Category: Behavioral Law and Economics

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Cultural Cognition and High-Definition Politics

OTVbelweder-front.jpgLast week, in reaction to the President’s latest speech on Iraq, Andrew Sullivan and Kevin Drum highlighted an unexpected consequence of the rise of high-definition television. As Drum puts it:

Just as Richard Nixon “lost” the 1960 debate because, although he sounded fine on radio, he looked bad on TV, so modern politicians are going to have to learn to look good even when they’re looming over their audience on 80-inch HD plasma screens. Looking good on a scratchy 32-inch tube doesn’t cut it anymore. I predict booming business for a whole new generation of media advisers and skin care consultants.

Approving nods from the blognoscenti followed. Gosh, even guys from the Corner agreed with Sullivan and Drum. Too bad the claim is trivial.

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The Law and Economics of the Doping Scandals

428px-Depo-testosterone_200_mg_ml.jpgPeter Singer has written a usefully provocative essay, “Why Not Let Doping Close the Gene Gap,” in which he questions the conventional wisdom on steroids’ moral harmfulness. Singer points out that prohibiting doping puts those with inferior genes at a disadvantage, and that the current line between that which sports leagues prohibit and that which they do not is hard to defend. Thus, why not permit athletes to take drugs, whether or not those drugs harm them.

Singer’s arguments are (as they often are) hard to cabin. If steroids, why not artificial legs, lungs, hands, eyes. Though, if not steroids, why caffeine, IVs, Gatorade, and pickle juice. I was left feeling kind of stuck in a swamp, and so I thought, as I often try to do when confronted by a vexing legal problem, WWPD? What would Posner do?

We could ask him, but he’s a busy guy. So, let’s see if we can gin up a back-of-the-envelope look at the law and economics of sports doping.

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Why Advertise Here?

cocacolla.jpgSo we’ve decided to take some advertising. Now that we’ve disclosed what we’re going to do with the ginormous revenue stream, no doubt other ads are on the way.

Now in my view, you should absolutely click through to our advertisers’ webpages. It will help make this site better, and it doesn’t cost you much time. But I have the nagging suspicion that click-through rates for most blogs are quite low. So, why would rational businesses spend their marketing budgets here?

There is some literature on this problem. The answer seems to be something called the “exposure effect.” As John Timmer explains:

There is a long history of experiments that show that repeated exposure to a stimulus that’s barely perceptible can enhance a person’s feelings towards what’s otherwise a neutral object. These feelings can include a liking or more subjective things such as “fame, truth, duration, loudness, stimulus brightness and darkness.”

Timmer is summarizing the findings from Xiang Fanget al.’s An Examination of Different Explanations for the Mere Exposure Effect, in which the authors noted that banner ads are a great candidate for increasing brand strength. They tested the hypothesis, and found that

“repeated incidental exposures to banner ads resulted in increased perceptual fluency without increasing recognition. Consistent with past research, we found increased perceptual fluency to be accompanied with more positive evaluations of the ad but not with negative evaluations, suggestive of a positive affect.”

Thus, the article tartly notes that a “practical implication of this research is that online advertisers might be placing excessive emphasis on the click-through rates—the primary metric for measuring the effectiveness of online ads. Our results suggest that even when there is no overt sign of effectiveness, such as recognition or click through, the banner ads may still impact ad liking.” Even more interesting, from the perspective of some who might be worried about overkill, “consumers tend to have a relatively high level of tolerance for repeated exposure to banner ads—the wear-out effects of banner ads did not kick in even after 20 exposures in this experiment.”

I’ve got to say that I find this research both fascinating and frightening. On the one hand, it hooks into my total persuasion hypothesis. On another, it suggests an inefficiency in the market for online advertising dollars, which allocates money based on click through rates. Perhaps as this research is replicated, that inefficiency will dissipate. What metric for online advertising’s efficacy is on the horizon? Change in Q-Scores?

(Photo Credit: Wikipedia Commons).

