Each email contained the same information: soliciting is illegal and police want residents [...]]]> Last week I received at least twenty different emails forwarding the same story about a house in my town that was almost burglarized.  A man with a rake who appeared to be looking for work knocked on a front door and realized it was open.  He went to the sidewalk and consulted with his friends.  The owner, who was in the house, locked the door.  After the men returned to the front door and found it locked, they tried to open a back door and then a basement window.  The owner called 911 and the police caught one of the men.  Not exactly high drama, but plenty scary for the owner inside the house.

Each email contained the same information: soliciting is illegal and police want residents to report all solicitors because these individuals might be casing houses.

Almost every email also contained either a subtle or not-so-subtle ratcheting up of the fear.  Some emails lamented that our blocks weren’t safe.  Others warned that criminals need money for the holidays.  One advised that we consider this story as our children start to get older and move around the town without parents.  Another suggested that we watch the movie “Taken” because it would make us rethink letting students travel to Europe.

The upside is that I now know that soliciting is illegal and that the police want me to report it.  I’m also being more careful about locking my doors, a good habit in any event. 

But here’s the downside to this email flurry.   I am discomforted as I move about my town and house in a way that I have never been before.  This is true even though I know about the availability heuristic, i.e., the tendency to think events are more probable if we can recall such an event occurring.  I also know how bad humans are at processing information about low-risk occurrences.   Email  only exacerbates this faulty reasoning.  The Rakeman story is significantly more available to me than it would have been had I heard about it once or twice through old-fashioned word-of-mouth.

Many would argue that discomfort is good.  They are probably right, to a point.  But here is what I would have said if I had allowed myself to respond to all those emails:  Lock your doors.  Be smart.  And relax, because you are a lot safer than you think you are.

Citation studies as a proxy for judicial quality are all the rage.  I concur with Larry that the effort spent often seems disproportionate to the result.  Selection is the culprit here, not just academic modesty: it’s hard to imagine that any truly dramatic effects of judicial character, or legal rule, would not be washed away by parties’ ability to settle strategically.

Exogenous shocks open windows – of limited scope – which may help us penetrate this fog.  There’s one ongoing today that I think could in several years allow us to test one of the most important, but obscure, questions about judicial performance.  Although there have been a few studies about the usage, hiring, and quality of law clerks, I haven’t seen work that [...]]]>

Judge food.

Citation studies as a proxy for judicial quality are all the rage.  I concur with Larry that the effort spent often seems disproportionate to the result.  Selection is the culprit here, not just academic modesty: it’s hard to imagine that any truly dramatic effects of judicial character, or legal rule, would not be washed away by parties’ ability to settle strategically.

Exogenous shocks open windows – of limited scope – which may help us penetrate this fog.  There’s one ongoing today that I think could in several years allow us to test one of the most important, but obscure, questions about judicial performance.  Although there have been a few studies about the usage, hiring, and quality of law clerks, I haven’t seen work that really convinces me that clerks change judicial performance (rather than match it).  That question of influence is pretty important for all kinds of reasons — not least because if law clerks were really influencing their judges, we might want to spend a little bit more time thinking about their roles, ethics, hiring, etc.

So what’s the shock?  I think that the period of 2008-2011 will prove, in retrospect, to be bumper years for clerk quality.  Anecdotally, I’ve heard that the clerkship market has never been more competitive: Yale grads have been encouraged to take state court clerkships (the horror); judges in popular jurisdictions are receiving literally four to five thousand applications per clerk year; individuals who before might have taken firm jobs are instead throwing their hats in the ring; magistrate judges are taking clerks previously destined for district judges; alumni in practice for five years are going back into the clerk market and competing with fresh-faced 3Ls.  As an organ of the government, the judiciary simply eats better brains when the economy stinks.

Assuming the effect is real (which we could test by looking at placement statistics), I’d propose that eight to ten years from now – in 2018 or thereabouts – we test whether opinions arising from this bumper-clerk period are cited at a higher rate than opinions from the ordinary market periods immediately preceding and following.  The hypothesis would be that if clerks influence judges to write better opinions, better clerks will produce to more citable opinions.  Notably, we can’t perform this same analysis on the effect of past recessions, as (1) they reportedly didn’t have the same effects on the clerkship market; and (2) opinion collection practices were really sporadic before 1995.  It’s 2018 or bust.  Mitu et al., I call dibs!

1) Increase productive competition in health care? Everyone talks about “increasing competition” among insurers and providers, but there are many ways to compete. Hospitals and doctors can game the reimbursement system. Insurers may not directly discriminate against the sick, but can find other ways to keep high-risk patients out of their plans, as even the most market-oriented health policy experts realize: [...]]]> House and Senate leaders will soon have to reconcile several different versions of health reform bills. The bills are complex, but some simple principles should guide the process of integrating them into a final product. As the press reports on a whirlwind of proposed laws, we need to ask of any particular proposal: Does it . . .

1) Increase productive competition in health care? Everyone talks about “increasing competition” among insurers and providers, but there are many ways to compete. Hospitals and doctors can game the reimbursement system. Insurers may not directly discriminate against the sick, but can find other ways to keep high-risk patients out of their plans, as even the most market-oriented health policy experts realize:

[T]o avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania’s Wharton School.

Both the Netherlands and Switzerland have already experienced problems in this area, even though the Netherlands has implemented risk-adjustment methods (which attempt to deter such “cherrypicking” and “lemondropping”) far more serious than anything proposed in current bills in the US. As Karen Pollitz has repeatedly argued, we’re going to need a much greater investment in insurance regulation to make any reform bill work.

2) Make it easier for uninsured or underinsured individuals to buy coverage? Many of the proposals for allocating and awarding subsidies for coverage sound exceedingly complex. We’re hearing about serious limitations on access to exchanges, subexchanges, burdensome “free rider” provisions, etc. Any particular provision may sound good in the abstract, but taken as a whole they could become an obstacle course that makes obtaining insurance coverage a miserable and exasperating experience for those supposedly aided by reform. During the second Bush administration, hundreds of thousands of children eligible for subsidized health insurance were not enrolled because states failed to make enrollment convenient enough for time- and cash-strapped parents. As Liebman and Zeckhauser remind us, “we must design systems for mere mortals, not the people who inhabit the models of traditional economists.” What seems easy to one of DC’s privileged elite can be very hard for an overworked mom or minimum wage-earning service worker.

