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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.

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In my previous post, I sketched out some trends in the Law & Economics movement in recent years. Specifically, I’ve focused on the trends towards increasing mathematical formality and specialization within economics as a stand alone discipline. The post triggered some thoughtful responses from Larry Solum and Larry Ribstein for which I am grateful. I also received a number of responses in private which asked, rather bluntly, “So what?” The point was that even if everything I claimed about trends in economics and L&E were true, perhaps the result would be L&E scholars being more detached from the legal academy and migrating to economics departments. Again, so what? L&E work would be getting done by somebody somewhere. More than one of these private responses included the observation that maybe L&E types should be in economics departments anyway where there are tougher tenure standards, peer review, and less pay.

I planned on jumping in to the issue of where I think L&E in law schools is heading (including the issue of theory versus empirical work that David Zaring raised in the comments to the first post) and then what law schools and other institutions could do to solve the “problem.” But it seems like I might have more work to do to establish that the movement of L&E away from the legal academy would, indeed, be a real problem worth solving. So, in this post I’ll try to make the case that the trends highlighted in the first post, despite the benefits of mathematical rigor and precision, should give L&E scholars pause. The next three posts will get into the details of how I think this trend will play out in law schools, economics departments, and in legal scholarship itself.

My sense is that the increase in mathematical rigor poses special problems for L&E for several reasons. The primary reason is that the historical success of law and economics turns at least in part of its unparalleled success at the retail level. First and second generation producers of law and economics scholarship — think Director, Alchian, Coase, Williamson, Posner, Easterbrook, Calabresi, Stigler, Demsetz, and others — were able to “sell” important economic insights to lawyers, judges, policy audiences and the legal academy more broadly. Henry Manne took advantage of the power and accessibility of the economics insights from these L&E scholars by bringing them together at Economics Summer Camps to teach economics to law professors. The newly educated law professors would in turn, retail the power of economic thinking to law students. A similar process would take place with efforts to teach federal judges basic microeconomic theory through the George Mason Law and Economics Center programs which were also a brainchild of Henry Manne (this seems like a good place to plug Larry Ribstein’s essay on Henry Manne: Intellectual Entrepreneur which is forthcoming in a book I am co-editing with my colleague Lloyd Cohen on the Pioneers of Law and Economics).

In any event, the point is that much of the success of L&E owes to its success at the retail level. Antitrust is a wonderful example of the success of L&E. There is perhaps no other area where economic theory is integrated into the law. But even in areas where economics have not completely dominated the intellectual discourse, L&E has been an important voice in academic and policy debates in many areas of the law. Its voice is one that pushes for an understanding of how economic agents will respond to changes in the law, how markets work, and how markets respond to legal change. No matter whether one adopts the L&E worldview, as I do, I don’t think there is much debate the L&E has added a significant and valuable perspective to legal discourse. Indeed, one can make the case that its impact has been mores strongly felt than any other interdisciplinary approach to the law. The recent trend towards detachment from the retail audiences, from this perspective, is a special historical development in L&E. It is also one that is quite troublesome from the perspective of an L&E scholar who would like to see the field retain its influence. L&E scholarship, it seems, is at a crossroads. The concern is not just that L&E scholarship as we know it will move to economics departments. After all, economics departments do not currently value much of the work that is done by L&E scholars. The concern is that L&E scholarship as we know it will disappear altogether.

So far, I’ve unfairly painted a picture of formal methods in economics as ruining L&E without any upside. This may appear odd coming from somebody who does some modeling and econometrics in his own research. So let me make sure I’m being clear. Mathematical rigor and formality is not without its benefits. Modeling can help generate testable implications. Mathematics can force out into the daylight hidden assumptions and make explanations more precise in a unique way. Like any other tool in economic science, mathematical modeling can produce insights for some problems but maybe less so for others. It would neither make sense to claim that L&E left no room for the sort of detailed institutional analysis and exposition supplied by Alchian, Coase, Williamson, Klein, Demsetz, or Tullock than it would to claim that L&E should ignore the insights generated by careful theoretical or econometric work. Though I do quite a bit of econometric work in my own research, I do believe (perhaps to the chagrin of my econometrician friends) that there is still some important empirical work to be done in L&E that doesn’t necessary involve large scale datasets and statistical analysis.

