Wednesday, July 17, 2013
Legal academics and journalists have marshaled statistics purporting to show that enrolling in law school is irrational. We investigate the economic value of a law degree and find the opposite: given current tuition levels, the median and even 25th percentile annual earnings premiums justify enrollment. For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.
We improve upon previous studies by tracking lifetime earnings of a large sample of law degree holders. Previous studies focused on starting salaries, generic professional degree holders, or the subset of law degree holders who practice law. We also include unemployment and disability risk rather than assume continuous full time employment.
After controlling for observable ability sorting, we find that a law degree is associated with a 60 percent median increase in monthly earnings and 50 percent increase in median hourly wages. The mean annual earnings premium of a law degree is approximately $53,300 in 2012 dollars. The law degree earnings premium is cyclical and recent years are within historic norms.
We estimate the mean pre-tax lifetime value of a law degree as approximately $1,000,000.
- Michael Simkovic (Seton Hall), The Economic Value of a Law Degree (Part 1 of About 5)
- ABA Journal, What’s the Value of a Law Degree? $1M in a Lifetime, Report Says
- Business Insider, Study: A Law Degree Is Actually an Amazingly Good Investment
- Inside Higher Ed, The Upside of Law School
- Dan Filler (Drexel), What Is a JD Worth? Study Suggests Lifetime Value of $1 Million, on Average
- Brian Leiter (Chicago), "The Economic Value of a Law Degree"
- Kyle McEntee (Law School Transparency), New Study on Economic Value of Law Degree
- Elie Mystal (Above the Law), Another Garbage Study Offering Misleading Statistics on the Value of a Law Degree
- Frank Pasquale (Maryland), "Fundamentally Changing the Conversation about the Economic Value of Legal Education"
- John Steele (Legal Ethics Forum), "What Is A JD Worth? Study Suggests Lifetime Value Of $1 Million, On Average"
Update #1: Michael Simkovic (Seton Hall), Above the Law Needs to Read More
- More on The $1 Million Value of a Law Degree (July 18, 2013)
- NY Times, WaPo, Others Debate The $1 Million Value of a Law Degree (July 18, 2013)
- What Is the Economic Value of a Law Degree -- $1 Million or $100,000? (July 19, 2013)
- More on The $1 Million Value of a Law Degree (July 20, 2013)
- Merritt on The $1 Million Value of a Law Degree (July 21, 2013)
- Diamond on The $1 Million Value of a Law Degree (July 22, 2013)
- Tamanaha: How 'The Million Dollar Law Degree' Study Systematically Overstates Value (July 23, 2013)
- Tamanaha: How the 'Million Dollar Law Degree' Study Understates Risk (Part I) (July 24, 2013)
- Tamanaha: Why the “Million Dollar Law Degree” Study Fails (Final Post) (July 25, 2013)
- Rasmusen: Critics of The Economic Value of a Law Degree Are Making the Paper Better (July 25, 2013)
- Pasquale and Simkovic Respond to Tamanaha (July 25, 2013)
- The American Lawyer: Paper on Law Degree's Economic Value a Non-Sequitur (July 26, 2013)
- Simkovic Responds to Tamanaha (Part 3) (July 26, 2013)
- Tamanaha: Short Term Versus Long Term Perspective (July 27, 2013)
- Harper, Diamond: The $1 Million Value of a Law Degree: Distraction, Astronomy, or Astrology? (July 28, 2013)
- Simkovic Responds to American Lawyer Op-Eds (July 29, 2013)
- Diamond Responds to Tamanaha (July 29, 2013)
- Rasmusen: The Economic Value of a Law Degree and the 'Typical' Law Student (July 29, 2013)
- Simkovic Responds to Tamanaha (Part 4) (July 30, 2013)