Brian Leiter's Law School Reports

Judge Posner on the same-sex marriage decision

This line from his commentary was particularly funny:

The chief justice criticizes the majority for “order[ing] the transformation of a social institution that has formed the basis of human society for millennia, for the Kalahari Bushmen and the Han Chinese, the Carthaginians and the Aztecs. Just who do we think we are?” We’re pretty sure we’re not any of the above. And most of us are not convinced that what’s good enough for the Bushmen, the Carthaginians, and the Aztecs should be good enough for us. Ah, the millennia! Ah, the wisdom of ages! How arrogant it would be to think we knew more than the Aztecs—we who don’t even know how to cut a person’s heart out of his chest while’s he still alive, a maneuver they were experts at.

U.S. Supreme Court rules in favor of same-sex marriage

The full majority and dissenting opinions are here.  A few quick observations:

1.  In finding an unenumerated right of same-sex couples to marry under the Equal Protection and Due Process clauses of the Constitution, the Supreme Court really for the first time since 1973 has found such a new right.  (Lawrence v. Texas, the 2003 case rendering homosexual sodomy statutes unconstitutional, was decided on the basis of a "liberty interest" protected by the Due Process clause.  If one treats that as part of the pantheon of "unenumerated rights" cases, it still gives a vivid sense of how rare such "discovery" of unenumerated rights has become.)

2.  The dissents, especially by Chief Justice Roberts and Justice Scalia, complain that the majority has, in effect, exercised a quasi-legislative power, rather than a judicial one.   I believe that is correct, but it is rich with irony coming from the conservative wing of the super-legislature, which has often exercised the same power for venal, rather than laudatory, ends.

3. This part of Justice Scalia's dissent is especially entertaining:

Judges are selected precisely for their skill as lawyers; whether they reflect the policy views of a particular constituency is not (or should not be) relevant.  Not surprisingly then, the Federal Judiciary is hardly a cross-section  Take, for example, this Court, which consists of only nine men and women, all of them successful lawyers who studied at Harvard or Yale Law School. Four of the nine are natives of New York City. Eight of them grew up in east- and west-coast States. Only one hails from the vast expanse in-between. Not a single South- westerner or even, to tell the truth, a genuine Westerner (California does not count). Not a single evangelical Christian (a group that comprises about one quarter of Americans), or even a Protestant of any denomination. The strikingly unrepresentative character of the body voting on today’s social upheaval would be irrelevant if they were functioning as judges, answering the legal question whether the American people had ever ratified a constitutional provision that was understood to proscribe the traditional definition of marriage. But of course the Justices in today’s majority are not voting on that basis; they say they are not. And to allow the policy question of same-sex marriage to be considered and resolved  by a select, patrician, highly unrepresentative panel of nine is to violate a principle even more fundamental than no taxation without representation: no social transformation without representation.

It's good to see that mindless identity politics has arrived at the Supreme Court in the hands of a conservative Catholic from Brooklyn!  But the most amusing aspect of this is the first sentence, and its parenthetical "or should not be":  that parenthetical is there because even Justice Scalia knows that judges are not chosen for their legal skill but for their moral and political views.  Everyone doing the selecting knows this.

Lateral hires with tenure, 2014-15

MOVING TO FRONT--ORIGINALLY POSTED AUGUST 22, 2014

These are appointments with tenure that will begin in 2015; I will move this to the front at various intervals during the year; recent additions are bolded.

 

*Owen Anderson (oil & gas law, natural resources) from the University of Oklahoma, Norman to the University of Texas, Austin.

 

*Jennifer Bard (health law, constitutional law) from Texas Tech University to the University of Cincinnati (to become Dean). 

 

*Ben Barros (property) from Widener University to the University of Toledo  (to become Dean).

 

*Ann Bartow (intellectual property) from Pace University to the University of New Hampshire.

 

*Thomas Brennan (tax, empirical legal studies) from Northwestern University to Harvard University.

 

*Christopher Buccafusco (intellectual property, behavioral/experimental law & economics) from Chicago-Kent College of Law to Cardozo Law School.

 

*Aaron Bruhl (legislation, statutory interpretation, federal courts) from the University of Houston to the College of William & Mary.

 

*Irene Calboli (intellectual property, international trade, comparative law) from Marquette University to Texas A&M University.

