Paul L. Caron

Saturday, August 4, 2012

NLJ: Law School — Still a Dodgy Investment

Following up on my previous posts (links below):  National Law Journal:  Law School — Still a Dodgy Investment, Analysis Suggests:

Three years ago, Vanderbilt [tax] law professor Herwig Schlunk was among the first academics to use hard salary data to calculate the economic value of a law degree — in essence, to evaluate a J.D. through the lens of an investor.

Schlunk has updated his findings using more recent data, but his conclusion was unchanged: Going to law school doesn't make economic sense for most students. "My overall assessment today is much the same as it was in 2009: Law school is a very risky (and expensive) investment; it should not be undertaken lightly."

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A better/next educational level is *always* a good investment (sure, some may pay out better than others). Even if you pick a completely different job afterwards, a more brightened eductation will always pay off - monetary and mentally :-)
Though, i know law degress are unbelieveable expensive in US, you're somewhat right, yes.

Posted by: Lelala | Aug 4, 2012 11:23:41 AM

Except that:

1. no investor would use revenue in the first year of a 30 to 50 year investment as revenue for the life of an investment -- they would make projections based on historic data, and in the case of a law degree would make projections of rising income through the persons 50s or 60s.

2. no investor would use a 12% discount rate for something that can be financed 100 percent with debt at between 5% and 7.9%

3. no investor would be as internally inconsistent, assuming that income from a law degree is risky while income from a bachelors is risk free, especially not in light of the data showing those with law degrees are more likely to participate in the workforce.

4. No investor would include 3 downside scenarios, and no moderate or upside scenario.

To say that Schlunk evaluated a law degree like an investor is unfair to investors.

Posted by: Anon | Aug 4, 2012 7:02:38 AM