August 03, 2015
His biography; his “intent”; the phases of his twenty-year career; the context [historical, philosophical] in which he wrote; his interpretation by others; indeed “the” meaning of his writing … all of that fosters erudite avoidance … and so will be out of bounds. The seminar is for “amateurs” able to take Nietzsche’s passionate, enigmatic words personally – and, so, able to be provoked by them.
Now that's embarrassing that an academic institution offers a course premised on the idea that utter ignorance is a virtue, since basic scholarly knowledge and competence would allegedly lead to "erudite avoidance."
July 31, 2015
One of the key claims of critics of legal education in general, and of ABA-approved law schools in particular, is that accreditation requirements drive up the costs of legal education without improving quality. If only we could deregulate law schools and unleash the creative power of free market competition and the awesome technological potential of online learning, legal education would become cheaper without any loss of quality. Or so the story goes.
Fortunately, deregulated law schools exist alongside regulated law schools, so we can get a sense of what deregulation might look like. And while unaccredited California law schools are less expensive than their accredited counterparts, their completion rates and bar passage rates are much lower than those for even the lowest ranked ABA approved law schools, as revealed by a recent Los Angeles Times investigation.
This is likely due at least in part to the incoming academic credentials and life circumstances of the students who enroll in unaccredited schools, and not simply due to differences in quality of education. But there is no law preventing unaccredited law schools from competing with accredited law schools for the best students who want to stay in California, a large and prosperous state where many lawyers will spend their entire careers. If accreditation is really an inefficient waste of time and resources, the unaccredited schools should have substantial advantages in the competition for students, and those students should have advantages in the competition for jobs.
At first glance, deregulation hardly looks like the panacea its advocates have made it out to be. ABA accreditation also looks pretty plausibly like standard consumer protection--a paternalistic attempt to eliminate low quality, low cost, and high-risk options--rather than a self-serving scheme to inflate prices.
There are usually tradeoffs between cost and quality. It's not surprising that as goes the world, so goes legal education.
The Wall Street Journal’s recent story about law-school funded jobs is a good example of the slant that has pervaded its law school coverage for the last several years. The general outline of the WSJ story is as follows: job outcomes for law school graduates have become so terrible that law schools are creating fake jobs for their graduates, not to help students succeed, but to game the U.S. News rankings. The implication of the story is that law school is not only a bad idea for economic reasons, but that law schools are fundamentally corrupt and dishonest.
The problem is that the WSJ has taken information out of context and presented it in a way that is misleading. Like a Rorschach test, the story reveals more about the Wall Street Journal than it reveals about the subject of the story.
Here are some problems with the WSJ's coverage:
1. The data visualizations are misleading
There is a standard and widely accepted way to present percentage data. The minimum possible value is 0 percent. The maximum possible value is 100 percent. Therefore, a figure showing percentages should almost always be scaled from zero to 100 percent. The Wall Street Journal violates this rule of data visualization in ways that are revealing.
The WSJ scaled the figure at the left, showing law school employment, from 60 percent to 95 percent. This makes law school employment look lower than it really is, and exaggerates the decline in employment.
The middle chart, showing law-school funded employment is scaled from 0 to 6 percent. This makes law-school funded jobs look like a huge proportion of employment rather than a tiny one (4 to 5 percent). Contrary to the thrust of the WSJ’s story, there does not seem to be much of a relationship between overall employment outcomes and the proportion of school-funded jobs.
(The third chart, showing the proportion of school-funded jobs that are full time, long-term legal jobs increasing over time, is not commented on in the text of the story).
2. There is no discussion of what percentage of graduates of other programs are working positions funded by their institutions and little discussion of whether such jobs might be helpful
School-funded jobs are not unique to law schools. Whereas press coverage of law schools hiring their own graduates has been overwhelmingly negative, coverage of colleges hiring their own graduates has generally been positive or the issue simply hasn’t been covered. People might have doubts about educational institutions that never hire their own graduates for open positions, just as we might doubt a manufacturer or retailer that did not use any of its own products.
Are law schools more likely than other educational programs to hire their own graduates? Are law-school funded jobs better or worse than these other school-funded jobs? Are law-school funded jobs more or less likely to lead to good outcomes over the long term?
None of these important contextual issues are raised by the WSJ.