The Genius of Metaphor: Obesity “Epidemic”

A fascinating recent study has found that obesity “can spread from one person to another like the flu or a fad:”

The researchers found that when one spouse became obese, the other was 37 percent more likely to do so in the next two to four years, compared to other couples. If a man became obese, his brother’s risk rose by 40 percent. The risk rose even more sharply among friends — between 57 and 171 percent, depending on whether they considered each other mutual friends.

The study reminded me of the troubled place of metaphor in contemporary reasoning. I recall reading many libertarians who dismissed the idea of an obesity “epidemic”–who felt this designation unduly alarmist and politically manipulative. An “epidemic” unfortunately calls to mind quarantines, panic, and an uncontrollable disease vector. But the ideas of “contagiousness” and “communicability” provide useful frames for thinking here, like Dawkin’s translation of natural genetics into cultural memetics. (For the legal implications, check out Balkin or Cotter.)

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How Not to Argue Against Inequality

Like his previous work, Robert Frank’s new book Falling Behind makes much of “happiness surveys” to demonstrate that once a country reaches a certain level of prosperity, one’s relative position in the economic hierarchy may do more to determine one’s happiness than one’s absolute level of buying power. As he stated in a 2001 piece coauthored with Cass Sunstein,

Such surveys have found that happiness levels within a country at a given moment are strongly positively correlated with relative position in the country’s income distribution. But the same studies find only weak long-term trends in average reported happiness levels, even for countries whose incomes have been growing steadily over time.

Sunstein and Frank argue that such studies demonstrate the importance of equality, or at least of collective action designed to prevent “arms races” for relative position.

This is perhaps the most controversial of Frank’s arguments for equality, and for good reason. As Gregory Besharov has argued, the most important question here is “what is the relevant group to which people compare themselves?” Certainly I might resent my neighbor’s purchase of a $10,000 gas grill when I can only afford an aluminum charcoal plate on a tripod. But should I really be comparing myself to him? Why not just be grateful that I have a BBQ apparatus at all?

Gregg Easterbrook’s book The Progress Paradox makes that point compellingly:

Our forebears, who worked and sacrificed tirelessly in the hopes their descendants would someday be free, comfortable, healthy and educated, might be dismayed to observe how acidly we deny we now are these things.

In short, mere subjective feelings of resentment oughtn’t count for much in the social calculus–a point Rawls made foundational in his treatment of the original position in A Theory of Justice. Many spiritual traditions counsel against resentment. Though Frank is often at pains to discuss the objective bases of the dismay of those at the bottom of the economic pyramid, those objective problems (such as suffering a higher likelihood of injury in a car crash when they can’t afford the larger cars driven by wealthier drivers) are what really matters. As I have argued elsewhere, the reverse finding–that “happy slaves” are perfectly satisfied with preventable injustices done to them–should not count in favor of a social system.

Ultimately, Frank’s subjectivism is part of a larger, and disturbing, trend in philosophy: an emphasis on brute feelings where our true concern is with the rightness, the appropriateness, of such feelings.

Is Inequality Bad in Itself?

Incometo2004.jpg

As the AMT debate heats up, there are a lot of efforts to justify the trend in income distribution represented in the chart above (which appears to only be getting more pronounced). But few economists have chronicled the rise of inequality in America as insightfully as Robert Frank.

Twenty years ago, Frank’s groundbreaking Choosing the Right Pond focused on the importance of status in everyday life, eloquently documenting the hidden injuries of class. Ten years later, in The Winner Take All Society, Frank questioned the myths of merit so often used to justify high levels of inequality. He showed how technology could exponentially increase returns to “superstars” who were marginally (or perhaps not at all) better performers than “also-rans.” Frank’s Luxury Fever chronicled the disastrous effects of “spending cascades” unleashed by the new inequality: as the near-rich strived to emulate the ever-wealthier rich, so the middle class strived to emulate the near-rich, leading to extraordinary levels of indebtedness. Each book developed the theme of “positional competition“–the wasteful race for goods that are valued to the extent others are denied them.