I believe that the main reason a solid 2/3 to 3/4 of the country supports a public option is because it is a straightforward, transparent way to provide a backstop of health insurance for everyone. If Congress both rejects a public option and makes subsidies for private insurance as complex as the tax code, health reform risks becoming a model case of government failure. Last week’s negative votes on Rockefeller’s strong and Schumer’s weak public options could easily become a “you broke it, you bought it” moment for centrist Democrats and Republicans on the Senate Finance Committee.

3) Fairly distribute the burdens of reforming the health care system? This is the tax and finance question, and it promises to generate some epic battles on Capitol Hill. However the Senate Finance proposal ultimately evolves, it will be in tension with a House of Representatives that sees progressive taxation as a foundation for financing reform. The Baucus proposal to tax “high end”/Cadillac/”gold-plated” health plans may seem progressive, but it promises to gradually engulf even normal plans. While David Leonhardt offers some good economic arguments for such a tax, policymakers should be guided by Leonhardt’s observations on the propriety of taxing those at the very top of the income scale, who have disproportionately benefited from economic trends and tax cuts of the past decade.

4) Provide incentives for long-term cost-saving and preventive medicine? Comparative effectiveness research is a crucial tool for focusing pharmaceutical research on drugs that save lives. We have a shortage of primary care doctors vis a vis specialists. Reimbursement systems are too easy to game. Insurance markets are concentrated and need more competition and transparency. Any bill that ignores these problems (or fails to empower HHS or another agency to address them) can’t lead to truly sustainable universal coverage.

The health reform fight has been bruising, disappointing, and frustrating for many who care about health policy. Many unwise assumptions are already baked into leading bills. In the Senate, ostensibly Democratic lawmakers are promoting what are essentially Republican ideas and granting enormous subsidies to industries that may well betray them at the next electoral cycle. Nevertheless, there remain many opportunities for improving the final product at the beginning of the end of the legislative process.

X-Posted: HRW.

In the Spring, I asked you folks for some help thinking of examples of true Holmesian agreements, “contracts which, when breached, have a similar psychological profile to a speeding ticket.”  It turned out to be pretty hard to identify such agreements, since most people believe breach to be a morally wrongful activity – not simply an option to pay damages at will.  As Jonathan Baron and Tess Wilkinson-Ryan previously have found, the degree to which individuals find breach to be “bad” is quite manipulable:  breaches to gain are worse than breaches to avoid loss, liquidated damages ameliorate feelings of reprehensibility, etc.  Missing from this research has been a psychological theory of what makes breach so aversive.

Tess and [...]]]>

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In the Spring, I asked you folks for some help thinking of examples of true Holmesian agreements, “contracts which, when breached, have a similar psychological profile to a speeding ticket.”  It turned out to be pretty hard to identify such agreements, since most people believe breach to be a morally wrongful activity – not simply an option to pay damages at will.  As Jonathan Baron and Tess Wilkinson-Ryan previously have found, the degree to which individuals find breach to be “bad” is quite manipulable:  breaches to gain are worse than breaches to avoid loss, liquidated damages ameliorate feelings of reprehensibility, etc.  Missing from this research has been a psychological theory of what makes breach so aversive.

Tess and I came up with a working hypothesis: breach is seen as a form of interpersonal exploitation that makes the breachee a sucker.  We’ve put together a paper that reports on a series of experiments supporting this hypothesis, titled (naturally) “Breach Is For Suckers.“  Check out the abstract, after the jump.

This paper presents evidence from three experiments offering evidence that parties see breach of contract as a form of exploitation, making disappointed promisees into “suckers.” In psychology, being a sucker turns on a three-part definition: betrayal, inequity, and intention. We used web-based questionnaires to test the effect of each of the three factors separately. Our results support the hypothesis that when breach of contract cues an exploitation schema, people become angry, offended, and inclined to retaliate even when retaliation is costly. This theory offers a useful advance insofar it explains why victims of breach demand more than similarly situated tort victims and why breaches to engorge gain are perceived to be more immoral than breaches to avoid loss. In general, the sucker theory provides an explanatory framework for recent experimental work showing that individuals view breach as a moral harm. We describe the implications of this theory for doctrinal problems like liquidated damages, willful breach, and promissory estoppel, and we suggest an agenda for further research.

The paper is a further extension of tons of work on reciprocity in the law, as well as Tess’s own work on the “sucker norm.”  I think it adds a unique contribution to the contracts literature in part because it suggests that studying parties’ behavior in one-shot contracts is worth the investment, and thus challenges the views of relational contract theorists, who hold that such discrete contracts aren’t worth the paper they are printed on.

The paper will be out to the law reviews in the next week.  We welcome any reader comments!

Consider the concept of salvage in admiralty.  Salvage is a liability rule that gives a vessel a claim against another vessel for a reward (determined ex post by a court) when a successful rescue is made.  This is more effective than imposing an affirmative duty on vessels to help others and sanctioning them if they do not, largely because the enforcement costs of such a duty [...]]]> One project that I’m working on (but haven’t written up yet) is about using liability rules to reward socially useful behavior.  The law is replete with civil and criminal sanctions against wrongful conduct.  Public policy is also enthusiastic about using property rights to encourage innovation or investment.  Less attention, though, is given to what I call “rewards” for positive action.

Consider the concept of salvage in admiralty.  Salvage is a liability rule that gives a vessel a claim against another vessel for a reward (determined ex post by a court) when a successful rescue is made.  This is more effective than imposing an affirmative duty on vessels to help others and sanctioning them if they do not, largely because the enforcement costs of such a duty would be prohibitive.  Likewise, there is no property rule that can achieve the worthy objective of preventing ships or their cargo from sinking once they are in distress.  Other rewards are set ex ante by an administrative body and tailored to a particular issue.  For example, the police often offer rewards for information leading to the arrest of a suspect.  This is better than threatening people with accomplice liability.

Why does this matter?  Part of the answer is that there are many areas of law where lack of compliance is a big problem.  Tax evasion, unauthorized downloading of copyrighted material, and companies that hire illegal aliens are three examples.  Sanctioning the people who violate these obligations has not worked well (assuming that people actually want these laws enforced and aren’t just grandstanding).  Property rights also do nothing for these problems.

