New Study on Economic Value of Law Degree

July 17th, 2013 / By

I won’t spend much time summarizing the new paper by Michael Simkovic, an associate law professor at Seton Hall University School of Law, and Frank McIntyre, an assistant professor of finance and economics at Rutgers University Business School. Inside Higher Ed summarized the report just fine.

Instead, I want to comment on what I see as a misguided attempt to quell critics claiming that the law school investment is not a sound choice for many people. I hope Professor Simkovic and Professor McIntyre are correct that, on average and even down to the 25th percentile, the law school investment makes financial sense.

It just completely misses the point and grossly under-appreciates the human element.

Rather than viewing law degree holders in isolation, we can get better estimates of the causal effect of education by comparing the earnings of individuals with law degrees to the earnings of similar individuals with bachelor’s degrees while being mindful of the statistical effects of selection into law school.

Unfortunately, law degree holders are individuals who are sometimes (perhaps often) hurt by going to law school. Talking about groups necessarily smooths over the stories underneath the data—the ones that make you feel good and the ones that make you sick to your stomach. The reality is that there are many people that have been hurt and are hurt right now as a direct consequence of the costs associated with entering the legal profession (or trying to). These graduates very well may make more money in the long run. But this is hardly comforting to those considering law school and those who care about the people who do.

As I told Inside Higher Ed, law schools have made a habit out of capturing as much value out of their students as possible—and for a long time, used deceptive and immoral marketing tactics to do so. The dynamics are changing and should change because of the outrageously high price of obtaining a legal education. Even if an analysis shows an investment has a positive net present value in the long run, people are not like corporations. The short-term matters more for real people. Tens of thousands of law graduates leave school each year wondering how they’re going to manage to pay off their six-figure loans. That’s what motivates critics and frightens prospective law students.

Long-term value is not irrelevant, but using it to argue that education isn’t priced too high troubles me. If we think our society and our country are better for having an educated population, as these two authors do, then we had better stop pricing people out of education.

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