The law school scam as a cognitive bias

By Razib Khan | July 1, 2012 11:57 pm

I’ve been aware of the whole “law school scam” genre for years. The basic issue is pretty straightforward: all the problems of higher education with easy loans and inflated tuition for credentialing are manifest writ large in law schools. Here are some plausible numbers, Law Grads Face Brutal Job Market:

The numbers suggest the job market for law grads is worse than previously thought. Nationwide, only 55% of the class of 2011 had full-time, long-term jobs that required a law degree nine months after graduation. The ABA defines “long-term” jobs as those that don’t have a term of less than one year.

Read the whole article, and you see how law school deans try to present weasel explanations for the damning statistics. There’s also a nice interactive graphic. Whittier College of Law has a 40% unemployment rate for the class of 2011. The bar passage rate is 66%, and the tuition is $38,000. In contrast, Columbia 2011 grads have an unemployment rate of less than 1%, with a tuition of  $51,000. Obviously the inputs matter here. Columbia professors aren’t that much better than Whittier professors. Rather, Whittier is probably taking $38,000 a year from individuals who are marginal lawyer material. They’re selling people a dream.

This where cognitive biases come in. A rational person will ask if an individual with a unimpressive LSAT and low G.P.A. and lack of genuine passion for law can be a great lawyer. Most people are quite rational…about other people. When it comes to oneself there’s a strong bias, perhaps for evolutionary reasons, to delude oneself about one’s intelligence, attractiveness, conscientiousness, etc. Despite the “market signal” of the collapse of vast swaths of the legal industry in the wake of 2008, and the real correction in the number of applicants an students, these sort of data still imply that the supply of self-deluded suckers is large enough to saturate the market.

One might point out the same issues that plague people who get law degrees also apply to graduate school. I would point out two mitigating factors. First, at least for science graduates usually there isn’t a large debt load. Second, people who gain a Ph.D. at least know something of theoretical interest. This applies even to an unemployed history Ph.D.! The main issue which one can bring up in favor of law school is the opportunity cost due to time invested for graduate school. Law school is 3 years of your life. A science Ph.D. takes on average 7 years. A humanities Ph.D. tends to take even longer. On the other hand the typical Whittier College of Law graduate has $140,000 in debt.

The takeaway is that law school in the USA is the apotheosis of the deep foundational problems with higher education. Higher education is marketed as a way to “invest in yourself.” Who doesn’t want to invest in themselves? More relevantly, who doesn’t overestimate the basic raw human capital in which they’re investing? The problem is when you start out with a low principal in regards to human capital the returns aren’t going to be that great. No one wants to admit that their own principal isn’t all that great in the first place due to natural human cognitive biases, and American society today has an ideology of self-esteem and self-worth which positively amplifies this tendency. Voila, you get a substantial proportion of the population borrowing to invest in improving human capital which they didn’t start out with in the first place. A number multiplied by ~0 is going to be ~0.

H/T Half Sigma

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Comments (27)

  1. Jay

    Something i’ve always wondered: Why don’t the people from low ranked law schools just put up a sign? Pick an area where you can do small-time high volume work. I can’t imagine that the people that help you get out of parking tickets do too poorly and their overhead can’t be all that high. Why not do that? Or market your skills to individuals and/or small businesses in a plethora of other ways? This might all seem very ignorant, I don’t know much about the field.

    Is it less about it being a terrible decision and more about people having absurd expectations? I.e. they’re thinking glamorous work for a large corporation or a big firm that works with large corporations or maybe some public sector job of real importance, and when they don’t get that they feel scammed.

    Or maybe the people that feel scammed (low GPA, low LSAT, barely passed the bar) don’t have the ambition to do the above, which is why they’re in their situation in the first place…

  2. When schools promote their programs, law and otherwise, maybe they should be compelled to include the employment stats of graduates for the previous five years. As it currently stands, it seems that a fraud is being perpetrated on higher ed students.

  3. Karl Zimmerman

    I agree with your post completely except for one point – that the difference between Whittier and Columbia is primarily due to merit. While on the whole Whittier students are probably less talented than Columbia students, I think the job placement differential has far more to do with the social signaling an Ivy League degree has compared to a non-Ivy League degree.
    You probably remember when this study came out last year, as there was much talk about it (link to abstract within, but it cannot be directly linked to for some reason. [there was no link here, so i removed href -razib] Admittedly Columbia itself is considered second-tier in this study, but given there’s been comparably little study of how recruitment works at any level, we shouldn’t assume that top-level recruitment is by its very nature a different animal than the next rung down.