Even Above the Law provided a more balanced discussion of the possible upsides and downsides of school-funded jobs.
A similar issue arose with press coverage of competitive merit scholarships. Law schools were condemned harshly for policies that are also widely used by colleges and state governments, whereas colleges generally received more balanced coverage. This was the case even though law students were actually more likely to keep their competitive scholarships than were many undergraduates.
3. There is no discussion of how overall law school employment compares to employment for recent college graduates or graduates of other programs.
When it comes to apples-to-apples comparisons of law school graduates to similar bachelor’s degree holders with similar levels of work experience at the same point in time, law school graduates are more likely to be employed, more likely to be employed full time, and no less likely to be employed in a job that is related to what they studied. They are also likely to be earning substantially more money than their less educated counterparts. For the overwhelming majority of law school graduates, the lifetime boost to earnings more than makes up for the cost of law school.
The problem is not law school employment outcomes. The problem is that the labor market in general is challenging for everyone, especially the young and inexperienced. Law graduates generally do better than similar college graduates, who in turn generally do better than similar high school graduates.
Law schools are not the employment story. The employment story is the debate about aggregate demand and fiscal stimulus, and how best to provide more workers with the benefits conferred by higher education.
4. There is no discussion of how law school employment reporting compares to employment reporting for other educational institutions or standard definitions of “employment” used by the government
Under standard definitions of employment used by the U.S. government and just about everyone else, employment counts as employment whether it is school-funded or not, whether it is long term or full time or not, whether it is highly paid or not.
The use of non-standard definitions by law schools makes law school difficult to compare to alternatives. This does not reflect higher or lower ethical standards—it simply reflects data collection and reporting practices that are not well thought out. It can bias the presentation of the data in a way that makes law school look worse relative to alternatives when in fact law school employment outcomes under standardized measurements are usually better than many likely alternatives.
The standard definition of employment is not the only interesting measure of outcomes, so law schools may also want to consider other measures. But any measure they use needs to be standardized and comparable across educational programs rather than used exclusively by law schools.
July 28, 2015
It's educational malpractice to recommend that incoming law students read Llewellyn's "The Bramble Bush"...
...as, alas, Michael Krauss (George Mason) does in The Washington Post no less. Llewellyn's book is delightful and rich with interesting material, but I guarantee it makes no sense to someone who hasn't already read a lot of cases and studied some basic common-law subjects, like torts and contracts. (I offer the basic Jurisprudence course here as a 1L elective in the Spring Quarter, and to those students it makes a lot of sense precisely because they've already seen so many examples of what Llewellyn is talking about.) The one book I recommend to students who ask what to read before starting law school is Ward Farnsworth's The Legal Analyst (though the "Jurisprudence" part of the book isn't really about jurisprudence). This is accessible to a novice, and provides a beginning law student with a variety of useful analytical tools. (Farnsworth, now Dean at Texas, is a graduate of the University of Chicago Law School, and the book actually covers much of the material covered in "Elements of the Law," a required fall quarter class for all 1Ls here--indeed, one of my colleagues who teaches "Elements" uses Farnsworth's book in the class.)
July 14, 2015
Two Colorado law professors (actual scholars, not the notorious clown!) have undertaken an interesting longitudinal study of law school success, looking at data, though, from just two schools: Colorado and Case Western. It is informative about schools with similar profiles, but I wonder whether the results hold if one looks at much stronger or much weaker schools?
(Thanks to Dean Rowan for the pointer.)
June 22, 2015
Here. The two most concrete proposals are to mandate enhanced financial counseling for prospective students, to be sure they understand federal loan programs and their options; and to mandate greater disclosure of law school finances, including tuition discounting. I was also pleased to see on p. 22 that evidence triumphed over anecdote and ideology when, citing the work of Simkovic and McIntyre, the Report notes that, "Despite the cost, the best available evidence suggests a significant lifetime income premium for those with a law degree compared to those with a bachelor’s degree."
June 18, 2015
A number of recent analyses purporting to show the negative effects of student loans compare group A, which has student loans and a bachelor’s degree to group B, which has the same level of education but no student loans (see here for an example). Not surprisingly, the studies find that the folks who have a college degree but no student loans are doing better on a variety of measures. Unfortunately, many of the studies improperly conclude that student loans are causing the bad outcomes.
