The University of Chicago Law School Faculty Blog

Student Blogger - Ambiguity about Ambiguity

Professor Anup Malani on how we know when we don't know

What are judges supposed to do when statutes are ambiguous? This question is the source of endless quantities of legal scholarship and is at the core of public debates over the proper role of judges. While the is obviously important, it is hard to see how anything really new could be said. Asking this question - how to deal with ambiguity - presupposes another, however: that ambiguity exists in the first place. How do we - or any given decisionmaker - know when a text is ambiguous? Relatively little academic work has been done on this question, which would seem to be at least as important.

Chicago's Anup Malani, along with co-authors Ward Farnsworth and Dustin Guzior (both at Boston University) attempts to fill this gap with his paper Ambiguity about Ambiguity: An Empirical Inquiry into Legal Interpretation, which was presented at this week's Works in Progress (WiP) talk at the law school. The paper is based on an empirical study of nearly 1,000 law students.

"Corporate Philanthropy and the Market for Altruism"

Todd Henderson and Anup Malani recently posted their paper "Corporate Philanthropy and the Market for Altruism" to SSRN. The abstract is below, and the paper can be downloaded here. You can also listen to Prof. Malani's discuss corporate philanthropy at a CBI earlier this year.

The existing literature on corporate philanthropy asks why corporations engage in philanthropy. But corporations are not alone in doing good works. Non-profit charities and the government also lend a hand. Together the three sectors compete in a larger market for good deeds where individuals seek to satisfy their desire to help others.

The existing literature on public goods ignores the role for-profit firms play in this market, which we call the market for altruism. Once the demand and supply for altruism is understood, asking why firms are philanthropic becomes about as meaningful as asking why Ford produces the Explorer or Apple produces the iPod Nano. Instead the question becomes how is this market different from other markets, and when are for-profit corporations best suited to supplying it. The market for altruism is special because one of the competitors - the government - also regulates competition in the remainder of the market. After analyzing the market for altruism, and explaining the comparative advantages of corporations, this paper highlights one area - tax policy - in which the government discriminates among competitors. We argue that this discrimination is not justified and propose a number of tax reforms to level the playing field and improve the efficiency of the market for altruism.

 

Anup Malani Podcast: "Understanding Corporate Philanthropy"

Last week, Anup Malani gave a Chicago's Best Ideas talk entitled "Understanding Corporate Philanthropy." Since we're feeling philanthropical ourselves, we're making a recording of the talk available here.

Here is the blurb for the talk:

Much of current scholarship views corporate philanthropy managerial waste or profiteering. In this talk, Professor Malani argues that both views are correct, and incomplete. Corporate philanthropy is the corporation’s entry into the market for private financing of public goods, also called the production of “warm glow.” This market was previously dominated by non-profit charities and the government. The feature that distinguishes corporate production of warm glow from other goods is that the corporation’s shareholders and workers are also its consumers. (Would you rather own or work for Google or Altria?) The key choices for the consumers of warm glow are whether to purchase from corporations or their competitors, and whether to do this via ownership, employment or product purchase. The talk will discuss the competitive advantage of corporations over charities and the government, and the importance of tax law in determining how consumers purchase warm glow from corporations.

Malani CBI: Valuing Laws as Local Amenities

On Wednesday, April 25, 2007, Professor Anup Malani delievered a Chicago's Best Ideas talk on "Valuing Laws as Local Amenities." Professor Malani thinks we go wrong in trying to determine the value of a law only by its direct effects - he argues that by looking at the effect that any given law has on wages and property values, we can determine the relative value of all laws. This allows us to treat laws just like any other community amenities, such as the fixing of potholes or the building of a swimming pool. Listen to the talk here, and read the full blurb after the jump.

Coase Lecture: Culling Chickens

The annual Ronald H. Coase Lecture in Law and Economics is geared towards our first year law students. This year's lecture, on January 23, 2007, was delivered by Professor Anup Malani and titled "Culling Chickens." Professor Malani spoke about prevention of the spread of avian flu in chickens, particularly, although not exclusively, in third world countries. Much of the discussion centered around the economic principles that go into determining the appropriate rate to pay for potentially-diseased chickens in order to ensure that farmers will indeed turn them over for slaughter.  A lively Q&A followed, and you can listen to the whole thing here.

Housing, Wages, and Malani

Anup Malani’s latest paper argues that perhaps the best way to evaluate a law is to look at how the law affects housing prices and local wages. The intuition is that a good law will make the relevant community more attractive, which in turn will cause housing prices to rise and wages to fall. That is, a good law will increase the number of people who want to live in a given community, and that will drive housing prices up and push local wages down.

Malani recently asked for examples of legal rules for which this story sounds plausible, in essence looking for things that might influence a person when they choose where to live. When debating whether to live in Hyde Park or Highland Park, Anup asks, is it plausible to think that people inquire about local land use regulation, criminal enforcement, and the like? With respect to schools the answer is surely yes; but Anup wants to know if the same dynamic applies on the state level to tort law or on the local level to criminal enforcement or parking issues.

Two reactions.

Valuing Laws as Local Amenities

I recently started a paper which argues that the value of a law should be judged by the extent to which it raises housing prices and lowers wages.   This may seem an odd way to assess the welfare effect of a law.  After all, higher housing prices and lower wages are thought to be bad outcomes, not good ones.  But the proper way to understand these changes is as signals of positive outcomes, not positive outcomes themselves.  They indicate that something good has happened in the community.  Housing prices go up because more people want to live there.  Wages go down because more people want to work there.  Phrased more formally, higher housing prices and lower wages are how markets ration an attractive local amenity.  Indeed, the increase in housing prices combined with the reduction in wages provides a measure how much people are willing to give up to enjoy the amenity.  Conventional economic thinking recognizes this when it comes to estimating the social value of a new park or a better school.  The same logic, I argue, applies when the amenity is anything from a better tort system to smarter rules regarding capital punishment.