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Economic Analysis of Law was first recognized as a field of interdisciplinary scholarship in 1993, and involves application of economic principles to analyze the economic effects of laws and determine their economic feasibility. As a field of study, economic analysis of law is categorized into two subdivisions:

Positive: Involving the economic analysis of the effects of legal rules and policies

Normative: Involving the identification of economic effects of legal rules and policies, along with strategic recommendations for further improvement.

Economic analysis of laws is based on the concept of economic efficiency. The most common method of determining economic efficiency is the Pareto efficiency, according to which, a law is economically efficient if it cannot be changed without favoring one person over another.

Not only is economics applied to the legal system, but its study is also prevalent in legal education. Many law scholars and faculties in major law colleges and universities of North America, Europe and Asia; have a graduate degree in economics. Conversely, many professional economists have been studying and writing on common laws and legal systems.

Economic analysis of law has also received criticism from a number of scholars from law fields. Particularly, the normative aspect of economic analysis has been criticized as an inadequate basis of jurisprudence, as it does not take into consideration the importance of human rights and distributive justice.

Over the recent years, economic analysis of law has further evolved to include the application of other aspects of economics, for example: game theory, statistics, econometrics, etc.  Some of the top universities and programs offering law and economics as a field of study include:

  • University of Chicago Law School
  • George Mason University School of Law
  • Vanderbilt University Law School
  • University of Leicester
  • University of St. Gallen
  • UTS Sydney
  • University of Connecticut
  • UC San Diego
  • University of Wisconsin – Madison
  • European Master Program in Law and Economics (EMLE)

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