Here’s a thought experiment.  Suppose the Government said that everyone who paid their income taxes in 2009 would be eligible would a lump sum lottery payout of $100 million drawn randomly.  This (or some equivalent) may induce far more than $100 million in tax payments to the Treasury.  In effect, this is how state lotteries work — it’s a voluntary tax or a probabilistic claim on a liability rule.  Now before you get too excited, there is a problem in that such a plan would have to be accompanied by a credible amnesty for past violations, and people might well reject the scheme on that basis.  The point, though, is that in some of these “lawless” situations we might want to think more creatively about carrots instead of relying on sticks that don’t work.

Two years ago, I noted that H. Beatty Chadwick was about to spend his thirteenth year in a Pennsylvania jail for civil contempt, arising out of his failure to comply with a 1995 order to turn over assets in a divorce litigation.  I opined that:

Unless circumstances change, Chadwick will die in jail to preserve an idea: even civil law must be obeyed. As Robert Cover wrote, “Legal interpretation takes place in a field of pain and death.”

So, I guess that Cover needs to be footnoted: “Except when judges blink.”  Beatty is out.  And his jailers are celebrating:

About 35 prison staffers gathered yesterday – some crying and hugging Chadwick – to say goodbye to the “model inmate” who had worked in [...]]]>

Beatty Chadwick, Post Release

Two years ago, I noted that H. Beatty Chadwick was about to spend his thirteenth year in a Pennsylvania jail for civil contempt, arising out of his failure to comply with a 1995 order to turn over assets in a divorce litigation.  I opined that:

Unless circumstances change, Chadwick will die in jail to preserve an idea: even civil law must be obeyed. As Robert Cover wrote, “Legal interpretation takes place in a field of pain and death.”

So, I guess that Cover needs to be footnoted: “Except when judges blink.”  Beatty is out.  And his jailers are celebrating:

About 35 prison staffers gathered yesterday – some crying and hugging Chadwick – to say goodbye to the “model inmate” who had worked in the law library and forged friendships with everyone from guards to senior administrators, said prison Superintendent John Reilly.

“He’s done more time than maybe the majority of people convicted of homicide do,” said Reilly, a former prosecutor. “What person in his right mind is going to flaunt the authority of the court and say, ‘I’m going to spend the rest of my life in jail?’ People just aren’t made that way.”

Maybe so, but that claim seems to be another example of how we routinely ignore the tremendous emotional investment people have in being vindicated by courts.  As far as I can tell, the state courts of Pennsylvania have not abandoned their factual finding that Chadwick had the money and refused to comply with their order. They’ve just concluded that his ornery will would never bow to any legal pressure.

But just because the judges of Delaware County gave up on compliance doesn’t mean that Chadwick has paid his debt to the courts, his ex-wife, or society at large.  His conduct (as alleged) created a social harm which his ultimate freedom only made worse.  As the  attorney for Chadwick’s ex-wife pointed out, “[h]ere’s a guy who thumbed his nose at a court order for 14 years … There should be some kind of sanctions for doing that.”

A draft paper by Raymond Fisman (Columbia Business),  Shachar Kariv (Berkeley Economics) and Daniel Markovits (Yale Law) has gotten surprisingly little attention given its potentially radical implications.  Maybe it’s the title: Exposure to Ideology and Distributional Preferences. I would have gone with something different.  Perhaps “Law and Economics Eats Law Students’ Hearts.”

The authors looked at first-year students at Yale Law School taking contracts and torts.  They labeled the students’ professors by their purported tendency to emphasize economic and “humanist” rhetoric in class.*  They then used the natural experiment of law school sorting to determine the effect that exposure to economic ideology had on law students’ distributional preferences in the dictator game. That is, did students taught by economically-minded [...]]]>

Richard Posner. Founder. Latter-Day Apostate?

A draft paper by Raymond Fisman (Columbia Business),  Shachar Kariv (Berkeley Economics) and Daniel Markovits (Yale Law) has gotten surprisingly little attention given its potentially radical implications.  Maybe it’s the title: Exposure to Ideology and Distributional Preferences. I would have gone with something different.  Perhaps “Law and Economics Eats Law Students’ Hearts.”

The authors looked at first-year students at Yale Law School taking contracts and torts.  They labeled the students’ professors by their purported tendency to emphasize economic and “humanist” rhetoric in class.*  They then used the natural experiment of law school sorting to determine the effect that exposure to economic ideology had on law students’ distributional preferences in the dictator game. That is, did students taught by economically-minded professors behave differently than those taught by professors disposed toward humanism or critical-legal studies?

The bottom line: students taught by economically-minded professors were both more selfish and more likely to see fairness as a form of kaldor-hicks efficiency.  By contrast, students taught by humanists were more generous and also  likely to see fairness as a matter of equity.

These are important results for those interested in legal education.

• First, and most obviously, it suggests that our preferences for altruism and the content of fairness are highly manipulable — one semester of teaching by a professor – at Yale, no less – can affect them.  I admit to being a bit surprised by the size of the effect, given the mixed results from earlier work on the relationship between economics and altruism.  It’s also surprising that Yalies are so impressionable!  I wonder whether the effect persists past a semester, and whether better coding of actual classroom discussion would have changed the results.
• Second, it suggests yet more reasons for researchers to think hard about the effect that law school teaching has on the content of legal doctrine.  As I’ve argued, it’s quite likely that some law school professors who never published a lick have had more effect on substantive legal doctrine than those who’ve written reams, simply by influencing how their students (who went on to be lawyers and judges) thought about the content of rules and the byways of arguments.  We should do more work like this!
• Third, and most personally, this makes me nervous.  I’m a highly socratic teacher who places lots (and lots) of emphasis in the first-year on efficiency-arguments and on the need to look beyond questions about distributional equality in the present case.  I thought that by doing so I was helping students to think critically about the dynamic nature of contract law – the relationship between contract rules and market price; the usefulness of an intelligent system of defaults; the importance of getting beyond gut intuitions.  But maybe I’m also indoctrinating the students to grab more of the pie for themselves.  Nuts.

*The method they used to code economic preferences was, to be frank, a little mystifying.  They gave points for PhD’s in economics, but had to make exceptions for Alan Schwartz, PhDless but L&E to the bone, Guido, for obvious reasons, and both Robert Gordon and Carol Rose, who are similarly off-set.  Why not simply ask the professors themselves how much they emphasized economic rhetoric in class?  Or the students?

