A Heritage Foundation training academy designed to indoctrinate law clerks with conservative legal theories got a lot of attention last week, leading Heritage to shutter the program. Legal experts condemned the dubious ethics of an ideological think tank openly influencing the judiciary by molding the youngest minds in the system.

The critics were right to warn of the consequences of the indoctrination, because it’s been tried before — not just on law clerks, but on judges themselves. And it worked.

In 1976, the Law and Economics Center, a corporate-funded academic organization now housed at George Mason University, began holding an intensive, all-expenses-paid, two- to three-week economics seminar for federal judges in Plantation Island, Florida. Organized by conservative economist Henry Manne, the Economics Institute for Federal Judges featured some of America’s most renowned professors teaching classical economic theories that could be applied to the courtroom. Though controversial in its day, the seminar recurred until 1999, and at its peak, over 40 percent of all federal judges had attended.

According to a new working paper by three researchers, this indoctrination into law and economics — which emphasized cost-benefit analysis and economic efficiency; warned of the downsides of union protections and environmental regulations; and found benefits to deterrence — had a quantifiable effect on future rulings. Judges who attended Manne’s seminars rendered more conservative verdicts in economics cases. They were more likely to rule against the National Labor Relations Board or the Environmental Protection Agency. They employed more economics language in their rulings, according to a linguistic analysis. And they imposed harsher prison sentences, particularly after receiving more discretion to set terms in 2005.

Moreover, the seminar attendees had a decided effect on their fellow judges who did not attend the program. After serving on a three-judge panel with an institute-trained judge, judges who did not attend the economics institute would increase their use of economics language as well. So, inserting law and economics training into part of the judicial bloodstream meant that it would eventually course through the entire judiciary.

“It’s remarkable how sharp the change is,” said Suresh Naidu, an economics professor at Columbia University and a co-author of the paper. “It winds up spilling over into criminal cases, even though law and economics is mostly regulatory. It’s like a virus.”

The Economics Institute for Federal Judges crammed a semester of economics coursework into a short period, with classes running six days a week, often for as many as 13 hours a day. It almost immediately drew critical scrutiny.

A 1980 report from the Washington Post, titled “Big Corporations Bankroll Seminars For U.S. Judges,” explains that 105 corporate contributors — among them Alcoa, AT&T, Chase Manhattan Bank, Ford, Exxon, IBM, ITT, Merrill Lynch, Pfizer, Raytheon, Shell, and U.S. Steel — provided funding for the Law and Economics Center, which put on the program. The same corporations habitually engaged in litigation before the federal courts over which program-attending judges presided. Judges quoted in the Washington Post story mostly said they were unaware of the corporate sponsorship, adding that it wouldn’t affect their decisions anyway.

Critics called the seminars propaganda sessions, designed to give the pro-business side of the argument. But Manne insisted that they merely helped acquaint judges with complex economic issues they had to face on the federal bench. And, he alleged, they were scrupulously nonpartisan. Both right-leaning professors, like Milton Friedman, and left-leaning professors, like Paul Samuelson, gave lectures.

Naidu and his co-authors, Elliott Ash of the University of Warwick and Daniel L. Chen of the Toulouse School of Economics, believe this patina of nonpartisanship hid a very clear agenda, as laid out in training materials and internal documents. Manne, the lead organizer, was an unabashed conservative who once wrote, “It is ironic that the word ‘profit’ has become a swear word, since profit is the only decent measure of the real public benefit provided by business.” The Law and Economics Center’s annual reports described the courses as an “objective view of economics” which just so happened to have “favorable implications for private property and free markets.”

Conservative instructors taught the major lessons on immigration, crime, antitrust, environmental, and family law. And the participation of liberals like Samuelson was always more generalist in nature. “Manne was in charge of the curriculum,” wrote George Priest of Yale Law School in a 1999 retrospective of the program. “A liberal economist teaching supply and demand is hardly dangerous. A liberal economist becomes dangerous when addressing how to improve the world with unlimited spending of other citizens’ tax monies. That, Henry Manne would never allow.”

Even liberal judges found the trainings useful. “The instruction was far more intense than the Florida sun,” wrote Supreme Court Justice Ruth Bader Ginsburg in a letter dated March 1, 1999. “For lifting the veil on such mysteries as regression analyses, and for advancing both learning and collegial relationships among federal judges across the country, my enduring appreciation.”

Naidu attributes the success of the law and economics framework to its seeming objectivity. “Lots of domains of the law were a hot mess,” Naidu said. “Law and economics put a structure on what the law is and what it should be. Particularly in complicated antitrust cases or regulatory cases, the idea that there’s a core principle that you can organize was really powerful.”

