March 26, 2015
The Problem of Short-Termism (Michael Simkovic)
Law schools and prospective law students may be paying more attention to employment outcomes shortly after graduation than this short-term data deserves. One potential use of the aggregate data about entry level employment and salaries is to assess whether now is a good or bad time to apply to law school. But fluctuations in employment outcomes for recent graduates do not predict fluctuations in employment outcomes 3 or 4 years in the future when those currently deciding whether to enroll would graduate.
Nevertheless, law students and the press pay close attention to the short-term outcome data. Starting salary data from the National Association for Law Placement (NALP) is covered by the press and is a good predictor of the number of law school applicants two years later (We assume one year lag for data collection and dissemination; one year lag to apply to law school).
Why are students responding to this data even though it does not predict their own short-term outcomes? And does the responsiveness of enrollment to short-term outcomes mean that law students care only about the short term?
Law students likely think more long term. If law students were so impatient that they only cared about one or a few years of earnings, it is doubtful that law students would have completed college, since college also makes sense only as a long-term investment. Indeed, students who were so focused on the short term might not even have finished high school. While temporal preferences can change over time, education appears to shift people toward thinking more long term. Aging from adolescence through the age of 30 is also associated with becoming more oriented toward the future.
Perhaps students are focused on the short term because they mistakenly believe that swings in short term outcomes predict more than they do. Students would not be alone in this error.
Some widely read back-of-the-envelope analyses started with initial salaries, assumed unrealistically low earnings growth along with high discount rates or an arbitrary payback period (lack of concern for the future) and reached the erroneous conclusion that going to law school does not make sense financially. (For a discussion see here; for examples of erroneous studies, see here and here )
Students may be focused on the short term because they mistakenly believe it predicts more than it does. Or they may focus on the short term because it is the only information that is readily available to them.
Legal educators and the press can and should make greater efforts to inform students of the long term as opposed to the short-term consequences of legal education. We should also shift the discussion away from raw outcomes and toward estimates of causation and value-added relative to the next best option.
This will be a challenge. Short-term raw outcome data is embedded in American Bar Association-required disclosures, in NALP’s data collection efforts and in the U.S. News rankings. Thinking in value-added terms requires us all to understand basic principles of causal inference and labor economics. But shifting toward long-term value added is ultimately the right thing to do if we are serious about providing students with meaningful disclosure and facilitating informed decision making.
This is not meant to justify indifference to the plight of young people who have suffered the misfortune of graduating into an unfavorable economic climate over the last several years. To help alleviate youth unemployment, we must understand that the cause of this misfortune is the macro-economy, not higher education. Education is an important part of the solution. Among those who are young and inexperienced, those with more education continue to do better in the labor market than those with less, and this difference appears to be largely caused by the differences in level of education.
Insurance programs like income-based repayment of student loans and flexible and extended repayment plans can help young people manage the unpredictable and uncontrollable risk that they might happen to graduate into a bad economy. If this insurance leads to more people pursuing higher education, earning higher incomes, and paying more taxes, it will benefit not only students and educators, but also the federal government and the broader economy.
Legal media cover the USNews.com rankings
March 16, 2015
USnews.com rankings came out last week
Last week, a website, USNews.com, released its annual rankings of law and other professional schools. (Since I was off-line last week, my comments had to wait.) Commentary, predictably, focused on the overall rank assigned by the website--what is known to "insiders" as the "nonsense number," since it is the upshot of an inexplicable weighting of 12 different factors, many self-reported and so of dubious accuracy anyway, but the amalgamation basically stipulative. Fortunately for USNews.com, many superficial journalists report the nonsense number, and changes in the nonsense number, as though they meant something.
So, for example, much ink was spilled on the "fact" that the University of Michigan Law School had a nonsense number of 11th, just outside "the top ten" where it usually resides. I did not see any journalist note, however, that just one raw score point (83 vs. 84) separated Michigan from Duke, Virginia, and Berkeley, all with a nonsense number of 8th. In other words, even by its own terms, the USNews.com demotion of Michigan to 11th was meaningless. (For those paying attention, Yale, because of its off-the-charts per capita expenditures, got a raw score of 100, Harvard and Stanford got 96, Columbia and Chicago 93, NYU 89, Penn 88, and then Duke et al. with 84.)
