Law & Economics Center

Searle Civil Justice Institute

The Law & Economics Center established the Searle Civil Justice Institute to provide rigorous analysis and balanced research on the impact of laws and regulations on the nation’s free enterprise system. Working with leading academics from George Mason University and other well-respected institutions, the SCJI’s research products are validated through a meticulous peer review process. The activities of the SCJI are made possible through a generous grant from The Searle Freedom Trust, a foundation established in 1998 to foster research and education on public policy issues that affect individual freedom and economic liberty.

Research Methodology
Using both empirical and qualitative research models, the SCJI addresses a full range of policy topics using diverse research methodologies and timeframes.

Large-scale, peer-reviewed empirical projects are conducted by task forces made up of academic experts and members of SCJI’s internal research team. This collaborative effort allows SCJI to benefit from the diverse perspectives of many subject matter experts while controlling quality and completion time. These empirical initiatives involve collecting substantial amounts of data, statistics and econometric analyses, and producing an SCJI public policy report. Every report is subject to a balanced peer review process in accordance with SCJI research protocol and is reviewed by the SCJI Board of Overseers. This rigorous process helps ensure that hard facts are part of the ongoing national debates on legal and regulatory policies.

The SCJI’s qualitative law and economics studies are organized through research roundtables and conferences that infuse active public policy discussions with critical thinking and research from the nation’s leading academics. The SCJI commissions original, high-quality law and economics research papers that have the potential to advance the understanding of key issues and drive actionable policy solutions. All papers are vetted at an SCJI public policy event attended by the authors, policymakers, practicing lawyers, judges, leading academics and other interested participants who read all the papers in advance and come prepared to offer constructive feedback. The papers are posted online and are published in symposia issues of law reviews.

Current Initiatives
At any given time, the SCJI is engaged in multiple research initiatives, typically resulting in the release of reports related to two or three projects each year. Four projects are currently in progress:

The Foreign Corrupt Practices Act (FCPA) of 1977 was enacted in response to several high-profile foreign bribery allegations and the post-Watergate era’s heightened sensitivity to the appearance of corruption. However, little enforcement action under the Act was taken until the mid-2000s. This marked increase in activity prompted several observers to offer competing theories to explain the reasons behind the spike.

A two-phase study by the SCJI’s Task Force on Foreign Corrupt Practices Act Enforcement looked at how the FCPA is used, its effect and the incentives it creates. The methodology included gathering data on case trends, conducting a first-pass examination to test varying hypotheses to explain the time series, and conducting formalized model and statistical testing of the hypotheses.  The preliminary report for the first phase will be released on Friday, September 14, 2012.

Task Force Members:

  • Jonathan Karpoff, Ph.D., Washington Mutual Endowed Chair in Innovation and Professor of Finance, University of Washington
  • Scott Lee, Ph.D., Professor of Finance, Texas A&M University
  • Gerald Martin, Ph.D., Associate Professor, American University
  • James Cooper, J.D., Ph.D., Director, Research and Policy, Law & Economics Center, George Mason University

The Civil Litigation and Discovery Reform initiative is studying the effects of civil litigation rules on economic efficiency and how the rules of discovery under established civil procedure affect business incentives and consumer welfare.

With the Federal Rules of Civil Procedure providing the context for analysis, this project looks at the welfare and efficiency effects of various cost-allocation rules in the discovery process. By focusing on competing discovery cost-allocation regimes, the researchers will determine how relative costs within the civil litigation system affect its overall effectiveness.

By using cutting-edge methods in experimental economics, the SCJI’s Task Force on Economic Efficiency, Civil Litigation, and Discovery Reform is producing original, human-generated data across a variety of demographics and education levels that simulate real-life litigation scenarios.

