Interdisciplinary research facilitates the building of an independent system of knowledge. Photo: TUCHONG

Interdisciplinary research is a crucial pathway for academic innovation. It not only significantly broadens the scope of inquiry into new research areas but also encourages critical reflection on the limitations within individual disciplines. This, in turn, promotes their further refinement and maturation, laying the groundwork for renewed academic prosperity. The emergence of law and economics in the 1960s manifests as an example of interdisciplinary research. It has fundamentally reshaped the internal structure of legal studies, redefined nearly every branch of law, and spurred both legal scholarship and economics to evolve through mutual reflection. Today, it remains a vital component of international academic discourse, continuing to advance through ongoing innovation. The developmental trajectory of law and economics offers valuable experiences for China’s current efforts to promote interdisciplinary research, providing useful insights for constructing an independent knowledge system with Chinese characteristics. 

Interdisciplinary innovation

The relationship between law and economics has long captured the attention of classical thinkers such as Adam Smith and Karl Marx. Yet, for a long time, scholars were unable to construct a theoretical bridge connecting the two fields. In the early 20th century, investigations into antitrust legislation and government regulation marked the beginnings of interdisciplinary engagement between law and economics. In 1960, Ronald Coase published The Problem of Social Cost, introducing the renowned “Coase Theorem” and pioneering a theoretical framework that demonstrated how legal rules shape resource allocation. 

Richard Posner’s 1973 publication of Economic Analysis of Law, the first comprehensive textbook in the field, signaled the formal establishment of law and economics as a distinct academic discipline. In this work, Posner systematically and extensively applied microeconomic theories and methodologies—such as cost-benefit analysis and supply and demand theory—to explain and dissect legal issues, initiating a micro-analytical paradigm for examining the inner workings of law. Posner’s framework drew widespread attention within academic circles and exerted a profound influence on legal practice. This sparked the first wave of research enthusiasm in law and economics, with nearly every legal field beginning to adopt the cost-benefit paradigm in their research. Academic conferences, associations, and journals dedicated to law and economics proliferated, and courses in the field became mandatory in American law schools, marking the successful entry of economics into the legal domain. 

However, Posner’s emphasis on efficiency as the paramount value provoked considerable debate. He asserted that the highest form of justice is efficiency, advocating that the creation and enforcement of laws should aim to maximize overall social utility. Critics contended that Posner placed disproportionate weight on economic efficiency, neglecting the law’s intrinsic values of equity and justice, and failing to adequately account for the broader social and cultural contexts in which legal systems operate. In response to these critiques, and in an effort to enhance its own theoretical robustness, the field of law and economics has progressively expanded its analytical tools and conceptual frameworks. 

The refinement and application of game theory as an analytical tool has greatly enriched law and economics. Game theory’s strategic interaction framework is particularly well-suited for analyzing legal relationships among various actors and for predicting the likely outcomes of dynamic legal interactions. For example, through constructing game-theoretic models, researchers can anticipate the behavioral choices of contracting parties under different conditions and design optimal contract terms to minimize the risk of breach. Today, game theory is widely used in interdisciplinary studies of law and economics, becoming one of its principal quantitative tools. 

Legal systems, by nature, govern relationships between individuals, and the presence of irrational behavior significantly influences how laws function. Traditional economics assumes rational actors; however, behavioral economics—through experimental and empirical research—reveals that decision-makers frequently exhibit irrational behavior. This insight carries critical implications for the design and effectiveness of legal systems, as it suggests that legal outcomes may not unfold as intended. Concepts such as the “nudge” effect demonstrate that by structuring default options and simplifying decision-making processes, individuals can be guided toward more beneficial choices. This approach has been widely adopted in fields such as consumer protection, tax law, and pension policy, enhancing both the equity and efficacy of legal institutions. 

Emerging alongside law and economics, new institutional economics shares similar theoretical underpinnings. It emphasizes that sound legal frameworks are not merely safeguards for economic development but essential drivers of it. Research in new institutional economics has strengthened the foundational theories of law and economics while supplying an array of analytical tools. Particularly, it places greater emphasis on examining the relationship between legal systems and economic growth. This perspective diverges from Posner’s micro-analytical approach, favoring instead a macro-level analysis of legal institutions as cohesive systems, studying their impact on economic expansion, technological innovation, and employment growth. These studies have not only advanced the transaction cost and institutional change theories of scholars like Coase and Douglass North but, through detailed empirical analysis, have identified the specific legal institutions conducive to economic growth. In doing so, they offer concrete policy recommendations for legal reform. 

