Law and Economics Discovers Social Norms

Although Ronald Coase, Guido Calabresi, Richard Posner, and the other founders of classical law and economics accomplished much, they exaggerated the role of law in the overall system of social control and, conversely, underestimated the importance of socialization and the informal enforcement of social norms. They also implicitly placed too much stress on individuals' hunger for material, as opposed to status, rewards. The upsurge in the 1990s of scholarly interest in socialization, norms, and status does not threaten the demise of classical law and economics but rather promises to enrich it.