This article originally appeared in in the Milken Institute Review.
Thanks to reforms of the past half-century, most federal regulations with a significant economic impact must be justified in terms of benefits and costs. And a good thing, too: without these analyses, we’d have no way to assess the value of rules affecting everything from air quality to auto safety. But did you know that the federal courts – in particular, the Supreme Court – are under no obligation to make such assessments, even when their decisions have massive economic impact?
Some dismiss the relevance of such assessments to the nation’s highest court, arguing they are beside the point because the Court’s task is to decide only whether lower courts have followed the law and, in some cases, the U.S. Constitution – for example, whether a person born in Canada could be elected president, or whether the Constitution creates a right to privacy that protects abortion decisions.
Some justices have gone much further, suggesting in tautological terms that the Supreme Court makes only correct decisions. Indeed, following the end of the Court’s term in July 2023, Chief Justice John Roberts and Justice Samuel Alito intimated that the justices’ rulings are beyond criticism. Conceptual support for this view is that the Supreme Court rests its decisions narrowly on the text of the Constitution or, in the case of statutory disputes, is best positioned to resolve them.
Is the Court Infallible?
But we know perfectly well that the Court can and does decide cases where it has no choice but to balance competing economic interests, such as the merits of antitrust law as applied to a specific industry or contract disputes between private parties. And it often must decide cases where there is true ambiguity about what the government statute means in contemporary context – for example, disputes over the ownership of intellectual property governed by laws written in the 19th century. Indeed, if there were no ambiguity as to how constitutional or statutory questions should be resolved, why are not all Court decisions unanimous (when many are not)? Or why don’t we have just one justice on the Court and possibly an alternate justice, instead of nine justices?
Unfortunate decisions could therefore arise when, as Michael Katz (University of California, Berkeley) argues, the Supreme Court is simply wrong about the scientific justifications for their decisions. By the same token, Robert Crandall (Brookings) and I criticize the justices’ application of economics in major antitrust cases. In such cases, it is surely important for the justices – and the public – to be able to assess economic impact as one factor in deciding outcomes.
Decisions that significantly harm society also could arise if justices’ decisions are strongly influenced by their ideological preferences. Recent empirical evidence suggests that justices have made ideologically based rulings that reflect the current significant polarity on the court. No, this isn’t limited to hot-button issues like voting rights. Econometric evidence shows that they have made ideologically colored decisions on business cases, with conservative justices’ doctrinal commitments making it more likely that they will decide in favor of business firms and liberal justices’ doctrinal commitments making it less likely that they will favor business firms.
Importantly, the evidence indicates that the Roberts court has become much more polarized along ideological lines than was the Court under former Chief Justice William Rehnquist. In the spirit of Richard Posner, the great conservative scholar who led the integration of economic analysis into law, if changing judges (with different ideological preferences) changes the law, shouldn’t we assume that the Supreme Court’s decisions are based on more than interpretation and application of the Constitution or relevant statutes?
Posner, in fact, went a radical (if logical) step further in an interview looking back at his long service as a federal appellate court judge. The Supreme Court, he argued, should forget about the law and make pragmatic policy-based decisions to resolve disputes that come before it. Thus, the utilitarian benchmark calls for the Court’s decisions to improve society as a whole based on a cost-benefit analysis that accounts for efficiency and equity effects. But because justices are not trained to make legal decisions this way, they are likely to commit judicial overreach and make decisions that reduce social welfare – as, I have argued, many policies in the legislative and executive branches of government have done.
We know that this is not about to happen. Indeed, in light of the inclination of the current Court to put ideology first, it is hard to imagine cost-benefit analysis (or any formal expert approach) gaining much traction. But great oaks from little acorns sometime grow.
Judges who have a healthy understanding of the limitations of their own time and training often appoint “special masters” to sift through complex data and analysis on the court’s behalf. One could imagine a trend toward greater voluntary use of experts, appointing them to offer cost-benefit analysis where it is relevant. And for some perspective here, there is little doubt that the research of Nobel economist Gunnar Myrdal, persuasively arguing that segregated education could not be equal, heavily influenced the Court’s landmark decision in Brown v. Board of Education in 1954.
Checks and Balances
Now that conservatives have a lock on the Court, it is easy to understand why any institutional change that diluted the absolute power of the majority is anathema to them. But that approach is short-sighted for a couple of reasons.
First, the controversial nature of the Court’s decisions on issues ranging from election finance to voting rights and its apparent willingness to abandon precedent or to give short shrift to Congress’ intentions has, according to a Gallup poll, reduced the Supreme Court’s public support to an all-time low. It is thus no longer unimaginable that Congress could assert its power by legislating term limits or adding justices. And, while formally imposing non-partisan expertise to the Court’s deliberative process wouldn’t necessarily change the thrust of its decisions, the concession to the appearance of sweet reason might well reduce the sense that the Court is acting in lockstep with the Republican Party.
Second, worms have a way of turning. Ferociously conservative courts gave way to distinctly liberal ones in the second half of the 20th century. And contemporary conservative decisions might well prove more durable if the Court went out of its way to lean on rigorous policy analysis, à la Posner, and less on red-meat ideology.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.