My last post pointed to a recent short piece on comics and the relationship between “anti-plagiarism” social norms that encourage comic creativity and the emergence of those norms in the context of commodified comedy.  Comics sold and consumers bought LPs by the boat-load. The success of record albums had a clear if unmeasurable impact on comics’ incentives to produce and innovate.

A generalizable point is this: Record album sales are an objective and observable characteristic of this particular environment. The data is mostly external to the comics themselves. What scholars describe as social norms among comics are, by contrast, mostly subjective. Norms are personal to each comic. We “observe” the existence of [...]]]> What’s the connection between law professors and stand-up comics?

My last post pointed to a recent short piece on comics and the relationship between “anti-plagiarism” social norms that encourage comic creativity and the emergence of those norms in the context of commodified comedy.  Comics sold and consumers bought LPs by the boat-load. The success of record albums had a clear if unmeasurable impact on comics’ incentives to produce and innovate.

A generalizable point is this: Record album sales are an objective and observable characteristic of this particular environment. The data is mostly external to the comics themselves. What scholars describe as social norms among comics are, by contrast, mostly subjective. Norms are personal to each comic. We “observe” the existence of social norms them by inferring their existence from regular behavior and from anecdotal reports. That interplay between observable, objective, and “external” dimensions of an innovation environment and subjective, “internal” dimensions of that environment is central to understanding its mechanics.

In fact, that interplay is probably central to understanding the mechanics of any cultural context. It’s a central theme in the work that I’ve begun on “cultural commons” with Brett Frischmann and Kathy Strandburg. And it connects stand-up comedy and law faculties. More below the fold.

In a comment on my last post, Jacqui Lipton asked about the greatest challenge that I’ve faced as Research Dean at Pitt. The short answer is that it is relatively easy to design, implement, and manage objective, observable dimensions of the faculty’s research and scholarship environment. It is very difficult to change the subjective, “internal” dimensions of that environment. Much of the job reminds me of my years teaching six- and seven-year-olds to play soccer: I could teach the rules of the game. I could teach basic skills and some rudimentary strategy. These were the objective, observable pieces. I could not teach instinct or passion, and I could not teach the idea that individual investment and collective success are inextricably linked. These were the subjective, “internal” pieces. Some girls would collect the ball at their end of the field and tear toward the other goal. Some of these were more skilled than others. Many of them intuited the proposition that individual effort and team success were linked. I’d call these players the naturals, “natural” in the sense that skills would come in time but they had a nose for getting to the right place, at the right pace. Some of them were skilled but selfish, human highlight reels, at least in their own minds, but in roughly equal portions both detrimental and helpful to the team. And there were the dandelion pickers, who would stab at the ball if it happened to roll in their direction.

Much of this maps on to the Research Dean question. (I am not the inaugural Research Dean at Pitt; one colleague held the position before I did. When I was appointed three-plus years ago, however, our (then new) Dean charged me with scaling things up.) On the objective, observable side, we have added a number of things, few of them really unique or innovative but most of them useful in one way or another: We instituted a program of regular faculty workshops, including faculty exchanges with some other law schools. We established an SSRN Research Paper Series and a program of stocking it with faculty scholarship. I built a Faculty Blog (which consists of my posting about my colleagues’ research and scholarship). I produce an annual internal report of faculty research and scholarship, including future research directions, that is independent of the information collected annually by the Dean and that is circulated to the whole faculty. I’ll save for another time, perhaps, the additional two or three paragraphs that would describe the programming and activities that I undertake or support.

All of that, however, is the relatively easy part. The challenging part is persuading the faculty dandelion pickers, as it were, to collect the ball in their own end and tear toward the other goal. The metaphor is a little overwrought, of course; I’m not misdescribing our faculty when I claim that we have no real dandelion pickers. Our faculty does, however, house a group of individuals with a broad range of subjective beliefs and expectations regarding their own research and scholarship and an equally broad range of beliefs and expectations regarding the relationship between their work and the institutional interests of the school. Changing either set of beliefs and expectations, if that is something that I’d like to do (and sometimes, it is) is very, very difficult. I can’t take for granted that every faculty member is motivated by the same goals, or that any of them necessarily subscribes to my goals, or to the Dean’s goals. Every faculty has its own range of beliefs and expectations, and its own history. There can be no assurance, as the saying goes, that lots of objective, observable programs that support research and scholarship will, in fact, produce more or better research and scholarship, or that it will produce more engaged scholars, or that the research and scholarship that a faculty produces will have greater impact in the world.

There are two obvious exceptions.  One is appointments; if a faculty (or a Dean) really wants to turn the ship, then hiring people who bring the desired set of beliefs and expectations with them is a direct way to do so. But there can be no assurance that the views of the Research Dean will have a strong bearing on the conduct of the Appointments Committee. There are always other important interests and goals at work.  Two is the scholarship of the Research Dean.  It’s important, I think, for the Research Dean to model what is expected from the rest of the faculty, and it certainly helps if the objective, observable features of the environment enrich the Research Dean’s beliefs and motivations.  For me, they certainly do.

It’s implicit in what I’ve summarized that some of the pieces of my Research Dean role are in tension with each other. It’s also implicit that if one of the things that I’m trying to do is to nurture the role of a law faculty as a kind of cultural commons (knowledge goes in to a community, gets stirred and shared, and new knowledge comes out), then measuring success – if there is such a thing in this context – requires a long-term perspective.  And it’s implicit that the Research Dean isn’t simply an appointment that any person can fill with equal success; the person who serves as Research Dean is a kind of focal or anchoring personality, a cheerleader as well as a teacher and an organizer.  A law faculty commons, like any commons (11 players, or 22, on a soccer field?), doesn’t simply happen; it’s created and managed, sometimes with greater success and sometimes with less.

In short, my biggest challenge as Research Dean — and probably an insurmountable challenge — is getting my colleagues to behave the way that I described in this older post:

I played competitive soccer until I finished high school. I played on horrible teams and magnificent teams; for coaches I had tactical masters, experienced former professionals, veterans of soccer on several continents. The best pure leader of the bunch, however, was Mark Speckman, who was my coach during my junior year of high school.

