The Future of Law and Economics Part 3: L&E Scholarship

Cite this Article
Joshua D. Wright, The Future of Law and Economics Part 3: L&E Scholarship, Truth on the Market (May 05, 2008),

In previous posts (Part I and Part II) I discussed the increasing trend towards formal mathematics in L&E scholarship and some of the potential issues this raises for the L&E movement as it becomes more detached from the legal academy. This post focuses on another question: What will L&E scholarship in law schools look like in the future?

The most natural question to start with, and one I’ve discussed a bit in prior posts, is whether there will be any L&E scholarship in law schools in the future at all? I think the answer is yes. But the L&E scholarship that comes out of law schools is going to look different. One possible change is that there is a plausible concern that formal L&E scholarship will be “crowd out” high quality informal scholarship and render L&E without any presence at the retail level. Under this scenario, the trend towards increased formalism is sustainable, formal theoretical and empirical L&E scholarship must be valued by colleagues despite the fact that most of them aren’t interested in it or can’t read it. A second, and I think more likely, scenario is that as formal L&E becomes increasingly detached from, and presumably less valuable to, its intended audience but also colleagues in the law school, L&E scholars will migrate toward economics departments and leave the legal academy behind. (Larry Solum raises this and other possible scenarios in a very thoughtful response to this post which also addresses how this trend might play out in the legal academy more generally).

I tend to think the second scenario is much more likely. I don’t see the current trends as sustainable in the long run. To be clear, this is not a critique of L&E scholarship per se. Highly formal theoretical and empirical work is highly valuable. The stale debate about whether formality in economics is good or bad on the whole held aside for a moment, there can be no serious claim that formal economic contributions, harnessing the power of mathematical precision, have increased our economic knowledge and been an engine of progress for L&E. The question I’m dealing with here is about the limits of this trend. I’m not sure how close we are to the limit. And that is worth discussing. Entry level placements and lateral moves suggest that L&E in law schools suggest that L&E is still on the rise. But what happens to L&E scholarship in law schools when L&E as a discipline becomes so detached from “the law” that our theories cannot be retailed to a general audience or the results of our research cannot be disseminated to the legal academy? What type of scholarship stays in law schools? Who migrates to economics departments? Does some scholarship simply die off, too formal for law schools and too interested in the law to get tenure at economics departments? Lastly, do these changes suggest any new and profitable opportunities for legal scholars?

Here are a handful of thoughts that propose some tentative answers to these questions.

1. Theory Goes But Econometrics Stays

First, I want to make an important distinction between formal modeling work and sophisticated econometric methods. I do not believe there will be many economic theorists in law schools (in the U.S.) in ten years, but I do believe that econometricians are going to be a part of law faculties for a long time. This is in part because of the rise of the empirical legal studies movement, which increases the likelihood that many legal scholars will be able to read sophisticated empirical work. Further, even for those legal scholars who cannot understand estimation procedures and instrumental variables, most can read regression results if the author takes some care to present them in an accessible manner. This just isn’t the case for modern theoretical modeling. Any attachment, even a small one like being able to understand the results and intuition behind the econometric model, will allow a colleague to understand the value of the research. In short, empirical law and economics isn’t going anywhere.

As Larry Solum points out:

This is not to say that some law and economics subspecialities might not remain in the legal academy. As Wright notes, econometrics is part of a larger trend, the empirical legal studies movement, which draws on the methodologies of a variety of disciplines, including economics, sociology, statistics, etc. The cash value of empirical work is not in doubt, and the results can be presented in formats that are accessible to the mainstream of the legal academy. Over the very long run, it seems likely that most legal academics will acquire sufficient empirical training so as to be able to understand a regression and interpret the results of empirical work.

A look at recent hiring trends in law and economics at top law schools, I think, would bear this out. I can think of a few modelers who have been very successful on the entry level or early lateral job market. And the ones that have typically have either some econometric skills or doctrinal expertise to go with the technical modeling skills. On the other hand, I can think if a boatload of econometricians who have done really well on the market. Most recently, for example, we noted that GMU grad Jon Klick accepted a tenured position at Penn. This is due, in no small part, to the fact that empirical legal studies are in high demand in the legal academy and despite the mathematical rigor, less detached from the academy. My prediction is that in 10 years, every top 20 law school has at least one PhD trained or equivalent econometrician. So hiring committees, if you’re listening, get ahead of the trend and keep loading up on those empiricists. Theoreticians with interest in empirical work will be fine too. The key is that the economist is producing work that is valuable to the legal community, can be retailed to general audiences (think judges), and can explain the primary economic insight of his model in 2-3 sentences.

So the remaining questions are, in my view, what happens to the formal theorists? What happens to informal L&E scholarship? And what kind of L&E scholarship will be done in law schools at the end of the day?

2. Will “Law and Economics” Theorists Move to Economics Departments?

Larry Solum sketches out a plausible migration of the formal L&E scholars to economics departments as their work becomes more detached from colleagues in the law school:

The path of migration might go: courtesy appointment becomes quarter-time appointment becomes half-time appointment with the end point being “zero time” in the law school. This path offers the “sophisticated law and economics scholar” the opportunity to interact with colleagues who understand their models and methods, and relieves law schools of the opportunity costs of supporting work that increasingly has no “cash value” except within the community of subspecialists. Rather, that “crowding out” informal law and economics, the result might be to make room for economic work that is accessible to the legal academy.

Larry raises the possibility of the movement of formal economic theoreticians out of law schools as an opportunity for more informal law and economics that is more accessible to the legal academy. I’m less optimistic about this. I do not doubt that there will be more informal L&E scholarship done in law schools if the formal theorists are in economics departments and the econometricians are split between law schools and economics departments. The question for me is whether the new scholarship will be any good. Modern top 20 Ph.D. programs train economists, primarily, in the sort of formal modeling and econometric techniques we’ve been discussing. It would be odd for a graduate student of one of these programs to eschew these techniques in order to get a job on the law market where they value something else entirely. One answer could be the type of multi-disciplinary PhD programs Larry talks about in his own post. Or PhD economics programs likes the ones at George Mason and Vanderbilt designed to produce legal academics.

But it seems to me that there is very little incentive for a junior entry level scholar in L&E to do this type of informal scholarship when empirical work is so highly valued. I worry that the only people left to do any “informal” L&E will be those that don’t have sufficient training to do it at all. The fear is what we are left with as L&E scholarship is vague talk about “incentives,” some hand waving about “efficiency,” or incompetent empirical work. If that is the state of play, and describes the only L&E scholarship that is accessible at the retail level, those who care about the L&E movement have much to fear. It may be the case that without an organized effort to retail the new, informal L&E it will not have much impact on the law at all. But that is the best case scenario. In that world, the influence of L&E will eventually dwindle and the work of pioneers like Manne and others undone. My next post will discuss what role law schools and other institutions can play in attempting to not only avoid some of these bad outcomes for L&E, but also harness the benefits of the advances in L&E on both the theoretical and empirical side.

3. A New Role for Translators & Collaboration

Let me finish with two somewhat obvious points that I will not save for the next post. The first is that there will be substantial value for entrepreneurial translators in the legal academy who are able to understand theoretical modeling and sophisticated econometrics and translate them into legally-relevant ideas. The question is where they will come from? They will have to have training to do this, but produce scholarship that is valuable to their colleagues to remain in the law school. Perhaps the joint degree programs at George Mason, Vanderbilt and elsewhere will produce academics with these capabilities. Or perhaps the future is the type of multi-disciplinary job candidate Larry Solum has discussed. The second point is that these trends increase the returns from collaboration, with legal scholars working with econometricians and theorists to produce legally relevant work.