Frequently, discussions of the increased formality of economics also include the observation that it has become pretty easy to run a regression with modern statistical software packages. This is also an important development in L&E scholarship and empirical legal scholarship more generally. I agree with others who have observed that the reduced costs to doing empirical work has become a problem in L&E scholarship in the legal academy. It is certainly true that legal scholars will make improper use of econometric tools from time to time. It is also true that misuse of empirical methods is less likely to be prevented by the peer review mechanism. Though on the positive side of the ledger, conferences like CELS are doing excellent work to raise the bar for empirical scholarship. Similarly, economists may fall prey to the mistake of letting the tools and methods determine which questions they answer, perhaps because the tools and methods determine what is publishable in top journals, or produce models or econometric work that is of little relevance. Neither of these errors are particularly interested to me, though I suspect the incidence of both errors has grown dramatically over time with the increasing demand for empirical legal scholarship and also changes in economic science over the past 30 years.

While I’ve focused on the costs of formalization and specialization throughout this and future posts, I do not want to be misunderstood as leveling the “physics envy” critique at economists, e.g. that economists use modeling as a thinly veiled attempt to make their work look more serious or to adopt a complex language to increase barriers to entry (an accusation most lawyers should be familiar with). For instance, a significant portion of my own research agenda involves some theoretical modeling and econometrics. As an aside, I’ve always thought that particular rhetorical critique (“physics envy”) was not very effective. Formalization clearly has both benefits and costs. The question I am interested in is how this change in economic science will change L&E as a discipline — its already started — and as we know it in law schools.

The increase in mathematical rigor in economics has translated, not surprisingly, into work in L&E that also makes increasing use of formal modeling or econometric methods. One consequence has been something I described as the “retail problem” in my last post:

L&E scholars will do work that is very relevant, and maybe even very good, but legal scholars wont know about it or care about it because of the “translation” issues associated with the formal mathematics will prevent it from being retailed to broader audiences, (the “retail” problem)

In other words, increased formalization has meant that a larger fraction of relevant and high quality L&E work has become less accessible to lawyers, judges, and policy makers. A simple way to describe this trend towards increased formalization might be as a movement toward of L&E towards the prevailing methods and trends in its home discipline. One might question whether this is a problem at all. For the reasons discussed above, I think it is. And at the very minimum, this trend has serious implications for the direction the L&E movement is headed in law schools and in legal scholarship.

The rest of this series, hopefully, will discuss various aspects of this problem. There are at least three immediate questions I think worth discussing concerning the implications of this trend of L&E generally:

(1) What will L&E scholarship in law schools look like in the future? This encompasses questions like whether informal L&E will be “crowded out” as the work becomes increasingly detached from, and presumably less valuable to, not only its intended audience but also colleagues in the law school. It also encompasses questions like whether “serious” L&E scholars will migrate towards economics departments leaving law schools 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).

(2) What efforts can be made to secure the benefits of specialization and formality while minimizing the likelihood of detachment from the traditional “legal” audience? This line of questioning presumes, I think correctly, that detachment would be a serious blow to the L&E movement and encompasses questions like: What role can law schools and other institutions play in ensuring that L&E remains interdisciplinary (not leaning too far toward its “home discipline”) and relevant?

(3) Does This Trend Have Implications for Law School Specialization? Larry Solum suggests that one possible path is the multidisciplinary model where graduate students would be trained in the basic methodologies of their discipline (the law) and PhD programs that trained in specialties such as empirical legal studies, economics, positive political theory, advanced doctrinal methods, etc. As law school specialization is a topic I’ve written about here previously (here, here and here), and a model that I’m familiar with here at George Mason, one might ask whether this trend toward formal L&E scholarship will impact schools like George Mason who have staked out a position as a school that specializes in L&E?

I plan on writing a separate post addressing each of these three questions over the next week or so.

 

 

First, David Bernstein reports on GMU’s very productive hiring season which includes the additions of Helen Alvare, Laura Bradford, T.J. Chiang, Jonathan Mitchell, Adam Mossoff, Chris Newman, David Schleicher, and Jay Verret.  

