have very different law, it just makes no sense. So what was the state, Hawaii? Because not many people drive from Hawaii, not successful anyway. And I proposed a system which was magnificent, a total reform, just wonderful. The governor was for it, the legislature was for it, it was wonderful, much more effective efficient, and all sorts of things, and I thought distributionally clearly sound. And everybody was for it, except the trial lawyers, who were going to lose a lot of money under it, and their distribution was something I didn't think about, because that's clearly wrong. Who cares about them? They bought half-time during the Super Bowl locally at that time, and they've got defeated. And I realized that while my distributional notions there may have been correct, I was just stating that as if it was scholarly, well, it was just my preferences, and that's self-indulgent. So can one say things about distribution in a scholarly way? Of course one can, whether it's right or wrong, Bentham certainly had ideas on that. But if you're dealing with distribution, you have to at least be honest about what you're doing, and saying I'm saying this is a scholar, or this is scholarly, this is just my politics, but you have to know what you're doing. Well, I want to bring out another distinction that you talk about in your book, and you talk about it early on, but I think it's one that is really a framework throughout the book. That's the distinction between economic analysis of law and law and economics. And if you wouldn't mind, tell us how you understand each of those different concepts, and how each has evolved, the path that each has evolved on. Yeah. Many people have been saying that it's been economic analysis of law. In this book, I begin, actually, with a little fable of John Stuart Mill being asked in 1850 around who the seminal minds of a century, between 1750 and 1850. And Mill says, first, courage, the poet, it's kind of interesting that you would have said that. And then, of course, he says, Bentham. And Bentham, he says, he approached all ideas as a stranger, it's a nice lie. And if they did not meet his test, he dismissed test of utilitarianism, their ideas as vague generalities, elsewhere he says nonsense, nonsense, and stills. And then Mill says, but what he didn't realize was that in those vague generalities lay the whole unanalysed experience of a human race. That is, sometimes what was done in the world, that Mill's, that Bentham's theory did not explain was wrong, passed over things, but often instead, it was experience what the world wanted, that the theory wasn't good enough to do. Economic analysis of law is like Bentham. It takes a theory, it can be Chicago, it can be Marx, it can be whatever you want, but it is a theory of economics, looks at the world, the world doesn't fit, and it says irrational, change it, get rid of it, because the theory says it should be this, and instead, it's different, so it must be irrational. Law and economics, which is what I have tried to do, and I think post clearly also did, Marx the same way, takes a theory, looks at the world, and the world doesn't fit. It then says, am I looking at the world correctly? Sometimes, we're looking only at appellate cases, and not at administrative cases, and so we think the world doesn't fit the theory, but it actually does, and then it causes the theory to look more broadly, but at other times, when you do that, the world still doesn't fit, and then you ask yourself, is it the world that's crazy, or is the theory not good enough? And very often, it's that the theory is not sufficiently complex, sufficiently nuanced to explain the world, and then the lawyer economist makes the theory different, makes it better, which helps solve that problem, teaches you what to do in that area better, but also many others, and that, of course, is exactly what Kost did in the nature of the firm, and it's what I have tried to do consistently. Many, many people do just the first, because it's easier, you know? You take the theory, you look at the world, the world doesn't fit, yet rid of the world. It's easier, and it gets a lot of people tenure, which is after all the main thing that's gone with your mouth, but the problem is that if you then use that, as a way of say, this is the reform that we want, what we should change, that can be wrong. Because the world is actually saying, we are doing some things, and it's your theory, that isn't good enough, and if you bother to change the theory, you often find it not only explains this area, but helps you vent a deal with that area better, because now you know what it is trying to do, and you can do it in different things, and then helps many other areas as well, and that's what I try to do in this book. I also want to continue to focus on some basic concepts here, just so we can understand them better. It may be fair to say, and you can just tell me if you disagree with this, that at least there's been a perception that law and economics as a movement has moved in a generally conservative direction. Would you agree that it has moved in that kind of direction, and if it has, do you think there was inevitable or inherent within the law and economics? Well, it certainly has moved, at least economic analysis of law has moved in that direction, it has moved in that direction almost inevitably, because if you're going to do that economic analysis of law, as I say, is much easier, you just take the theory, and you do it. And the place that did it most happened to be Chicago, which happened to then use as a theory a traditional, very conservative view of economics. You could, as I say, have done the same thing