"Law and Economics" is the most controversial of the methodologies currently employed in legal scholarship and legal education. The literature is replete with emphatic denunciations of the method and equally emphatic rebuttals. The purpose of this essay is to organize the claims and counterclaims and to assist you in evaluating them.

In trying make sense of the welter of arguments, it is crucial to keep in mind that there are many varieties of economic analysis. Criticisms that bear directly upon one variety are often irrelevant to the others. To permit us to catalogue the full array of critical arguments, we will concentrate on the style of economic analysis that has drawn the most fire: wealth-maximization studies. As you will see, the other styles are vulnerable to only a subset of the attacks made upon wealth-maximization.

To make the discussion concrete, consider the following example:

Under what circumstances, if any, should the owner of a parcel of land be liable in tort when a trespasser is injured on the premises? William Landes and Richard Posner offers three nested guidelines:

1. Generally speaking, the landowner should have no duty to exercise care to make the premises safe for trespassers, because "the costs of [avoiding] trespassing is ordinarily much lower than the landowner's cost of fencing or otherwise keeping the land safe." In other words, potential trespassers are the "least cost avoiders"; they can avoid the social costs associated with injuries more cheaply (merely by staying off private property) than can landowners (who would have to locate and correct dangerous conditions). Consequently, net social welfare will be maximized if we deny recovery to injured trespassers, thus inducing them to take the optimal level of precautions.

2. The situation is reversed, however, when the source of the injury is a dangerous condition that is enticing to children. It is notoriously difficult to prevent children from entering upon private property when they can see a plaything. In such cases, the cost to parents "of avoiding the lure of the attractive nuisance is ordinarily much greater than the cost to the landowner of fencing out the children." Consequently, net social welfare will be maximized if, under these circumstances, we impose liability on the landowners, thus inducing them to take the optimal level of precautions.

3. What if "attractive nuisances" of the sort just discussed are not visible from a place where the children have a right to be? Under those conditions, the balance tilts back in favor of the landowner. It is less difficult for parents to teach their children to stay off private land than it is for landowners to purge their holdings of all conditions that children might find enticing. As long as children obey their parents, they will not know that, over the horizon, lie playthings. Thus the special circumstances applicable to "attractive nuisances" do not apply.

What is wrong with normative, wealth-maximization studies of this sort? Critics of this style of economic analysis make five main claims. To each, as one might expect, there is a rebuttal.

Criticism	Rebuttal
1. Economic analysis often excludes important variables	1. Serious, sophisticated economic analyses do not make such mistakes
2. People are not the rational maximizers of individual preferences that economic analysts assume them to be.	2. Deviations from the rational-actor assumption can and should be incorporated into economic analysis
3. Unless supplemented with another political theory, economic analysis in many contexts is indeterminate	3. Such contexts are rare.
4. Unless subordinated to a more inclusive set of ideals, economic analysis would generate an undesirable or unjust legal regime	4. Wealth-maximization analysis is commendable, not pernicious
5. Economic analysis leads to commodification	5. No, it doesn't