Between these books, Frank has also published fascinating works on moral psychology (such as Passions Within Reason and What Price the Moral High Ground), and has formalized his insights in leading economics journals. In the tradition of Albert O. Hirschman and Jon Elster, Frank is one of few leading social scientists capable of enriching economic thought with philosophical, psychological, and sociological insight.

But Frank’s work has also attracted an array of critics. . . .

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Consent Decrees and Unintended Consequences

lapd.jpgRobert Parry of the LA Daily News has written a curious column about the relationship between legal rules and police behavior.

As Parry explains:

In the late 1990s, rogue Rampart Division CRASH officers provided the Los Angeles Police Department’s legion of critics with ammunition . . . to place their vaunted enemy under the oversight of a federal court . . . All complaints against officers are now thoroughly investigated and subject to triple audits — by the LAPD Audit Bureau, the inspector general and the consent decree monitor . . . Serious uses of force are double-investigated — one administrative investigation and one criminal one . . . In short, after six years, if the LAPD was at all brutal and corrupt, shootings should be down, use of force down, complaints down, sustained complaints up and more officers prosecuted.

But, Parry asserts, shootings have increased 15%, complaints have increased, but guilty findings have decreased. Indeed, the “only statistic that appears to have tracked as the activists indicated is use of force. On a per-100-arrests basis, serious use of force is down about 20 percent.”

Parry asserts that these complicated data can be boiled down to a simple cause: “Cops are fleeing in record numbers [because of the increased supervision] . . . As a result, inexperienced cops with unseasoned supervision are using more deadly force and getting more complaints, but the force is deemed acceptable and the complaints are increasingly bogus.”

To my reading, this claim is bogus.

Attrition problems at the LAPD are old – they certainly predate the consent decree, starting as early in the mid-1980s. The problem’s severity has engendered a number of explanations, and solutions, varying from: excessive financial disclosure requirements, bad press due to the Rodney King riots, insufficient funds, a convoluted application process, bad equipment and physical plant, and even affirmative action policies. Shucks, the only explanation not offered is that LA’s famously sunny climate makes officers too happy to effectively walk the beat.

Even were attrition to be exacerbated by the consent decree, Parry still hasn’t come close to making his claim stick.

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The Last Shall Be First

diamond.jpgThe WSJ has a terrific article on “stretch” givers–people who make “donations seemingly out of proportion to the givers’ resources . . . . [which] require donors to make sacrifices or at least live more modestly than their income would allow.” Recent legal changes have helped this “movement,” as “[t]he Pension Protection Act of 2006 allows people 70½ years of age and older to make tax-free donations of up to $100,000 directly from Individual Retirement Accounts.” What’s particularly surprising about the article is that the big givers often end up doing better than stingier peers:

Arthur C. Brooks argues in his book “Who Really Cares,” which identifies the forces behind American charity, that people who give in a way that pinches are happier and, surprisingly, end up wealthier. According to Mr. Brooks’s analysis, a dollar donated to charity led to $3.75 in extra income for the donor in 2000. “They often create great discomfort among their families, but when people give there is substantial personal transformation,” says Mr. Brooks, an economist and professor of public administration at Syracuse University’s Maxwell School. “They tend to work harder,” leading to greater prosperity, and in the long run, he says, “this leads to more success, both financial and nonfinancial.”

I had worried that the “super givers” would Darwinianly be out-competed by greedier peers intent on keeping every penny “in the family.” But as one interviewee says in the article, she doesn’t “believe in inherited wealth” in part because she’s “seen it ruin so many nice families.” If that logic takes hold, perhaps we can expect to see “more aging Baby Boomers are choosing charity to add meaning to their lives — and to get a buzz that lasts longer than the kick that comes from splurging on a designer watch or expensive car.” Such a movement could well be self-reinforcing, as often the only reason people (believe they) need such luxuries is because of the competitive spending of peers. Perhaps diamond taxes can help keep the giving going.

