Vanderbilt’s New PhD Program in Law & Economics

Keith Sharfman —  31 January 2006

Brian Leiter and David Bernstein report an exciting development: Vanderbilt Law School is starting a new PhD program in “law and economics.� See the official announcement here. The program will be headed by Kip Viscusi and Joni Hersch, two well-regarded law and economics scholars who are joining the Vanderbilt faculty from Harvard Law School. One imagines that Robert Rasmussen, who now heads Vanderbilt’s existing law and economics program and is himself a highly respected law and economics scholar, will also be involved in the enterprise.

Is this program a good idea? I think so. Until now, the only place for would-be law and economics scholars to get PhDs has been at economics departments. And most economics departments don’t have faculty who are learned or do research in the law and economics area, which by now has become a distinct field and which to teach right requires a level of knowledge about the legal system that most economists lack. Moreover, at least half of what is taught in economics departments is of little relevance to law and economics (i.e., everything on the “macroeconomic� side of the divide). A JD/PhD program jointly sponsored by a law school and an economics department thus entails spending a great deal of time studying subject matter that in no way illuminates the law with economics instructors who by and large lack legal training.

In contrast to traditional JD/PhD programs, the Vanderbilt program will be able to focus entirely on traditional legal training and on analytical methods from economics that can illuminate the law while avoiding study of those areas of economics that are of little use to legal practice and legal-economic scholarship. An initial challenge (but ultimately an advantage) for the program is the need to develop a uniquely law-centric curriculum that makes the study of law its central focus and tailors the economic aspects of the program to that end. Such a curriculum would enable students in the Vanderbilt program to complete a JD/PhD more quickly than can be done at other schools and at the same time equip them better for the task of legal-economic research.

If successful, Vanderbilt’s program may well start a trend and before long we could see similar programs at other law schools with strong faculty in law and economics and perhaps even in other “law and” fields such as legal history and law and philosophy.

15 responses to Vanderbilt’s New PhD Program in Law & Economics

  1. 

    The interesting thing is that Vandy already has two economists, Jennifer Reinganum and Andrew Daughety, with courtesy appointments in the law school that do law and econ scholarship in the areas of torts, judicial behavior, and dispute resolution. In the law school itself, Paul Edelman is jointly appointed in law and math and writes on public choice and judicial behavior, Robert Rasmussen–as mentioned–is there, and Randall Thomas is a noted corporate law scholar who also holds an econ phd. It will be interesting to see how these folks are included in the new program — it might be that this becomes the catalyst for all of these scholars to coalesce into a more collaborative and productive group.

  2. 

    I’m grateful to everyone for their comments. A few points.

    1. I don’t want to be understood as denigrating traditional economics PhD programs or joint JD/PhD programs. Far from it. As Geoff points out and as Josh’s own case makes clear, many outstanding L&E scholars teach in and have come through such programs. I like and have great respect for economics PhD programs—especially the outstanding one at George Mason—and am not suggesting that students shouldn’t continue to enroll in them.

    2. My point rather was that for someone who wishes to specialize in law and economics, there are some potential advantages to studying in a program housed in a law school specifically designed for the purpose. The greatest advantage is probably time. Average time to completion of a JD/PhD should be quicker at Vandy than in a traditional joint degree program. And while extra years of study certainly have value, they also entail costs. I’m reminded here of a debate at Columbia Law School a few years ago between Judges Calabresi and Posner on the issue whether law schools should require a third a year. Calabresi favored having a third year and gave examples of how the time could be used valuably. Posner agreed that the third year has value, but predicted that in a world in which the third year wasn’t mandatory most students wouldn’t take advantage of it—i.e., that the value of the extra year would be outweighed by its cost. So while spending a lot of time studying macroeconomics might theoretically prove useful for understanding the law one day, it may not be a wise ex ante to spend the time that way.