with Marxism, but there ain't much Marxism around in the United States as a theoretical matter, so you didn't get very much of that. I think that in doing that, it has lost much of the power that economics instead has of asking us to ask real questions, and it's that that I try to bring back, not necessarily to move it to the left, but to ask some of the questions that the really wiser people at the beginning, like Kose, who, as I say by the time he wrote the problem of social cost, was certainly very conservative, but who could see that this would be useful as a way of looking at the world and helping people then decide what they wanted to do and what the best way of doing it was. I'm going to go ahead and use one of the questions from the audience, because this question touches on something I know you talk about in the book. You certainly talk about tort law a great deal, but this question is, how does eminent domain figure into law and economics, so that's a whole other important field. Eminent domain is a marvelous example, because in eminent domain, we all think of the idea is to pay people the value of their property if it were on the market, and that's a kind of traditional economic analysis of law. You look, you take the market price, you look at the property for a public good, you take that property. But if you look at the world, it turns out that in the world, that often is either not done or is hated. Let me tell you one area where it's not done. In Italy, traditionally, when you took property for a public purpose, you paid not the value, not the market value of the property, but the value in use. So some very rich Lord wanted to have a very fancy villa, because he wanted it to be, because he wanted to look nice, and the land was worth more for redevelopment, or for development of something, but he kept it as farming, and then the state needed that land for something, they would only pay him the lower amount. That was because the society, social democratic, if you want, wanted to push people out of being in that situation. I know that very well, because my great uncle owned a lot of land outside Bologna and had a great villa, and it was worth much more if he had sold it for development because the city was moving out, he was an economist, and so he claimed that he was actually keeping it because the rate of interest was lower than the increased value of land, as it would come. At a certain point, the town fathers of Bologna said, we have to build a airport, and they looked, and they said, where is there lots of nice empty land, and they looked at my great uncle's land, and they said, oh, that's a perfect place for an airport. So they took it, and they paid the value of it as farming land, and a much poorer than I otherwise would have been. He had no children, and so I'm not complaining, but that was that society's deciding that it wanted to do that to make people be more willing to give up their property, which otherwise they wouldn't. On the other hand, take Kilo, you know, New London wants to take houses of relatively poor people who live in their houses, and their houses are not for sale, and they want to take that land to do redevelopment, and to make it nicer. So they give a private person the right of them in domain who wants to take their houses and pay only the market price. The Supreme Court said, that's okay. There was a huge stink. People said, that's unfair, that's not right, that's done. But you know, during the oral argument, just as Kennedy of all people, not the one you think of as the one will come up with some great new theory, said, wouldn't we all feel a lot better about this, if when it's a private person taking private houses for a public purpose, they had to pay two or three times for market price. What is there about the market price that should drive us? Why wouldn't it be better if in these areas, eminent domain, had to pay much more? The opposite social judgment, if you want, from the one in Italy with respect to villa owners, but one which I think would have made everybody feel better. That would have been the world saying to the theory, you don't need to be driven by what would be the market price in every area. Now this of course is discussed in the book and I want to stay with the book and get back to another question to about it, but I also am getting some great questions from the audience, so I want to sort of go back and forth between their questions and what you've talked about, so I will just read this question which should be self-explanatory. Edmund Burke would say that no sophistur, Edmund Burke would say that no sophistur could ever create a system that accurately describes reality. Do you think that there is a Berkian limit to what law and economics can tell us about human society? And then there's a PS towards one in the fall term of 1967 was my favorite course. Okay, I don't identify yourself, by the way, no. Burke is the perfect counter to economic analysis of law, because Burke is exactly somebody who is saying, you see how the world does things and then you think about theory. Now I don't think Burke was against theory, but he was a person who wanted to emphasize the what was happening as a way of looking at things. My own view is that the beauty of law is precisely that we are profoundly Berkian and common law subjects, especially, case by case, see what happens, look at what is going on, and criticize the theory that would tell us. And then the other hand, Mill is also correct when he says sometimes when the world doesn't fit the theory, the world represents ideas that are no longer valid, past accretions of power, past exploitations so that the theory