In the face of months of anecdotal attacks on the American law school, the first serious longitudinal analysis of the economic value of a JD is now out in working paper form. It is authored by Michael Simkovic at Seton Hall Law and Frank McIntyre at Rutgers Business School.
It has long been my suspicion that the attack on the law school as an institution was a politically motivated effort divorced from objective academic interest. I thought that this would be clear to many when the two leading figures in the attack, Brian Tamanaha of Washington University and Paul Campos of Colorado, appeared side by side at the Cato Institute to make their case. Cato is a right wing think tank that is anti-tenure and anti-academic freedom. They view university faculty and law professors in particular as members of a featherbedding protective guild that should be destroyed by market forces. Tamanaha and Campos were introduced at the Cato event as the “good cop [Tamanaha] and bad cop [Campos]” of law school reform. Neither speaker disassociated themselves from either that remark or the Cato Institute’s agenda. And both have criticized tenure in a fashion similar to that of Cato.
But the problem for these critics is that they attempt to build their case on a version of naive empiricism, “the uncritical acceptance of empirical observation.” They have for years refused to do the kind of careful analytical work it takes to answer some basic questions about law schools and about higher education in general. Instead, they have come along in the wake of the 2008 global financial meltdown, which destroyed millions of jobs and livelihoods all over the world, and tried to argue that somehow law professor salaries caused the problem. This would ordinarily have been dismissed as a rather bizarre conclusion disconnected from reality, worthy of precisely the kind of ideologically driven “research” that goes on at places like Cato.
But two other forces were at work that gave this campaign some salience.
First, the dynamics of law school admissions are such that a larger than usual number of recent college graduates went to law school in order to “hide out” from the recession, relying on historically low interest rates to finance the effort. In past recessions this was a rational response because those downturns typically exhaust themselves in about three years just in time for the new cohort of JDs to join the labor force. But this latest meltdown was unprecedented in the history of capitalism. It was global, it spread across all economic sectors, it hit corporations and government, it hit homeowners [we lost all the equity and then some in our house, for example] and it hit credit card borrowers. Law firms began layoffs and they have only very slowly began to rehire. JD applications have now fallen (most likely below what will be needed in the near future as the recovery takes hold) but there is still a painful overhang of thousands of underemployed highly trained recent JDs laboring under debt they once thought they could afford.
Second, a small handful of what appear to be relatively inexperienced class action lawyers have decided to exploit the pain that these recent JDs are experiencing by contending that somehow the marketing brochures distributed by law schools were responsible for the macroeconomic woes hitting those JDs. These cases have made limited headway, with three of them being thrown out on their ears in New York while one is proceeding in California and another in federal court in New Jersey.
This is a volatile atmosphere. And it is into this atmosphere that Campos and Tamanaha dove, irresponsibly in my view, but of course as academics they are free to express their views on issues of academic governance. Unfortunately, the raw material they have persistently used in their attacks has been largely anecdotal. The very limited data used by Tamanaha in his book, Failing Law Schools fails to make his case as I explained in my review essay on the book. My faculty invited Tamanaha to speak about his work at Santa Clara but in the wake of the posting of my review he cancelled his appearance. His only response to my essay inaccurately summarized my views on student debt as I explained to him and the publisher of his response.
Now comes the Simkovic/McIntyre study. It is a very readable (although that has not stopped some of the critics who have clearly not read it yet) and straightforward decimation of the naive empiricist case, a thoughtful explanation of why hunch and anecdote are starting points in scientific work but that when there is real data available it is better to look at it. What the authors demonstrate most effectively is that students who go to law school are not being irrational. They do, generally, add value, significant value, to their human capital. Adding economic value is not the only reason to go to law school and should not be the only reason but it is important to consider, especially when low-cost debt is available and young college graduates are making a crucial decision about how or whether to finance their graduate education.
The heart of the study’s conclusion is that across the distribution of lifetime earnings (that is, at the high end and at the low end) most JD holders will earn more than the cost of their education and at the mean that amount (pre-tax), in today’s dollars, will be close to one million dollars.
This is not the place to summarize the entire study, which covers more than 70 pages and is based on data from the Census Bureau going back to the early 1990s and taken through 2011. The study is available here and the power points that the authors used to present at a recent peer-reviewed law and economics conference are here.
The authors are also blogging about the study at Concurring Opinions. Already they have taken on directly the claims of Tamanaha who is sticking, naively, to his anecdotal analysis. His latest attempt to defend his approach included a concern that students at lower ranked schools take on debt and yet may not have the results reported in the study. It is not clear how Tamanaha could make this claim after reading the study. The authors make clear that the million dollar value in today’s dollars is an average. They also explain that at the ends of the tail do not indicate those same returns. The 75th percentile is 1.1 million while the 25th percentile is 350,000. It should be obvious to anyone that a tier 4 school – Tamahana mentions Thomas Jefferson – is more likely to see its graduates be closer to if not entirely within that 25th percentile. If they fall at the bottom of that portion of the distribution there is likely a point where law school is NOT a positive NPV proposition. But as the authors point out for a very large majority of law school graduates the opposite is true, even in the wake of the recent downturn.
It is time to put anecdotes aside and one can only hope that this study will be part of the discussion in Deans’ offices and Trustees’ meetings when dealing with the cyclical downturn that law schools now find themselves in. It is to be expected in the wake of such a downturn that as the economy improves fewer students will postpone work for more education. But to scare students out of law school as Campos and Tamanaha expressly attempt to do is irresponsible and destructive of both our academic culture and, as I explain in my review essay, more widely of the place that the rule of law has in our society.