Losers: Recovering Lost Property in Japan and the United States

This article examines the lost property regime of Japan, which has one of the most impressive reputations in the world for returning lost property to its rightful owner, and compares it with that of the United States. Folk legend attributes Japanese lost-and-found success to honesty and other-regarding preferences. In this article, I locus on another possible explanation: legal institutions that efficiently and predictably allocate and enforce possessory rights. These recognized, centuries-old rules mesh with norms, institutional structures, and economic incentives to reinforce mutually the message that each sends and yields more lost-property recovery than altruism alone. Introduction This article examines finders' law and recovery of lost property in Japan and the United States. Using a variety of tools-statutory exposition, interviews, new institutional economics analysis, statistics, surveys, and "lost wallet" experiments in which I purposely lost property in Tokyo and New York-I attempt to determine whether and to what extent lost property recovery rates differ, and to disentangle the causal factors that underlie those differences. To be sure, finders' law is relatively low-stakes, and it may be a trivial matter in the grand institutional scheme. Yet two factors suggest that finders' law warrants further attention. First, it is in part this very rationale of triviality that underlies this study. While much legal scholarship examines high-stakes issues, little focuses on lower-stakes, everyday concerns that resonate with the life experiences of ordinary people. I attempt to analyze the relation between law and the everyday, with an aim toward a richer understanding of the role of formal and informal institutions in society. By using finders' law to do so, and by situating the analysis in a comparative and historical context, I hope to understand better the interaction and hierarchy of legal and economic incentives, norms, and altruism in a system of social control. Second, while finders' law may be trivial in terms of nation-building, the way that a society deals with lost property can be central to quality of life. Overprotection may lead to excessive state expense to be borne by taxpayers. Underprotection may subject potential losers to daily fear, excessive care and security measures, and underproductive uses of property as they attempt to counteract potential theft and trespassing. For quality of life, it is critical that the state get these "trivial" institutions "right."1 Although several prominent scholars (Helmholz 1983; Levmore 1986; Posner 2000:556) have recently explored finders' law, and related Good Samaritan issues have received thoughtful attention (Dagan 1999; Stout 2001), these issues are not exactly at the forefront of modern property law theory, much less practice. Several reasons may explain why; as important as the legal allocation of rights to lost property may be, enacting a finders' law is unlikely to be seen as a cornerstone of property rights in a developing system. But one reason why finders' law has the status in property law that it does may be that nobody knows how-or indeed whether-the law works. As far as I can tell, there has been no serious empirical finders' law research since two studies appeared nearly simultaneously more than 60 years ago. In the first (Riesman 1939), published in 1939 in the Harvard Law Review, the author listed the results of a questionnaire sent to railroad companies (none of which currently exist), department stores (Woolworths, Macy's, and Sears, each of which kept no figures), and other large gathering places, and found that practice did not coincide with common law doctrine; establishments seemed to make up their own rules. In the second (Donner 1940), published in 1940, an education scholar polled high school students about their knowledge of finders' law and found that they didn't know much about the law or what to do with found property. …