New Program Ties Ec and Law

Harvard has established an interdisciplinary program between the Law School and the Economics Department, formally recognizing what scholars say is a growing interdependence between financial and legal analysis.

The program, supported by a $900,000 grant from the John M. Olin Foundation, includes courses in Law and Economics, research by professors, visiting lecturers, and a series of seminars and conferences. The grant also provides funds for student research fellowships and two prizes of $2000 each for the best papers in this field at the end of the year.

Law-and economics-related courses, seminars, and discussion paper series have been offered at the Law School for years, said program director Steven M. Shavell. The grant served as the stimulus to draw these activities into a formal program, said Shavell, professor of law and economics.

Similar programs at Yale, Stanford, the University of Chicago and other law schools have been operating for years, Shavell said, adding that this was one factor in Harvard's decision to establish a similar one here. Before the founding of the new program, "Harvard was behind," he said.

"The grant allows us to do things we wouldn't have been able to do beforehand," Shavell said. For example, the funds allow the program to increase bring visiting scholars to the Law School on a weekly basis.

The program reflects a growing necessity among students to analyze law with a solid background in economics, particularly in studying large liability cases, Shavell said.

"Using methods of economics, it is possible to gain a good understanding of how firms and insurers behave when faced with potential liability, which is not possible with traditional legal analysis," he said.

Robert C. Clark, a professor of corporate law and a member of the program's advisory committee, said the law and economics project is invaluable in bringing professors together. "The program creates a great sense of community and sparks intellectual interest," he said.