Second, Brian Leiter reports that Jonathan Klick (Florida State), a graduate of GMU Law (and of the economics department with a Phd in 2003) and former Levy Fellow, has accepted a tenured offer at the University of Pennsylvania Law School.  Congratulations to both Jon and Penn!

Todd Zywicki and Maxwell Stearns have a draft of their new textbook, “Public Choice Concepts and Applications in the Law,” available for review for profs that are interested in teaching with the manuscript this Fall 2008 or Spring 2009 term (the book is due to be published in 2009).  The book is designed for law profs along with “teachers of economics, political science, and public policy courses as well … and to be taught as either a follow-on to a traditional law and economics course or as a substitute for a traditional law and economics course.”  Zywicki & Stearns description of the project and invitation for those interested in early adoption to view the current manuscript is below the fold.

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The value of interdisciplinary legal education is coming up once again. This time, Brian Tamahana argues that the interdisciplinary movement is a bad idea:

the notion that interdisciplinary studies within law schools promises to improve the practice of law is an old idea backed up by little evidence. Non-elite law schools might not be serving their students well if they get caught up in this trend.

Tamahana’s argument is largely empirical: “there is no evidence that it will make their students better lawyers.” He also argues that such a move may not be cost-effective for non-elite law schools and that students might suffer if they are taught in by an increasing fraction of JD/PhDs with little or no practice experience. There has been plently of blog commentary on this issue (see, e.g., Dan Solove, Ethan Leib, and some very interesting comments at Brian Leiter’s Law School Reports). Predictably, as one of those JD/PhDs with little practice experience teaching at a school that prides itself on interdisciplinary legal education, I tend to believe there is considerable value in interdisciplinary education — especially economics.

But I don’t want to turn this into a general defense of law and economics. Nor do I want to spend any time with the second and third aspects of Tamahana’s arguments. The commentary from Solove and others covers those issues. But what about the empirical question? Is there any evidence that such education will make students better lawyers?

What about this study from Craft & Baker (2003) in the Journal of Economic Education that we blogged about awhile back? The most pertinent finding is that undergraduate education in economics lead to higher earnings as a lawyer. I suspect that the level of interdisciplinary education in law school is similar to the subject matter that one would learn in an undergraduate program. Here’s the abstract:

Using nationally representative data, the authors examine the effects of preprofessional education on the earnings of lawyers. They specify and estimate a statistical earnings function on the basis of well-established theory and principles. Along with standard control variables, categorical variables are included to represent graduate degrees in addition to the law degree and an assortment of undergraduate major fields. Holding a Ph.D. or M.B.A. degree, with the law degree, is associated with significantly higher earnings in some sectors. Lawyers with undergraduate training in economics earn more than other lawyers, ceteris paribus, and economics is the only undergraduate field associated with earnings that differ significantly. The available evidence supports the hypothesis that economics training increases a lawyer’s human capital compared with other undergraduate majors.

Apparently, at least some employers tend to believe that there is something value in this type of education for lawyers. That’s certainly a start to answering Tamahana’s empirical challenge. Of course, there are some obvious concerns with endogeneity and selection effects here (which the authors discuss at 278-279 at the link above). But the most interesting result appears to be that neither undergraduates in other majors with high average LSATs or other majors with similar content (business, accounting) generate the same increase in lawyer earnings. The authors properly and cautiously conclude with some reservatation about whether they have identified a causal relationship here:

Although firm conclusions cannot be drawn from this analysis, the available evidence suggests that the effect of an economics bachelor’s degree on the earnings of lawyers results from more than simply self-selection effects. Hence, it appears that the development of additional human capital may be playing some role.

I’m certainly not arguing that the study is dispositive of a link between economics education and quality of legal education in terms of producing value. And perhaps there is something different about undergraduate education in economics and integrating in economics to the general legal curriculum. Though I doubt any differences in that vein are really significant to the debate here. The question of what exactly produces value in the legal education process is an incredibly important one. But if this evidence cuts in any direction, it is that economics education does indeed tend to make students better lawyers.  If further study was to support this finding, perhaps it would suggest that the more important question for legal education is not whether interdisciplinary education makes for better lawyers, but what types of programs improve legal education under what conditions?

