Last year I made up a new term, Macro-Legal-Economics, to highlight the need for our profession to better understand the larger trends that drive access to legal services for everyday people and how that has become a classic example of market failure. That concept remains an important idea for us to pursue, but this month I want to turn to a more mainstream economic concept that does not get enough attention in access to justice circles: behavioral economics.
Behavioral Economics lays waste to the traditional economic theory that we are all rational actors and if just given the right information at the right time, we will make rational decisions. In fact, in the real world, there are many reasons that any one of us may not act rationally in any given situation–biases, emotions, and informational overload to name just a few.
As we think about access to justice in this age where people have access to increasingly powerful technology-based options, it is important for us to better understand these concepts as we evaluate the appropriate legal interventions for different kinds of legal problems and circumstances.
Don’t worry, I’m not going to try to teach a class here, but it is both interesting and very useful to better understand this theory and some of the particular concepts within it that are most pertinent to access to justice issues.
The Economist recently published a handy glossary, “The A to Z of economics,” that defines behavioral economics as a “school of thought that believes that the economic decisions of individuals are often driven by psychological biases rather than the rational analysis of expected returns.” As Psychology Today puts it, “behavioral economics uses an understanding of human psychology to account for why people deviate from rational action when they’re making decisions.”
Here are just a few behavioral economics concepts that are relevant to access to justice.
Bounded Rationality
As defined by The Economist, bounded rationality is “a theory which assumes that, while individuals try to act rationally, there is a limit to the amount of information they may have, or can absorb. This may make their decisions look irrational.”
This is one we should particularly pay attention to when thinking about helping people without lawyers navigate the courts. When we try to teach someone interacting with the courts for the first time what is typically at least a semester-long civil procedure course in law school, we should not be surprised they may struggle with that and make mistakes
Choice Overload
Related to bounded rationality, when people are given more than two or three choices, there is a point where it quickly becomes overwhelming and just makes it harder to make any decision, let alone a rational one. This is something we can probably all relate to in the grocery store.
We often do this in the legal system too, in the usually well-intentioned way of trying to give people as many resources as possible, which can quickly become unhelpful. When it comes to legal resources, it really is quality over quantity.
Asymmetric Information
When one side of a transaction knows more than the other, bad things can happen.
Imagine a person coming to court on their own for the first time and encountering a lawyer on the other side who regularly practices in that area of law, a judge who regularly presides over those cases, and court staff who work there every day. It could be just a bit intimidating and lead to decisions based off of fear that are not in the person’s best interests.
Loss Aversion
This is a cognitive bias most of us possess where the fear and associated pain of loss is much more powerful than the pleasure that comes from gaining the same thing. For example, most people feel much better not losing $10 than they do when they find the same $10.
It does not take a lot of imagination to see the many ways this bias can affect our decisions throughout the legal system.
Heightened Emotions
This might be the most important one of all to keep in mind. Even on our best days, people facing legal issues often bring a whole range of associated emotions to the table that can cloud their ability to be objective and make the right decisions on their own: anxiety, fear, anger, anguish, hurt, and many others.
This is where the famous adage that the lawyer who represents himself has a fool for a client. It is not because the lawyer does not understand the law or the system, but because when they are personally involved in the situation, it can cloud their judgment about their own best interests. And that is for a lawyer, we can only imagine what is like for people not trained in the legal system.
Looking Ahead to Part Two
These are just a few of the more common examples of behavioral economics principles that can have a big impact on people’s experiences in the legal system. Food for thought for part two of this post next month, when I’ll share some thoughts on how we can better account for them in our access to justice planning.
In the meantime, if you are interested in learning more about these concepts, three great books to consider for your reading list are Misbehaving: the Making of Behavioral Economics by Richard Thaler, Thinking Fast and Slow by Daniel Kahneman, and Nudge by Richard Thaler and Cass Sunstein.