Mark was only about five years older than we were, and he was just starting his coaching career. He knew next to nothing about soccer. He had been a football player in college, earning national recognition as a linebacker at Azusa Pacific in the old NAIA. He was hanging around our school helping with the football team, when he was asked to take the reins of the soccer program for a year.

I should mention at this point that Mark Speckman was born without hands.

So picture a non-soccer playing linebacker, without hands, coaching a bunch of kids whose job it was to put a ball in the back of a net — without using their hands. He didn’t teach strategy, or tactics, or skills; he couldn’t. He was smart and a quick study, and he put 11 men on the field in mostly the right places. We did the rest. But at every practice and at every game, he was on fire. En fuego. With his energy and enthusiasm for us and for the cause, and partly simply by his own history and presence, Mark Speckman was a one-man force of nature.   One-to-one, in the group, whatever it took, Mark Speckman goaded us, cheered us, and validated us loudly and publicly whenever we made great plays and sometimes when we were merely OK but he and we all knew that better was there for the taking, with more effort. His was always the loudest, most positive, and most relentless voice on the sideline. No hands for him; no hands for us.

I honestly don’t remember our record, though we did pretty well. We were competing against schools that were five and ten times our size. Occasionally there was a college coach lurking here or there, but to my knowledge none of us went on to college careers (and a number of our opponents did). What I do remember, however, is that just about to a person, we would run through walls for Mark, and for each other.

Back in March, Danielle put up a post on Trivializing Women’s Harms: The Story of Cyber Gender Harassment. That post attracted commentators, and links, who vigorously disputed both the seriousness of the risk posed by online speech and the (lightness) of the burden that she suggested be placed on anonymous speech. Were we not controlling the comment threads on these posts relatively carefully, we’d see a similar level of skepticism, expressed in vivid, personal, terms. But why would [...]]]> I want to join the other participants in this symposium in congratulating Danielle for putting together such a terrific article. As James G. writes, Danielle frames a compelling case for thinking about online harassment as a civil rights problem, an approach both novel and bracing.

Back in March, Danielle put up a post on Trivializing Women’s Harms: The Story of Cyber Gender Harassment. That post attracted commentators, and links, who vigorously disputed both the seriousness of the risk posed by online speech and the (lightness) of the burden that she suggested be placed on anonymous speech. Were we not controlling the comment threads on these posts relatively carefully, we’d see a similar level of skepticism, expressed in vivid, personal, terms. But why would this be? Why aren’t the risks that the online “speech” pose as obvious to our commentators as they are to Daneille and others on this blog?

The reason isn’t because partisans (like the ACLU, whose inconsistency is remarked by Ann Bartow), or free speech advocates, are deliberately conforming their views of risk to their personal interests or ideological positions. Rather, as cultural cognition theory predicts, “individuals are disposed selectively to accept or dismiss risk claims in a manner that expresses their cultural values.” Persons of hierarchical and individualistic orientations will worry more about being rendered defenseless by gun control; egalitarians and communitarians will worry about the legacy of patriarchy and racism associated with guns and thus discount those risks. Similarly hierarchs will be worried about the risks of disorder following flight from the police; egalitarians will be more concerned about the risks of police oppression. And so on.

Applying the group-grid theory to the project of cyber risks suggests that individualists , who value markets and private ordering, might be disposed to discount the risks of online “mobs”, unless those mobs are directed at values of concern, like the right to be anonymous and free from regulation. By contrast, communitarians believe that individuals will interact with one another frequently, depend on one another, and that this mutual inter-dependence is a condition to be celebrated and supported. Thus, people of different cultural views will have distinct views of the risks of conduct & the benefits of regulation, and those views will (significantly) be less likely that you might think to respond to new sets of “facts”. Perversely, arguing from facts my accent, not ameliorate, dissension between individuals holding different values.

What, then, is to be done to convince the individualists that their values aren’t under assault and that the risks of online mobs are severe enough to warrant some form of regulation? Danielle suggests that framing this as a civil rights problem would serve a valuable “normative and expressive role.” The danger, I think, is that many will respond, as does Orin Kerr here, by suggesting that there are competing norms and expressed values in play. It’s a serious problem, and I don’t have the answers. But I do think that being more generous & attentive to those holding different values is an important part of coming to consensus, and thus I’m really pleased with the respect and collegiality demonstrated in this symposium so far.

Believe me, no. I thank my fortune for it

My ventures are not in one bottom trusted,

Nor to one place; nor is my whole estate

Upon the fortune of this present year.

Therefore my merchandise makes me not sad. (I.i.41-45)

Having ignored the problem of fat tails and black swans, Antonio decides to engage in [...]]]> Over the weekend, I re-read A Merchant of Venice, and I was struck by the fact that Shakespeare manages to include in the play virtually every element of the current financial crisis. Scene one begins with a discussion of risk assessment, and Antonio’s belief that he has managed to tame the vagaries of commercial fate through diversification. Asked by Salarino if he “Is sad to think upon his merchandise” (I.i.40), Antonio responds:

Believe me, no. I thank my fortune for it

My ventures are not in one bottom trusted,

Nor to one place; nor is my whole estate

Upon the fortune of this present year.

Therefore my merchandise makes me not sad. (I.i.41-45)

Having ignored the problem of fat tails and black swans, Antonio decides to engage in a bit of dodgy finance. He borrows in the wholesale market from Shylock under terms that appear favorable, but have a huge downside in the unlikely event of his default. Antonio, of course, is unconcerned. From his point of view he is getting cheap money by taking on what seems like an extremely remote risk. He then takes these borrowed funds and uses them to make what can only be described as a no doc, subprime loan. Bassiano wants money for a speculative venture — the wooing “In Belmont [of] a lady richly left” (I.i.161) — and Antonio agrees, in effect renting out his credit rating:

Try what my credit in Venice can do;

That shall be racked even to the uttermost

To furnish thee to Belmont to fair Portia.

Go presently inquire, and so will I,

Where money is; and I no question make

To have it of my trust or for my sake. (I.i.180-185)

Shylock, for his part, does not approve of the loose monetary policy in Venice, which he rightly blames on wild lending practices, such as Antonio’s loans:

How like a fawning publican he looks.

