November 18, 2021
Cornell Law School professor (and former Davis Polk financial institutions group lawyer) Saule Omarova, was nominated by President Biden to head the Office of Comptroller of the Currency, which regulates nationally chartered banks. Omarova is a progressive scholar of financial regulation who has written about the possibility of increased public provision of financial services, including a National Investment Authority to help finance infrastructure projects.
Such public financial institutions might sometimes compete with private financial institutions, much as public universities and k-12 schools take some business away from private universities and private schools, and as public transit takes some business away from car companies. Omarova's advocacy for public options, and some of Omarova's critiques of private financial institutions, have made her a target.
During Omarova's Senate confirmation hearing, her critics resorted to name calling and nationalist dog-whistles, with Republican Senators accusing her of being a "radical" and a "comrade" (i.e., a communist) out to "end banking as we know it" in part because she emigrated from a central asian country that was once part of the Soviet Union.
In what seemed like an anachronism from the worst days of the 1950s, Omarova felt compelled to defend herself by saying: “I am not a communist. I do not subscribe to that ideology. I could not choose where I was born . . . My family suffered under the communist regime.”
The Financial Times has the full story.
Senators are of course free to take exception with Omarova's proposals for an NIA or publicly backed electronic payments systems, or to disagree with her advocacy for robust financial regulation, but accusing her of being a communist is beyond the pale.
October 11, 2021
Nobel prize in economics awarded for innovation in causal inference from observational data (Michael Simkovic)
Three renowned labor economists, David Card (Berkeley), Joshua Angrist (MIT) and Guido Imbens (Stanford Business School) shared the Nobel prize in economics for their pioneering work using observational (i.e., non-experimental) data for causal inference. This work facilitated empirical analysis of the effects of various legal and public policy changes, which are enacted in the real world and not under laboratory conditions. Many scholars in law & economics and empirical legal studies built on their work and relied on the techniques the prize-winners developed.
Card is famous for a series of difference-in-differences analyses across state borders that showed that moderate increases in minimum wage often don't lead to unemployment, as had been previously believed based on economic theory and simplifying assumptions. Card's work was met with substantial skepticism, and conflicting claims from other empiricists, but he eventually changed the conventional wisdom among economists--a triumph of empiricism over theory and of science over ideology. Card is a co-editor of the Handbook of Labor Economics.
Angrist and Imbens developed new ways to identify Local Average Treatment Effects, such as the use of instrumental variables. Angrist is also a co-author of Mostly Harmless Econometrics, a text that is widely used to train economists, law professors with an empirical bent, and other researchers. Imbens' methodological work is taught heavily in an empirical studies workshop run by Bernard Black at Northwestern and the late Matt McCubbins at Duke. Imbens is also the co-author of a popular book on empirical methods, Causal Inference for Statistics, Social, and Biomedical Sciences.
Black & McCubbin's workshop--which I highly recommend--is intended to help law professors and other researchers learn to engage in more sophisticated empirical analysis.
In widely cited work, Angrist found strong evidence that military service--specifically in Vietnam--adversely affected subsequent earnings. Imbens and Angrist have also found strong evidence that education substantially increases subsequent earnings, using changes and variation in compulsory schooling laws. The causal relationship between education and earnings is now widely accepted among labor economists and other empiricists.
October 02, 2021
Economists, sociologists, and public health researchers have long observed that more highly educated groups tend to be healthier and live longer than those that are less educated. Debates emerged about whether increasing levels of education caused improvements in health. Some economists argue that those who know themselves to be healthy at a young age will be more likely to pursue additional education because they expect to benefit from it more, over a longer career because their greater health enables them to work longer and harder. Many others argued that education inculcates healthier habits--diet, exercise, sleep, medical checkups, prophylactic use, skepticism about "alternative" (non-evidence-based) medicine--and provides individuals with the literacy, numeracy and critical thinking skills to make better health-related decisions going forward.
A new study by my colleagues at USC's Center for Economic and Social Research (CESR) finds that more highly educated populations are more likely to be vaccinated, more likely to choose to be vaccinated, believe that vaccines are more effective, and believe that the risks from vaccination are lower, compared to their less educated counterparts. Across education levels, Asians are the most pro-vaccination group, while blacks are the least.
