So much for agency expertise.

Joshua D. Wright (George Mason University School of Law) and Angela M. Diveley have posted on RegBlog a synopsis of their recent unpublished paper, Do Expert Agencies Outperform Generalist Judges? Some Preliminary Evidence from the Federal Trade Commission.

The authors compare the appeal rates from antitrust decisions of federal district court judges and the Federal Trade Commission, and find that the FTC’s decisions “are more likely to be appealed (and reversed) than those of Article III judges.”

Taken at face value, the comparison implies that when it comes to adjudicatory decision-making, the Commission does not perform as well as district courts. We acknowledge that these differences in appeal rates may be the result of factors that influence the decision to appeal from a Commission judgment differently than from a district court judgment. For example, the selection of cases by the FTC may differ systematically from the cases brought by plaintiffs to federal court, though it is not necessarily the case that those differences imply a higher appeal rate for agencies. Further, differences in procedure between litigation in federal court and at the agencies provide different incentives to settle. However, when we conducted further analysis to control for such factors to the extent possible with available data, our basic results remained unchanged. Further, we found that – looking exclusively at FTC cases – appeal rates are not reduced when the Commission modifies the initial decision of the FTC administrative law judge.
The expertise hypothesis posits that the institution with greater expertise will consistently outperform any institution without endogenous expertise.  That assumption should be grounded in a comparative analysis of the institutions and the processes translating expertise to decisions. The inability of an agency like the Federal Trade Commission to translate its expertise into higher-quality decision-making than found in the courts renders it at best ineffective and at worst costly to society.
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