  4. Charles Nydorf

    I would estimate that the prestige differential between a Columbia law degree and a Whittier College one is so great that it largely swamps other factors. A secondary factor it would be the enormous social class advantage of Columbia law students.

  5. Trevor Lawson

    A couple of comments:

    1. Up until very recently (and continuing in some cases) Law Schools were selling themselves based on post graduation employment numbers that were severely inflated. For example, the school would survey students 6 months after graduation, and if the student was working, regardless of whether or not their job was in the legal industry or even required a law degree, that student was counted as “employed” for the purpose of the survey.

    2. To the comment about why don’t unemployed law school grads hang up a sign: In many cases these people have crushing debt payments due the moment they graduate. Since most are not independently wealthy or come from money, the cost of opening their own businesses is prohibitive, and banks are reluctant to loan money to people who already have large amounts of debt already.

    Otherwise, I agree wholeheartedly with this post. There is no good reason why one should attend a second or third tier law school. The cost is so disproportionate to the potential for a positive return, self delusion is the only rational explination.

  6. little mary sunshine

    “More relevantly, who doesn’t overestimate the basic raw human capital in which they’re investing?”

    Me. Depressive realism saved me from falling into the law school trap. Much to the dismay of the chorus of well-meaning voices who say things like “You can do anything with a law degree!”

    My problem is underestimation.

  7. I think the job placement differential has far more to do with the social signaling an Ivy League degree has compared to a non-Ivy League degree.

    sure. my main point is that the cost difference of whittier vs. columbia is not proportionate with the return-on-investment of whittier vs. columbia.

  8. Karl Zimmerman


    Indeed. Either way, people are over-estimating their own chances of success. It’s more a question of to what degree they are inflating their own chances of success due to the lack of their own skill, or the lack of actual meritocracy in our culture at the highest echelons. I expect it’s a little from both column A and B.

    It’s interesting to compare how law has developed as a profession compared to say medicine. Med school is set up to highly limit the supply of doctors, and is incredibly strenuous to filter out the truly incompetent, so those left will have guaranteed jobs for life. In contrast, lawyers never developed a cartel to control their profession as doctors did. They did get it under control after a fashion, as law school used to be something you could get by mail order with only a high school degree in the 19th century, but it has suffered the same “professionalism drift” that is endemic in modern culture. Still, there are few barriers to entry in theory, which means the number of law-degree holders has always been higher than the amount the market needs. It’s particularly bad now, because the instinct of many students in a bad economy is to “seek more education,” and this is around the time that those who went to law school when the economy got really bad have graduated.

    People taking a chance and failing is not so much a bad thing though – it is after all, what entrepreneurship is about, and why we (for better or worse) allow people to incorporate their business finances separate from their personal ones. The issue is more I think the degree to which law school is more expensive than it needs to be. Most lawyers I have spoken to have admitted that one year of a law degree could probably be dropped entirely with no loss, as the required classes outside of your eventual chosen field of law are ultimately useless in your professional life. That would immediately cut the price by 33%. Beyond this, it’s difficult to say why the actual costs of running a law school would be higher than any other academic program on an annualized basis. Yes, presumably the professors are a bit better compensated, but on the other hand, unlike undergraduate education there isn’t a real need for residential facilities.

    Ultimately, it comes down to our screwy higher education system in America. I’d prefer that we treated higher education more like Europe, where it’s a social good supported regardless of economic impact to those students smart enough to attend. Instead, we have a free market on the consumer side, but with demand totally uncoupled from cost due to government-backed student loans. Which means, basically, a lot of people get swindled very, very badly.

  9. Jerome

    If educational institutions were required to cosign their students’ loans, we would see a substantial change in admissions policies. Which means that the educated, sophisticated and knowledgeable people who run the admissions departments are fleecing the naive, ignorant young people off of whom they make their living. Used car salesmen have a much higher standard of ethical behavior.

