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:
- Steven Davidoff at the New York Times Dealbook
- Dylan Matthews at the Washington Post
- Jordan Weissmann at the Atlantic Monthly
- Lauren Ingeno at Inside Higher Education
- Debra Cassens Weiss at the ABA Journal
- Christina Sterbenz at Business Insider
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
- Brian Tamanaha mischaracterized our research as only presenting means in a quote to Inside Higher Education.
- We pointed out the error.
- Dylan Matthews at the Washington Post reported that Professor Tamanaha’s description of our research was “false.”
- Brian Tamanaha posted and emailed several new questions and comments, which we will begin to respond to this week.
Representativeness of the data
- We responded to questions about the representativeness of the U.S. Census Bureau’s Survey of Income and Program Participation (“SIPP”).
- Paul Campos, Jack Graves, Brian 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.
- Adam Levitin, Jordan Weissmann, and Deborah Merritt ask how much we can learn about the future from data about the past. We will respond the week after next.
- 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.
- Adam Levitin asks whether law school is underpriced.
Confusion at Above the Law
- Above the Law subsequently posted a correction.
- Above the Law mischaracterizes our research again, overlooking our careful controls for ability sorting and selection, described at length in Part II and Appendix A of The Economic Value of a Law Degree.