Sunday, July 21, 2013

The Economic Value of a Law Degree: Week 1 Summary

In The Economic Value of a Law Degree Frank McIntyre and I measure differences in annual earnings and hourly wages between those with law degrees and similar individuals who end their education with a bachelor’s degree.   We account for unemployment and disability risk.

We also control for many demographic, academic, and socio-economic characteristics other than law school attendance that predict earnings. In a supplemental analysis using data from the National Education Longitudinal Study, we incorporate additional control variables and tests for ability sorting and selection.

The Economic Value of a Law Degree was covered by:

Our first blog post at Concurring Opinions ends with a presentation of annual earnings premiums at the mean and median, as well as at the high and low end of the distribution. 

Questions and Critiques

The low and and high ends of the distribution

  • We pointed out the error.
  • Brian Tamanaha posted and emailed several new questions and comments, which we will begin to respond to this week.  

Representativeness of the data

Present Value and Net Present Value
  • Paul Campos, Jack GravesBrian Tamanaha (in a comment below the post), and Derek Tokaz (in a comment below the post) misunderstood net present value and double-counted opportunity costs.  Campos, Graves, and Tokaz arrived at median after-tax, after-tuition net present values for a law degree that are too low by hundreds of thousands of dollars. 
  • Tamanaha erroneously included undergraduate debt as a cost of attending law school.
  • Stephen Diamond explained Net Present Value and Opportunity Cost and performed the correct calculation, and noted that the median after-tax, after-tuition net present value of the law degree was approximately $330,000 as of the start of law school.


  • John Steele at Legal Ethics Forum reports that according to NALP, median full time starting salaries increased dramatically between 1996 to 2011.  He forgets to take inflation into account. In real terms, median starting salaries exhibited a pattern of cyclicality.


Confusion at Above the Law

Guest Blogger: Michael Simkovic, Law Professors Saying Dumb Things, Legal Profession | Permalink

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