Law & Econ Prof Blog

Amusing Take on the Financial Crisis

I have loved Andy Borowitz's short, amusing essays in The New Yorker in the "Shouts and Murmurs" section.  His recent column. "Too Big to Fail," available here, is a wonderful take on the financial crisis.  You'll enjoy it. 

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Guinness Book of World Records

The 2009 edition of the Guinness Book of World Records appeared recently. Yesterday's Wall Street Journal had this marvelous review of the book by Dan Ackman. You will be amused and enlightened.

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Regional Personalities in the U.S.

This article in yesterday's Wall Street Journal reports on research that suggests that there are distinct personality types in the different regions of the United States.  I do not know the underlying methods or data that were used to reach the conclusions.  But let us assume for the time being that the data are correct.  The study raises the fascinating question of issues of why there should be these regional types, that is, why do they arise (to accommodate real regional conditions, such as population densities, immigration patterns, educational levels, economic opportunities, rural v. urban splits) and why do they persist, particularly in light of the fact that approximately 25 percent of the U.S. population moves each year -- many of them across state (and, presumably, regional) lines.  Do people, for example, sort themselves out by moving to different sections of the country, trying out various possibilities, and staying only in those regions whose personality type is most congenial to them?  Or are there endogenous regional cultures that shape the people who live there (on a theory, say, that you have to accommodate to the local customs in order to get along)?  Or is there some other process by which relatively invariant regional psychology types assert themselves? 

l suppose that one other possibility is that the empirical finding on which the article is based is incorrect. 

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A Manipulated Prediction Market?

I am a fan of prediction markets -- unless, of course, they are being manipulated so as not to reflect the true aggregated beliefs of traders. So, this column at fivethirtyeight.com (an excellent source of statistical information about the election) about suspicious trading at intrade.com in the presidential market is worrisome. (Thanks to Michael Vogel for pointing this out.)
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More Financial News

David Leonhardt of The New York Times is back from his several-month sabbatical and has an excellent article, "Bubblenomics," in today's New York Times Magazine on the financial crisis.

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Financial Crisis

The causes of the financial crisis and the particular correctives of the federal government's bailout plan are both a bit hazy to us nonspecialists. Today's Freakonomics column, guest written by Douglas Diamond and Anil Kashyap and available here, is extremely clear and helpful.

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CELS

Last Friday and Saturday, four of my colleagues at the University of Illinois College of Law (David Hyman, Jay Kesan, Bob Lawless, and Jen Robbennolt) and I attended the Third Annual Conference on Empirical Legal Studies.  The conference was held at Cornell Law School in beautiful Ithaca, New York.  Our hosts (and the co-organizers) were Ted Eisenberg, Valerie Hans, Michael Heise, and Jeff Rachlinski.  They all deserve a great round of applause for a marvelous conference. 

From a relatively modest but enthusiastic number of people attending the first conference two years ago at the University of Texas Law School, the number of attendees at the Cornell conference exploded to 350.  Michael Heise told me that the organizers' wildest upper-bound estimate on attendance was just above 200, and that they were nearly overwhelmed by the number who found their way to Ithaca.  There was a full and enticing schedule of papers from early on Friday till late on Saturday, and most sessions had seven concurrent panels. 

I had the pleasure of commenting on Anthony Niblett, Richard Posner, and Andrei Shleifer's "The Evolution of a Common Law Rule," which was very ably presented by Anthony.  The paper, available on SSRN, is a very important study of the extent to which state appellate courts converged on an efficient interpretation of the economic loss rule between 1970 and 2005.  The long and the short of a complex story is that the courts did not converge on the efficient or any other single interpretation of the ELR.  There is much food for thought in the paper. 

Next year's CELS is at the Gould Law School of the University of Southern California on November 20-21.  And the following year (2010) the conference will be held at University College London. 

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TV -- Good or Bad?

There's an interesting article in this morning's Wall Street Journal summarizing recent empirical work by economists on the effects of children's TV-atching.  See here.  Ignore the breathless description of new statistical techniques and focus instead on the empirical work.  Because TV was introduced at different times in different states, the economic work here described takes advantage of this "natural experiment" to tease out the effects of TV-watching on child development, educational attainment, and the like.  The general conclusion is that TV-watching was not the mind-numbing activity -- captured in the phrase "the boob tube" -- that many critics and parents thought.  Interestingly, the article also describes work by Robert Jensen and Emily Oster showing that the spread of TV-watching in India has helped to dampen discrimination against women. 
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