Another couple had left their jobs in the previous year. Even though they had quickly found new ones — as a psychiatric aide at a state hospital and a manager at a state agency — their income dropped 25 percent. They fell behind on their $45,000 mortgage and other debts. Their experience illustrated the study’s crucial finding that lenders had extended an enormous amount of credit to people who were clearly bad risks.
While the files did not tell the whole story, they provided enough evidence for Mr. Warren and her co-authors to write, “Repeatedly, we have been surprised by the data and forced to rethink our own understanding of bankruptcy.”
The study’s findings, laid out in their 1989 book, also explicitly raised questions about a central tenet of law and economics: that individuals respond rationally to economic incentives. As applied to bankruptcy — the more generous the bankruptcy provisions, the more people would file — that idea had been the rationale behind the campaign that succeeded in toughening the bankruptcy code in 1984.
Over the years, the research elevated Ms. Warren’s status, from little-known Texas professor to sought-after lecturer, writer and consultant in bankruptcy law. It also set the stage for her career in politics.
In 1995, Mike Synar, a former Democratic congressman from her home state, asked Ms. Warren, by then a Harvard professor, to advise a special commission reviewing the bankruptcy system. She balked, fearing the Washington work would render her scholarship impure, but signed on when Mr. Synar promised to keep her insulated from politics.
It was during that period, in 1996, that she switched her party affiliation from Republican to Democrat, though she insists that her essential conversion was from “not political” to “political.”
“I didn’t come from a political family,” she said. “I hadn’t been political as an adult. I was raising a family, teaching school and doing my research,” she said.