 

*Joshua Cohen (political philosophy) resigned from Stanford University (where he taught in Law, Philosophy & Political Science) in October 2014 to join Apple University.  He will now also be part-time at the University of California, Berkeley.

 

*Matthew Diller (administrative law, social welfare law & policy) from Cardozo Law School to Fordham University (as Dean).

 

*Marcella David (international law, foreign relations law) from the University of Iowa to Florida A&M University (as Provost).

 

*William Dodge (international law, international transactions, international dispute resolution) from the University of California, Hastings to the University of California, Davis.

 

*Susan Fortney (legal ethics, legal professions, legal malpractice, bioethics, torts) from Hofstra University to Texas A&M University.

 

*Brian Galle (tax) from Boston College to Georgetown University.

 

*Nuno Garoupa (law & economics, comparative law) from the University of Illinois to Texas A&M University.

 

*Elizabeth Garrett (legislation, administrative law) from the University of Southern California to Cornell University (to become President).

 

*Andrew Guzman (international law and trade, law & economics) from the University of California, Berkeley to the University of Southern California (as Dean).

 

*C. Scott Hemphill (antitrust, intellectual property, law & economics) from Columbia University to New York University.

 

*Robert Jerry II (insurance law, dispute resolution, health law & finance) from the University of Florida, Gainesville to the University of Missouri, Columbia.

 

*Christian Johnson (tax) from the University of Utah to Widener University-Harrisburg (to become Dean).

 

*Sonia Katyal (intellectual property, civil rights, privacy, property, law & sexuality) from Fordham University to the University of California, Berkeley.

 

*Daniel Katz (empirical legal studies, computational legal studies, criminal procedure) from Michigan State University to Chicago-Kent College of Law.

 

*Paul Kirgis (alternative dispute resolution, evidence) from St. John's University to the University of Montana (to become Dean).

 

*Charlotte Ku (international law) from the University of Illinois to Texas A&M University.

 

*Gillian Lester (employment law) from the University of California, Berkeley to Columbia University (as Dean in January 2015).

 

*Erik Luna (criminal law & procedure) from Washington & Lee University to Arizona State University.

 

*Glynn S. Lunney, Jr.  (intellectual property, law & economics) from Tulane University to Texas A&M University.

 

*Timothy Lytton (regulatory law and policy, administrative law, torts) from Albany Law School to Georgia State University.

 

*Bruce Markell (bankruptcy) from Florida State University to Northwestern University.

 

*Andrei Marmor (legal philosophy) from the University of Southern California to Cornell University.

 

*Andrea Matwyshyn (law & technology, cyberlaw, privacy) from the Wharton School at the University of Pennsylvania (untenured) to Northeastern University.

 

*Paul McGreal (constitutional law, law & religion, business ethics) from the University of Dayton to Creighton University (as Dean).

 

*Ajay Mehrotra (tax, legal history) from Indiana University, Bloomington to Northwestern University and the American Bar Foundation.

 

*Tim Meyer (international law--incl. international economic, environmental and energy law; law & economics) from the University of Georgia to Vanderbilt University. 

*Douglas NeJaime (family law, law & sexuality, constitutional law) from the University of California, Irvine to the University of California, Los Angeles.

 

*Paul Ohm (law & technology, computer law, privacy, intellectual property) from the University of Colorado, Boulder to Georgetown University.

 

*Dave Owen (environmental law, natural resources, water law, administrative law) from the University of Maine to the University of California, Hastings.

 

*Mary-Rose Papandrea (constitutional law, media law, national security law) from Boston College to the University of North Carolina, Chapel Hill

 

*Dylan Penningroth (legal history) from Northwestern University (History Dept.) and American Bar Foundation to the University of California, Berkeley.

 

*Jennifer Rosato Perea (family law, bioethics, legal ethics, civil procedure) from Northern Illinois University (where she was Dean) to DePaul University (to become Dean).

 

*Scott Pryor (bankruptcy, contracts, UCC) from Regent University to Campbell University.

 

*Srividhya Ragavan (intellectual property, international trade, contracts) from the University of Oklahoma, Norman to Texas A&M University.

 

*Laura Rosenbury (feminist legal theory, family law, employment discrimination) from Washington University, St. Louis to the University of Florida, Gainesville (to become Dean).