August 05, 2021
Wall Street Journal law school analysis overlooks increased diversity and lower interest rates (Michael Simkovic)
In my last post, I discussed problems with WSJ coverage of law schools. In particular the WSJ has effectively faulted law schools for broad, national declines in employment that are most likely due to macroeconomic conditions such as the financial crisis of 2007-2009 and its aftermath, to COVID, and to other broad secular trends in labor markets, not to declines specific to law graduates or the legal profession. In challenging economic climates, although law graduates suffer along with others, they continue to do better than most, primarily because they are more highly educated.
There are additional attribution problems with the WSJ's recent coverage.
The WSJ claims that the real value of a law degree has declined over an extended period of time and cites slow growth in lawyer starting salaries. This is problematic for several reasons. As the analysis below explains, it is almost certainly the case that over the last 20 years, the lifetime present value of legal education has dramatically increased. This is particularly obvious when one controls for the changing demographics of law graduates, as one should to assess the value added by law schools. However, the increase in lifetime value of legal educaiton is largely because of lower interest rates. Smaller contributions have been made by improvements in legal education. Those improvements appear to have done more to broaden access for more diverse students than to increase value for students fitting demographics that were more prevalent a few decades ago (i.e., white male students from upper middle class backgrounds with high-quality K-12 and undergraduate educations).
- How should we calculate the "economic value of a law degree"?
- Earnings premiums should control for changing demographics
- Falling Interest rates have dramatically increased the lifetime value of a law degree
- Even small percentage increases in lifetime value can offset large percentage increases in tuition
- Student loan default rates are declining nationally, and are much lower for law graduates than overall
August 03, 2021
In 2010 to 2013, the Wall Street Journal effectively blamed law schools for the economic fallout of the financial crisis and the Great Recession. In particular, the recession caused a large reduction in employment which hit young and inexperienced workers across the economy.
July 16, 2021
One of the great joys of being a student or academic is the ability to engage in self-directed learning. The freedom this affords can be overwhelming, given the massive volume of books, articles, and other media that could be consumed. This raises the question, what should be read for pleasure first?
Recently, I've been reading (and listening to audio books) by Nobel prize winners. There are of course many great books by people who have not won Nobel prizes, and who many never win one (for example, because they work in a field that is not eligible). But there seem to be few bad books by Nobel prize winners, and so I've been pleased with my selections.*
I'm including a partial list of books by Nobel prize winners that I've recently enjoyed.
I encourage others to use the comments section to include books by Nobel prize winners that they've enjoyed. Please only use the comments for this purpose, and please include your real name.
Please also indicate what field the author won the Nobel prize in, and (to your knowledge), whether an audio book version is available. For purposes of the list below, I am including the Nobel prize in economics and am not counting the Nobel Peace prize, since my interest is in scientists, writers and social scientists rather than politicians.
March 10, 2021
Ashley Deeks (Virginia) and Francis Shen (Minnesota) win ALI early career Scholars Medal (Michael Simkovic)
The American Law Institute will award its Early Career Scholars Medal to Professors Ashley S. Deeks of the University of Virginia School of Law and Francis X. Shen of the University of Minnesota Law School. The award recognizes outstanding law professors whose work is relevant to public policy and has the potential to influence improvements in the law. It's awarded to 2 professors (out of around 3,000 who are eligible) once every two years.
Deeks writes about national security, international law and foreign relations. Shen writes about law and neuroscience, with a focus on criminal law and elder law.
The full announcement is available here. This is the third win for Minnesota (Professors Schwarcz and Monohan are previous winners).
Previous years' ALI medalists have frequently been targeted for lateral hires shortly thereafter, including Jeanne Fromer (who moved from Fordham to NYU), Oren Bar-Gill (who moved from NYU to Harvard), and Michael Simkovic (who moved from Seton Hall to USC).
October 26, 2020
I recently discussed research debunking claims that law school and business school are only worthwhile for those privileged enough to gain admission to elite programs. Press coverage has been curiously oblivious to social science research using high quality data and well-established methods.
Why might the press overlook high quality information sources while instead elevating the views of less reputable sources of information like think tanks and advocacy shops? Experts proffered by such sources often have questionable credentials, use dubious methods, and rely on opaque sources of funding.
