Paul L. Caron

Friday, August 6, 2021

Simkovic: WSJ Law School Analysis Ignores Data Showing That The Lifetime Present Value Of Legal Education Has Dramatically Increased

Following up on my previous posts:

Michael Simkovic (USC), Wall Street Journal Law School Analysis Overlooks Increased Diversity and Lower Interest Rates:

In my last post, I discussed problems with WSJ coverage of law schools. In particular the WSJ has effectively faulted law schools for broad, national declines in employment that are most likely due to macroeconomic conditions such as the financial crisis of 2007-2009 and its aftermath, to COVID, and to other broad secular trends in labor markets, not to declines specific to law graduates or the legal profession. In challenging economic climates, although law graduates suffer along with others, they continue to do better than most, primarily because they are more highly educated.

There are additional attribution problems with the WSJ's recent coverage.

The WSJ claims that the real value of a law degree has declined over an extended period of time and cites slow growth in lawyer starting salaries. This is problematic for several reasons. As the analysis below explains, it is almost certainly the case that over the last 20 years, the lifetime present value of legal education has dramatically increased.

This is particularly obvious when one controls for the changing demographics of law graduates, as one should to assess the value added by law schools. However, the increase in lifetime value of legal education is largely because of lower interest rates. Smaller contributions have been made by improvements in legal education. Those improvements appear to have done more to broaden access for more diverse students than to increase value for students fitting demographics that were more prevalent a few decades ago (i.e., white male students from upper middle class backgrounds with high-quality K-12 and undergraduate educations). ...

This again raises the question of why the WSJ chose single out law graduates when the data simply doesn't support their editorial decisions.  The slant they've chosen looks like it was predetermined by the editors without even looking at relevant data. Considering that the newspaper business revolves around gathering and reselling consumer attention to advertisers, the story may have been selected based on something other than its correspondence with reality, such as its click-bait value.  For an excellent discussion of the large disconnect between useful, accurate information and press coverage, I recommend Narrative Economics by Robert Shiller.

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