can help us to make the world better. It isn't always the world that is right. The world is often what has happened because the people in the past have had powers or because things have changed. So what we need is both to be Berkians in criticizing the theory and to be lymphomas, if you want, in criticizing the world, but go both ways. The economic analysis of law makes economics the queen and law the handmaiden. A thing that is solely Berkian says law and our experiences, but queen, and any theory whether it's economics or philosophy is the handmaiden, they're both reductions. I don't think Berk himself was that way, but that way of thinking is reductions. You need both to try to make the world better because the world, because things are hard, and theoretical thinking helps that, and practical experience does too. And that for me is the joy in law, but because it is hard to do both, there's always a tendency for people to say, the other side, I won't bother. Much easier to get ten, you're even way. Well something that might capture both, I'm going to dare to say, something that might capture both, I dare to say, is something you talk about in your book, and that's the rise of behavioral economics. So to what extent is that influence your own thinking about law and economics? Now in my vanity, and those who have had me as a teacher, know that modesty is not my greatest quality, I like to think that I was a behavioral economist before they were behavioral economists, and there's a guy in Belgium actually, his name is Four, who once gave a talk in my presence, in which he said just that, and he showed a part on the screen, some things I'd said in my first article, and a picture of me as a child, because I wrote the article when I was 12, and then something else which was behavioral economics when I was 17 or something, and kept saying that behavioral economics, and specifically the great psychologists who were behind it, did in a particular area, in a particular way, what I'm suggesting in this book more generically, with respect to a series of things which economic theory did not explain what people did, they said if you bring in some psychology and make the theory more complicated, you will understand perfectly well what people are doing. And that explained the strange thing that most of us value something we have, more than something we have to go and buy, but you know you have something, and you don't sell it, even though you'd never spend the money to buy it, I know that very well, because when my classmates and I graduated from college, we put aside some 1953 wine, we didn't know anything about wine, but we bought some mooton Rothschild, 1953, because somebody told us, yeah, that's a good wine, and we said we'll drink it for our 25th anniversary, and our 25th anniversary, that those wine bottles were worth a fortune because the mooton Rothschild 1953 was one of the greatest years and so on, we could have sold it for all out of money. Of course we didn't sell it, we drank it, would we have bought that in 25 years later, no, this was the first insight, but one of the insights about psychology that became behavioral economics, and that is wonderful, I'm very glad they are doing that, but it's a mistake to think that that is the only area, or psychology is against them, for apology is against bananonology, or other things can help us to understand in the world what is going on, but to me, behavioral economics is just one part of what we're talking about here. Well this may be a good place as well to sort of get into this question, it says please talk about the role of law and economics ideas in your judging, how frequently do you think your law and economics approach has affected your express reasoning and result? Well, you know, a judge is not a simple theorist, there are areas where there is not much law and where economic theory or some other theory will help me as a judge, and then I'm willing to do it. On the other hand, I am a judge, and I am bound by the law, and I'm bound to follow the law, and I will follow the law, whether I like it or not, for many reasons, one, because I've taken a note, and two, because I'd rather have the law bind my colleagues than have them do what they want, according to what their theories. But I love my colleagues, but I think the law on the whole is better. And by the way, Dick Posner, who didn't start out that way as a judge, but I tease him, he's a great scholar, but I tell him he's a better judge than he is a scholar, because as a judge, he is also not just tied to the theory. There are some cases, some situations where economic theory is helpful because there is no law that tells you, and then you do what you can with that. There are other situations where you look at the law and you think the law is wrong, and because they have gotten a theory or something else is wrong, and then you think about it, and you decide it's the world that is wrong, and then theory may be useful. But rarely do you do that as a holding, in fact there's an interesting thing, as to an issue of punitive damages, Dick Posner wrote an opinion which was based on economic theory. I wrote an opinion which followed the law as it was, and then wrote an opinion concurring in my own opinion, but separately say, but I don't think this law makes sense here. So you know, you can use economics in that, but you've got to be careful, it depends on how aggressive a judge you are, and I'm not that aggressive, you know. I think, I'll say this about judgey, I think there are three ways of looking what a judge does. There are some people, great judges, like Mike Boudin, who think basically the job of a judge is