Yes to "Cultivating Conscience" But More, Please

Like all the others who have commented on Lynn Stout's Cultivating Conscience, I enjoyed it thoroughly. I found her critique of rational choice theory to be fresh and persuasive. I loved her contention that homo economicus appears to have all the characteristics of a sociopath as defined by the DSM. Very clever and thought-provoking.

Let me join in all the praise that others have heaped on the book, and spend my comment picking a nit and asking for a follow-up from Lynn.

First, the nit. Lynn spills a lot of ink to criticize law and economics. I understand her criticisms (and those of others who have, for many years, tried to convince readers and law students that law and economics is wrong and pernicious). And I even subscribe to some of them. But ultimately I disagree with these criticisms and think that they miss a central and vital point about law and economics: It has brought to the study of law the practice of clearing articulating a hypothesis (normative or descriptive) about the law and, more importantly, in my view, the urge to confront those hypotheses with data to see whether the real world confirms or refutes the hypotheses. Painting with a very broad brush, before law and economics, legal argumentation largely consisted of making more elaborate and more coherent arguments that amounted to "my hypothesis is better than your hypothesis." The problem with that way of trying to understand the world is that it never gets to the crucial issue of saying "I gathered data designed to see whether my hypothesis explains and predicts actual events in the legal world, and I found that ..."

I would almost claim that law and economics (even in its non-empirical early phase -- the one that critics love to hate) is the father of the burgeoning empirical legal studies movement.

I could cite many pieces of first-rate empirical scholarshp that have appeared in the past 20 years that owed their existence to a desire to test some law-and-economics hypothesis. One of my favorites in this regard is Bob Ellickson's "Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County," 38 Stan. L. Rev. 623 (1986). Ellickson went to Shasta County, California, because he believed that differing liability rules in the two halves of the county created the conditions of a natural experiment in which to test the predictions of the Coase Theorem. But he learned something very different -- namely, that people in Shasta County -- including lawyers and judges -- were not being governed by the prevailing liability rules. They only used those rules to resolve end-game disputes. Instead, they were conducting their day-to-day lives so as to comply with a prevailing social norm of being a "good neighbor." What a remarkable finding! And one that might have eventually come to light through some other scholar's work but one that clearly and significantly advanced our understanding of the world. 

But there's more to say in defense of law and economics (and of other "law and ..."s). Anyone who is paying attention to what is going on in economics these days will find that economists are doing some remarkably interesting work. To take as one example, consider the remarkable outpouring of work by economists on the difference between intrinsic and extrinsic motivation. (For a terrific summary, see Uri Gneezy, Stephan Meier & Pedro Rey-Biel, "When and Why Incentives (Don't) Work to Modify Behavior," 25 J. Econ. Persp. 191 (2011).) That literature makes it impossible to rely upon an un-nuanced "people respond to incentives" view of how people might respond to the directions contained in legal rules and standards.

So, I think that there is a great deal in law and economics for which all legal scholars should be thankful and a great deal of fascinating work in economics (and many other social scientific fields) to which legal scholars should be paying attention.

Second, I want to challenge Lynn to go a bit further than she has in Cultivating Conscience. Let us grant her the premise that human beings are motivated by conscience and morality (and by other things, too; let us also recognize that they are systematically mistaken about some aspects of conscience and morality and other things, and that we scholars ought to be clear about what those mistakes are when we recommend legal interventions). If we grant that premise, then I am very eager to hear Lynn's detailed proposals for how legal education ought to reform itself in order to cultivate conscience and morality and how, in more details, various areas of the substantive law ought to be reformed so as to foster conscientious and moral behavior. And, importantly, I'd like to see some empirical work to show how those educational and substantive law reforms might, in fact, work.

I can't resist citing -- as a criticism of bringing more conscience and morality into the law -- the marvelous article by Tess Wilkinson-Ryan, "Do Liquidated Damages Encourage Breach?: A Psychological Experiment," 108 Mich. L. Rev. 633 (2010). Wilkinson-Ryan found, through careful experiments that without a liquidated damages clause, contract parties were reluctant to breach a contract that -- on efficiency grounds -- ought to be breached. That is, moral considerations induced contractual parties to over-perform contractual promises. But when a liquidated damages clause was a part of the contract, parties were more likely to breach when breach was Pareto optimal than they were when there was no such clause. So, perhaps we should recognize that morality is a good thing but only up to a point.

Tom Ulen