Democracy, judicial attitudes and heterogeneity: the civil versus common law tradition

A key feature of legal systems is the law making institution used to aggregate citizens' preferences over the harshness of punishment. While under Case law appellate judges' biases offset one another at the cost of volatility of the law, under Statute law the Legislator chooses certain rules that are biased whenever she favors special interests: i.e., when the preference heterogeneity is sufficiently high and/or the political process sufficiently inefficient. Hence, Case law can be selected only in the last scenario. Instrumental variables estimates based on data from 156 countries, which eventually reformed the transplanted law making rule, confirm this prediction.