  10. A few observations.

    * The labor market for graduating lawyers and young associate attorneys has never been worst since law schools were invented in the 1870s than it has been in 2008-2012. In the wake of the crisis, several major law firms have gone under and something on the order of 12,000 big law firm associations have been laid off. Many had hiring freezes, pay freezes, and pay cuts as well. Big firms cut lots of equity partners to non-equity partners, etc.

    * Law schools need a lot of lead time to change course (tenured professors, four years from law school application to bar admission, etc.), and a very long period of criticism of their practices usually didn’t bear out in fact until the last few years.

    * Law schools felt justified increasing tuition as lawyer pay grew, and a lot of the increase in tuition has gone to reduce the subsidy that law schools receive from the university endowment as a whole to the benefit of less career certain fields, on the theory that they didn’t need it, rather than to increase law school spending within law schools.

    * It is very important to realize that while LSATs and GPA are good predictors of bar passage and law school completion that they are much poorer predictors of success outside of big law firm practice once admitted to the bar. Many people who are great at law school are only middlling at practicing law. Lots of people who have mediocre grades and LSATs and just barely pass the bar on the second or third try become very successful once they are practicing lawyers in small and medium sized law firms or public service. Law schools overweigh IQ and underweigh key personality traits (like extraversion and conscientiousness) relative to what practicing in the profession actually requires.

    * This doesn’t mean that someone who is admitted to law school only the drop out in the face of academic failure, or who graduates and never gets admitted to practice has been done any favors. If you don’t have what it takes to pass the bar exam, you’ve made a catastrophically bad economic mistake and saddled yourself with student loans that aren’t discharagable in bankruptcy that you may never be able to repay.

    * Marginal students who get their ticket (often because they are conscientious) gain enormously from being admitted to the bar – even in today’s tough labor market – relative to any alternative available to that mediocre student. This is why people who have the money routinely send their academically marginal kids to law school. These particular individuals couldn’t have been engineers or scientists or computer experts. They couldn’t have gotten hired at top consulting firms or Big Four accounting firms or investment banks. They were marginal, non-quantitative liberal arts college grads, looking a management trainee positions in retail, or pure commission real estate and insurance sales when both are anemic, not the kind of alternatives available to top tier law students, maybe some of them had a shot at becoming cops.

    * As bad as the labor market for new lawyers may be, even in this darkest of hours for new lawyers, the market for new humanities PhDs seeking to do academic work, even at the best of times, is much worse. You do not see hundreds of applicants for every bottom of the barrel attorney opening in nowhereville the way you do for humanities PhDs.

    * The schools with the most generous admissions policies often do so out of a specific institutional mission to do so (e.g. many are historically black law schools or were specifically founded to encourage low income people to become lawyers).

  11. “Why don’t the people from low ranked law schools just put up a sign?”

    Been there, done that (I graduated with honors from a high ranked law school, but was laid off two weeks after passing the bar due to the corporate merger of the dominant client). Suffice it to say that it is very, very hard to make a living at first that way and impossible to service you loans. In general, you’re right that it makes sense, but the school of hard knocks is not a great way to learn how to manage a law firm. Unless you had parents who did it or have worked as an office manager in a firm for a long term, or has a prior career where you ran a small business, starvation will loom large. New lawyers don’t have the skill set to make tolerable money from self-employment from their law school education alone.

  12. karasukanzaemon

    ohwilleke is absolutely correct as regards hanging out one’s shingle: law school is not set up to teach law students how to be lawyers as much as it is set up to teach law students how to be associates in existing firms (whereupon they can hopefully learn how to practice law over the course of their apprenticeship). Low end law schools don’t do any better at this as they specialize in teaching their students merely how to pass the bar exam.

  13. BoredJD

    Allow me to respond to some of these posts. I’m a recent law school graduate.

    Karl Zimmerman- You are right that Columbia students are getting many more jobs, and much better paying jobs, than Whittier grads due to a sort of signaling. However, it is not “social signaling,” at least not directly. The days of the blue bloods are over. What a top ranked law signals is a certain kind of basic Law IQ desired by large law firms. Top 10 law schools like Columbia, NYU, Penn, Harvard, mostly admit students with around 3.7 GPAs and top 1% LSAT scores. While these numbers do not correlate particularly well with either law school grades or abilities as a lawyer, they do signal a high general IQ and a willingness to work pretty hard- the qualities desired by large law firms in their entry-level employees. Other “institutional” hiring organizations- or those that have a special hiring process for entry-level recent law grads, also use school rank as proxies- the largest two are federal government honors attorney programs and federal clerkships.

