The Third Function of Law

Abstract

This chapter examines how “law and economics” is affected by the broadening of the scope of economics. The “command function” of law was partly dismantled and enriched by the new work on the “expressive function,” which recognized that the law works not just by command, reward, and punishment but also by triggering social norms and affecting some of our preferences. The chapter then introduces a third novelty, what can be referred to as the “schematizing function” of the law. Lodged in their brains, human beings have cultural categories and concepts that influence what they focus on and what they ignore. At one level, all this happens instinctively and so may seem like innate qualities, but they are influenced and shaped by many social factors by the laws of the nation and also the deliberations surrounding the adoption of laws. The chapter shows how entrenched cultural categories can be used to both reinforce and to block a law.