The University of Chicago Law School Faculty Blog

Student Blogger - Fall WIP: Daniel Chen and the Effect of Sexual Harassment Law on Gender Inequality

Scholars, particularly economists, are of two minds when it comes to employment regulations aimed at protecting vulnerable groups. The goal behind these laws, of course, is to equalize the status of groups seen as vulnerable to economic discrimination, such as women or the disabled. One prominent position amongst economists, however, is that these policies often are counterproductive, raising the cost of employing the relevant groups and thus imposing unneeded costs upon them. In a new paper with Jasmin Sethi, Kauffman Fellow Daniel Chen finds evidence that sexual harassment law does help reduce gender inequality in the workforce.

It's useful first to explore the mechanics of why theorists posit such laws might or might not operate to the benefit of the groups they're attempting to aid. One position holds that the laws, by imposing increased enforcement costs on firms, disincentivize them from hiring the group in question. For persons already hired, these laws act as forced benefits -- if a firm willing to spend X amount of resources on a given employee, the amount they are forced to expend to stay in compliance with specific laws or regulation will simply be taken away in other areas (salary, benefits, hours, etc.). This model also posits that the market should resolve invidious discrimination, because firms which don't discriminate should be able to seize a competitive advantage by exploiting the labor of otherwise superior workers irrationally excluded by their competitors.

With regards to sexual harassment, however, an alternative view emerges. Harassment can be seen as a form of "economic warfare" waged by insiders (i.e., men who already have jobs) against outsiders who might underbid them and thus deprive them of established benefits. By withdrawing their cooperation (i.e., harassing), the men can lower the productivity of the competing group, removing their competitive advantage and prompting firms to either refrain from hiring or dismissing women. The dissenting position explains why firms don't quash discrimination themselves by noting that the insiders may be risk-averse to any changes in the employment structure. It is also possible that the managers in a position to enforce an anti-harassment norm may also be the very "insiders" benefiting from it (indeed, there is research indicating that women in supervisory positions are more likely to face harassment than non-manager women).

To test these models, Chen and Sethi examined how labor markets shifted in response to sexual harassment decisions by federal courts, specifically, how firms responded to plaintiff "wins" at the appellate level (the authors use the idiosyncratic variation in pro plaintiff decisions provided by the random assignment of judges (of particular gender and party affiliations) to panels). Disaggregating the results amongst the federal circuits helped provide variation in results for comparison purposes. They found that sexual harassment law reduced gender inequality by 1.3-15% in the areas of employment status, hours worked, wages, and management status -- seemingly buttressing the dissident view and differentiating harassment law from other areas, such as disability and maternity benefits, where the dominant view had been borne out via empirical research.

Digging deeper into the results, at least two further findings stand out. First, the reduction in gender inequality was enjoyed predominantly by women who were not already in the workforce. This is consistent with the insider/outsider model forwarded above: that harassment law prevents entrenched actors in sex-segregated occupations from locking out newcomers. Reducing harassment prompts women who were previously outside the workforce to enter, but women who already have jobs see little change. Second, the results demonstrated that firms respond to victories by sexual harassment plaintiffs regardless of how large or small the damage award is. This indicates that the response by the firms was motivated less by a desire to avoid the monetary sanctions of a damage award, and more by reputation or other less tangible costs associated with the risk of being seen as a harassment-friendly workplace.

Audio: Epstein on Bilski

Continuing with today's Epstein/Fed Soc theme, the Federalist Society has posted a recording of Prof. Epstein discussing Bilski v. Kappos. The SCOTUS heard oral argument in the case on November 9. According to the Fed Soc site,

The issue in this case is whether a "process" must be tied to a particular machine or apparatus or transform a particular article into a different state or thing in order to be eligible for patenting under 35 U.S.C. § 101.

You can download the podcast here.

Video: Richard Epstein on the Redistribution of Wealth

Over on the Federalist Society's YouTube Channel, they've posted an 11-part series entitled "Redistribution of Wealth," recorded at the 2009 National Lawyers Convention on Thursday, November 12, 2009. Our own Richard Epstein was one of the discussants.

Other participants included Steve Forbes, Chairman and CEO of Forbes Inc. and Editor of Forbes Magazine; Prof. Jed Rubenfeld of Yale Law School; Andrew L. Stern, President of the Service Employees International Union; and Judge J. Harvie Wilkinson III of the U.S. Court of Appeals for the Fourth Circuit as the moderator.

