Judicial Deference and the Efficiency of the Common Law

Abstract: Economists and legal scholars have long been interested in the efficiency of common law. A shortcoming of existing studies in this literature is that they ignore the role of judges in reviewing legislative enactments. Judicial review ties the efficiency of common law to the efficiency of the statutes reviewed. If judges defer to inefficient statutes, the common law will then reflect those inefficiencies. To investigate the efficiency of judicial review, the paper examines 496 judicial rulings of occupational licensing statutes in federal, state, and territorial courts during the period 1885 to 1911. Evidence from this analysis suggests that judicial deference has evolved over time, from efficiency-supporting review during the Progressive Era to inefficient deference currently.