Economics is everywhere, and understanding economics can help you make better decisions and lead a happier life. – Tyler Cowen
INTRODUCTION
Economics is about making decisions. Every day, we make numerous decisions. How much gas should I buy? Which is the most direct route to work? Where should we eat? Which job or profession should I pursue? Can I adopt that dog? Should I marry and have children, and when should I do so? Many people associate the word “economics” with money. Economics is about more than money. It involves weighing various options or alternatives. Some of these critical decisions involve money, but the majority do not. The majority of your everyday, monthly, or life decisions have nothing to do with money, but they are still considered economic decisions. Economics is a vital subject in every field, whether it is law, business management, political science, or another. The subject of economics teaches us about the economic value of everything[1].
Furthermore, Economics is a subject based on human behaviour that plays a significant role in several aspects of the law, and in my view, every law student should be familiar with this subject. It will not only help you to understand your society if you work in a smaller place, but it will also help you in a larger aspect. Much of the law is influenced by economics. Not only does the Supreme Court frequently rule in ways that “lubricate the skids of commerce,” but most dispute are pushed by economics in some way. Sometimes equal and fair knowledge should be available for a lawyer to indicate the true causes of the fluctuating economy in relation to societal crimes. The importance of economics is demonstrated by the fact that every law has economic implications. Tax system, International Commerce, Corporate Law, Copyright Law, Banking, Insurance, Investment and Securities, Employment Laws, Mercantile Law, and many other areas all contain significant amounts of Economics[2]. To understand these laws, it is necessary to have a working knowledge of Economics.
The course Economics in the university program help students learn, tools, and methods to make effective economic choices under risk and uncertainty. Major topics include decision-making methods and standards, demand and cost theory and estimation, pricing theory and practice, pricing new products, and competitive bids and price quotes. The goal of the course is to teach students how to list the various requirements and objectives that firms face, how to apply economic thinking to individual and business decisions, and how to use calculus to find the best solution.
SIGNIFICANCE OF ECONOMICS IN LAW
Following are the points which help us understand the need to study economics at law school:
- Assist In Legal Arguments Made During The Prosecution And Defense Of The Case
Economic analysis is a key component of the legal arguments used in both prosecuting and defending the lawsuit. Economic experts are most often brought in to make or bolster the arguments, but the lawyers involved in those kind of cases need some understanding of economics to comprehend and effectively use the issues raised by the expert[3]. Economic arguments are frequently at the centre of antitrust and price-fixing cases, as well as employment discrimination, wrongful death, injury, and tax cases. This list is obviously not exhaustive, and the trend over time has been for economic arguments to be used and accepted in a wider range of cases.
- Helps In Lawmaking And Public Policy
Those law students who want to pursue a career in policymaking can work as legislators, lobbyists, or legislative staff in the executive branch of government. In that situation, they will be perpetually entangled in economic issues, because almost everything the government does costs money—either its own or someone else’s—and resources are always scarce. Law students interested in policymaking will be required to work on issues as wide and varied as the rationalization for free trade, the financing of wars, the layout of Social Security, the implementation of Medicaid and Medicare, the reform of welfare and other anti-poverty programs, minimum wage laws, student loans, deficit reduction, and many others[4].
- Aids In Better Interaction With Clients
Understanding economics, even on a basic level, will undoubtedly aid a law student in clearly articulating his clients and opposing parties. It will help him learn how to assist a client in developing a successful estate plan that meets their needs. It will assist him in understanding how to write strong and enforceable contracts. The primary goal of the law is to protect someone from infringements of his basic rights, which means that the law is oriented toward human behavior and must develop a proper and better interaction with humans in order to provide settlements for their disputes related to economic factors in the economy.
- Allows For A Better Understanding Of Issues Encountered In A Variety Of Legal Areas
Getting to know some economics should help students understand the issues that arise in a variety of legal areas :
Criminal Law
It is vital to consider that criminal law and economics cannot exist apart from one another. Criminal acts are inevitably a source of major societal costs that cannot be neglected by any society. Poverty is a major topic in economics and also relates to criminal law as it strongly drives the crime. Knowing how to prosecute and defend criminal charges must take into account economic circumstances.
Contract Law
The law of exchange is essential in a market economy. Most contract law doctrines show a correlation with economic efficiency. Contract law research has revealed that, in general, allowing parties to write their own contracts and allowing courts to enforce the agreed-upon terms, including the agreed-upon price, is efficient. A law student should study economics in order to understand these concepts.
Property Law
Economics discusses the resource availability in our country, the size and attributes of our country’s population, their needs and preferences, and the regulatory frameworks for people to execute within a country’s territorial boundaries. Economic includes detailed information on all of the aforementioned categories, allowing lawmakers to enact property laws for the people of the country to be applied to them after determining these factors[5].
- Use of Micro-Macro Economics in law firms
As a lawyer, you must be able to see the rationalization behind business decisions while also understanding the big picture and where the particular deal you are working on fits into the client’s broader global strategy. Microeconomic principles are used by businesses to make decisions about productivity, supply, and pricing[6]. Thus, studying Microeconomics teaches you the reasoning behind these decisions. When you hear about a macroeconomic event in the news, extensive experience in Macroeconomics will enable you to anticipate and understand your clients’ decisions. You will also have the skills in communication to confidently speak with clients about world trends that are shaping the businesses in which they operate.
CONCLUSION
Economics essentially refers to human welfare and resource scarcity. The aim of the law is to regulate an individual’s social and economic actions. Economics, whose most fundamental subject is not money or the economy but the consequences of rational choice, is a critical tool for determining the effects of legal rules. The importance of economics is demonstrated by the fact that every law has economic effects. Taxation, Foreign Trade, Company Law, IPR, Banking, Insurance, Financing and Securities, Labor Law, Mercantile Law, and many other areas are heavily influenced by Economics. Thus, in order to comprehend these laws, a working knowledge of Economics is required. Even students who have not been presented to the subject prior to dealing with these laws must eventually read about the economic principles involved. Everything that related to business and trade necessitates an understanding of Economics, and the law that governs these aspects is no exception.
YLCC would like to thank Dipti Tharwani for her valuable insights in this article.
[1] Dutta, S. (2006). Review of Introductory Economics (Micro and Macro). New Age International (P) Ltd.
[2]Rubin, P. H. Law and Economics . ECONLIB. https://www.econlib.org/library/Enc/LawandEconomics.html
[3] Cserne, P. & Esposito, F. (2020). Economics in Legal Reasoning . Palgrave.
[4] Stewart, J. (2016, February). The role of economists in policy-making. United Nations University. https://www.wider.unu.edu/publication/role-economists-policy-making-0
[5] Besen, Stanley M. &Leo J. Raskind. 1991. An Introduction to the Law and Economics of Intellectual Property.Journal of Economic Perspectives, 5 (1): 3-27.
[6] Rodrigou, G. C. (2020). Micro and Macro: The Economic Divide. International Monetary Fund. https://www.imf.org/external/pubs/ft/fandd/basics/6_micro-macro.htm