I hate him for he is a Christian;

But more, for what is low simplicity,

He lends out money gratis and brings down

The rate of usance here with us in Venice. (I.iii.38-42)

Faced with such low returns on normal loans, Shylock is forced into the shadowy world of loan-to-own, in this case targeting, as he tells Antonio, “…an equal pound/ Of your fair flesh, to be cut off and taken/ In what part of your body pleaseth me” (I.iii.147-149). As he later reveals, Shylock is engaged in a bit of arbitrage in the commodity markets and wants Antonio’s flesh “To bait fish withal” (III.i.49).

When all Antonio’s “argossies” reportedly wreck at the same time — a wildly improbable event predicted by none of Antonio’s complex statistical models and, as we have seen, completely discounted by him — his over-leveraged balance sheet sends him spinning into bankruptcy and ruin. For his part, after Lorenzo makes off Madoff-like with Shylock’s daughter and his savings — “A diamond gone cost me two thousand ducats in Frankfurt!” (III.i.77-78) — he is left to lament (albeit in prose):

Why thou loss upon loss! The thief gone

with so much, and so much to find the thief, and no

satisfaction, no revenge, nor no ill luck stirring but

what lights o’ my shoulders, no sighs but o’ my breath-

ing, no tears but ‘o my shedding. (III.i.85-89)

Of course, once his ill-fated bet on Bassiano and the power of risk management starts to unwind, Antonio’s surrogates begin lobbying the government to change the rules so as to avoid unwanted contracts. To his credit, the Duke resists these entreaties, because, as Antonio acknowledges:

The duke cannot deny the course of law;

For the commodity that strangers have

With us in Venice, if it be denied,

Will much impeach the justice of the state,

Since that the trade and profit of the city

Consisteth of all nations. . . . (III.iii.26-31)

His laudable concern for the commercial reputation of Venice, however, does not prevent the Duke from using the bully pulpit in an attempt to brow-beat Shylock into renegotiating his contract with Antonio:

Shylock, the world thinks, and I think so too,

That thou but leadest this fashion of they malice

To the last hour of act; and then ’tis thought

Thou’lt show thy mercy and remorse more strange

That is they strange apparent cruelty’

And where thou now exacts the penalty,

Which is a pound of this poor merchant’s flesh,

Thou wilt not only loose the forfeiture,

But touched with human gentleness and love,

Forgive a moiety of the principal,

Glancing an eye of pity on his losses,

That have of late so huddled on his back,

Enow to press a royal merchant down

And pluck commiseration of his state

From brassy bosoms and rough hearts of flint,

From stubborn Turks and Tartars never trained

To offices of tender courtesy.

We all expect a gentle answer, Jew. (IV.i.16-34)

The Duke’s speech, of course, falls into the standard rhetorical tropes from the perennial battle between Main Street and Wall Street, finance and the “real economy.” Shylock is asked to forgive the principal out of “human gentleness and love” and Antonio’s unfortunate losses “huddled on his back,” nevermind, of course, that it was Antonio who got himself into the problem with the first place through irrational exuberance and shoddy lending practices. Of course, beneath the velvet appeal to mercy and solidarity there is the steel fist of an unstated threat. Shylock is “Jew,” the member of a hated minority and the memory of young men following him through the streets taunting him over the loss of his daughter just a few scenes before must be fresh in his memory. The duke is willing to stand behind the “justice of the state,” but for how long in the face of an increasingly belligerent public that his sided decisively with Antonio?

Of course, the story is resolved when deus ex machina Portia arrives with clever legal arguments that allow Antonio to escape his obligations while giving the city a fig leaf behind which it can hide its ultimately thin commitment to contractual sanctity. (Of course, realist that I am, in the end I think that that it is Portia’s rhetoric — “The quality of mercy is not strained…” (IV.i.182) — rather than her legal analysis that does the real work.) The ending, however, requires the forced conversion of Shylock and what amounts to public control of his capital through a series of strong-arm negotiations rather than outright legislation.

Needless to say, finance and capitalism will never be the same in Venice again. With Antonio and his friends in control, I shudder for the prospects of efficient capital allocation in the future. I think that we can expect more loans to well-connected folks like Bassanio with questionable business models.

Liptak offers a slightly different slant on the Article than I might, focusing not on the mechanism shaping individuals’ differing views of facts and risks, and the normative consequences of those differences, but instead on the unique risks posed by video evidence. Quoting Jessica Sibley, Liptak suggests that [...]]]> Adam Liptak’s sidebar column for today’s NYT talked about the use of video evidence in the Supreme Court, using as a lede Whose Eyes Are You Going to Believe, an article by Dan Kahan, Don Braman, and me which just came out the HLR. (Blogged before. Often. Too often? Shamelessly. Sorry. Last time! But Liptak could still have used the SSRN link. If I’m to catch Solove, I need to start somewhere.)

Liptak offers a slightly different slant on the Article than I might, focusing not on the mechanism shaping individuals’ differing views of facts and risks, and the normative consequences of those differences, but instead on the unique risks posed by video evidence. Quoting Jessica Sibley, Liptak suggests that video evidence is particularly likely to persuade judges, even though it is only a “a partial, volatile and dangerously persuasive account of what happened.” Why? Because of our genes: “it works on the brain in a different way.”

Although it is plausible that judges react to visual evidence more intensely than the paper record, nothing in Whose Eyes actually depends on judges relying on their brute sense impressions. That just made the problem much easier to test. If the Court had processed a paper record about deception in exchange (the strength of caveat emptor, for example, in a puffery case) I think that we’d see similar culturally-loaded dissensus about the meaning of shared facts. As Orin Kerr pointed out in a comment to this post, there’s nothing that special about video evidence. On the other hand, video evidence might pose distinct legitimacy concerns, since the evidence can be easily shared and viewed by the public, making it more likely that judges who call those that disagree with their view of the facts “unreasonable” will offend a large number of people. (Cf. Slobogin.)

The blog appears to be little visited so far, and consequently the comments are pretty good. Check it out!

I’ve learned from the work of my colleague Peter Huang, and my former colleague Rick Swedloff, that we should all be a little bit more skeptical about [...]]]> There’s a large, and burgeoning, literature on the ways that individuals mispredict their own happiness. The classic examples are the loss of happiness from injury (becoming a paraplegic) and the gain in happiness from winning a lottery. In both scenarios, we mispredict how actual individuals experience the losses and gains. Another well-known result is one of particular salience today: individuals aren’t as unhappy when their sports teams lose as they predicted they would be, nor does their happiness last as long as they anticipated. Scholars argue that we adapt, quickly, and revert to our baseline happiness.

