U. law lecturer Warren studies why people file for bankruptcy

While many University entrepreneurs are only interested in making money, one law school professor is trying to understand why people lose money and file for bankruptcy. Elizabeth Warren, a lecturer at the University's Law School since 1987, has conducted three national studies on the causes and consequences of bankruptcy in the past decade. Warren's studies have gained national prominence. She has spoken before Congress, appeared on the Today Show, ABC's World News Tonight and CNN, and received the prestigious Silver Gavel Award for a book she co-authored. Last week, Warren appeared on 60 Minutes, in a piece which featured results from a recent study that examined national causes of family bankruptcy. Warren began her studies on bankruptcy in 1981 with University of Texas Sociologist Teresa Sullivan and University of Texas law professor Jay Westbrook. She works with the Texas professors on The Consumer Bankruptcy Project which is funded by the National Science Foundation and the National Conference of Bankruptcy Judges. "Our first hypothesis [in 1981] was that the decision to file for bankruptcy . . . was not so much driven by economic rationale, as many economists believed, as it was driven by other sociological and demographic factors," Warren said. "We were correct in our assumption." The first study examined the files of 1550 families who declared bankruptcy in 10 judicial districts, including the three in Pennsylvania. The second study, whose results are being released now, examined 2550 families who declared bankruptcy in 16 judicial districts. "We had the debtors fill out questionnaires so we could get a better analysis on why they filed for bankruptcy," Warren said. "We tabulated demographic information, such as age, education, race, ethnicity and marital status." In the second study, questionnaires revealed that one-half of all families who file for bankruptcy list medical debt as a major reason for filing. "The financial consequences of serious medical problems have larger effects on middle-class America than anyone initially thought," said Warren. According to Warren, the largest medical expenses result from babies born with serious medical disorders, strokes or heart attacks among the elderly and AIDS. "The debt is overwhelming," Warren said. "This is a really sad story." What started out for Warren as a single question has now snowballed. "We're no longer driven by a single hypothesis," she said. "There are about 150 different issues we are looking into." Among these issues is why baby boomers are declaring bankruptcy more than any other age group. She is also studying the link between bankruptcy and age, race and education. Warren said she hopes the results will have a positive effect on how the country deals with bankruptcy. "There is too much debt relative to income and there is no cushion," she said. "We have to change consumer information about debt . . . people need more information." "We can't innoculate people against bankruptcy," she said. "If we could, I'd work on the vaccine." Linda Zimmermann, a 1992 Law School graduate, worked with Warren on her most recent study and praised her research and teaching skills. "She was the best professor I ever had in my whole scholastic career," Zimmermann said. "It is rare to find someone not only premier in her field, but also a good teacher." Warren was voted best professor by her graduating class, according to Zimmermann. "She won it more than once while I was a student at the school," she said. "She made a big difference in my, and so many others' legal education." Co-researcher Sullivan said that all of their surveys are vital in examining America's sociologic and economic livelihood. "It is a lens for examining American society," Sullivan said. Warren is currently spending two semesters at Harvard Law School, but will return to the University in the Fall of 1993.