Photo Credit: Flickr/Scottwills.

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When Does Jail Fail to Scare?

This past April, a milestone passed with little fanfare: H. Beatty Chadwick entered his thirteenth year in Pennsylvania jail. He has never been adjudicated guilty of a criminal offense, but, rather, continues to face charges of civil contempt related to a 1995 order in divorce litigation. In that proceeding, Chadwick was ordered to turn over $2.5 million in assets that the courts found he had stashed overseas. Twelve years and many appeals later, Chadwick still refuses to comply. The Third Circuit’s dispositive, and standard-setting, ruling came in 2002 in an opinion by then-judge Alito:

“The Supreme Court has never endorsed the proposition that confinement for civil contempt must cease when there is “no substantial likelihood of compliance.” On the contrary, in words that might as well have been written to describe the case now before us, the Bagwell Court stated that “[t]he paradigmatic coercive, civil contempt sanction … involves confining a contemnor indefinitely until he complies with an affirmative command such as an order ‘to pay alimony, or to surrender property ordered to be turned over to a receiver ….’ ” Bagwell, 512 U.S. at 828, 114 S.Ct. 2552 (emphasis added) (citation omitted) . . . Because the state courts have repeatedly found that Mr. Chadwick has the present ability to comply with the July 1994 state court order, we cannot disturb the state courts’ decision that there is no federal constitutional bar to Mr. Chadwick’s indefinite confinement for civil contempt so long as he retains the ability to comply with the order requiring him to pay over the money at issue. “

On one level, twelve years in jail without the full panoply of due process protections that come with a criminal trial seems unjust. Much of Chadwick’s defense rests on the claim that he doesn’t have the money: in a criminal trial, maybe the burden of proof would have made his claim more plausible. And there is a nagging feeling that he would not have seen twelve years for stealing $2.5 million, so maybe he has served his time, however it is constituted.

But, ultimately, Alito’s opinion seems right to me. (I say that even though it reversed a judgment issued by the Judge I clerked for.) If the constitutional status of a civil contempt order depended on its effect on defendants’ will, the resulting rule would produce perverse incentives. Those with greater fortitude and demonstrated willingness to continue to serve time rather than comply would be let out earlier than those who seem afraid of jail. This would promote false confidence and bravado, and reduce the general deterrent effect of contempt sanctions.

Unless circumstances change, Chadwick will die in jail to preserve an idea: even civil law must be obeyed. As Robert Cover wrote, “Legal interpretation takes place in a field of pain and death.”

Vanity Taxes vs. Worthless Competitions

vanity.jpgNew Jersey adopted a “vanity tax” in 2004, levied on “any medical procedure performed on [an] individual which is directed at improving [his/her] appearance and which does not meaningfully promote the proper function of the body or prevent or treat illness or disease.” In a critique of the tax, Michael Duel argues that it is sexist and such surgery is frequently nondiscretionary:

Women can either feel inferior, enjoy a lower quality of life, and be rejected by mainstream society, or else suffer the pain and toil of cosmetic surgery to achieve the exact same ideals society uses to reject them.

Cosmetic surgeons have also railed against the tax, unctuously declaiming that it “discriminates against women” because they buy about 86% of the procedures.

NOW President Kim Gandy has a nice response to that canard:

In general, I’m opposed to most things that impact women disproportionately, but disproportionate use isn’t a good measure if a tax is unfair or not. I can’t imagine someone arguing against having a luxury tax on yachts because more of them are bought by men.

State Senator Karen Keiser is uppping the redistributive ante in Washington state, with a plan to earmark vanity tax revenue for health insurance for poor children. As one tax policy analyst claims, “In this anti-tax climate, these user-based, selective tax proposals are more palatable than broader ones.”

Duel also attacks the vanity tax as a matter of tax policy, but I have a feeling he misses its point. . .

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