    3. A second potential advantage of a law school-based program relates to focus and emphasis. The Vandy program will be in a position to focus curricularly on law in ways that economics PhD programs cannot.

    4. Josh is right that there are risks as well as benefits in having the law school do everything. It may well make sense for the Vandy program to outsource some of its core requirements to the Vandy economics department. Price theory and econometrics are courses that come to mind. But outsourcing a few courses is different from outsourcing the entire degree.

    5. Consider finance, another field of applied economics. Some business schools give PhDs in financial economics without any apparent loss in core curricular quality. Chicago’s finance students, for instance, have been able over the years to study finance with the likes of Miller and Fama while studying other aspects of economics with people like Stigler, Carlton, and Peltzman. I think it’s pretty clear that this program provides superb core economic training. At the same time, it has been more likely to produce students like Scholes than would be a joint MBA/PhD program with the PhD being awarded by an economics department lacking much of a finance faculty.

    6. Geoff is right that the actual talents of an individual scholar matter more than the particular type of institution in which the scholar is housed. And Geoff is right to ask: which type of institution is more likely to hire individuals who are talented L&E scholars? Historically, I think it’s fair to say that law schools are where the great majority of L&E talent is housed. For every Alchian there’s probably three Cooters. And the balance will likely tilt even further in favor of law schools if programs like Vandy’s gain traction. Law schools have long been hospitable to hiring great economists like a Coase or a Viscusi. But when was the last time an economics department hired someone away from a law school? I’m hard-pressed to think of any examples.

  3. 

    Building on Geoffrey’s comment, a couple of thoughts on the relative inability of non-lawyer economists to understand how law is operationalized in the real world.

    First, those processes can and should themselves be modeled economically. Whether we’re talking about the Schoolhouse Rock classic “I’m Just A Bill,” the common law model, or the more complicated interactions that characterize much of our legislative and legal environments, economics has a place in describing those phenomena, and trained economists are in fact capable of contributing meaningfully to the discussion without spending 3 years getting a J.D. Game theoretical modeling of political processes. I/O influenced analyses of the two-party system as duopolistic competition. Public choice assessments of the way legal sausage gets made. These all contribute.

    Second, in my fairly extensive (but nonetheless anecdotal) experience, non-J.D. economists operating in legal fields can usually walk the walk, despite their near-universal, quasi-reflexive need to disclaim legal expertise. I’ve hung out primarily in the worlds of antitrust law and (to a lesser extent), contract law, but despite a personal incentive to claim that my J.D. gives me some significant advantage over the non-J.D. economists with whom I’ve worked, I just can’t do it. My “advantage,” to the extent there is any, often amounts to a (slightly) better knowledge of the case law and a slightly less reflexive tendency to think in terms of “efficiency” or what the law should be than the economists.

    With all due respect to my terminal degree, any serious economist capable of speaking in complete sentences is capable of learning everything they need to know about The Law by osmosis over a couple of years. An overstatement? Perhaps, but not by much.

    It takes a certain type of economist to do so, a category I always thought of as the “why people do what they do” economists until Leavitt became a rock star and left us with the “Freakonomics” label. But there are lots of these folks out there, and I’m not sure I see any particular value in overemphasizing the value of a law degree in l&e scholarship.

    A couple of disclaimers, though: First, non-Ph.D.’s are certainly capable of doing good econ. At least I hope they are, insofar as I don’t have the time or the money for another degree. Second, I do think there is some incremental value to a Law & Econ type actually practicing law long enough to understand the practical issues attendant with operationalizing law(which does presuppose a JD). But it’s not the training, it’s the experience.

  4. 