 

*Erin Ryan (environmental law, natural resources law) from Lewis & Clark College to Florida State University.

 

*James Salzman (environmental law) from Duke University to the University of California, Los Angeles (Law) and the University of California, Santa Barbara (Environmental Science & Management). 

 

*Michael Schill (property, real estate law, urban policy) from University of Chicago to the University of Oregon (as President).

 

*David Schwartz (patents, intellectual property, empirical legal studies) from Chicago-Kent College of Law to Northwestern University.

 

*Jessica Silbey (intellectual property, law & culture) from Suffolk University to Northeastern University.

 

*Kenneth Simons (torts, criminal law, law & philosophy) from Boston University to the University of California, Irvine.

 

*Alexander Somek (EU law, comparative constitutional law, legal theory) from the University of Iowa to the University of Vienna.

 

*Alec Stone Sweet (comparative constitutional law and politics, international law & courts) from Yale University to the National University of Singapore.

 

*Alan O. Sykes, Jr. (international trade, law & economics) from New York University back to Stanford University.

 

*Eric Talley (corporate law, law & economics) from the University of California, Berkeley to Columbia University (in July 2015).

 

*Steve Vladeck (federal courts, national security law, constitutional law) from American University to the University of Texas, Austin (effective 2016).

 

*Melanie Wilson (criminal law, criminal procedure, evidence) from the University of Kansas to the University of Tennessee (as Dean).

 

*Peter Yu (intellectual property, communications law and policy, and comparative and international law) from Drake University to Texas A&M University.

 

*Kathryn Zeiler (torts, health law, law & economics, empirical legal studies) from Georgetown University to Boston University. 

ABA Task Force on Financing Legal Education Advocates Disclosure, Experimentation and More Empirical Research (Michael Simkovic)

The ABA Task Force on Financing Legal Education’s report  was released last week.  I was among the people who testified before the Task Force last summer, and the report cites both my presentation and my research with Frank McIntyre on The Economic Value of a Law Degree.  Consistent with our research, the report notes that challenges facing legal education are similar to challenges facing higher education more generally, and notes extremely low student loan default rates for law school borrowers.  

The report is forthright about the limitations of existing data and careful in its recommendations—most of which relate to:

• disseminating existing information more clearly (especially about student loan repayment options),
• gathering better information going forward (especially about tuition and scholarships), and
• structuring “experiments” in legal education (e.g., relaxation of accreditation rules) as field experiments that facilitate causal inference by trained social science researchers.  

The report notes that legal education appears to be responding to market forces.  After declines in applicants, law schools reduced capacity and offered more scholarships.  Actual tuition increases have been lower than widely publicized increases in sticker tuition because of increased use of scholarships (tuition-discounting), although net-tuition has still increased faster than inflation as measured by CPI-U.

The ABA Task Force on Financing Legal Education report urges the legal profession to support federal student loan forgiveness programs that encourage public service.  

Some student loan forgiveness programs have been criticized by politically powerful, media savvy, and well-funded think tanks, which claim that these programs will be costly for taxpayers.  (I am skeptical of many of the think tank estimates for empirical and mathematical reasons, but that is a discussion for another day).  Loan forgiveness programs may be revisited in upcoming budget negotiations.  Many are expecting reduced funding for higher education to help fund increased military spending. 

The Task Force on Financing Legal Education’s report is a major improvement over last year’s report from another Task Force assembled by the ABA, The Task Force on the Future of Legal Education.  This year’s report is both better researched and more cautious in its claims and recommendations.

ABA Task Force on Financing Legal Education Final Report

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."

SALT salary survey, 2014-15

Here.  Schools with the highest salaries tend not to participate in this survey, but it does give a realistic sense of what's going on at most law schools in the U.S.

Student Loans Are Better Than the Alternative (Michael Simkovic)

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.

Risk Based Student Loans in Bloomberg (Michael Simkovic)

Here.  For earlier coverage, see here.  For the original paper, see here.

Understanding Student Loans in the Context of Legal Education (2 of 2) (Michael Simkovic)

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).

Loan Payment Calculator in Google Sheets

Download Loan payment calculator in excel.

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.

 

Unpacking "over-education" claims (Michael Simkovic)

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.