Self-Criticism to Economic Analysis of Law in Peru (II): Incomplete Microeconomics [J.M. MARTIN]

+José-Manuel Martin Coronado 

Jur/Eco. President

Asociación Peruana de Economía y Derecho
(Peruvian Law & Economics Association)
APEYD

www.apeyd.org

One of the problems of the Economic Analysis of Law (EAL) in Peru and other countries of the world is incomplete and selective teaching of economic principles and microeconomic foundations, which is responsibility of those who advocate for the "easy- EAL" or "soft-EAL " used simplify their criticism to traditional legal institutions, focusing on the outcome rather than the analysis process to get to this. They are not interested on replication nor development of the EAL, but to publish it in the more precarious way possible, and to show off in the middle.

Even for an economics student at a university that also teach strong finance or management, the teaching of microeconomics can be below the standards required for an economist.

On the other hand, non-economists EAL Scholars, usually follow a given model learned from their non- economist teachers or indirectly using an autodidact path based based on the same model without supervision. Many have learned what is market and what is a demand, but fewer of those have understood what are the preferences or choices are, and perhaps a very small group have heard about the budget or the utility as microeconomics considerations. 

Also, many may know that there is a risk in asset markets, but fewer are linking it with uncertainty and its complications, and very few understand what intertemporal decisions are. Similarly, knowing what how a demand curve usually works doesn't mean also knowing how the mind of the consumer processes decisions. Some don't recall why it's necessary to understand what revealed preferences are and what is the use of the Slutsky equation .

Another important element is that they reduce the scope of economics to maximize something, when minimizing the costs is also an strategy, as well as understanding and design of the cost curve, and restrictions.

On tegulatory issues, many speak about the integrations of markets, but not everyone consider the different nature of these markets, which are not mere concatenated markets of buyers and sellers of goods or services between companies, but markets of factors which have a different final buyer market logic.

It is also interesting, some usually teach a little more complex issues from a microeconomic perspective, such as externalities, public goods, information asymmetry, game theory, among others, without the teaching of sufficient economic foundations explained so far; generating a conceptual and analytical void which is going to be filled with false principles, custom or third party indications .

Thus one of the main problems of EAL in Peru is itself, because it doesn't  emphasize strongly enough or remember that the basis of its analytical power is just that, the economic analysis and not a retorical one with subtle ideologies. Only when scholars who speak publicly of EAL, economists and non-economists, are aware of this core failures, this branch will really begin to be taken seriously.