The problem is that the likely alternative to student loans and a college degree for people who need to borrow to afford college is not a free college degree. The likely alternative is no college degree and no student loans—i.e., lower earnings, and eventually, a lower net worth.
Among those who will eventually graduate from college, those who will graduate with no student loans are very different from those who will graduate with student loans. These differences are present before they even set foot on campus.
Why do some people graduate from college with no debt?
1) Their parents are rich and pay for college—and most likely provide additional financial support after college
2) Their parents are not rich but are extremely devoted to their children’s education and find a way to pay for college—and most likely provide additional support after college
3) The students are exceptionally talented academically, athletically, or artistically and obtain large scholarships
4) The students are unusually hard working and market savvy and find a way to earn a lot of money while in college
5) The students live in a wealthy city or state that generously funds public services such as higher education, and probably also funds other public investments (Note that most public colleges are not generously funded and have lower completion rates than resource-rich private colleges).
These “student loan studies” are not studies of the effects of student loans. They are studies that find that people who are more talented, harder working, come from wealthier and more supportive families, and live in richer communities with more enlightened governments are more successful. This is neither surprising, nor is it relevant to student loan policy.
Eliminating student loans won’t magically give everyone rich, devoted parents, boost students’ intellectual, athletic, or artistic abilities, or turn the least developed and most mismanaged parts of the U.S. into centers of economic activity and paragons of efficient public administration.
Criticisms of student loans seem to be motivated by an idealized conception of public, taxpayer funded higher education. In practice, these systems are too often characterized by weak, underfunded institutions, misguided political interference (for an example of left-wing interference, see here; for right wing interference, see here, here, and here) and micro-management (here and here) by political leaders , price controls (here and here, and here), disruptive budgetary uncertainty (here, here and here), and resulting shortages (here, here, here, here, and here).
This does not mean that we should abandon the goal of a well-funded public higher education system where academic freedom is protected, but it would be imprudent to put all of our eggs in a single basket, particularly one that political leaders frequently raid to close budget gaps.
Scaling back student loans will undermine investment in higher education, to our collective detriment. Without access to credit, students from modest backgrounds will too often be trapped in the under-resourced institutions that our tax-adverse political systems is willing to support (or denied access altogether because of enrollment caps) instead of at least having the option to pursue the higher quality education that is ultimately in their best interests.
June 16, 2015
So how should our understanding of student loans apply to law students? Mortgages are routinely repaid over 30-years, even though owner-occupied housing is close to pure consumption (most of the value of housing is consumed as imputed rental income, with appreciation averaging only around 1 percent above inflation). Legal education typically provides a much higher rate of return than real estate, and is probably closer to investment than consumption.
Rather than focus on initial salaries at graduation alongside student loan balances, it would be more appropriate to emphasize student loan debt service payments, assuming students pay their loans over several decades and with payments that match the expected trajectory of earnings. This would be an apples-to-apples comparison—initial cash flows compared to initial cash flows.*
It also makes sense to report student loan payments in real terms by subtracting expected inflation (typically around 3 percent) from the nominal interest rate before calculating loan payments.** (As inflation increases wages and the prices of goods and services, a nominally flat debt payment becomes less valuable in terms of what the money can buy and how much work is necessary to earn enough to make the payment). Adjusting for inflation won’t take into account the increase in real earnings (above and beyond inflation) that typically comes with additional work experience and secular increases in economy-wide productivity, but at least takes into account increases in earnings that match inflation.
$100,000 in debt repaid in equal installments monthly over 30 years at a 3 percent real interest rate (6 percent nominal) comes to $5,059 per year ($422 per month) in real terms. In nominal terms (without adjusting for the power of inflation to make debts easier to repay), the payments are $7,200 per year ($600 per month).
With a graduated extended repayment plan over 25 years, the real initial monthly payments come to $3,420 per year ($285 per month). In nominal terms (without adjusting for the power of inflation to make debts easier to repay), the initial payment is around $6,000 per year or $500 per month.
Law graduates typically earn around $60,000 to $75,000 per year to start and have debt service payments of around $3,400 to $7,200 per year. Recent law graduates have much more cash at their disposal than most bachelor’s degree holders of a similar age even after paying down their loans.
Law students’ incomes can support their debt service payments, as demonstrated by the exceedingly low student loan default rates for recent law graduates. It is time for the ABA to rethink how law schools disclose debt balances and student loan repayment obligations so that students are not mislead into underinvesting in education.