simply to settle disputes, doesn't even matter how they come out, there's an argument, there's a dispute, you settle it, that does it, and that's the end of it. Something to that, but I don't think that's enough, there are some judges who are determined to make the law the way they want it, as lawmakers, and you can have people from the right or people from the left who do that, and they are there, and I won't name them, although many of them are my good friends, but they're not. I believe that a judge is part of many law-making institutions. It is more of unsettling and dispute, but it is part of making law along with others. Some people said that my judicial theory is talking, not surprising, because I love to talk. And that what we do is take small steps, talk to other institutions, talk to legislatures, talk to be executive, talk to other courts, certify to state courts, talk to many different things, and out of this, the law develops, we can bring theory, we talk to be academy, learn the theory, but that that is what we're doing, and that obviously means also using theory, but not letting dominators. Well, that may, your last comments may be answered to a question I was about to ask, I'll go ahead and ask it, and any event, because I want to just be clear about it. You end the book with Arthur Corbin's famous farewell to Yale Law School, and Arthur Corbin who, folks here right now, was one of the great legal scholars as well at Yale Law School. And near the end of his farewell address, as you I'm sure recall, he says, I've always believed that the most important part in the evolution of our legal system is played by the judges, and he explains this in part by saying it's because judges make decisions. So I, would you agree that the judges play the most important part in the evolution of law? Well, I just want to, I just wanted to talk about the evolution of law. Arthur Corbin was a contract man. He was a common law guy. I'm a tortsknik, I'm a common law guy, and if you are a common law person, you think that judges' role in the evolution of law is likely to be important. Arthur Corbin was also writing in the 1930s before the world of statutes. It's become much more complicated because now judges are not the Lemmeville Shaws who had no statutes to deal with and could redo everything, maybe too aggressively, but as part of a common law. Now we're constantly talking with the other thing, with the other bodies, with the other parties. I think that Corbin viewed the role of the judge as greater than I would today, and yet the judge is very much in the middle. I find myself sometimes in a sentencing situation saying, this sentence undervaled statutes and the sentencing guidelines is not unreasonable, and therefore the district judge could do it. But it is absurd because the guidelines and the law are ridiculous. What I'm doing there is saying, my role is to play this and to do that, but I want to talk to the legislature or to the sentencing to the Guidelines Commission and get them to change and that respect Corbin is still quite right. I'm back to a question from the audience. Have you noticed a shift in judicial policy in the last 30 years in tort law, where the primary emphasis of the courts is on keeping insurance costs low? Well, I think there are times when the costs are too low, you know, and I don't care about whether it's insurance costs or whatever, but if things are costly, if they cause accidents, we should know what those costs are, and we should respond to those costs by trying to find safer ways. And often the only way we can know it is if we have to pay money for it because we don't like to think of ourselves as being injured and so we will often underestimate the cost of the injury, and the person who is injured and killed off, they're no longer there, but actually safety would be cheaper. And if we can convert that into money so that we really know what it costs, then we'll find all sorts of things to be safe. If enough, worth doing. And there are times when because of administrative costs, costs are too high, and that's waste, and we ought to do things better, and there's an awful lot in tort law that is sheer waste, of course, but there are other times when the costs represent what we think of as the harm, the value of this injury, and then we ought to find a way of making it part of the decision making. I want to give you a chance to respond to at least one thing from Judge Posner. So Judge Posner obviously has some different views on economic analysis of law, and in particular and I just want to quote him here, this is not me speaking, but this is Judge Posner, and if you know Judge Posner, he doesn't hold his punches back. So he said in reference to one of your classic works, the cost of accidents, he said, well, that's a failure. And I want to know, would you agree with that or not? I think he was suggesting that at least in this partially critical review that he thought that, well, the approach you had to torch there was never adopted. So therefore, somehow that made the book a failure, I want to give you a chance to respond. I don't think it's at all a failure. The cost of accidents said that essentially if you do not take distributional things into account, probably non-fault systems would be more efficient than fault systems. I think that is certainly the case. On the other hand, if you take distributional systems into account, you may decide that something in between is the better way of doing it, and that taking into account some negligence sometime, but there are many, many areas, not of that, is better. And if you look at how comparative negligence actually works today, in virtually