Sara Sternberg Greene, an interdisciplinary scholar whose interests span bankruptcy, commercial law, contracts, tax, poverty, and health law, will join the governing faculty in 2014. Broadly concerned in her scholarship with the relationship between law and inequality, Sternberg Green uses qualitative empirical research to examine and, ultimately, optimize, the impact of financial laws on low- and moderate-income families.
Greene received her BA, magna cum laude, in 2002 from Yale University and her JD in 2005 from Yale Law School, where she received the Stephen J. Massey Prize for excellence in advocacy and served as notes editor for the Yale Law Review and articles editor for the Yale Law and Policy Review. She also served as chair of the Student Board of Directors for the Jerome N. Frank Legal Services Organization and as student director and intern in the Housing and Community Development Clinic. After clerking for Judge Richard Cudahy on the United States Court of Appeals for the Seventh Circuit, Greene focused on housing law matters at the law firm, Klein Hornig, in Boston. She will soon receive a PhD in social policy and sociology from Harvard University.
“Sara will be a truly wonderful addition to our faculty,” said Steven Schwarcz, the Stanley A. Star Professor of Law and Business. “Her strong interests in consumer bankruptcy and finance complement our current focus on the corporate and systemic sides of those fields. Significantly, Sara brings the highest level of empirical expertise to her inquiries, creating scholarship that is both bold and well-grounded. Furthermore, her writings demonstrate a rare ability to integrate business and social welfare concerns. She is a brilliant young scholar, and we are all fortunate to have her as a colleague.”
Greene’s new article titled “The Broken Safety Net: A Study of Earned Income Tax Credit Recipients and a Proposal for Repair” and recently published in the NYU Law Review, is based on a novel study of 194 individuals with whom she and other researchers on her team conducted in-depth interviews. “Many people who receive the Earned Income Tax Credit have received welfare in the past,” she said, noting that as an anti-poverty program the EITC enjoys bipartisan support in Congress. “I was particularly interested in whether this was an improvement from their point of view.” While she found an overwhelming appreciation for the tax credit among its recipients in her study, she found its distribution as a lump-sum annual payment during tax refund season left them vulnerable to mid-year “financial shocks,” be they unexpected car repairs or dental work.
“Because the Earned Income Tax Credit comes only once a year, when people experience unexpected financial shocks six months into the year they don’t have a safety net,” she explained. “They are working and they are earners. They avoid programs, like welfare, that carry stigma, so they use credit cards, which are fast and stigma-free. The problem is that interest and fees build up quickly on the cards, and by the time these people receive their tax credit they have to use the money to cover credit card interest and fees rather than putting it towards their mobility goals.” Study participants routinely spoke of their desire to save money during their interviews, she added.
Greene’s suggestion for repair involves a simple change to the distribution scheme. “I propose that the IRS put 20 percent of the individual’s Earned Income Tax Credit into an interest-bearing account I call a ‘savings and emergency fund’ – ‘SAEF Fund’ – account that is reserved for emergencies. The rest would be distributed as a lump sum. Whenever the recipient experiences these small shocks, they can use that money instead of resorting to credit cards.”
Her proposal includes incentives to encourage saving, absent a pressing need for the money, but in the event that the EITC recipient chooses to withdraw the 20 percent holdback, he or she can do so with no penalty. Any unused balance in the SAEF account would roll over and continue to accumulate interest year to year, and recipients would receive quarterly statements on their accounts. Greene hopes that her proposal can eventually be tested in a pilot program operated through the IRS.
“Sara Sternberg Greene’s in-depth interview-based research on how the earned income tax credit affects the lives of its recipients is path-breaking,” said Lawrence Zelenak, the Pamela B. Gann Professor of Law, and a noted expert on tax law and policy. “Her work is exciting both for its use of sophisticated qualitative empirical research methods, and for its focus on legal issues of particular importance to working class families.”
Among several bankruptcy-related projects Greene has ongoing, one utilizes data from the comprehensive 2007 Consumer Bankruptcy Project to predict consumer success in emerging from Chapter 13 bankruptcy, with a view to identifying ways to improve the system.
The promise of retaining key assets, such as a home, after partial repayment of debts, often makes Chapter 13 appear preferable to consumers filing for bankruptcy than the asset liquidation mandated by Chapter 7, she explained. But filers are discharged from Chapter 13 only if they strictly adhere to multi-year plans for debt payment, and only about 33 percent of them succeed. “The others have dropped out,” often after suffering some sort of financial shock and thus not meeting repayment obligations, said Greene, who is working with other researchers on the project. “We are still working through the data, but the idea is that factors that predict or mitigate against success in Chapter 13 – things like the amount of secured and unsecured debt you have – are factors that you should discuss during your first meeting with a bankruptcy lawyer, as you are considering whether Chapter 7 or Chapter 13 is the proper choice under which to file.”
Having been an AmeriCorps volunteer before she went to law school, Greene notes that she has long had an interest in issues facing economically challenged communities. Working in Yale’s Housing and Community Development Clinic caused her to question policy and statutory design, and led her to the methodologies she uses in her current research.
“There were a lot of issues that came up where I felt that I was constrained by what the law was, but when I met with and talked to clients, it seemed the law wasn’t working for them and could be redesigned to work better,” she said. “I was interested back then in becoming a law professor, but I also felt that I wanted to learn empirical methodologies that would help me study these issues before I began writing about them.” Working, during graduate school, as a research assistant to Sen. Elizabeth Warren, then a Harvard law professor, deepened Greene’s interest in bankruptcy.
Duke Law promises to be a good fit for Greene’s multi-disciplinary interests, she said. “One of the things that drew me to Duke is that there were so many people doing interesting and different things across disciplines. I wanted to be at a law school, in particular, because in my writing and research, that’s my end goal: What should these programs and laws look like? What should the statutes say?”
“Sara is a fabulous hire for Duke, giving us strength in issues related to access by low-income people to bankruptcy, income support, and legal services,” said Katharine Bartlett, the A. Kenneth Pye Professor of Law and chair of the Entry Level Hiring Committee. “She blends different research methodologies and will surely be, in short order, a leading scholar in the legal subjects of greatest concern to 47 percent of the population.”
Greene will begin teaching at Duke in the fall 2014 semester.
Greene is the fifth scholar recruited to the governing faculty in the past year; Mathew D. McCubbins, Marin K. Levy, Darrell A. H. Miller, and Elisabeth de Fontenay bring expertise in such areas as civil procedure, judicial administration, financial markets, and constitutional law and history. Jayne Huckerby, a prominent human rights lawyer, advocate, and teacher, also will join the faculty on July 1 as an associate clinical professor of law and director of the new International Human Rights Clinic.
“Duke Law had a remarkable hiring year this past year of both junior and senior scholars,” said Dean David F. Levi. “Our success in attracting top scholars, the most promising new academics, and the most creative and accomplished clinicians, reflects the existing strength s of our faculty. Because of our faculty’s commitment to the success of new academics we have been able to recruit extraordinary new scholars, like Sara Sternberg Greene, who are looking for an intellectual environment that is at once vibrant and supportive. Sara will add a new perspective and set of skills to a terrific group of business, tax, and empirical scholars and teachers at the Law School. We are eager to welcome her to Duke Law.”