Student Blogger - Think of the Consequences

Imagine you are the newly appointed director of the Centers for Disease Control. You are reviewing a report that suggests that a new vaccine is likely to prevent thousands of deaths from an impending outbreak of a new viral epidemic. However, vaccines like this one have had problems in the past, causing many recipients to get severely ill. You call your two most trusted advisors, Ben and Kent, into your office and explain your problem, and say, “Look, fellas, I’m not going to play politics here. I want to do the right thing.”

Ben quickly chimes in, “This is an easy one. You only need to look at the total social benefits weighed against the total social costs. Avoiding thousands of deaths sounds like a lot of benefit, so I say release the vaccine.”

Kent interjects, “Wait. Don’t you remember your Hippocratic Oath? You have a moral duty to do no harm. That has to be your guiding principle.”

This exchange leaves you in a bit of a muddle. Should you start by aggregating harms and benefits or should you start from an acknowledgment of a duty to respect the inviolability of each individual affected by your policy choice? What did Kent actually advise you to do?

Stanford Law School’s Barbara Fried is skeptical that any answer derived from a duty-based theory like Kent’s can get off the ground. Fried presented her argument from a forthcoming book on risk regulation at the Law and Philosophy Workshop.

Student Blogger - Lunchtime Talk: Virtue and Drug Use

As the State of California prepares to debate whether or not marijuana should be decriminalized, the Federalist Society sought to resolve an issue of higher magnitude: whether virtue and drug use are incompatible.  The lively lunchtime debate featured plenty of snacks and The Law School’s own Professor Richard McAdams and Professor John Baker of the LSU Law Center to hash out an answer.

The most surprising part of the debate was that there was not much of a debate on drug laws at all.  Both professors agreed in general the that so-called “war on drugs” had largely been a waste of resources given its growth to a multi-billion dollar economic intrusion and espoused general support for the DOJ’s new stance on marijuana.  As for whether virtue and drug use are incompatible, let’s just say the professors agreed that everything in moderation was a good creed to follow.  Who says you can’t pass on a question in law school?

Professor Baker began with a summary of the medical marijuana laws in California and wondered aloud whether AG Holder was a libertarian or just soft on crime for the DOJ’s reversal on prosecutions.  Given that there are over 4,500 federal crimes, only a small fraction of which are actually enforced, Baker proposes that it just might be an end to the unjust and disproportionate focus on drug laws.  Baker even went as far to say that he thinks that the federal government should be out of the business of governing people altogether. 

For drug cases in particular, federal policies blur the line between crimes and simple regulatory offenses.  To Baker, crimes are acts that need to be prohibited while regulation says what you are doing is actually okay, just let me—the federal government—tell you how to do it.  Thus, the federal government spends money on labels and chasing regulatory offenses disguised as crimes in order to justify their existence. 

Amended Google Book Search Settlement

If you are following this issue, I have a quick new paper on the amended Google Book Search settlement. You can download the paper here.

Student Blogger - Fall WIP: Youngjae Lee asks What's Wrong with Disloyalty?

Disloyalty occupies a special place in the law. It gets its very own constitutional clause (Article III, Sec. 3). Over British history, persons convicted of high treason could expect to receive particularly harsh punishment well above that of other felonies (hanged, drawn and quartered for men, burning at the stake for women). Yet missing from this account is a seemingly very simple question: What's Wrong with Disloyalty? And this was the subject of visiting professor Youngjae Lee's fall WIP talk.

Before reaching the meat of his paper, Professor Lee first disaggregates "nonloyalty" from "disloyalty". Loyalty, Lee argues, is a feeling or sentiment towards an institution such as a state. Nonloyalty is the lack of such sentiment. Disloyalty, by contrast, involves some overt act harming the entity. The distinction matters, because it helps diminish one of the intuitive problems many have with policing disloyalty in the first place: that it will punish thoughts (or worse, lack of thoughts). While most of us maintain an intuition that disloyalty is a bad thing and probably worthy of punishment, we simultaneously fear mass arrests because one failed to attend a Veteran's Day event or failed to cheer loudly enough for team USA at the Olympics.

