The University of Chicago Law School Faculty Blog

Wikis and More

(The following is excerpted and condensed from an op-ed in yesterday's Washington Post.)

In the past year, Wikipedia, the online encyclopedia that "anyone can edit," has been cited four times as often as the Encyclopedia Britannica in judicial opinions, and the number is rapidly growing. In just two years, YouTube has become a household word and one of the world's most successful Web sites. Such astounding growth and success demonstrate society's unstoppable movement toward shared production of information, as diverse groups of people in multiple fields pool their knowledge and draw from each other's resources.

Give Thanks for those (Soon to Disappear?) Benefits

A striking thing about the jobs most commonly chosen by newly minted graduates of elite law schools, is that they come with valuable fringe benefits. Base salaries are widely imitated and therefore fairly uniform, but firms compete a bit more when it comes to benefits. Health plans, inclusion of same-sex partners, fitness centers, part-time work options, and other things are on the minds of employers and employees, but one particularly expensive and nonuniform benefit is parental leave. At Thanksgiving dinner this year I sat next to a new associate at a Boston firm who seemed thrilled that her firm offered maternity and paternity leave, for biological or adopted children, of three paid (plus benefits) months. The law requires only some leave without pay, so we can think of this as a benefit worth more than $50,000 per child. I think my friend's reaction was partly social/political, as she prefers a world in which parenting is encouraged, or at least not penalized, in this manner, and I think it is also economically rational. She does not think of this costly benefit as coming out of her paycheck, although I think it unlikely that she cashes in on this benefit with this employer, because she correctly sees her own compensation as moving in step with other firms' base salaries. I think her reaction would be the same even if the associate in the office next door had five children in the next five years, and even if that associate's partner also received paid leave from his or her employer. Of course, the birthrate in this group is likely to be low. The benefits come out of the partners' returns, though they may of course encourage new associates to join this firm.

Arizona's (Defeated) Voter Reward Act

And so Arizona's Initiative, Proposition 200, to enter primary and election day voters in a lottery for a $1 million prize, funded by two years' of unclaimed lottery prizes, was defeated. It is politically correct to wish for higher voter turnout, but then incorrect to contemplate mandatory voting , as is found in some other democracies. But it turns out that while we do not like sticks, which is to say penalties for not voting (Australia has a $20 fine, sufficiently enforced that it was paid by some 50,000 persons in the last election there), we do not like carrots either. Arizona's plan would have offered voters the equivalent of a lottery ticket each time they voted in a general or primary election. Of course the expected value of this lottery ticket would have been fairly low, and had Arizona simply paid 50 cents or a dollar to each voter, who could then have turned around and purchased a lottery ticket with the money if a shot at a million prize was preferred, we do not imagine voter turnout skyrocketing. Instead, the mainstream preference, at least for mainstream politicans and academics, is for somewhat easier voter registration rules and procedures. Even if these are more expensive, they are politically more correct or acceptable.

Pricing the Elections

F.A. Hayek, for a long period at the University of Chicago, emphasized the ability of markets to aggregate dispersed knowledge, ensuring that prices incorporate new information. Prediction markets, aggregating dispersed knowledge, have been flourishing on the Internet, and many of us have been impressed by their accuracy. For example, the Hollywood Stock Exchange has done well in forecasting Oscar winners and box office receipts. But many people are skeptical; they believe that as these markets become better known and more manipulable, they will often be proved wrong.

We are about to have a new test of prediction markets in the political domain. As of this writing, the markets say that the Senate will stay in Republican hands and that Democrats will capture the House. Some markets offer more specific forecasts. For example, the Washington Stock Exchange now predicts that Jim Talent will defeat Claire McCaskill in Missouri; that Bob Casey will defeat Rick Santorum in Pennsylvania; that Robert Menendez will beat Tom Kean in New Jersey; that Jim Webb will beat George Allen in Virginia (a surprising prediction, at least to me); that Joe Lieberman will defeat Ned Lamont in Connecticut; and that Bob Corker will defeat Harold Ford in Tennessee. It will be interesting to see if there is significant movement, in any of these predictions, over the next days.

It should be possible to learn a great deal once we know about the accuracy of such predictions. The Washington Stock Exchange does not involve real money; overseas markets, some of which allow a number of relevant bets, do. Will real money be shown to matter? Will the markets do well in predicting not only who wins the Senate and the House, but also who wins particular races? Might there be some major surprises? We'll have the answers soon.

