Tuesday, November 24, 2015

Law and Economics People:Don't They Suck?

Of course they do. They are the worst, aren't they. Always talking about efficiency, consumer surplus and the like. Heartless people who are not in touch with real values. "Bean counters."

I think I would be regarded as a law and economics person by anyone who has not read anything I have written and that's fine. With respect to most of the people who have rolled their eyes, accused me of have a law and economic agenda or whatever I stand with Rod Stewart. I would not let them tie my shoe.

There a couple odd things about being or not being a law and economics person. First, in actual real life it seems like the non law and economic types are far more likely to act like self-interested rational economic people. My observations are they are more inclined (or at least no less inclined) to worry about getting the best teaching load, the right number of students, enough money to travel the world, the highest salary, the best deal on a car, etc. And if you think for a second this is in service to the institution, forget about it. It is over-the-top self interest regardless of the impact on the community. In the words of Toby Keith, it is about "my, me, my." OMG, the stories I could tell of programs, certificates, LLMs programs that all reflect personal as opposed to institutional and student welfare. This is demonstrated most when they have outlived their usefulness, if there was a use in  the first place, and yet individuals cling to them.

So when it comes to individual self interest it's all about "law and economics." They should be teaching a course because they live in the shoes -- whether tied or not -- of the economic man. Interestingly this applies regardless of whose money is spent but the difference is this:

1. If the decision affects the individual, the hard nosed economic man comes out.
2. If the decision is spending the money of others the "it's not about the money, there are other values" comes out.

Well here is a little news: IT IS ALWAYS ABOUT THE MONEY!!! (Unless, that is, there is an unlimited amount of it.)

The only way to believe it is not always about the money is to be born without a part of the brain that understands opportunity costs. And since everyone I know understands opportunity costs when it comes to personal decision making, that part of the brain is in good shape. So what explains ignoring then in all kinds of other contexts? For example:

1. You want to run a summer foreign program in Poland, France, or Santa Barbara. You say it is  enriching for the (mostly already well-to-do) students. You send faculty there and say it does not cost anything because they would have been paid anyway. Yes, but the cost is in terms of what they would otherwise be doing. And if you say,  "They otherwise would be doing nothing" then the opportunity you missed was not paying them at all in the summer or paying the same money to some who actually does do something.

2. You want to have a Program in Intermediate Snooker Law because someone deeply interested in snooker wanted to teach it and then add advanced courses (total enrollment 30). You cannot have a program without a director and a director cannot possibly teach a full load what with all that directing that goes on. He or she is taken off the schedule for one course. The loss of that course is the opportunity cost.

3. You have an LLM program that wants teach its courses over a 60 minute class period even though the 95 per cent of the school teaches 50 minutes classes. The teachers really, really want it. It means dedicating a classroom to their use even though the room is rarely full and, in fact empty several hours a week. The opportunity costs? Classes that students want cannot be put in that room even when there is no other room for them.

Am I saying summer programs, snooker law certificates, and LLMs taught in 60 minute class periods are bad. Nope, not at all. I am saying the reasoning, or lack thereof, that results in those decisions conveniently  does not reflect the same law and economics analysis that the same people apply to themselves when trying to maximize their own well-being.

Yes, those law and econ people do suck but they may not be the ones most people think of.


Eric Rasmusen said...

The law and economics approach is only about self interest in the sense that it assumes people are maximizing a utility function. That utility function can be altruistic, so what this amounts to is just that people rationally choose how much to give away and how much to consume on themselves; e.g., if the tax deduction on donations rises, they will make more donations.

What about a scholar who sees everything in terms of race, sex, or class? Would such a person act only for the benefit of his race, sex, or class, instead of for the good of the university?

One thing we for sure don't see: people who praise John Rawls don't give away most of their salaries to someone worse off so as to maximize the welfare of the least-well-off person. I've wondered about that. Is there some kind of ethical out for the Rawlsian liberal when it comes to improving the justice of the the distribution of wealth using his own money instead of other people's?

Jeffrey Harrison said...

As I recall it is Sen you asks if we are capable of counter preferential choices. If not then it all boils down to what is included in one's utility function. My only point is that the utility functions of people I know who dislike economic because they see it as not including other values, also seem to have utility functions that do not include the welfare of others.

On the Rawls thing, I believe behind the veil people would opt of the difference principle but it is hardly a matter of altruism but a matter of being risk averse. But even if that were not the case, no single Rawlsian or even all the Rawlsians in the world could not make the difference principle a reality.