every state, what you compare is not fault, but you compare fault and causation. You compare an awful lot that is non-fault, and fault plays into it a little bit. You compare responsibility. So what I think a system of comparative negligence is much more what one might have expected in practice. Again, the book is a book of theory, and it suggests some things. You then look to how the real world reacts to it, and you come back and you say, hey, you know, this theory, my own, can be tweaked a bit and made a little better, and then it explains that world. And I think it's much closer to what goes on than to what Dick suggested in his original writings, which were brilliant, but we're also asked a question from the audience, is there an intellectual theory for solving the problem of gun-related violence? I've got to be careful because I'm a judge, and I can't take any position that is political. And I won't. On the other hand, it is interesting that we have not used, and actually by statute are prohibited from using, something like tort law in that area. We just made it in my torts class this term, the question, one of the questions in the torts exam. We said, you are the assistant to Senator So-and-So, who has decided that torts would be a way to deal with gun violence, and wants you to write a statute. Write a statute doing that, or criticize why that is wrong, why that is not the way to do it, and do that. I got many wonderful answers, as you can expect from first-year students, but think about it. Think about the fact that something like torts would not prohibit anybody from owning guns. On the other hand, if it made people liable, they might just find ways of making guns be used only by people who are safe. You might have a gun that could only be used by somebody who did not have a criminal background. I'd leave it up to the industry to figure out the ways within centers. Now, would you do it from tort law, as it is today, probably not, even in theory, because tort law is so inefficient? I mean, there are so many administrative costs, but think about a way in which one could allocate for costs of guns in the same way we very not effectively, but to some extent allocate the costs of cars, and you might come up with good ideas. You know, it's interesting. We have no cars which have spikes on the front, which impale people. It's surprising. I'm sure that there'd be lots of people who'd like to do that, to be very interesting to have a car that did that, but the insurance cost to them of a car that sort would be wild. No insurance company would ensure you, unless you were willing to pay a huge amount. So it's out. The market worked in a wonderful way. It would be kind of interesting to think about, and I'm not saying that one should do it, because the market doesn't dominate us politically, but kind of interesting to think of what the market would do about gun safety, were it allowed to operate? I'm going to use my prerogative as a moderator and substitute for Jeff by going over. I'm going to use that power for good today, and so this may be my last time as well. But I want to ask a couple more questions, while I've got you. You'd mentioned earlier, and the judges followed law. Of course, I think almost everybody would agree with that. Does that make being a Supreme Court justice harder or easier, given the nature of the Constitution? Well, tell me again, so you'd suggest the judges follow the law. When we get to a case that didn't hear that, it suggested what? It suggested earlier that judges follow the law. Well, of course, being a Supreme Court justice, you have much, much more room, because you do have a Constitution and have to follow a Constitution, but what the Constitution says gives you much more room. A judge on my court is bound by the Supreme Court, and they bound us. And they very rarely take our cases, so that most of the time we know we are of a court of last resort, and we write differently when we know it's a case they will take, we write much more broadly, given much more of a menu, hoping to help them, and when instead we're of a court of last resort, we're much more likely to say this is the way it is, because that has courts of last resort we are bound by what they say. They're also bound by previous decisions of our court, so that we have much less room. The Supreme Court is not bound by its previous decisions, and it reads the Constitution in very different ways as it wishes, so that it can do much, much more. It is still a court, though, and still is bound in some ways by the law. Two stories on this. When I was Dean reaching the end of my dean's shift, Connecticut's governor, who had been a classmate of mine in college, Lowell Wiker, suggested that I might be Chief Justice of Connecticut. I said no, because Connecticut had a retirement age of 70. I thought that would be much more fun, much more interesting. I hadn't really thought of a court of appeals, because to be the Supreme Court of Connecticut in areas like torts and contracts, one could do so much more when had Connecticut's Constitution, but one could do so much more. I couldn't do it, because I was already in my dotage to take me three or four years to learn my job, and by the time I had learned it, I would be lame duck, retired. So I said no, and I went on a court of appeals, because President Clinton decided if he wanted me, well, I had never had no idea what such a court did, and I found it was wonderful, but as an idea, I was more interested in the other, because I thought you could do more. On the other hand, it is also the case that the Supreme Court is bound by law, and my story there is, Justice Reed was in racial matters a