Harvard College decided this year not to offer a service option many of its customers want — early admission. When Harvard’s new policy was announced, the dean of admissions took care to emphasize, “We’re looking for all the company we can get.” Soon thereafter, Harvard got some company; Princeton adopted a similar policy, and a number of other elite Northeastern schools began planning to cut early admission.

I thought this looked fishy. (See here and here.) There was a consciously parallel service cut-back that would not seem to make sense if accomplished unilaterally. (Indeed, officials from a number of the schools admitted that unilateral action wouldn’t make sense.) That looks like an “agreement” under cases like Interstate Circuit. And if it’s an agreement, then it’s an agreement not to compete in providing a service demanded by customers. Smells like anticompetitive collusion.

Collusion, though, is tough to implement. If there are other suppliers of the good or service besides those who are parties to the agreement, they can respond to consumer demand, thereby usurping business from the colluders. Perhaps that’s what’s happening with college admissions. Since Harvard and Princeton announced their policies, applications are up 45% at the University of Chicago. Wow.

It’ll be interesting to see how Harvard and Princeton respond. If they stick to their policies of no early admissions, then we can infer that they’re truly trying to better their institutions by setting up optimal admissions procedures. If they go back to their early admissions ways, we might chalk this up to a failed attempt at collusion. Anyone wanna place bets?

Bill tells the story of his research team’s failed attempt to get data from the California Bar to test a possible mismatch effect in law schools.  Bill’s prepared remarks are here.  He sums up the case for disclosing the data aptly at the end of his post:

But if we fail to diagnosis factors that contribute to low minority bar passage, we have no basis to formulate effective policy or educational strategies.  Regardless of which way the data cut, our study would have guaranteed one of two favorable outcomes:

  1.  
    1. Using the more refined California Bar exam (i.e., a continuous dependent variable rather than pass/fail and schools put in analytically useful clusters, unlike the LSAC-BPS data), the mismatch theory would have little or no empirical support.  So a contentious academic theory would be put to bed, at least in the law school context.
    2. A mismatch effect would be supported, which would pressure law schools to take concrete steps to help current or prospective students.  These might include: (a) disclosures that reveal bar passage prospects for past students with similar entering credentials; (b) creation of rigorous academic support programs (such as this one) that increase the bar passage for students in the bottom 1/2 of the class; and (c) identify curricular and teaching strategies that produce higher bar exam scores.

As legal educators, we should want more than the status quo.

Eric Gould and Todd Kaplan have posted an interesting paper (highlighted at the WSJ Economics Blog) identifying the “Canseco Effect.”  They test baseball player Jose Canseco’s impact on his teammates productivity in response to Canseco’s assertion in his book that he made he improved his teammates’ performance by introducing them to steroids.  Turns out he was right about the improved performance.  Gould & Kaplan find that teammates’ performance did in fact increase after playing with Canseco, an impact which they report is quite rare in baseball.  Whether it was a result of introduction to steroids or some alternative mechanism is up to debate. 

All of this got me thinking about whether the general idea that a particular worker increases his teammates’ productivity is one that might apply well to the law school faculty setting.  Ignore the salacious steroid angle here.  I’m not talking about faculty members introducing their colleagues to technologies that will improve their productivity.  But I find it quite plausible that there exist faculty members that make the entire faculty better off in tangible terms like productivity.  This could happen through a number of mechanisms: (1) a highly productive colleague might simply push you to work harder (though this would be difficult to disentangle from a general culture of productivity); (2) a colleague’s willingness to talk through problems and research ideas might help you produce faster and with higher quality; (3) a colleague with expertise in some area complementary to your own, think econometrics, might help you work through basic empirical approaches to your own work or co-author with you.  I hypothesize that the Canseco Effect in the legal academy would be more frequent than in baseball (but less than basketball) though still relatively rare.  There must be a handful of scholars with this type of impact on their colleagues.  The data are out there.  This seems like information a hiring committee would want to know.

The Tilburg Law and Economics Center has a call for research proposals out in the amount of EUR 15,000. Proposals are due November 20th. Details here.

Last Wednesday, the Wisconsin Supreme Court heard oral argument on whether to reinstate an antitrust lawsuit against taverns around the University of Wisconsin (story here). In 2002, the taverns agreed to eliminate drink specials after 8:00 PM on Fridays and Saturdays. A group of students filed a class action lawsuit against the taverns for injunctive relief and damages, claiming that the agreement constituted an illegal conspiracy in restraint of trade.

