Friday, July 26, 2013
The American Lawyer: Paper on Law Degree's Economic Value a Non-Sequitur
The American Lawyer: Paper on Law Degree's Economic Value a Non-Sequitur, by Matt Leichter:
In their paper, Simkovic and McIntyre compare Census Bureau and National Education Longitudinal Study income data for law degree holders to the incomes of mere college graduates for the time period spanning 1996 to 2011. They calculate that law degrees add a median $32,300 in annual earnings and a median $420,000 in after-federal-income-tax lifetime earnings over college degrees. The authors conclude that these figures justify enrolling in law school, contradicting critics warning that law school is an "irrational" investment. But what really grabbed people's attention was the paper's magic, seven-digit number: A law degree's mean pretax net earnings bonus is a cool million dollars. ...
Although the criticisms offered by Mystal and others are well-founded, they miss the even more troubling problems embedded within "Economic Value": The paper's causal theory for explaining the law degree's income bonus is nonsense because it assumes law school pays off equally for non-lawyers, a notion that diminishes the relevance of the authors' findings. Even if its income calculations were applicable to the real world, they in no way call into question reformers' criticisms of legal education, so on that score the paper amounts to a non-sequitur. ...
Even if its findings were applicable to reality, academics and media outlets eagerly heralding "Economic Value" as fundamentally changing the debate over legal education will be disappointed to learn that the paper's findings support no such position. ...
Ultimately, anyone who believes "Economic Value" applies to the law school debate in any way fails to recognize that the debate is fundamentally distributional in character. It only concerns how much of the social surplus should go to law schools. One could agree with "Economic Values"'s numbers and still believe the above points are true.
Many people have pounded the drum for more longitudinal data on law graduate earnings outcomes, and "Economic Value" delivers them. Lamentably, the paper shortchanges both itself and the legal education debate by assuming that law degrees intrinsically increase earnings. Despite its detailed econometric methodology, "Economic Value" answers the questions it takes on much too broadly, and it certainly shouldn't convince anyone that there are too few law schools, that most aren't overpriced, that legal education can't benefit from substantial reforms, or that students will be able to repay their debts from their incomes.
- Michael Froomkin (Miami), Fur Flies in Debate over ‘The Economic Value of a Law Degree’
- Milan Markovic (Texas Wesleyan), Structural Shifts, BigLaw, and the Economic Value of a Law Degree
- Dan Rodriguez (Dean, Northwestern), More on the $1 Million Question: Is Law School Worth It?
Prior TaxProf Blog coverage:
- What Is the Economic Value of a Law Degree -- $1 Million? (July 17, 2013)
- 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)
- 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)
That is, like the previous quote, a line with two possible interpretations, based on what you read "from 1996 to 2008" as modifying. If you read it as modifying "census data," then ATL's claim is incorrect. If you read it as modifying "J.D. holders," then ATL's claim is correct.
Again, I would point to the context, and specifically to ATL acknowledging that the study looks at salaries through 2011. I don't see any meaningful difference between ATL writing that line or quoting the ABA Journal.
As for being on "good behavior," sure. I have no problem respecting the tone Professor Caron has set for his blog. And I would not expected anyone to be surprised by the tone used on a site that has as its title a low brow pun, though I fail to see the relevance.
Posted by: Derek Tokaz | Jul 28, 2013 8:25:56 AM
The second quote adduced by Mr. Tokaz is from an ABA article, not from Mr. Mystal. What Elie Mystal actually wrote prior to the mistaken criticism was: "The professors used census data and the National Education Longitudinal Study to compare J.D. holders to non-J.D. holders form 1996 to 2008." Mr. Mystal then complains that the study was "cut...off" at 2008.
Mr. Tokaz is on good behavior, I see, when he signs his name. Anyone who wants to get a sense of what he is really like should take a look at Constitutional Daily, which includes a wide array of confused criticisms of the Simkovic & McIntyre study, as well as assorted juvenile insults aimed at professionals and adults.
Posted by: Brian | Jul 27, 2013 4:19:38 PM
ATL's actual statement giving rise to Simkovic's first complaint: "Cutting your study off in 2008, before the market significantly changed, means that your study HAS NO CREDIBILITY. NONE."
This can be read in two ways. The readings Simkovic and Brian use are: "The article doesn’t present any earnings data after 2008 and ignores changes since the financial crisis," and "ATL falsely claimed that it excluded financials after 2008," respectively. Under that reading, ATL would be wrong.
An alternative reading is that ATL is criticizing the study for not including people who graduated after 2008, which S&M's article does not.
Which reading is correct? I think context matters. Prior to the quoted line, the ATL article also said this, "The data covers four panels of graduates from 1996 through 2008 and looks at salaries through 2011." So, either ATL is saying "The data goes through 2011 but doesn't go through 2011," or they're saying "The data goes through 2011, but doesn't include people who graduated after 2008." One of those seems far more reasonable than the other.
Posted by: Derek Tokaz | Jul 27, 2013 4:41:00 AM
JM's post is exactly why I think there's been a fundamental shift in the market that is not sufficiently discussed in the S&M paper. If you have been boxed out of the legal market for a year or two, I don't think you get back in. It's understood that the S&M paper found that there was an earnings premium among non-lawyer JDs, but how many of these started out as lawyers? I kind of LOL at how cavalier S&M and their cohort are with this study. Yes, it's evidence that a JD has value, but it's not irrefutable. Study or not, I would never advise a prospective to attend Seton Hall without a full or nearly full ride.