Targeted Minimum Wages: Big Box Veto and Local Minima

Mayor Daley has vetoed Chicago's Big Box Ordinance, though this chapter of local history remains open until is known whether the City Council will override the veto - and whether a new, somewhat different ordinance will be proposed. Proponents might draft a yet more refined minimum, or "living," wage bill.  The federal minimum is $5.15; the Illinois minimum is $6.50 (another example of asymmetrical preemption by federal law); the proposed Chicago minimum would have been $9.25 (plus some benefits and then increases over several years) but only for firms that are $1 billion in size and then in business properties occupying 90,000 square feet or more. My subject here is what to make of such targeted minimum wages.

Do We Overcompensate Tort Victims?: Reading Stumbling on Happiness

Over Memorial Day weekend, I read Daniel Gilbert’s new book Stumbling on Happiness. Gilbert is a Harvard psychology professor and the book isn’t a how-to—that would be a big seller—but is instead on the “science” of happiness. In econ grad school, I learned that we maximize utility subject to constraints. It is a long, long way from that to knowing how people do that or—another step—how people actually experience happiness. Gilbert’s book is an effort at situating a great deal of serious research on happiness and is well worth reading.

To tort victims and I guess we call it hedonic adaptation. Here is what Gilbert says: “Able-bodied people are willing to pay far more to avoid becoming disabled than disabled people are willing to pay to become able-bodied again because able-bodied people underestimate how happy disabled people are (p. 153).” That is backed up by references to three studies, one of which references “hedonic adaptation” in its title.

We can see quickly where we might go with this. If able-bodied jurors can’t really understand that accident victims will adapt, they will over-compensate victims. In the extreme case of full habituation, the disabled would report identical happiness levels to the abled, and no “compensation” would be required.

Chief Justice Roberts and Minimalism

By their nature, commencement addresses tend to be platitude-filled and substance-free. But Chief Justice Roberts, in his first commencement speech (at Georgetown University Law Center), recently said some quite interesting things -- and they bear on his views about the role of the Court and of the Chief Justice.

Chief Justice Roberts made a plea for more consensus within the Court -- for unanimous or near-unanimous decisions, on the ground that they promote the rule of law. But that wasn't the most interesting part. He also argued that unanimous or near-unanimous decisions lead to narrow, minimalist opinions. “The broader the agreement among the justices, the more likely it is that the decision is on the narrowest possible ground." In his view, narrow decisions tend to be best. In an aphoristic summary of the minimalist position in constitutional law, he added, “If it is not necessary to decide more to dispose of a case, in my view it is necessary not to decide more."

Consulting Foreign Law

Justice Ginsburg recently gave a speech in which she offered a qualified defense of the practice of consulting foreign law. The speech has already received exceedingly intense criticism. In fact Supreme Court references to foreign law have produced some of the most passionate criticisms of the Court in recent years. This is itself a bit of a mystery. (Maybe some people think, wrongly, that the cautious practice that Justice Ginsburg defends will mean that the United States will "lose its sovereignty"?)

Unwise Crowds and the Oscars

Almost everyone thought that Brokeback Mountain would win the Oscar for Best Picture. This belief was so widespread that relevant prediction markets -- including Tradesports and the Hollywood Stock Exchange, the latter of which went 8 for 8 last year -- accepted it too. But almost everyone, including the prediction markets, was wrong; Crash won instead. What happened? And what broader lessons might be drawn for group behavior and for prediction markets?

Deliberation Day and Political Extremism

A few months ago, David Schkade, Reid Hastie, and I helped to organize a kind of Deliberation Day in Colorado. (The events were sponsored and funded by ABC News, which should be broadcasting our experiment soon, in connection with a general discussion of political polarization in America.) Two cities were chosen: Boulder (a predominantly liberal area) and Colorado Springs (generally Bush country). About 60 citizens were brought together to explore three of the most controversial issues of the day: affirmative action, an international treaty to control global warming, and civil unions for same-sex couples.

People in Boulder deliberated with others from Boulder, and people from Colorado Springs deliberated with people from Colorado Springs. Thus people were generally sorted into groups of like-minded people.

Citizens expressed their views in three ways: anonymously, before deliberation began; in small groups, which deliberated and tried to reach verdicts; and anonymously, after deliberation concluded. Our key question was this: What would be the effect of deliberation on people's views?