Anti-education narratives have become increasingly prominent in press coverage since the Gates Foundation and its partners began sponsoring news coverage and affiliated charities at a vast number of publications including the New York Times (see also here), NBC, BBC and its affiliated charity, NPR, PBS (see also here), The Guardian (see also here), Gannet (which owns USA Today), the Hechinger Report, The Atlantic, the Texas Tribune, the Financial Times, and the Chronicle of Higher Education, among many others.
The Gates Foundation and its partners have also funded education policy analysts at many think tanks and advocacy groups, as well as groups like the Education Writers Association that connect the press with education experts and award prizes to journalists and editors. Gates has reportedly spent more than $250 million on press sponsorship—which is more than enough to outright buy several newspapers.
Gates has not only funded advocacy and news coverage of that advocacy, but also new approaches to measuring the ripple effects of news coverage to ensure that his organization gets a good return on investments in influence. The echo chamber created by Gates-funded press, quoting Gates-funded policy advocates, packaging and promoting minor variations on Gates’ personal views—all the while concerned that layoffs will be even worse if another round of funding does not materialize—can make it difficult for dissenting voices to be heard.
September 22, 2020
A popular narrative is that business school is not worth the time and money, especially outside of a handful of elite programs. This narrative closely echoes earlier critiques of legal education that have since been thoroughly debunked. (See here, here, here, here, here, here, here, here, here, here). As was the case with legal education, the anti-business school narrative has been followed by multi-year declines in applications to business school and a shift toward more online programs.
As with legal education, the anti-business school narrative does not appear to be supported by the data. A careful study by Peter Arcidiacono at Duke tracked the incomes of GMAT test takers who attended business school, before and after business school. The study compared the income trajectory of business school students to the income trajectory of similar test takers who did not attend business school.
Arcidiacono et al. found evidence of negative selection into non-elite business schools. That is, the sorts of people who attend non-elite business schools had lower incomes before business school than one would expect given their test scores, academic performance, demographics, and other observable characteristics. The areas in which they likely had lower (but difficult to observe) earning potential included less developed social skills and more limited social connections.
This means that non-elite business schools actually boosted their students' earnings by more than has been previously assumed. Moreover, the fact that Arcidiacono et al. focused on earnings within a few years of graduation means that they very likely understated the benefits of business education. Those with graduate degrees typically see the annual boost to earnings from their degrees rise until they reach peak earnings, usually in their 50s.
One key takeaway is that social connections are an important part of the value of education. Even non-elite graduate programs can help their students improve social skills and forge valuable connections. This may not bode well for the value of online education relative to traditional brick & mortar education.
Arcidiacono's study came out in 2008, but discussion of it has been remarkably absent from press coverage regarding the value of business education. My next post will delve into some of the possible reasons for low quality and overly negative education news coverage.
September 19, 2020
In the NY Review of Books (recently republished online):
Nazism was so horrifying and so barbaric that for many people in nations where authoritarianism is now achieving a foothold, it is hard to see parallels between Hitler’s regime and their own governments. Many accounts of the Nazi period depict a barely imaginable series of events, a nation gone mad. That makes it easy to take comfort in the thought that it can’t happen again. . . .
Milton Mayer’s 1955 classic They Thought They Were Free, recently republished with an afterword by the Cambridge historian Richard J. Evans, was one of the first accounts of ordinary life under Nazism. [H]is subjects were working as a janitor, a soldier, a cabinetmaker, an office manager, a baker, a bill collector, an inspector, a high school teacher, and a police officer. All of them referred to themselves as "we little people.”
Nazism took over Germany not “by subversion from within, but with a whoop and a holler.” ... Mayer’s subjects “did not know before 1933 that Nazism was evil. They did not know between 1933 and 1945 that it was evil. And they do not know it now [in 1952].” Seven years after the war, they looked back on the period from 1933 to 1939 as the best time of their lives.
Even in retrospect Mayer’s subjects liked and admired Hitler. They saw him as someone who had “a feeling for masses of people” and spoke directly in opposition to the Versailles Treaty, to unemployment—to all aspects of the existing order. They applauded Hitler for his rejection of “the whole pack”—“all the parliamentary politicians and all the parliamentary parties”—and for his “cleanup of moral degenerates.” The bank clerk described Hitler as “a spellbinder, a natural orator. I think he was carried away from truth, even from truth, by his passion. Even so, he always believed what he said.”...