The most interest was in the nonsense number for UC Irvine, ranked for the first time this year. UCI came in at #30, the highest nonsense number debut I've ever seen in USNews.com. In USNews.com land, this puts UCI third in the UC system--behind Berkeley and UCLA, and ahead of UC Davis (31st) and UC Hastings (59th). (Hastings has probably been the most dramatic victim, over many years, of the small, private school bias in the USNews.com rankings.) Interestingly, UCI got this result despite weaker reputational scores: 29th in reputation among lawyers/judges (a rather good result, though, for a new school), and only 42nd among academics. Almost every school with a nonsense number around UCI had a higher academic reputation score, and my guess is UCI's will now improve accordingly. (The evidence for the echo chamber effect of the "overall rank" on the reputation scores in subsequent yeras is even greater now than in the past.) My guess is all those annoyed by the UC system starting a new law school penalized UCI in the reputational survey--if USNews.com published the median and mode, we'd have some idea, but I wouldn't be surprised if the distribution was skewed in that way. Counting against UCI is that it is still very small, and will presumably have to grow, which may affect other metrics.
USNews.com reported some curious data in various categories. I note two examples. Columbia, for the first time, reported the best student-faculty ratio in the nation: 6.3 to 1. Yale was 7.6/1, Stanford 7.3/1. Virginia reported 97.3% employed at graduation, but only 97% nine months out. This might be an artifact of the fact that USNews.com for the first time did not give schools full credit for graduates in law school funded positions--though many of these positions are quite legitimate.
The USNews.com reign of terror has now been going on for 25 years. It has been a disaster for legal education, though a boon for students with the favored numbers. In the 1990s, I used to try to reason with the USNews folks, and they in fact corrected some of their worst mistakes--for example, using starting salary data without taking into account regional differences; doing reputation surveys based on "quartiles" (meaning the dumbest evaluator--the one who forgot to put Harvard in the top quartile--determined the score); and failing to adjust expenditures for cost-of-living differences. But with regard to the basic problems--namely, that the weightings of the inputs are arbitrary, and that a lot of the data relied upon is bogus--they've done nothing. The only remedy for the USNews.com reign of terror will be competing systems, though hopefully not ones that simply replicate the USNews.com mistakes, though that is mostly what we have had so far.
March 02, 2015
Buffalo, Iowa to admit some students without requiring the LSAT...
NLJ's annual list of the law schools that send the highest percentage of graduates to NLJ 250 law firms
February 19, 2015
More signs of the times: major restructuring at Washington & Lee
A rather detailed announcement from the University; excerpts:
- Beginning with the 2015-16 academic year, the school will enroll entering 1L classes of about 100 students, resulting in a full-time student body of about 300. For comparison's sake, the current law school student body is 374 and includes the largest third-year class in school history. The Class of 2017, which entered last fall, had 101 members....
- In October 2014, the Board of Trustees authorized an increase in the payout from the law school's endowment income to 7.5 percent through 2017-18. This will add about $3 million to the law school budget in 2015-16. [BL note: typical endowment payouts are in the 4 to 4.5% range]...
- The current student-faculty ratio (9:1) will be preserved, but with smaller enrollments the allocation for faculty compensation will be reduced by about 20 percent (equivalent to six positions) and will be achieved through attrition over the four-year period. In addition, some senior faculty salaries will have a one-time salary reduction of 2 percent with salaries frozen for all faculty during the three-year period....
- Operating budgets will be reduced by 10 percent in 2015-16 with the exception of the library budget, which will grow by 2 percent.
- Although the financial model currently shows operating deficits for 2014-15 through 2017-18, the law school budget is projected to be back in balance by the 2018-19 academic year....
With a university-wide endowment of about $1.5 billion and only about 3,000 students undergraduate and graduate, Washington & Lee is quite a wealthy university--though how much of the endowment is for the law school is unclear, though I'm guessing a sizable amount. (Here are 2000 figures, and most of the endowments on that list have roughly doubled since.) A well-established law school (a member of the AALS since 1920!), Washington & Lee was most recently ranked 43rd in USNEWS.COM, though has ranked higher in prior years (sometimes in the top 25ish). I would imagine similarly dramatic changes are taking place elsewhere with perhaps less publicity about them.
Faculty productivity over time at one law school
Orin Kerr (George Washington) looked at his school; what he found may be surprising.
February 04, 2015
The battle for transfer students
IHE covers the phenomenon.
January 27, 2015
$30 million naming gift for the law school at British Columbia
I wonder if there has ever been a larger gift to a Canadian law school?
January 20, 2015
IHE covers the drop in LSAT scores at many law schools