Polarization: Planned and Spontaneous

One of the most interesting findings in modern social science involves group polarization -- the process by which like-minded people go to extremes. More technically, deliberating groups tend to end up in a more extreme position in line with their predeliberation tendencies. (A good discussion can be found in Roger Brown, Social Psychology: The Second Edition (1985); at the University of Chicago the phenomenon has been explored for both juries and three-judge panels.) It follows, for example, that after talking with one another, those who are excited about Judge Alito will be still more excited about him; those who are skeptical of him will be still more skeptical after internal discussions. (Of course this is a statistical regularity, not an unbroken rule.)

The Monorail Episode Redux

Seattle's lengthy flirtation with a municipal monorail came to an end in yesterday's municipal elections.  Voters who had approved pro-monorail initiatives in four separate previous elections finally ran out of patience with a public works project whose budget had ballooned far beyond initial estimates.  By the date of Tuesday's vote, Seattle had spent $200 million on the monorail without laying any track.  A bit over $60 million of this money went toward land and right-of-way acquisition, but tens of millions were spent on consultants' reports, feasibility studies, staffing, hundreds of public meetings, debt service, and, of course, legal fees.  Having shut down the monorail, Seattle voters have absorbed an enormous sunk cost, and Seattle motorists can expect to pay hundreds of dollars each in monorail taxes over the next several years so that the project can pay off its debts.  Anyone who has watched a classic Simpsons' episode might have seen this coming.

There are a number of lessons here.

The Wisdom of Groups and the Use of Experts

On September 29, 2005, Dean Saul Levmore delivered a lunchtime talk to the students entitled "The Wisdom of Groups and the Use of Experts." (Click on the link to listen.) Dean Levmore blurbed his talk as follows: "A growing literature (much of it from Chicago) shows the power of markets, votes, and internet sites to capture and then aggregate the knowledge of large numbers of participants. How do we know when to rely on this wisdom of groups?  And to the extent that this means that "experts" will become relatively less useful in the future, what does it say about the development of legal practice and institutions?" Readers of Dean Levmore's previous posts on this topic know how rich it is. Dean Levmore is a runner and we can only assume he does some of his best academic thinking while enjoying Chicago's lakefront paths. For maximum verisimilitude, we recommend downloading this talk and listening to it while jogging. For instructions on downloading, please click here.

Dean Levmore's talk was part of the Chicago's Best Ideas series, an annual series of lectures originally created in honor of the Law School's Centennial in 2002-03. Three lectures (with free lunch, of course) are given each quarter by our faculty on topics related to the intellectual life and history of the Law School.  We intend to post mp3s of many of these lectures here.

If (On Court Resignations, Nominees, and Information Markets)

If there is no serious misstep in the next couple of weeks, Samuel Alito will be confirmed as a Supreme Court Justice, and Sandra O'Connor's iffy resignation will become real. I think such "ifs" are provocative.  First, we should wonder about the future of contingent resignations.  O'Connor is sitting on the Court now, and this sort of lame duck could encourage strategic behavior (both in confirming a new Justice and in deciding cases on the Court), though a straightforward resignation, and an 8-member Court, might simply have raised other strategic possibilities.  Leaving aside the idea that the Court could have 10 or some other number of members, the contingent resignation might next be taken one step further: a Justice could resign subject to the confirmation of a successor by a certain date.  Thus, a conservative Justice might offer to resign, contingent on the sitting Republican President appointing someone and seeing that nominee confirmed.  We might squirm if we observed such a conditional offer of resignation, but it is only one step beyond where we are now.  Another would be a resignation contingent on seeing (and approving) the identity of the next nominee.  That seems almost beyond imagination.

Politically Correct

A lot of attention is being paid to a recent study, by David Horowitz, of political affiliations of faculty in law schools and schools of journalism. A major finding is that Democratic faculty are far more numerous than Republican faculty. An underlying concern is that if the overwhelming majority of faculty shares a set of political beliefs, teaching and discussion are likely to be skewed.

The concern is an entirely legitimate one, but here's another: As decades of social science research have shown, like-minded people, engaged in discussion with one another, tend to go to extremes. Suppose that one group of people believes that global warming is a serious problem; another thinks that Harriet Miers is unqualified; another believes that aggressive affirmative action policies are desirable; yet another believes that feminism has "gone too far." After the members of these groups talk to each other, they are likely to shift toward a more extreme version of their original views. More technically: Deliberating groups, after deliberation, usually adopt a more extreme position in the same direction as the median of their predeliberation views.