December 2007 Newsletter

Law & Economics: Paige Marta Skiba

Because Paige Marta Skiba was gifted in math, her father, a mechanical engineer for a Detroit car manufacturer, encouraged her to major in engineering. But when Skiba took an introductory course in economics as part of her engineering program at the University of Massachusetts at Amherst, she was hooked. She soon changed her major to economics and earned her Ph.D. in the field this year at the University of California-Berkeley before joining Vanderbilt’s law faculty.

“I enjoyed the technical aspects of engineering,” Professor Skiba recalls, “but the way people behave is what really fascinates me. When I took an introductory economics class, I absolutely fell in love with it. Economics is very technical, and it provides the tools to better understand human behavior, so it’s the perfect combination for me. Really, my interests haven’t wavered since that introductory economics class. Today, my research continues to focus on the psychology of consumer choice.”

As a behavioral economist, Professor Skiba applies psychological insights to economic principles to help explain human behavior. Her current research involves ways in which self-control and procrastination affect financial decision making for people who use pawn shops and take out payday loans. “Why do people borrow on payday loans at such high interest rates, and what effect do these loans have on a person?” she asks. “These are the questions I’m trying to answer.”

Not surprisingly, Professor Skiba has found that one effect of borrowing on payday loans is a rise in personal bankruptcies. “Payday loans seem to be the straw that breaks the borrower’s back because payments are normally due every week or every other week,” she explains. “That means other debts, like credit cards or mortgages, tend to be ignored.”

Professor Skiba, who is teaching a behavioral law and economics seminar to J.D. students this fall, is a core faculty member in the Vanderbilt’s new Ph.D. Program in Law and Economics. She characterizes her appointment to the Law and Economics faculty as her “dream job.”

“I am absolutely thrilled by this program,” she says. “Behavioral law and economics is the vanguard of research.”

She will teach a behavioral law and economics seminar to the law school’s first Ph.D. class this spring, as well as continuing her research in the area of payday loans. “I’d like to examine the legal regulation of payday loans,” she says. “I hope to add an objective, scientific voice to the lively and polarized discourse on high-interest.”