    It seems to me that the real issue is whether an econ department or a law school is more likely to hire the sorts of individuals well-suited to a law and econ program. There are economists in economics departments who would top anyone’s list of standout law and econ profs (Alchian, Demsetz & Klein — Josh’s dissertation committee — at UCLA come to mind; so do many of the econ/public choice profs at George Mason like Boudreaux, Caplan, Cowen, Tullock, Buchannan, etc.). I’m sure few of these have had formal legal training, but who cares? What they understand is how to analyze human behavior, how people respond to legal incentives. One does not need to learn “the law” from them in order to learn an enormous amount about the law. Whether these individuals are in an econ department or a law school, it’s the indivduals, I think, who matter more than the institution.

  5. 

    The idea that somehow a good economist can just study micro and ignore macro (or even public finance etc) is silly. There are a lot of techniques that overlap. In fact, sometimes insights in one area of economics can be applied in another area – thereby opening up new avenues of research. Think of how Barro and Gordon used game theory to talk about central bank behavior. Imagine if the macro types never studies micro. Similarly all the General equilibrium models developed in macro are quite useful in micro today, especially when talking about global micro-models (think of the Pakes, Levinson work which showed that price-fixing may be welfare improving etc).
    As to the idea that economists don’t have an idea of legal institutions – well ditto for lawyers talking about economic institutions. BUT also ditto for law profs talking about legal institutions. Many law professors have minimal legal experience, and when they purport to speak about areas such as criminal law (plea bargaining, sentencing, fair trial) many of them have never even done a jury trial or criminal appeal. Same for profs teaching civil procedure or torts or insurance law. Yet that does not disqualify them from teaching law. Think of the Shavell’s, Polinksy’s, Landes’s, David Freidman’s of this world – all self trained law professors.

    I do think the Vanderbilt program is a good thing – I just wouldn’t sell it as superior to a traditional PhD in economics with a focus on L&E.

    Many of my points were made by Josh and others – but I wanted to add my two cents.

  6. 

    Who is better equipped to provide law and economics training: the economists at a top l&e program like the one at George Mason law school (who are learned in the law and in the law and economics literature and in the techniques and issues that are peculiar to l&e research), or the economists at George Mason’s econ department (who by and large are not trained in the law and not learned in the l&e literature)?

    Keith, the head of GMU’s econ department, Don Boudreaux, was trained as a lawyer and also is one of the professors for the 1L required L&E course. I think your point is much more true at other schools, but in contrast, I think that GMU’s very high percentage of Austrians (and those close to the Austrians, like Bryan Caplan) lead to a higher familiarity with the relevant L&E literature.

  7. 

    Matt, this is an excellent point and I think is at the heart of my sense of what will be lost in the law school housed program. The core training of an economist involves a pretty broad set of topics (even excluding macro, which as Matt points out, may have its own benefits for law and econ types as well) and it is unclear whether a law school based program would have sufficient faculty to do this training at a high level.

    As an example, a typical first-year graduate micro sequence involves micro theory, game theory and general equilibrium theory. Specialists in each area are typically teaching each course, and other specialists in applied field areas such as labor, industrial organization, economic history, etc. All of this training is relevant and important. As much as I appreciate the fact that “some” of my own graduate training has not made its way into my scholarship, I might also be suspicious of a trained economist without it.

    None of this, of course, is to say that Vandy will not find a way to thread the needle here. More faculty seem seem like a good first step. There are certainly some advantages to be had in training economists with a comparative advantage in understanding legal institutions and nuances. This will be very interesting to watch.

  8. 