However, even this does not get us all of the way there. If disloyalty to the state involves taking some overt act against it (or in favor of a rival), and even if we expel pure speech -- such as rooting for the Canadians against the Americans at the Olympics (full disclosure: as a kid, I typically rooted against team USA in international competitions, primarily out of an instinctive empathy for the underdog. To borrow from and update Joe E. Lewis, in 1992, rooting for the American Olympic basketball team was like rooting for Microsoft -- it just seemed unsporting) -- we could still imagine something like agreeing to be a waterboy for team Canada. An overt act? Yes. "Disloyalty"? Seems harsh.

Student Blogger - Fall WIP: Bradford and Ben-Shahar on Rewarding the Enforcers of International Law

They say you catch more flies with honey than with vinegar. They might be wrong. But what would really be great is if the same substance could serve as both honey or as vinegar, as the job requires. Anu Bradford, presenting a paper co-written with fellow Chicago Professor Omri Ben-Shahar, thinks they may have that magic policy in the nettlesome field of international law enforcement.

Enforcement of international agreements is a difficult and costly endeavor. In an ideal world, the threat of sanction would be the preferable way of deterring cheating behavior, because a threat alone is costless. Unfortunately, a threat is only effective if it is credible, and it is only credible if the cost of following through is less than the cost of simply absorbing the bad behavior. Because sanctions are often expensive, many threats of punishment are not credible, and thus bad behavior goes undeterred.

An alternative to punishment (vinegar) is rewards (honey) -- paying off potential violators to encourage them to play nice. Rewards are generally cheaper than punishment, but at root the suffer from a similar problem: if the amount of harm to the enforcer is less than the benefits accruing to the violator, the enforcer has no incentive to offer a reward high enough to convince the wrongdoing to cease misbehaving. Consequently, if there is a desire to continue reducing the level violation below this point (for example, to account for difficult to monetize externalities, as often is the case in environmental regulations)

Bradford and Ben-Shahar's solution is deceptively simple: have the money do both. Enforcers should pre-commit a certain amount of money to an escrow account, with the promise that it will be offered out as a reward to violators who clean up their act. If the violator refuses to do so, then that money is used instead to finance a punishment, effectively multiplying the investment. They analogize this to a system wherein bail money is used to finance bounty hunters (if the defendant skips town). Not only does the wrongdoer lose the money they put up for bail (the reward for coming to trial), but they also face increased resources directed against them as punishment.

Student Blogger - Push-pin, anyone?

You haven't lived until you've won a few of your friends' hard-earned quarters in a heated round of push-pin.  Push-pin–"hattie" as I prefer to call it–is a high-stakes game of skill and cunning where two pins are placed on the brim of a hat, the players gently tapping the brim in turn hoping the pins come to rest across one another.  (Who doesn't travel with a brimmed hat and spare tailor's pins?  I know I do.)  This game of chance (or innocent children's pastime) was immortalized by the founder of Utilitarianism, Jeremy Bentham, when he claimed that, in calculating the sum total of pleasures, "the game of push-pin is of equal value with the arts and sciences of music and poetry."  In this year's first meeting of the Law and Philosophy Workshop, Professor Elizabeth Anderson examined J.S. Mill's innovative response to Bentham's claim.

In her paper, Anderson focuses our attention on the lively debate among Mill's contemporaries over democracy and elitism, as reflected in the proper goals of education.  The conservative curriculum of Mill's day lauded theology, the classics, and the other humanities as the highest accomplishments of civilized society.  In the mean time, the arts and humanities were viewed by Utilitarians as luxuries at best, and vestiges of a pernicious elitism at worst. 

Fundamental to the Utilitarians was the concept of equality of taste, which dismissed claims to give some pleasures more weight than others.  For Bentham, if a game of push-pin supplied more pleasure, it was more valuable than music or poetry.  Attempts to refine or uplift the sensibilities of the masses were misguided.  Understandably, the Utilitarian was an advocate of the sciences and mathematics for their empirical success and useful application to technological progress, a progress that was rapidly expanding utility-enhancing advances in medicine, manufacturing, and economics. 

Video: Richard Posner on Fiscal Irresponsibility and the Future of the U.S.

The Council on Foreign Relations has posted a video of Judge Posner discussing the topic "Fiscal Irresponsibility Clouds the Future of the United States." The discussion is part of the CFR's C. Peter McColough Series on International Economics.