“Law and Economics” is a school of legal study that says that the economics, namely costs and benefits, should be factored into decisions about legal matters. An easy example would be if there were a factory that emitted a lot of pollutants that stained furniture near the plant. One idea would be that the factory should install expensive scrubbers over its works. Law and economics would say that simply giving the neighbors powerful air conditioners with great filters might be cheaper and better for everyone.
Some have suggested that similar reasoning should be applied to other dollars and cents issues in society, especially extending into the world of investing.
The crisis at Volkswagen might be an example of where this kind of thought would be worthwhile.
As we all know, VW cheated on its tests about how much of various kinds of pollutants its engines emitted at various levels of speed. These phony test results were meant to show that VW in fact had much more economical diesel cars, with less pollution, than it did.
The revelations have been devastating to the U.S. stock market and in fact to stock markets all over the world.