July 05, 2017
The Wall Street Journal closed several of its blogs on Monday, including its Law Blog. The WSJ has maintained its blogs with broader readership, such as those about economics and personal finance.
June 23, 2017
Least educated county on Oregon's Pacific Coast shuts its last public library rather than increase taxes by $6 per month per household (Michael Simkovic)
Douglas County in rural Oregon recently shut its last public library rather than increase property taxes by around $6 per month per household. Less than 16 percent of the population of Douglas County has a bachelor's degree or above, making it the third least educated county on the Pacific Coast of the United States and the least educated coastal county in Oregon.
Across the Pacific, cities like Singapore, Hong Kong and Shanghai have built globally competitive workforces by investing heavily in education and infrastructure and embracing global trade. In the United States, excessive anti-tax movements have contributed to disinvestment and have slowed U.S. economic growth.
Update: Michelle Anderson (Stanford) and David Schleicher (Yale) debate policy responses to local economic decline and migration of educated populations away from depressed areas. Hat tip Paul Diller. (Willamette).
April 18, 2017
Mark Hall and Glenn Cohen have extended Brian Leiter's approach to ranking faculty by scholarly citations (based on Sisk data) to the field of health law.
According to Hall and Cohen, the most cited health law scholars in 2010-2014 (inclusive) are:
|Rank||Name||School||Citations||Approx. Age in 2017|
|2||Mark A. Hall||Wake Forest||480||62|
|3||David A. Hyman||Georgetown||360||56|
|4||I. Glenn Cohen||Harvard||320||39|
|5||John A. Robertson||Texas||310||74|
|6||Michelle M. Mello||Stanford||300||46|
|10||George J. Annas||Boston U||270||72|
The full ranking is available here.
April 02, 2017
New York Times Reporter Elizabeth Olson Claims That Professors Earning Less than First Year Associates are Paid like Law Firm Partners (Michael Simkovic)
New York Times reporter Elizabeth Olson recently complained that the Dean of the University of Cincinnati College of Law was suspended after attempting to slash faculty compensation (“Cincinnati Law Dean Is Put on Leave After Proposing Ways to Cut Budget”). According to Olson, “law schools like Cincinnati [pay hefty] six-figure professor salaries that are meant to match partner-level wages.”
Olson goes on to cite the compensation of the current and former Dean of the law school. This makes about as much sense as citing newspaper executive compensation in a discussion about reducing pay for beat reporters.
Data from 2015—the latest readily publicly available—shows that law professors at Cincinnati earned total compensation averaging $133,000. A few professors earned less than six figures. Only one faculty member—a former dean and one of the most senior members of the faculty—earned more than $180,000. Including only Full Professors—the most senior, accomplished faculty members who have obtained tenure and typically have between seven and forty years of work experience—brings average total compensation to $154,000 per year.
As Olson herself reported less than a year ago, first year associates at large law firms earn base salaries of $180,000 per year, not counting substantial bonuses and excellent benefits. With a few years of experience, elite law firm associates’ total compensation including bonus can exceed $300,000. Law firm partners at the largest 200 firms can earn hundreds of thousands to millions of dollars per year according to the American Lawyer, and often receive large pensions after retirement.
March 16, 2017
Daniel Hemel and David Herzig argue in the New York Times that a Republican plan to replace a tax penalty paid by the uninsured under the Affordable Care Act with a penalty paid directly to insurance companies after a gap in coverage could thwart Republican efforts to repeal Obamacare using budgetary reconciliation procedures.
January 19, 2017
Established datasets, proxies, and customized data collection: The case of international LLMs (Michael Simkovic)
How should researchers make tradeoffs between the costs of data collection, the speed of the analysis, the precision of the measurements, reproducibility by other researchers, and broader context about the meaning of the data: how we might compare one group or one course of action to another, how we might understand historical trends, and the like?
Must we always measure the precise group of interest, with zero tolerance for over-inclusion or under-inclusion? Or might one or a series of proxy groups be sufficient, or even preferable for some purposes? What if the proxies have substantial overlap with the groups of interest and biases introduced by use of proxy groups are reasonably well understood? How close must the proxy group be to the group of interest?
These are important questions raised by a group of legal profession researchers which includes several of the principal investigators of the widely used After the JD dataset.
Professors Carole Silver, Ethan Michelson, Robert Nelson, Nancy Reichman, Rebecca Sandefur, and Joyce Sterling (hereinafter, Silver et al.) recently wrote a three-part response (Parts 1, 2, and 3) to my two-part blog post from December about International LLM students who remain in the United States (Part 1) and International LLM students who return to their home countries (Part 2). The bulk of Silver et al.’s critique appears in Part 2 of their post, and focuses mainly on Part 1 of my LLM post.