    I don’t know enough about the details of the Vandy faculty or of law and econ to have an informed opinion about whether their program is a good idea or not. But, I can say I’d be quite skeptical about a similar program in an area I do know something about- law and philosophy. First, I think it’s quite necessary to have a very solid background not just in jurisprudence and philosophy of law proper, but in the core subjects of philosophy, and preferably the history of philosophy, in order to do philosophy very well. It seems unlikely to me that one can get that outside of a philosophy dept. Even a school like Penn, which has quite a few philosophers on the faculty (4 appointed primarily in the law school, two primarily in philosophy w/ joint appointments in law, and a few other professors with significant philosophical interest and skill, though without PhD’s in the subject) there just isn’t enough coverage to really prepare one to do philosophy at a very high level. And, Penn has more philosophers than nearly any (maybe any) other law school. So, I doubt that a law school could, at least not without significant more hiring, give a fully adequate training in philosophy, one that would justify awarding a PhD. I don’t know if the situation is similar for econ (there are certainly more economists at most top law schools already.) But, I’d feel suspicious about someone who didn’t have some training in those “irrelevent” fields for the same reason I would about a legal philosopher who knew nothing about metaphysics or the history of philosophy. The closest to a program like the Vandy one for philosophy is perhaps Oxford’s DPhil program in Jurisprudence, though my understanding is that the students in this program have access to, and often work closely with, the massive philosophy dept. at Oxford.

  9. 

    “Economists doing law and economics sometimes do not have a sufficient understanding of the legal institutions they study.”

    Heck, law professors doing law and economics sometimes do not have a sufficient understanding of the legal institutions they study. The problem gets even worse when it’s law professors/judges and economic institutions.

  10. 

    Fair enough, Josh. I agree with you that quality should not be sacrificed and indeed if possible) should be enhanced. I share your hope that Vandy will succeed in this experiment. Of course you’re right that many of the best people in L&E today trained in economics departments–e.g., Dennis Carlton, Bill Landes and Kip Viscusi—though of course there are others like Posner and Tullock who didn’t. But note that a Vandy-style program has never been available before. Vandy’s L&E faculty believe that a law school-centered program is a more efficient way to deliver an interdisciplinary education in L&E than jointly administered programs. We’ll see if they’re right!

  11. 

    Keith,

    I think you are clearly right that the dissertation committee, etc., might best be made up out of folks learned in the techniques in the law and econ literature. But I guess what I am really getting at is the tradeoffs in terms of training in the relevant skill set (micro, econometrics, some field work).

    All of those Mason law school economists were trained in econ departments … (of course, Gordon Tullock, is the self-trained are notable exception!). If a Vandy-style program could train the relevant skill set as well as a stand-alone econ department — there is no question that they will be incredibly successful. My primary fear is that because so much of the learning at the graduate level in economics, in my experience, is outside the classroom, some of this might be lost in a single house approach. Perhaps this will not be the case. If all that happens is that the two programs are highly integrated but housed in the law school, my fear will not amount to much.

    That said, I am well aware of (and have been victimized by) the frictions (substantive and administrative) in a dual house program, and think that there are some great advantages to the single house approach. I really do hope that it works well and will be anxious to see how the Vandy program develops over the next few years.

  12. 

    Thanks, Josh, for your excellent comment. You are truly in a position to know more about this subject than I am. And I quite agree with you that it’s not a good idea to sacrifice intellectual rigor–if watering down the economics is the function of a Vandy-style program, then it’s a bad idea.

    Here’s the point that I’m really getting at. Who is better equipped to provide law and economics training: the economists at a top l&e program like the one at George Mason law school (who are learned in the law and in the law and economics literature and in the techniques and issues that are peculiar to l&e research), or the economists at George Mason’s econ department (who by and large are not trained in the law and not learned in the l&e literature)? Isn’t it obviously the law school’s economists who are better suited? I understand the point that the econ department may offer some courses that a budding l&e scholar ought to take that aren’t offered at the law school and for which it would be wise to cross-register. but who would be better to serve on the dissertation committee? who should have a greater say over the student’s overall program? who should have the ultimate say on whether the student deserves the PhD? seems to me that it’s the law and economics faculty who should control that, not an econ department whose members largely have only a lay understanding of the law. i’m not against cross-registration or intellectual rigor. my point is about control, emphasis, and focus.

