Research Handbooks in Law and Economics series
Edited by Lloyd R. Cohen and Joshua D. Wright
Lloyd R. Cohen and Joshua D. Wright It all began with Gary Becker. The story – perhaps apocryphal – involves the young Becker giving a workshop on his original work on the economics of discrimination to a learned audience, at least half of whom initially thought the subject matter of the paper was monopolistic price discrimination. Even now, those not learned in the economic arts believe that economics is either solely or essentially concerned with commercial relations. And, so it was, originally. Understanding the economic world in that narrow sense of the term seemed an ambitious and difficult enough task. Then, in the second half of the 20th century, economists began to turn their attention and apply their minimalist but sturdy tools to other human activities: marriage, child-bearing, crime, religion, social groups, etc. How are we to appreciate the nature of this revolution? And, what are we to make of its causes and prospects? The fundamental driving force behind this imperial expansion of economics into these social relations arises from a transformation of our understanding of the discipline. We once understood it to concern a subject matter: exchanges (principally commercial) between individuals across markets. But we now understand it as a discipline in which we use the assumptions and tools of understanding those exchanges to analyze a wider world of human interaction. The most interesting part is that the very great power of economics in its core commercial inquiries came from its spare minimalist assumptions: maximizing behavior, market equilibrium, and stable preferences....