    As Justice Antonin Scalia famously said about why he hired most of his clerks from Harvard and Yale, despite these schools having very easy grade curves and theoretical, impractical courses taught by people who in all likelihood had never practiced law for very long- “you can’t turn a silk purse into a sow’s ear.” Biglaw firms desire top ranked schools grads for a similar reason- they provide the best clay, and firms can tell their clients they recruit associates out of schools with the highest achieving law applicants. This is very important when the client is not going to meet the lesser cogs in the machine.

    Now whether it is the more privileged social class of Columbia students that helps them get higher LSAT scores and better GPAs in the first place is another question.

    Jay Says- There are a number of practical barriers to going solo right out.

    First, the “break-even” point for a young lawyer is actually higher than people who graduated a few years ago since tuition has been rising so quickly. You would think a recent graduate would be able to charge LOWER rates than experienced counsel, but if you factor in student loans as a fixed cost, they may have to charge much higher fees.

    Second, bar requirements restrict lawyer mobility. You cannot simply up and relocate to another state and start a practice immediately- you need to wait a year to take the bar and get sworn in. There are other requirements too, some states require lawyers to have a physical plant, no virtual offices allowed. Unless the lawyer wants to be inviting clients to their home or meeting with them and sharing confidential info in public places, they need an office.

    Third, the startup costs are substantial. Not only do you need at least a year of operating expenses, office supplies, rent, malpractice insurance, fees, research costs, you also need an ad budget in order to get clients, since the market for small law/people law is so saturated with experienced practitioners. Students loans make getting a small business loan difficult.

    Fourth, many clients simply cannot pay even break-even rates. Legalzoom and other automatic drafting services allow clients to do their own work for much cheaper than the novice lawyer would need to turn even a small profit. Although there is more demand for legal services than there are suppliers, the costs of running your own practice are so high that lawyers cannot charge enough to take on many clients who need legal services.

  14. BoredJD

    I’d also like to point out two specific biases that operate in the legal education system especially:

    Confirmation bias: The common wisdom is that 1) higher education is a good investment that will return it’s initial cost many times over, 2) lawyers are highly-paid, well-respected professionals, 3) the law degree is versatile and many non-legal employers want to hire you. A common refrain we hear is that prospective law students are “on notice,” as the amount of negative press grows and grows. Assuming prospective law students even see all the negative press, it still may not be enough to overcome the positive marketing materials and press from the law schools.

    Optimism bias: An obvious one. When asked if they though they would score a good job after graduation, 81% of law students said they would. 18% of those students said that the most of their classmates would do so. This flies in the face of data from USNWR which shows that most students attending a given school fit into a very narrow range of LSAT/GPA scores. Although they should expect to rank no higher than median, prospective students come up with all sorts of rationalizations- “well, I didn’t try very hard in college but I’m really going to bust ass in law school” “I’ve been out of school for a year or two and am more mature than my future classmates who came straight from college” “I’m really good at reading and writing and arguing so I should do well in law school!”

  15. Tern

    I think that quite a bit of this is the optimism bias – but a better name for it would be pride and arrogance. And law schools, by their very nature, select for prideful suckers.

    Most new law students have come from undergraduate careers where they were among the best and brightest in their class – the big fish in the small pond, as it were. They are used to this. And the idea that they are going into an environment where everybody was the best and brightest in their undergraduate, and that someone has to be in bottom half for there to be a top half, escapes them.

    Of course they realize that not everyone is going to do well – that some people will be in the bottom, that some will never practice law, and that some people will incur outrageous and virtually unpayable student loans.

    They just think that someone is someone else. In other words, they are the suckers, and the law schools are taking advantage of them. It’s one thing if it’s P.T. Barnum doing it for the price of an admission ticket; it’s another thing when institutes of higher education are doing it for the price of their students futures.

  16. Syon

    Razib:”One might point out the same issues that plague people who get law degrees also apply to graduate school. I would point out two mitigating factors. First, at least for science graduates usually there isn’t a large debt load.”