Posted by: HTA | Jul 26, 2013 11:28:25 AM
My, my, Derek Tokaz seems quite "butthurt" (to use his favorite phrase from "Constitutional Daily," where he regularly lies about, insults, and derides law professors, but without putting his name to it). In fact, the point goes to Simkovic on #1 too, as anyone who looks at Elie Mystal's fraudulent posting can verify. The Simkovic & McIntyre study stopped with the Class of 2008, for which there was data, but includes earnings through 2011, so well into the recession. ATL falsely claimed that it excluded financials after 2008.
Posted by: Brian | Jul 26, 2013 10:51:26 AM
Frustrated Educator: That response was far from devastating.
"(1) ATL Claim: The article doesn’t present any earnings data after 2008 and ignores changes since the financial crisis"
That's not the claim ATL made. They criticized the article for "cutting off" the study in 2008, and the context makes clear they meant it didn't look at people graduating after 2008, which the paper does not. ATL acknowledged that earnings data did extend in to 2011.
"(2) ATL Claim: The article relies on averages (or means) and doesn’t provide any information relevant to students who attended lower ranked law schools"
Simkovic correctly points out that the article does give quartile earning data. However, ATL is correct that the data does not look in to outcomes based on school ranks. It gives the 25th percentile of all grads, and not something like the median outcome of grads from the 25th percentile school.
"(3) ATL Claim: The article doesn’t present after-tax earnings"
Point to Simkovic. ATL got this wrong.
"(4) ATL Claim: The article doesn’t consider the cost of tuition"
I'll give this point to Simkovic as well, since the paper does consider tuition. However, the big headline numbers, like the $1 million return, or $350,000 even at the 25th percentile do not consider tuition.
"(5) ATL Claim: The article simply “assumes” that law degree holders who don’t practice law benefit from a law degree"
Again, point to Simkovic. However, I'd take that point back because ATL's next remark is that the study is flawed for comparing law school to pursuing no other education or training. If you're familiar with negotiation theory, you've heard of BATNA, Best Alternative To Negotiated Agreement. The same principle should apply. The JD should be compared to other common alternatives, one of which is ending your education there, but it's hardly the only choice.
"(6) ATL Claim: The article compares apples to oranges and fails to control for differences between bachelor’s and law degree holders"
Split the difference on this. The study has some controls, but there are still important differences between people who stop at a BA and those who get a JD that were not (and potentially cannot be) controlled for.
Posted by: Derek Tokaz | Jul 26, 2013 9:48:33 AM
Frustrated Educator - Matt Leichter is not Brian Leiter, and it seems like the two have different views on Eli's analysis.
Posted by: anonymous | Jul 26, 2013 9:01:54 AM
hahaha "devestating response." Right.
I love Prof's who are dumbfounded when people have the audacity to challenge their reasoning. It must be nice to spend all day proselytizing to a captive group of 22 year olds who don't know any better.
Posted by: Stan | Jul 26, 2013 8:57:31 AM
Professor Simkovic: I estimate that 2/3 of the 2012 graduating class of Seton Hall is underemployed. By that I mean, a non-associate, or equivalent professional job. Keep in mind that the majority of grads listed as employed in firms of 2-10 attorneys will be in sub-associate level positions, and the vast majority in "business/industry" category are in jobs that have little professional growth opportunities (i.e. insurance adjusting, retail). Oh, and state court clerkships often lead to unemployment as well (Seton Hall remarkably put 89 grads in state-court clerkships, which to me indicates that they are fraudulently counting internships because othwerwise that number is unfathomable).
Putting aside your "historical research" on the value of a JD for a second, how exactly do you expect these graduates to improve their circumstances so dramatically? Literally, take me through the next 10 years a current unemployed/barrista graduate of the 2012 Seton Hall JD class, that you assume will be a success story and grateful that she made the decision to attend law school.
. . . So on.
Do you doubt that JD's become less marketable to law firms after a year or two of unemployment?
You keep trying to obfuscate people's rational concerns by trumpeting the magic alchemy of a law degree. How about you open up the black box and tell us exactly how this will work?
Posted by: JM | Jul 26, 2013 8:04:14 AM
Leichter says the "criticisms offered by Mystal ... are well-founded."
How can he say that, given this devastating response:
Keep up with the debate, please.
Posted by: Frustrated Educator | Jul 26, 2013 5:43:01 AM
Give it up Mr. Tokaz. Elie Mystal, who may be even more out of his depth than you are, declared that the study "has no credibility none" on the basis of either (1) the mistaken belief that the study ended in 2008, or, on your rendering, (2) the belief that it included only salary outcomes through 2011. If it is (2), his conclusion is still idiotic and unwarranted, as presumably even you will admit. But you yourself acknowledge that almost all his other criticisms of the Simokvic & McIntyre paper were mistaken; why you think he was a more careful reader/thinker in this instance is mysterious.
The issue about Constitutional Daily is not its tone, but its content, which ranges from insulting and idiotic, to defamatory. But now that you're out in the open as responsible for that cesspool, we'll see how things develop.
Posted by: Brian | Jul 29, 2013 10:56:38 AM