Data for theoretical advancement 

The incorporation of game theory, behavioral economics, and new institutional economics has significantly enriched the theoretical framework and research methodologies of law and economics. These additions have not only addressed external criticisms but also reinforced the economic analysis underpinning the discipline, garnering broader academic recognition. Building on this more refined theoretical structure, law and economics has now progressed into a stage where empirical research is employed to testify theoretical judgments. 

Although empirical research on law has long been part of scholarly tradition, constraints in data availability and research techniques limited its development. It was not until the late 20th century that empirical legal studies began to flourish. Advances in information technology and expanded statistical coverage have since led to an increasingly rich supply of legal data. New analytical tools, such as difference-in-differences models for assessing policy effects before and after implementation, have emerged in parallel. As a result, empirical analysis has become a dominant trend in contemporary law and economics research. 

Current achievements in legal empirical analysis generally fall into five categories. The first involves providing comprehensive overviews of law implementation, aiming to describe and summarize how specific laws function in practice. The second focuses on evaluating the effectiveness of legal measures and rules, using empirical data to determine whether particular legal initiatives have yielded the intended outcomes. The third clarifies ambiguities within legal texts; when statutes contain unclear or potentially ambiguous provisions, empirical research can help elucidate them. The fourth explores the underlying factors influencing judicial behavior, seeking to uncover the reasons and motivations behind specific court decisions. Studies have shown that a judge’s educational background, regional economic conditions, and political climate can all exert influence on rulings. The fifth category investigates the “peculiarities” of law implementation, examining phenomena that deviate from conventional expectations or standard theoretical models. 

Empirical research demonstrates the mutually reinforcing relationship between data analysis and theoretical construction. By drawing on extensive empirical data to verify hypotheses or propose new theoretical insights, law and economics establishes strong links between theory and practice. This cyclical process—where theoretical research emphasizes data support, and data analysis yields fresh theoretical perspectives—has solidified the theoretical foundations of the discipline and refined its academic structures. 

Three prominent features 

First, it adheres to a problem-oriented approach, which serves as a guiding principle for interdisciplinary research. One of the key missions of law and economics is to provide a theoretical framework and analytical tools for evaluating government regulatory actions. In this sense, law and economics offers a successful example for other interdisciplinary fields: scholarly inquiry thrives when it addresses major societal concerns. For academic disciplines to remain evergreen, they must be rooted in the urgent demands of their time, and theoretical research must seek practical relevance. Interdisciplinary efforts must likewise follow this basic rule to yield social value and ensure the sustainable development of knowledge. 

Second, law and economics places strong emphasis on theoretical preparedness within interdisciplinary research. When the challenges of the era pose pressing questions, the ability to answer them effectively hinges, in large part, on the maturity of theories. By the 1960s, economics had evolved into a well-established discipline, characterized by a relatively complete analytical paradigm and coherent theoretical system. Drawing upon this robust foundation, Coase built a conceptual bridge between law and economics, after which Posner applied the basic supply-and-demand framework to analyze numerous areas of law, introducing innovative theoretical frameworks. These contributions not only provided legal scholarship with fresh perspectives but also expanded the practical applications of economic theories. The development of law and economics vividly illustrates the crucial role of theoretical preparedness in interdisciplinary research: a solid theoretical foundation offers both stability and direction. Consequently, constructing an independent theoretical framework based on a relatively comprehensive theoretical system is a fundamental task for any interdisciplinary endeavor. Only by opening up new theoretical horizons can subsequent interdisciplinary analyses and applications be effectively guided. 

Third, it is important to focus on the integration and application of multi-disciplinary methods. The development of law and economics also highlights the importance of integrating and applying multi-disciplinary methods. Economic theories and analytical tools form the core methodology of law and economics, earning it the designation of “economic analysis of law.” Through economic analysis, law and economics has, to a certain extent, transcended the traditional understanding of law and some proposed new theoretical propositions. It also draws extensively from multiple disciplines, including sociology, psychology, and political science, striving to situate legal issues within varied social contexts and the dynamic interactions of different actors. In doing so, it not only enriches its own theoretical framework but also addresses critiques from other fields. The integration of multi-disciplinary methods broadens the scope and depth of research, enabling scholars to uncover patterns and phenomena that may elude a single-discipline approach and to provide more nuanced explanations for seemingly “anomalous” occurrences. 

Since its introduction to China in the 1990s, law and economics has become an integral part of both legal and economic scholarship. The publication of court rulings online and the advancement of judicial reforms have further accelerated the development and application of law and economics research in China. 

Wei Jian is a professor from the School of Economics at Shandong University. 

Edited by ZHAO YUAN