My post, which I described as “a very preliminarily, quick analysis intended primarily to satisfy my own curiosity” used U.S. Census data from the American Community Survey and two proxy groups for international LLM (“Masters of Law”) graduates to make inferences about the financial benefits of LLM degrees to international students who remain in the U.S. Silver et al. agree with several of the limitations of this analysis that I noted in paragraphs 5 through 8 of Part 1 of my post. They also note that historically, many LLMs have returned to their home countries and argue that the benefits of LLM programs to returning students may be greater than the benefits to those who remain in the United States. (While I am skeptical of this last claim—especially if we focus exclusively on pecuniary benefits—it seems likely that both groups benefit).
Silver et al. have also helpfully made several additional points about limitations in my proxy approach and ways in which proxies could over-count or under-count foreign LLMs. The most important of these limitations can be addressed with a few modifications to the LLM proxy group approach. Those interested in the technical details are encouraged to read footnote 1 below.
Returning to broader questions about the use of proxy groups, my view is that proxy groups can be helpful and potentially necessary for certain kinds of analysis.
Suppose that we wish to know the temperature in New York’s Central Park before we take a stroll, but we only have temperature readings for LaGuardia and Newark airport. While neither of those proxies will tell us the precise temperature in Central Park, they will usually be sufficiently close that we can ascertain with a reasonable degree of certainty whether we should bring our winter coats, wear sweaters, or proceed with short sleeves. Indeed, readings from Boston or Philadelphia will probably suffice, particularly if we’re aware of the direction and magnitude of typical temperature differences relative to Central Park.
Should we refuse to venture out until we can obtain a temperature reading from Central Park itself?
December 14, 2016
Republican Tax Plan likely to cause "an explosive rise in federal debt" according to Centrist former Treasury Secretary Lawrence Summers (Michael Simkovic)
Former Secretary of the Treasury Lawrence Summers recently warned that President Elect Donald Trump's proposed tax reform plan "will massively favor the top 1 per cent of income earners, threaten an explosive rise in federal debt, complicate the tax code and do little if anything to spur growth."
Summers served as Secretary of the Treasury during the Clinton Administration, during one of the few periods in the last 4 decades when the Federal Government ran a surplus budget. Summers is a Professor of Economics at Harvard University, served as the President of Harvard University, was the Chief Economist of the World Bank, was the Director of the National Economic Council, and was a managing partner at hedge fund D.E. Shaw.
Summers is widely regarded as data-driven, rigorous, and centrist (Summers has complained about "absurd political correctness" in academe and his potential nomination as Chairman of the Federal Reserve was opposed by Progressive Democrats).
"Unfortunately, neither the Trump plan, nor the one put forward by Paul Ryan, speaker of the House of Representatives, provides for nearly enough base-broadening to finance all the high-end tax cutting they include.
Steven Mnuchin, Treasury secretary-designate, asserts there will be no absolute tax cut for the upper class because deductions would be scaled back. The rub is that totally eliminating all deductions for those with incomes over $1m would not even raise enough revenue to cover reducing their marginal tax rates from 39 to 33 per cent, let alone offset their benefit from huge rate reductions on business and corporate income, and the elimination of estate and gift taxes.
Estimates of the Trump plan suggest that it will raise the average after-tax income of the 0.9 per cent of the population with incomes over $1m by 14 per cent, or more than $215,000. This contrasts with proposed tax cuts for those in the middle of the income distribution of $1,000, or about 2 per cent.
The repeal of estate and gift taxes is especially problematic because it would provide a window for the very rich to use gift and trust structures to ensure that their wealth passes without tax not just to their children but to their grandchildren and great grandchildren, regardless of subsequent legislation. . . .
The envisioned Trump tax cut is about the same size relative to the economy as the 1981 Reagan tax cut. It is worth remembering that Reagan, hardly a fan of reversing course or raising taxes, found it necessary to propose significant tax increases in 1982 and 1984 (the equivalent in today’s economy of $3.5tn over a decade) due to concerns about federal debt.
August 19, 2016
"There's a new book out about the student loan crisis [Student Debt: Rhetoric and Realities of Higher Education], or what author Sandy Baum suggests is a "bogus crisis." Baum, a financial aid expert and senior fellow at the Urban Institute, claims it has been [sensationalized and exaggerated] by the media in search of a spicy story and fueled by politicians pushing "debt free college" proposals. . . . "
"People who earn bachelor's degrees, by and large, do fine.