However, law and economics was not a neutral framework. Another quote, from District Court Judge David Carter, illustrates this. “I regard myself as a social progressive and all the economists in attendance, from my perspective, had Neanderthal views on race and social policy,” he said. “The basic lesson I learned … is that social good comes at a price, a social and economic cost. I had never thought that through before being exposed to Henry’s teachings. …. [It] has led me to measure the cost of the social good being furthered against the gain to be achieved.”

That perspective lingered when the judges went back to their cases.

After obtaining the full attendance records from George Mason University, Naidu and his co-authors cross-referenced them against 380,000 circuit court cases and 1 million criminal sentencing decisions in the district courts. And the data jumped out.

tint-Figure-6-1540231867

Notes: “Event study effects on voting against government agency on labor and environmental issues, relative to year before attendance. Regressions include judge and circuit-year fixed effects. Right panel also includes elastic-net-selected controls. Error spikes give 95% confidence intervals.”

Chart: "Ideas Have Consequences: The Impact of Law and Economics on American Justice" by Elliott Ash, Daniel L. Chen, and Suresh Naidu

“Manne judges exhibit a sharp and sudden increase in propensity to vote against federal labor law and environmental regulatory agencies,” the authors write, showing a statistically significant change of about 5 percentage points. “This suggests that the program changed the direction of their votes, not simply giving them tools to actualize their votes.”

The effect held for most economics-related cases, like regulation or antitrust. For years afterward, judges ruled in a more conservative direction after taking the courses. According to the authors’ figures, 28-42 percent of the rise in judicial conservatism can be attributed just to Manne’s training program. Using an index of common phrases from law and economics — like “externalities,” “optimal efficiency,” and “economic efficiency” — the paper also found that program graduates employed more economics-related language in their written opinions after taking the courses.

tint-Figure-8-1540231868

Notes: “Left panel: Event study effect on Ellickson Law-and-Economics Index. Right panel: Event study effect of case similarity to Ellickson word vectors. Regressions include judge and circuit-year fixed effects. Sample limited to economics cases (regulation and labor) and authors. Observations are weighted to treat judge-years equally. Error spikes give 95% confidence intervals.”

Chart: "Ideas Have Consequences: The Impact of Law and Economics on American Justice" by Elliott Ash, Daniel L. Chen, and Suresh Naidu

What the authors found most surprising was the effect on one non-economics-related area: criminal sentencing. A law and economics framework promotes theories of incentives, which lends more credence to deterrent effects like additional punishment for crimes than rehabilitation. And judges who took the seminars increased sentence lengths by 7 percent on average.

This jumped even more after the 2005 ruling in United States v. Booker, which freed judges from the mandatory constraints of the U.S. Sentencing Guidelines. Even though Manne’s program ended six years earlier, judges who had taken the program appeared to give 20 percent longer sentences, equivalent to 10 additional months in prison. Racial disparities were also larger for judges trained in the program. The harshness was concentrated mostly in immigration crimes; Friedman advocated drug legalization in the seminars, and therefore drug crimes did not elicit increased sentencing from judges who went through Manne’s program.

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Notes: “Log of 1+ sentence length in days, plotted by year, separately for Manne judges (red) and non-Manne judges (blue). Right panel includes elastic-net-selected biographical controls, interacted with years, and crime type controls. Spikes give 95% confidence intervals.”

Chart: "Ideas Have Consequences: The Impact of Law and Economics on American Justice" by Elliott Ash, Daniel L. Chen, and Suresh Naidu

The random selection of three-judge panels in circuit court cases brought Manne-trained and non-Manne-trained judges into contact with one another. This meant the study’s authors could also test spillover effects. Using linguistic analysis, they showed that key phrases like “capital,” “deterrence,” and “law and economics” crept into non-Manne-trained judges’ opinions after they served on panels with Manne-trained judges.

It’s hard to say whether the effect of a program that ended in 1999 still lingers to this day. But in antitrust, the law and economics movement’s perspective has completely captured the federal judiciary, with nearly all cases regarding mergers or anti-competitive behavior decided on the basis of consumer welfare rather than — as the law prescribes — market power. That’s despite numerous economic studies today showing the debilitating effects of market concentration.

In other words, law and economics had a particular anti-regulatory, pro-monopoly mindset that doesn’t necessarily align with any neutral view of markets as we currently understand it. “If you did law and economics in 2018 instead of the 1970s, you would get a different policy view,” said Naidu. “Economics has moved on, but law and economics in the judiciary got fossilized into that particular thing.”

It may be fossilized, but dinosaurs are still roaming the courts, substantially affecting rulings coming out of the federal judiciary. The seminars were among the quietest but most powerful means to influence political outcomes in recent memory. By introducing to federal judges what appeared to be a neutral method to organize and understand the law, Manne was able to significantly shift the way law is now practiced.

As the paper concludes: “If you teach judges that markets work, they deregulate government.”