I’ve learned from the work of my colleague Peter Huang, and my former colleague Rick Swedloff, that we should all be a little bit more skeptical about the hedonic adaptation literature, and its adaptation to legal policy. Here’s a particular example. The literature might predict that when my Eagles beat the (hated) NY Giants today to advance to the NFC Championship, I would be joyful briefly, but then would adapt, so that I’d be moderately pleased by dinner and phlegmatic by the late evening. Indeed, on this theory, I might have started to adapt as soon as it was clear (by the mid-fourth-quarter that the Eagles weren’t going to execute their long-planned choking maneuver. And, I certainly would be aware that this win only sets me up for a greater feeling of disappointment. next week, when the Birds lose to a decidedly inferior Cardinals team. If behaving at all rationally, I should price that anticipated regret into my current mood.

Not so. I still feel pretty darn good. And, though I feel for certain Giants fans, I have concluded that the forces of evil once again have lost a battle today. Philly is on the march.

The bankers, for example, were rational in betting on mortgage-backed securities and other housing-related investments, even long after they recognized that their entire industry was, in fact, standing deeply inside an enormous, overstretched bubble. “Even if you know you’re in a bubble, it’s extremely [...]]]> I missed this when it originally happened, but you should read Richard Posner’s take on the financial crisis, as delivered to Columbia law students.

Posner devoted the bulk of his presentation to outlining the myriad motivations behind the excessive risks. What disturbs him most, he said, is that all of the risk-takers – from CEOs to the day traders to home buyers – were behaving rationally, which free-marketers such as Posner generally believe should act as a bulwark to protect against such catastrophes.

The bankers, for example, were rational in betting on mortgage-backed securities and other housing-related investments, even long after they recognized that their entire industry was, in fact, standing deeply inside an enormous, overstretched bubble. “Even if you know you’re in a bubble, it’s extremely difficult to get out,” said Posner. Pulling up stakes before the bubble explodes means telling investors to expect smaller short-terms rewards. “I think that is a very hard sell,” he said.

Besides, Posner added, when investors want to balance their portfolios, they will do it themselves with, say, bonds or treasuries. The purpose of the high-risk funds is to take the high risks necessary to generate the outsized profits.

Posner also cited the win-win structure of most top executives’ contracts: If their high-risk decisions result in big gains they receive huge bonuses, and if the gambles fail they result in huge severance packages. He noted the $161.5 million awarded last year to outgoing Merrill Lynch chief Stanley O’Neil. “Very, very generous compensation incentivizes executives to maximize their short-term profits,” he added.

Boards of directors, Posner lamented, are hardly “reliable agents of shareholders.” With compensation in the high six-figures for positions that require them to attend only a few meetings per year, board members would need to act against their own self-interest to contest a CEO’s plus-size salary – which wouldn’t exactly be rational.

“This is rational behavior. This is troublesome for economists,” Posner said. “You can have rationality and you can have competition, and you can still have disasters.”

Though he said he wanted to end the presentation on a high note, Posner seemed to have trouble finding one.

There is much here to agree with, particular Judge Posner’s skepticism about the efficacy of regulation. But I’m not as convinced (as he is) that this story is best explained as a failure of perfectly maximizing actors. Indeed, as the story describes his position, it sounds like many of the agents were not maximizing at all. Why, for instance, could bankers not convince (purported) rational investors that we were in a bubble? The best reason, which Posner hints at, is overoptimism bias. Why aren’t executives’ contracts structured for long-term return instead of short-term profit taking? Wouldn’t rational boards and rational executives prefer a smooth future income stream? I’ve got to think that a rich account of compensation behavior would take into account both the tournament effect and risk aversion. And why isn’t there a better market for board members? Could it be some kind of bias against out-groups?

Crowd motivation seemed at work yesterday as well. [...]]]> According to this month’s Scientific American, academics at UCLA have found that peer pressure does a better job of motivating people to conserve resources than do standard environmental messages. In an experiment, researchers presented two different signs to hotel guests: one had a typical conservation message and the other told guests that most of their fellow travelers had reused towels. The study found that the social-norm message worked 25% better than the generic environmental message in convincing guests to reuse their towels. It also found that telling guests that those who had stayed in same room had reused their towels worked even better than saying that other guests at the same hotel had done so.

Crowd motivation seemed at work yesterday as well. According to The New York Times, recent studies attribute our drive to cast a ballot to the desire to see ourselves as the kind of people who vote. In other words, we vote to maintain our moral self-image. This desire seemingly operates internally and externally. We vote because we want to feel good ourselves and because we want others to feel good about us too. Hence, so many kept on their “I Voted!” stickers throughout the day. As the UCLA study suggests, those “I Voted!” stickers likely motivated others to head to the polls, especially if they were worn by colleagues and friends. Although the heavy turn out was no doubt due to the historic nature of the race–an African American candidate (now President elect)–and the unbelievably high stakes given our economy and the war, it also created a contagion of the greatest kind, one that was red, white, and blue.

As I watched the celebration gather steam (fireworks! champagne! mosh pits!) I thought back to a post I’d written about watching Naples soccer fans celebrate a soccer victory back in ‘07. Apparently, Naples tied with Genova in a soccer match, resulting in both teams being promoted to Series A soccer, or the major [...]]]> After the Phillies won last night, I went out to Broad Street with tens of thousands of my fellow Philadelphians to celebrate. I felt happy, but in a vaguely distanced way, stunned as I was by the unexpected reality of a major sports team championship in Philly. Because Philadelphia is such a small place (in some ways) I saw three students on the street in fairly quick order. Good times.

As I watched the celebration gather steam (fireworks! champagne! mosh pits!) I thought back to a post I’d written about watching Naples soccer fans celebrate a soccer victory back in ‘07.

Apparently, Naples tied with Genova in a soccer match, resulting in both teams being promoted to Series A soccer, or the major league. This led to a general “celebration” consisting of an impromptu “parade” of thousands of mopeds and cars, flags flying and horns blaring, with the occasional firework (or pistol?) thrown into the mix. I expressed some doubt then and now about the celebratory atmosphere not just because there were some random acts of violence against Genovese fans, but because the scene was decidedly chaotic. I also question whether a parade can occur simultaneously on every main street in town.