    RE: debt load,

    I think that this is also true of people in the humanities as well. I went to a top-ranking public university for my BA (Berkeley) on a full scholarship. At present, I’m working on a humanities PHD at a private university. I pay no tuition and receive around 18,000 a year working as a TA. So, when I graduate, I will have no student debt whatsoever. Now, I don’t know how uncommon my undergraduate experience was, but I do know that all of my fellow graduate students at my university are receiving the same deal.

  17. Charles Nydorf

    Levi-Strauss, who went to law school before becoming an anthropologist, cited a French saying about law “It’s a profession that can lead anywhere provided you leave it.”

  18. BoredJD

    For a nice anecdotal example of optimism bias at work in one student’s decision-making process, see this thread on a law school forum:

    Quote: “S’all good. After double checking with the website and crunching the numbers, it appears that a 50% will actually keep one with a full ride – my mistake there. I am confident I could do top 10% here, so that is not really the issue.”

    Another neat trick some law schools pull- they will award scholarship money contingent on a 3.0 or some other GPA. The student thinks “of course, that’s easy, I had a 3.6 in [insert liberal arts BA with no grading curve here]. They don’t look up the grade curve and realize that the school’s curve is at a 2.6. They lose their scholarship and social conditioning against dropout and failures kicks in to keep them at school for two more years where they are paying full tuition.

    Some lower ranked law schools have been known to section-stack- have one “section” disproportionately filled with scholarship students. “Sections” are basically groups that take all the same classes and are curved against each other. Section-stacking ensures that, if 60/100 students in the same section all have scholarships and the requirement is top 30%, at least half and probably more of the students will lose their scholarships.

  19. Karl Zimmerman

    17 –

    You are correct – generally speaking in “academic track” degrees (particularly doctorates, but sometimes masters as well), one does not enroll unless they get funding, which includes a full assistantship and tuition waiver. That said, many people do take the cost-of-living loans, which results in some student debt. Really though, it’s “professional degrees” where students almost always pay out of pocket.

    19 –

    Why the hell would a law school do that? Presumably those lost scholarships then go to the lower-scoring sections, meaning students of lower merit get the money instead. Is it a backhanded effort at Affirmative Action?

  20. BoredJD

    20- Of course not. The lost scholarship amounts go back into the law school’s coffers. The student pays full tuition for the next two years unless they drop out. It is a tactic to attract students with high LSAT scores and GPAs (thus propping up the school’s USNWR ranking) while being able to claw back some of that money later, taking advantage of the social stigma against dropping out.

    If you give 60 students full-tuition scholarships at 40K per year (2.4 mil per year/7.2 per 3 year class), and stack sections and set stipulations so you know at least 20 students will lose the scholarship their first year, you have saved your school 1.6 million over the life of that class (20 * 40K *2). You might get more if students lose their scholarships their second year OR more students in that section underperform the stipulation.

    Law schools do not offer scholarships once you have signed up- in fact you can expect between 5-10% or more tuition increases per year.

    Some law schools do “tiered” stipulations- so a 3.5 will keep the full amount and a 3.0 will keep half. A few do allow students to regain the scholarship in their third year with increased performance during their second year (although the school still keeps the tuition from the second year).

    If anyone can name another undergraduate or graduate program that uses tactics like this, it would be much appreciated.

  21. Chris_T_T

    Alas, law is still viewed in American culture as the gateway to earning lots of money. Combine this with the view that more education is always a good investment, and law schools hardly have to expend any effort convincing people to pay.

  22. The difference between Whittier and Columbia is primarily due to merit. While on the whole Whittier students are probably less talented than Columbia students, I think the job placement differential has far more to do with the social signaling an Ivy League degree has compared to a non-Ivy League degree.

    Yet, as Razib said, the costs of the two schools are roughly the same, i.e., astronomical. A rational person would recognize what you said, that the “social signaling” of an Ivy League degree will trump the Third Tier Toilet school every time despite the similar cost. Thus, said rational person would (should) decide not to attend law school if they only got into Whittier, or to study harder for the LSAT and re-apply to an Ivy.

    Yet the Third and Fourth tier schools are flooded with new students every year. So, my conclusion is that these schools are not filled with slightly less caliber Yale admits but with irrational unfortunates blinded by their own cognitive biases. I doubt there’s a study to back this up, but I’d imagine that students who got into a Stanford or Ivy would not have said, “Well, screw it, let’s go to Whittier” if they’d not been admitted . . . just like I would not have gone to a third tier, unfunded doctoral program had I not been admitted to my top choices (with apologies for tooting my own horn).

