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In the early 1960’s economists and lawyers from university of Chicago expanded principles and methodological individualism of neo-classical micro-economics to law and non market behavior. From the United States this approach has reached other common law counties and a number of civil law jurisdictions and in a short time intellectual imperialism of the economic approach to law reached it’s highest degree, so that some lawyers has described it as the most important development in legal scholarship of the twentieth century. From the economic point of view, law and legal rules are considered as instruments for “changing behavior” and
“policy-making” and a scientific theory to predict the effects of legal sanctions on behavior is presented: legal rules and sanctions look like the effect of prices on behavior: just as increase and decrease of the price of a good influence consumer and producer’s behavior, people react to legal rules and there is a direct relationship between kind and nature of that rules and human behavior. In this approach inner and normative aspect of law, which is the basis of traditional legal theories, is ignored and correctness and morality of all legal rules and institutions is evaluated on the basis of their ability to maximize the wealth of society; even the notion of justice is different from traditional concept and economic efficiency is the criterion of justness of an action. The economic approach to law has two positive and normative branches: Positive approach is about how the law and legal rules are and seek to identify and quantify the effects of law on measurable variables; According to normative approach law should be made to conform to the dictates of economic efficiency. In this article, history , foundations and methodology of the economic approach to law is briefly studied.