Here, again, the naive foreign tourist might think to himself that the law had broken down, resulting in a potentially bad situation, a view itself reinforced by a Napolese citizens who told that tourist that it was “very dangerous” to walk to the train station. But a more realistic analysis demonstrated that so long as that tourist walked at a brisk pace while shouting “Forza Napoli” at intervals, he could effectively comply with the new set of norms and not be sanctioned by passing celebrants. Plus, I hailed a cab halfway through the walk.

This post was accurate, except that “brisk walk” really needs to be re-written as “a terrified shambling run, dragging luggage behind”. I remember thinking, while shambling, that if this were only happening in Philadelphia I wouldn’t be scared, because I would have a better situation sense of what was appropriate celebration and what was rioting. That is, a “riot” is a subjective thing, determined by your own contextual and culturally-determined view of what kind of public behavior is ok. I don’t speak Italian well enough to know what happy screams sound like, and without a nuanced sense of language, smiles start to look like the prelude to a mugging.

This is a long way of saying that while fireworks, smashing bottles, and random people screaming in Naples made me fear for my life, those same activities on Broad Street last night only made me feel closer to my fellow celebrants. I was right: when you are home, raucous celebrations feel entirely appropriate.

That said, it is true that I left the party around 11:30, before a night’s work of drinking kicked in and the scene turned a bit more ugly. (A few upturned cars, some smashed windows, but no reported serious injuries. (Cf. Boston).

(Image Source: Chris Bowers)

Today the very notion of “recession” is enough to put the Federal Reserve Board into a tizzy. Yet in rushing to lower interest rates to stave off a recession in the middle part of this year, and in then throwing hundreds of billions of dollars into hastily cobbled-together, poorly coordinated rescue packages for banks and mortgage lenders, the [...]]]> As the election draws nigh, financial panic has given way to something like legislation-phobia in some swathes of the electorate. I think that caution can be overblown, but has a ring of truth when it brings up specific instances of misguided government responses to crises in the past. Sasha Abramsky’s recent article on fear provides a great example of the right kind of cautions for collectivists:

Today the very notion of “recession” is enough to put the Federal Reserve Board into a tizzy. Yet in rushing to lower interest rates to stave off a recession in the middle part of this year, and in then throwing hundreds of billions of dollars into hastily cobbled-together, poorly coordinated rescue packages for banks and mortgage lenders, the Fed may well ultimately have unleashed an inflationary spiral that will, in the long run, do at least as much economic damage as a corrective recession would.

As for climate change, while it’s clearly a massive problem, it’s also an extremely complex one. Yet suddenly, as the reality of a warming planet belatedly enters public consciousness, we’ve all become climate experts. Every storm, every deviation from the norm regarding daily temperatures, rainfall, wind speed, is now blamed on global warming. And so we look for quick-fix solutions. In glomming onto one such panacea, biofuels, we may actually have made the problem worse, while contributing to a massive global food crisis. In short, we’re becoming so fearful of the future — the next attack, the next economic collapse, the next environmental catastrophe — that we’re undermining the present.

It’s useful to compare that wise counsel to the usual empty rhetorical attacks on collective action.

For example, here’s David Brooks on the “lessons” of behavioral economics:

And looking at the financial crisis, it is easy to see dozens of errors of perception. Traders misperceived the possibility of rare events. They got caught in social contagions and reinforced each other’s risk assessments. They failed to perceive how tightly linked global networks can transform small events into big disasters. . . .

If you start thinking about our faulty perceptions, the first thing you realize is that markets are not perfectly efficient, people are not always good guardians of their own self-interest and there might be limited circumstances when government could usefully slant the decision-making architecture (see “Nudge” by Thaler and Cass Sunstein for proposals). But the second thing you realize is that government officials are probably going to be even worse perceivers of reality than private business types. Their information feedback mechanism is more limited, and, being deeply politicized, they’re even more likely to filter inconvenient facts.

Note that Brooks gives no specific examples here of government’s “worse perceptions” of reality. Having promoted Nudge, he might want to take a look at Sunstein’s critique of the precautionary principle, a more sophisticated version of Brooks’s deep skepticism. Sunstein and Hahn have claimed that “the precautionary principle does not help individuals or nations make difficult choices in a non-arbitrary way. Taken seriously, it can be paralyzing, providing no direction at all.” Even failure to make a decision often amounts to a decision. A policymaker “guided” by Brooksian skepticism would have likely made virtually all the deregulatory decisions that led us to the current financial crisis, throwing up his hands at the inevitable politicization and incompetence of government. Sometimes those handicaps of the collective pale in comparison to the destruction wrought by the greed and recklessness of a well-heeled elite.

[W]hen three performers who spent the day rehearsing for “Shrek the Musical” walked into a restaurant on 42nd Street recently, they saw on the menu that a Japanese-style beef bowl had 1,090 calories. They decided to head down the street for a salad. “Counting calories is so 1980s,” said Rachel Stern, one of the dancers. “But when it’s right there, it’s kind of hard to ignore.”

500-calorie muffins and 1300-calorie salads are a real wake-up call. There are a few disappointments, though. As a frequent Dunkin’ Donuts customer (Starbucks’ Fritalian is way too elitist for me), I’ve noticed many of their franchises putting calorie ranges next [...]]]> New York City has mandated that many restaurants disclose calorie counts, and the results can be pretty surprising:

[W]hen three performers who spent the day rehearsing for “Shrek the Musical” walked into a restaurant on 42nd Street recently, they saw on the menu that a Japanese-style beef bowl had 1,090 calories. They decided to head down the street for a salad. “Counting calories is so 1980s,” said Rachel Stern, one of the dancers. “But when it’s right there, it’s kind of hard to ignore.”

500-calorie muffins and 1300-calorie salads are a real wake-up call. There are a few disappointments, though. As a frequent Dunkin’ Donuts customer (Starbucks’ Fritalian is way too elitist for me), I’ve noticed many of their franchises putting calorie ranges next to items–leaving customers to make a probabilistic assessment of how much a given donut will clog their arteries.

But some information is better than none, and it’s hard to see how people like Ed Glaeser can oppose a trend in policymaking as helpful as this. Philip Zimbardo sizes up the situation well–and explains how we can do more to promote good decisionmaking.