The problem is that we have a lot of people actually borrowing small amounts of money, going to college, not completing [a degree] or completing credentials that don't have labor market value. They tend to be older. They tend to come from disadvantaged or middle-income families and they're struggling. [But] not because they owe a lot of money. . . .
Its not realistic to say we're going to pay people to go to college [for free]. Someone has to pay. We can have everyone pay much higher taxes. But short of that, it's not clear how we would pay. . . .
There are some people who borrowed under fraudulent, deceptive situations and their debt should be forgiven. There are people for whom education did not work out through no fault of their own and their debt should be forgiven. . . . We don't give people very much advice and guidance about where [and] when to go to college, how to pay for it, what to study. . . .
[[There are facts that] get little or no attention because they don't fit the "crisis" narrative:
- A third of college students who earn a four-year degree graduate with no debt at all. Zero.
- A fourth graduate with debt of no more than $20,000.
- Low-income households hold only 11 percent of all outstanding [student] debt.
- Almost half of the $1.3 trillion in student loan debt is held by 25 percent of graduates who are actually making a pretty high income.]
This is an investment that pays off really well. The median earnings for young bachelor's degree recipients is about $20,000 a year higher than the median earnings for high school graduates.
Student debt is really creating a lot of opportunities for people. People wouldn't be able to go to college otherwise."
Baum notes that many graduates with high debt levels (>$100,000) have advanced degrees, high expected incomes, and low default rates.
"The highest debt levels are for those earning professional degrees . . . Despite high debt levels, default rates among graduate borrowers are very low." However, Baum expresses some concern about those pursuing expensive master's degrees in fields "that rarely lead to the kind of earnings that doctors, lawyers, and MBAs can expect."
Baum's findings are broadly consistent with recent research by Beth Akers and Matthew Chingos, reviewed by David Leonhardt for the New York Times. Akers and Chingos have a new book coming out this fall.
August 17, 2016
New York Times journalist Elizabeth Olson recently reported that the law school graduating class of 2015--which was very close to the size of the class of 1996--had about the same number of private sector jobs 9 months after graduation as the class of 1996. That's a pretty good outcome considering that the economy-wide employment population ratio in February 2016 was 3.6 points lower than in February 1997. Olson puts a negative spin on the non-story.
UPDATE: Casey Sullivan at Bloomberg provides more balanced coverage, noting the smaller class size at the outset of his story and focusing on overall earnings rather than job counts in one segment of the market.
For previous coverage, see
Timing Law School (forthcoming in JELS)
August 15, 2016
“Glass Half Full” author concedes problems with estimates of solo practitioner incomes and headcounts (updated 8/18)
Professor Benjamin H. Barton recently responded to critiques of his estimates of solo practitioner incomes. Barton does not answer the specific questions that I posed about his use of IRS data, but he generally concedes that the IRS data is problematic.
- Barton wrote:
“Is it possible that the IRS data undersells the earnings of solo practitioners? Yes, for the reasons I state above and for some of the reasons that you and Professor Diamond point out.”
- Barton wrote:
“Do I think that the IRS data are off by a factor of 3.5 or even 2? No.”
I encourage Professor Barton to present a revised estimate that he thinks is more accurate. Several studies that he cites for support suggest that his solo income estimates are off by a factor of approximately 2 to 3 (see below for details).
- Barton defends his use of IRS data on three grounds, each of which is problematic:
a. “The IRS data on lawyer earnings is the longest running data I could find and thus the best dataset for a discussion of long term trends.”
Professor Barton overlooked the U.S. Census Bureau’s Decennial Census, which has data on Lawyer’s incomes since 1950 (which reports 1949 incomes).[i] The IRS data presented by Barton starts 18 years later, in 1967.
When considering long term trends in occupational incomes, it’s important to consider changes in the race and sex of members of the occupation. Across occupations, women and minorities generally earn less than white men. Race and sex variables are available in Census Household data, but not public-use IRS data.
b. The IRS data “separates lawyer earnings into solo practitioners and law firm partners”
Professor Barton acknowledges that his data misses incorporated self-employed lawyers, and that this group likely has higher incomes than those that he captures.[ii]
This means that Professor Barton’s IRS data is much less useful for identifying small and solo practitioners in 2013 than it was in 1970. This is because the proportion of solo and small attorneys who incorporated has likely increased dramatically. In 1970, 5 percent of full-time self-employed lawyers were incorporated. By 2014, the share increased to more than 50 percent.[iii]. Barton is missing many solo and small time practitioners. If trends toward incorporation continue, his data will become less useful every passing year. The IRS data has different biases at different points in time, making trends potentially unreliable.