Well it sure as heck seems so, at least under federal antitrust law. The competing taverns agreed with each other not to offer discounts. The U.S. Supreme Court held in Catalano v. Target Sales that an agreement to eliminate interest-free short-term credit, which is effectively an agreement to deny discounts, is per se illegal. Similarly, the taverns’ express agreement to refrain from selling more booze for less money would seem to be per se illegal. It matters not that the competitors were seeking some desirable social end (less binge drinking, etc.); antitrust does not permit them to pursue that end by reducing competition. That’s the lesson of Professional Engineers, in which the Supreme Court, in condemning a price-fixing agreement purportedly aimed at providing safer buildings, emphasized that “the statutory policy precludes inquiry into the question whether competition is good or bad.”

The Wisconsin Court of Appeals, though, held that the taverns’ agreement was immune from antitrust scrutiny because the taverns entered their voluntary agreement under pressure from local government officials. That pressure, the court concluded, created a sort of state action immunity. Never mind that the government never actually acted. The fact that the handwriting was on the wall — that the taverns believed the city government would impose restrictions if they didn’t do so themselves — effectively turned the private agreement into state action, immune from antitrust scrutiny. Under this reasoning, a group of competitors could immunize their anticompetitive agreement by demonstrating simply that some government official was merely threatening to impose the agreement at issue.

The potential for mischief here should be obvious. Normally, to get state action immunity for a competition-reducing agreement, a group of competitors must convince legislators or regulators actually to impose the competition-limiting policy (or, at a minimum, to authorize self-regulation by the competitors). Adversely affected groups (consumer groups, etc.) will generally have some opportunity to argue against the policy at issue, and a majority of the state decision makers will have to approve it. Under the approach of the Wisconsin court of appeals, there is no need for an official decision by a state legislature or regulatory body — a single official’s threat to act in the future could be enough to insulate a private competition-limiting agreement. That threat could occur without any input by adversely affected parties and without approval of the majority of legislators or members of the regulatory body.

Many, many anti-consumer initiatives succeed because the “bad guys” — the ones who stand to gain from a reduction in competition — are able to front some “good guys” who convince the government that there’s some social value in the competition-reducing rule. It’s exactly what happened with Prohibition: the bootleggers, who stood to make a killing off the reduction in supplies of alcohol, put up the Baptists, who favored Prohibition for all the right reasons, to be their mouthpieces. Once the Baptists convinced the government to restrict supplies of alcohol, the bootleggers made out like bandits.

The reasoning of the Wisconsin Court of Appeals would exacerbate the bootleggers and Baptists problem, for the Baptists would no longer need to convince the government actually to impose the restriction at issue. As long as the Baptists could convince some government officials to threaten the restriction at issue, the bootleggers could respond by voluntarily limiting competition amongst themselves.

(Of course, the real lesson here is that Columbia, Missouri is a much cooler college town than Madison, Wisconsin.)

Advice to Chemerinsky Series

Josh Wright —  26 September 2007

Over at TaxProf Blog is an interesting series on “advice to Dean Chemerinsky” from various folks throughout the legal academy.  Here are my three favorites:

  • Gordon Smith (Ditch co-curricular offerings, law reviews, moot court, clinics, and writing programs and use the money to improve classroom education)
  • Bill Henderson (UC’s brand name and location will get you ranked in the top tier just by showing up to work.  Focus your energies on listening to the labor market … and read his post)

GMU’s Dean Dan Polsby offers a bit of advice any economist could love:

“Think hard about what your comparative advantage is going to be. Build your mission around that. Do not spend a minute or a penny on anything that does not further the mission. And get to be best, best friends with Mr. Bren.”

Along the lines of successful law school specialization strategies, I hope that Caron & Henderson solicit Henry Manne’s advice.

Melissa Lafsky at the Freakonomics Blog reports on a study showing no relationship between law school courseload choices and bar passage rates (except in the third quartile of students apparently).  So what to do?  Yet another reason to take antitrust (and I guess other specialized electives if you insist …) rather than enrolling in bar subject courses in the hopes that it will impact bar passage.