In response to Christine’s “what now?” query, I end where I started.  What world events - financial crisis, housing meltdown, deficit debacle, the looming retirement crisis, etc. – should teach us is not so much that we should teach our corporate finance classes differently but that we should teach finance (and its application to law and policy) to more people.

Imagine a world in which every citizen understood just a little bit about option pricing theory.  They would understand that options are more valuable if the underlying asset is more volatile.  They might recognize that options are everywhere.  They might therefore understand how the proliferation of options increased risk-taking.

Even among lawyers, finance is more a basic literacy problem than an advanced, sophisticated understanding one, in my opinion.  The details of the contracts will change, but the archetype of an option (asymetric payoff profiles) and the dynamics (moral hazard, etc.) that come with it won’t.  So that’s why, Torts (a la Christine) or Civil Procedure (a la Helland’s use of Easterbrook) or maybe even Con Law (wherever the big social issues of the day get talked about) ought to be the place to start. 

Enough sermonizing.  I’m off to the woods with a bunch of rising 2Ls.  We’re backpacking the Loyalsock Trail, a personal favorite.  In addition to the normal gear, everyone is required to bring an HP-12C.  Beats ghost stories.

Erik et al, thanks for having me.

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