Task Force Members:

  • Kevin McCabe, Ph.D., Professor of Economics, Law, and Neuroscience, George Mason University
  • Bruce Kobayashi, Ph.D., Professor of Law, George Mason University
  • Peter Tweig, Graduate Research Assistant, Center for the Study of Neuroeconomics, George Mason University

Measuring the Effects of Twombly and Iqbal is a study of the ambiguous theoretical effects of the recent Supreme Court decisions that modified the extant pleading standard established more than 50 years ago. While the new standard may reduce frivolous lawsuits, it may also reduce access to the courts for meritorious cases. Using a large database of cases created for this project, this empirical study will determine which effect dominates.

The holding in Twombly (2007), later expanded in Iqbal (2009), provides a useful experiment to test the effect of pleading standards on access, use and outcomes in the civil justice system. While the experts engaged in this debate agree these cases are a departure from precedent, settling the question of how and to what extent they have an impact requires careful examination of case records.

Lead Researcher:

  • Jonah Gelbach, Ph.D., Senior Research Fellow, Department of Economics, Yale University

The FDA Advisory Committee Conflicts of Interest initiative is the first attempt to comprehensively determine the existence of voting bias among the independent experts that serve on FDA advisory committees and to provide a statistical analysis of the direction and extent of biases that are identified.

The FDA’s drug approval determinations are made by advisory committees comprised of a limited pool of technical experts from industry, academia and consumer groups. Often these experts have various financial interests tied to industry participants that raise potential conflicts with regard to their voting behavior. However, the actual existence, scope and direction of potential biases are largely based on conjecture.

This large-scale, data-driven project will determine whether financial conflicts among this limited pool of experts can be demonstrably linked to biases in committee decisions.

If the study finds such biased voting exists, it will then examine whether it results in over-approval of drugs that otherwise would not reach the market, or whether it leads to under-approval of otherwise safe drugs. 

Lead Researcher:

  • Joseph Golec, Ph.D., Associate Professor of Finance, University of Connecticut

Completed Research Projects
Four recently completed SCJI research studies, which examined a variety of timely topics affecting the free enterprise system, are available to view online. These include:

Third-Party Financing of Litigation (October/November 2011)
To advance the state of knowledge on the issue of third-party financing of litigation, 11 original papers were commissioned and presented by their authors at conferences in New York and Brussels. The papers provide international comparisons of financing regimes, new original data, and novel theoretical models of the incentives of allowing or disallowing such approaches to funding court access. To read more about the project and download the papers, click here.

State Consumer Protection Acts & Consumer Welfare (September 2011)
This large-scale, empirical analysis examines the competing hypotheses concerning the consumer welfare impact of state consumer protection acts: do they correct market failures or instead increase costs through litigation and limiting competition? The results of this study will help shape future discussion on whether consumers actually benefit from consumer protection statutes.

Task Force Members:

  • Henry Butler, J.D., Ph.D., Foundation Professor of Law and Executive Director of the Law & Economics Center, George Mason University
  • Eric Helland, Ph.D., Robert J. Lowe Professor of Economics, Claremont McKenna College
  • Joshua Wright, J.D., Ph.D., Professor of Law, George Mason University

To learn more about the project and download the study, click here.

Litigation vs. Regulation  (November 2010)
Five original research papers, commissioned to examine the effects of litigation versus regulatory approaches on market behavior and the impact of ill-defined legal and regulatory overlaps, were presented and vetted at an SCJI public policy roundtable. To view videos of interviews with project participants and download research papers, click here.

Is Consumer Arbitration Fair?  (March 2009)
Using a sample of over 300 consumer arbitrations closed by award before the American Arbitration Association, the SCJI’s Consumer Arbitration Task Force released a comprehensive empirical examination of arbitration outcomes. The task force found the arbitrators were not unfairly biased against consumers, nor was there compelling evidence of a “repeat customer” effect. To download the study, click here.

Task Force Members:

  • Christopher Drahozel, J.D., John M. Rounds Professor of Law and Associate Dean, University of Kansas
  • Samantha Zyontz, Senior Research Associate, Law & Economics Center, George Mason University

 

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