Judge Guido Calabresi : The Future of Law and Economics [45:24-50:31]

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.