Economics

Linear extrapolations are widely suspected of being unreliable, but maybe not widely enough. Stated differently, it’s a category error to engage in static, not dynamic, analysis. Stated yet differently, the interesting challenge is almost never to ask, “What can we do to solve this problem?” but instead, “What happens after we take this approach to solving the problem?”

Here’s an example. A long-running contributor to structural disequilibrium in the metropolitan New York traffic congestion pattern is that bridges across the East River are toll-free, whereas almost all other bridges and tunnels in the area carry tolls as high as $12 one-way. Not surprisingly, the East River bridges are chronically congested and “over capacity.” (The experts’ knowing diagnosis that they’re “over capacity” always amuses me; drivers are paying in time, not money: The “capacity” of the bridges is what it always has been.) So periodically proposals are floated to impose tolls on these bridges, with seemingly reliable projections of how much revenue would be collected based on today’s vehicle traffic multiplied by the average toll.

This is a linear extrapolation, a static analysis, and it’s wrong. It overlooks the question, “How will people alter their behavior in light of the tolls?” Obviously, the answer is that some will carpool, some will take mass transit, some will telecommute more often, some will use different combinations of bridges and tunnels. Whatever happens, toll revenue will fall short of {[today's traffic volume] x [proposed toll]}.

Now, in law school land, we have a stunning example of market dynamics at work….

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* The TSA must be stopped. They’re now leaving creepy notes when they spy personal items in your luggage. [Not So Private Parts / Forbes]

* Law students, trust me, there’s nothing on your Facebook page that three more points on the LSAT won’t fix. [WSJ Law Blog]

* Berkeley Law 1Ls are playing an awesome game of assassin. Man, I miss college. I mean law school. [Nuts & Boalts]

* Would there even be medical malpractice if libertarians ruled the world? [Overlawyered]

* The Casey Anthony jurors are probably dying for a closeup. [Huffington Post]

* The future of Law and Economics. [Truth on the Market]

[S]ome of the conclusions of which our leading economic experts have been confident have turned out to be incorrect. For example, Alan Greenspan, appointed and then reappointed Chairman of the Federal Reserve for five terms by four different Presidents, recently admitted to a significant flaw in the ideology that caused him to support and implement policies of financial deregulation…

And Judge Richard Posner, a highly respected jurist and a leading economics expert, has recently expressed his admiration for Keynesian economics, reversing a lifetime of reliance on the Chicago School’s approach.

Judge Stephen Reinhardt, writing for the Ninth Circuit in State of California v. Safeway, Inc.

Earlier this month, your Above the Law editors had a little debate about whether attractive people make better lawyers. Apparently a couple of economists asked a similar question a decade ago. Jeff Biddle and Daniel Hamermesh published a paper in the Journal of Labor Economics in 1998 titled Beauty, Productivity, and Discrimination: Lawyers’ Looks and Lucre.

Gavel bang to University of Florida law professor Daniel Sokol, for pointing us in the direction of the article. It’s a fascinating read. We learned that:

* lawyers in the private sector are more attractive than those in the public sector;
* ugly looks-challenged people clerk;
* litigators are the most attractive attorneys, and that regulatory lawyers are the least attractive.
* being really, really, super good-looking makes men more likely to become partners, but makes women less likely to become partners; and
* attractive lawyers bill at higher rates and make more money.

The economists looked at law school graduates from the 1970s and 1980s. They created a control group by focusing on the graduates from just one law school, referred to as “Law School X” in the paper: “a highly selective institution that has typically matriculated and graduated between 300 and 400 students each year.”

We spoke to Professor Hamermesh this week about his research into how being hot helps lawyers’ careers. It’s not hiring partners who are solely to blame for this, though. The selective pressure comes from lawyers’ clients. Hamermesh shared his insights, and also revealed to us which law school provided his lovely guinea pigs…

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