Journalists and education experts should also be careful to discuss student loans using apples-to-apples comparison—cash flows to cash flows, and lifetime present values to lifetime present values.
* If student loan balances or initial cost of education are presented, these should be compared to the expected present value of the boost to earnings from the degree over the course of a lifetime. Thus, for example, whenever reporting that law school costs around $100,000 on average, it should also be reported that the average value before taxes and tuition is around $1,000,000 and that the median value is around $750,000.
** Part of what graduated loan repayments accomplishes is to make real payments closer to level. If nominal payments remain flat, as in standard fixed repayment loans, in real terms, payments decline over time and repayment of the loan is front-loaded.
Tom Friedman's latest New York Times column uses the labor market for executive assistants and executive secretaries to illustrate dubious claims about credentialing and over-education. Friedman argues that since most current executive assistants and executive secretaries don't have bachelor's degrees, employers should not try to upgrade the workforce by hiring new executive assistants and secretaries with bachelor's degrees. After all, executive assistants without bachelor's degrees can do the job, so who needs a bachelor's degree?
The problems with this reasoning should be obvious.
First, education is only one of many factors that are valued in the labor market. Some individuals who are smart, hardworking, personable, physically attractive, or fortunate, but have limited education, will inevitably be as successful or more successful than other individuals who are highly educated but less gifted in other respects. This does not in any way challenge the extremely strong evidence that a bachelor's degree can improve labor market outcomes. It simply means that we are dealing with a heterogeneous population.
If two homogenous groups who were initially equally strong on non-education factors were given different amounts of education, the more educated group would typically be more successful in the labor market. Labor economists who have studied identical twins routinely find that twins with more education are more successful than their less educated counterparts. When labor economists control for unobserved heterogeneity within education levels using fixed effects models rather than OLS regression, "over-education" effects on earnings diminish or disappear. In other words, highly educated folks who are about as successful as those with less education--and end up in the same occupations as the less educated--tend to be weak on factors other than level of education. But even within occupations that combine the worst of the more-educated with the best of the less-educated, those who are more educated still tend to earn more. Since profit-maximizing employers are not in the habit of handing out money for nothing, this suggests that the more educated are better at their jobs.
In sum, education many not always be enough to make you more successful than your neighbor or coworker, but it can make you more successful than a less educated version of yourself.
Second, the fact that something was "good enough" at some point in the past does not mean it is good enough today. Rising standards typically involve both increases in quality and commensurate increases in cost. In inflation adjusted terms, the average new car today costs about 10 times as much as a Ford Model-T in the late 1920s. But the average new car is faster, safer, more reliable, and easier to operate. Similarly, as education increases, so does the productivity of labor and the cost of labor--wages or earnings. Highly educated workers today are far more productive than their counterparts decades ago, and as a result, they earn more.
It is interesting that Friedman chose executive assistants and executive secretaries--a field where most workers have less than a bachelor's degree--as an example of supposed "over-education." According to the Bureau of Labor Statistics Occupational Employment Statistics, employment of executive assistants and executive secretaries is collapsing. Employment fell by more than half between 2007 and 2014, from over 1,500,000 workers to barely more than 700,000. In other words, the level of education that most executive assistants and secretaries had in 2007 was not enough to make it in the labor market of 2014.
Among secretaries, those with higher levels of education still earn more than their less educated counterparts after controlling for race. Employer hiring priorities cited by Friedman suggest that those who are more educated are more likely to keep their jobs or find new ones.
This is consistent with general trends in the labor market. Low and middle skill workers with limited educations are the hardest hit by automation, outsourcing and layoffs, while their more educated counterparts are navigating the recession and changes in the labor market more successfully. (During the 2007-2014 period, employment of a group of highly educated workers, lawyers--supposedly the victims of job-destroying structural change--continued to grow faster than overall employment).
For another angle on Friedman's column, readers may be interested in Frank Pasquale's critique. Pasquale discusses apparent bias in the New York Times' Higher Education coverage and argues that as newspapers struggle to adapt to a world replete with free online content and greater competition for advertising dollars, business priorities may be overriding traditional news values. Given the nearly 20 percent decline in employment for reporters and correspondents between 2007 and 2014, journalism does appear to be under serious financial pressure.