Law and Economics in the Civil Law World: The Case of Brazilian Courts

Abstract

Conventional wisdom holds that economic analysis of law is either embryonic or nonexistent outside of the United States generally and in civil law jurisdictions in particular. Existing explanations for the assumed lack of interest in the application of economic reasoning to legal problems range from the different structure of legal education and academia outside of the United States to the peculiar characteristics of civilian legal systems. This paper challenges this view by documenting and explaining the growing use of economic reasoning by Brazilian courts. We suggest that the rise of economic reasoning in Brazilian legal practice is driven not by a supply-push from scholars, but by a demand-pull due to ideological, political, and legal factors leading to greater judicial empowerment in the formulation of public policies. Given the ever-greater role of courts in policymaking, the application of legal principles and rules increasingly calls for a theory of human behavior (such as that provided by economics) to help foresee the likely aggregate consequences of different interpretations of the law. Consistent with the traditional role of civilian legal scholarship in providing guidance for the application of law by courts, the further development of law and economics in Brazil is therefore likely to be mostly driven by judicial demand.