    On the focus point, it’s not just macroeconomics that’s irrelevant to law, or monetary theory, or money and banking. It’s also many micro-oriented courses like public finance and agricultural economics. Indeed, even the law-oriented courses (like antitrust) are better studied at a law school than in an economics department. Most economists without legal training regard the legal system as a “black box” and haven’t the vaguest notion of how particular policies are operationalized. There are many exceptions, of course, of outstanding legal-economic work being done at economics departments (e.g., Becker’s work on criminal law, or Hart’s work on contracts). But by and large, the economic profession’s general ignorance about the legal system is a serious weakness in legal-economic training–a weakness remedied in a Vandy-style program.

    An economics department would not accept the notion that law should enjoy some sort of primacy in a joint degree program–and rightly so. From an econ department’s perspective, economics has primacy or (at best) the two subjects enjoy equal status. But in the law and economics field, it’s the law that matters most; economics is merely a tool used to illuminate it. A PhD program administered by a law school could, would, and should recognize this; the PhD granting department in an l&e joint programs typically would not.

    There are many economic policy issues that implicate the law in only a trivial way–e.g., what is the optimal level of taxation, or spending, of deficit or surplus?. All of these policies are set by law in the sense that they require an act of Congress to be put into effect. But there’s nothing deep or interesting or important about the legal aspect of the problem and hence is not really an appropriate area of inquiry in my view for a legal academic (though I know that some distinguished legal academics have done research in the area). I regard these matters as pure economic policy questions that are outside the domain of law and economics. An economics department would sensibly spend a lot of time teaching about and doing research in these areas. But a law school program on law and economics would not and should not.

  13. 

    Keith, you are right that there may be some advantages to bringing the Ph.D. under the law school’s roof. Economists doing law and economics sometimes do not have a sufficient understanding of the legal institutions they study. Perhaps a law school-based economics phd program would help to solve this problem. The question is at what cost? I wonder if the program will sacrifice the rigor of the core micro and econometrics requirement in order to maintain sufficient numbers to support the program?

    As for macro and its relevance to modern law and econ, I guess my response would be that I can think of a number of law school courses that are not very relevant to the work of a modern law and econ scholar either. In any event, macro is far less than 1/2 of the total coursework — maybe 1/4. I am pretty sure most dedicated Ph.D. students at top programs could learn enough about the law to participate in meaningful scholarly discourse by taking the first year courses plus a few specialty courses (antitrust, business associations, etc.). Im not sure if the converse is true.

    At UCLA, where I did both programs separately, I found that the biggest advantage of the dual house approach was that the integration with the econ dept. meant that I could walk over to Bunche Hall and listen to workshops and presentations on cutting edge research in say, micro theory, which had no immediate application to the law. Immersion in these disciplines forces on to learn skills, and acquire skills later on, that may prove useful in law and economics. This is a fine balance to strike. While there are imperfections in the dual house structure for law and economics scholars, I am not sure how convinced I am that housing the program in the law schools is the right answer. It all depends on the magnitude of the loss in economics training (some might argue that less formal, mathematical training would be a good thing!).

    That said, I am anxious to see how the Vandy program turns out. It looks like they are certainly dedicated to attracting top scholars to train the graduate students and my guess is that they are well aware of the potential risks here.

Trackbacks and Pingbacks:

  1. TRUTH ON THE MARKET » Update: Vandy’s PhD in Law and Economics - October 6, 2006

    […] A few months ago, Keith posted regarding the announcement of Vanderbilt’s new PhD program in Law and Economics. The post generated a lively discussion in the comments (and a follow up post here on GMU’s own Law and Econ program). Much of the discussion focused on the following questions: what would such a program should look like? What classes would be taught? And by whom? Well, Vandy has answers! The new (to me at least) website contains a program announcement, information on curriculum design, and a roster of what looks like a truly top notch faculty (which is apparently looking to expand). […]

  2. The Volokh Conspiracy - February 1, 2006

    Interesting discussion/debate over housing law and economics Ph.D. programs at Law Schools…

    featuring Keith Sharfman and my colleague Josh Wright over at Truth on the Market….