    In other words, the fact that a person would pay 30k/yr for a third or fourth tier law degree is evidence that the person does not make good life choices. Although I suppose, as I type this conclusion, that bad reasoning skills in life does not necessarily translate to bad reasoning skills in a courtroom.

  23. William Larson

    Mr. Kahn–
    I appreciated your post–thank you. One thing I would like to know, however, fully to appreciate your Whittier/Columbia comparison, is the percentage of Columbia law grads who pass the bar (vis-a-vis the 66% at Whittier). Do you have that number? And do the two schools use the same criteria for “employed”?

  24. Molly

    Dr. Khan –

    as a sibling to 2 J.D.’s, only 1 of whom is employed as a lawyer, and possessing a science Ph.D. myself, I agree with many of your points. I quibble with this statement, however – “First, at least for science graduates usually there isn’t a large debt load.” True, there is not a large debt load for the individual Ph.D. holder, but many biomedical Ph.D.s receive federal funding through grants, fellowships etc., and given that the federal government is currently deficit spending, it seems to be that there IS a large debt load – just not owned by the actual Ph.D. holder, but rather the U.S. taxpayers. Current NIH paylines will necessarily diminish the number of applicants graduate schools can fund, and given the glut of bioscience Ph.D.s, this correction is a good thing.

  25. 2L

    Great article, just wanted to add some other factors that create a cognitive bias for prospective JD’s.

    First, the employment numbers fail to properly express how legal salaries are bimodal. Typically a law school will express the salaries of its employed graduates as an average, but that doesn’t reflect reality. After the “big law” jobs that pay around $120-160k depending on the market there is a huge drop-off in entry-level JD-required salaries to the $40-80k range (and the few jobs at the $80k level are typically harder to get than the big law jobs). People go in assuming that even if they don’t do well enough to get the jobs at the top range they will find something in the $80-120k range, but legal salaries are more all or nothing than that. Even if they find employment they are stuck with massive loans and a salary that won’t allow them to pay it off.

    Second, prospective students fail to take into account how curves work. Unlike undergrad (especially in liberal arts courses) your grade was determined by your personal performance. If you did A-quality work, you got an A. Not so in law school. The curve makes it nearly impossible to predict and/or control your grades (except for a few people on either end). If your professor gives a really easy exam, even if you do objectively well, you might not get the grade you “deserve” since others did better. Furthermore, since law school admissions work in a way that groups similarly-credentialed students with each other, most people being graded on that curve come in with relatively similar raw ability to perform well. Thus, most law school curves push people into the median range. There are outliers on either side, but most people end up with fairly indistinguishable grades. This is dangerous for the vast majority of law students since outside maybe the top 6-14 schools, median is not a safe place to be employment-wise. People go into law school thinking that they will get a job if they do reasonably well, but outside the top schools, they have to basically be an outlier on a tough curve, which is impossible to control for for most students. Of course some students will prove naturally gifted at law school and do extremely well, but many others at the top are there partially due to luck and the vagaries of the curve.

  26. Addi

    The lag is an important factor to take into account. Current law grads made the decision to goto law school about 4.5 years before they graduated, and make their decisions based on marked predictions with a degree of uncertainty. Three things have happened in professional education, (save medical schools) 1. the professionalization boom of the mid2000s resulted in making it cheap to open new professional schools to meet the booming demand for specialty-educated professionals. 2. Profession boom weakened the roles of paraprofessionals like paralegals and decreased their rolls, making the profession top heavy. 3. the bust of the market in 2008 crunched the entire job market. These factors were unpredictable back in 2007-2008 when the current graduates made the decision to goto law school.

    It’s going to take time for the education market to balance itself with the market demand. In the meantime, the careers of a generation of professionals are being squashed. This will come to hurt the profession later down the road as aging professionals retire and find a dearth of experienced professionals that didn’t make it through this bottleneck.


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About Razib Khan

I have degrees in biology and biochemistry, a passion for genetics, history, and philosophy, and shrimp is my favorite food. In relation to nationality I'm a American Northwesterner, in politics I'm a reactionary, and as for religion I have none (I'm an atheist). If you want to know more, see the links at


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