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Million Dollar JD Debate: If You Don't Like Their Argument, Ignore Their Facts

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Michael Simkovic is back for round 2 of defending his paper on the $1 million law degree against law school critic Brian Tamanaha. [Question for the people who describe Tamanaha, Campos, et al as "critics" (Simkovic doesn't use the term in his post, but others have in this debate and others): What's the alternative? Someone who does not question the status quo or who believes law schools have reached the Platonic Form and no improvements are possible?]

Here's the point-counterpoint of Simkovic's second post on the topic on Brian Leiter's web blog:

BT Claim 2: Using more years of data would reduce the earnings premium

BT Quote: There is no doubt that including 1992 to 1995 in their study would measurabley reduce the 'earnings premium.'"

Response: Using more years of historical data is as likely to increase the earnings premium as to reduce it

First things first, the "claim" Simkovic says Tamanaha is making is not supported by the quote provided. Put on your LSAT hats and work your way through the logic. The supposed BT claim is More Years = Reduced Premium. But, the quotes says "1992-95 = Reduced Premium." Tamanaha is not claiming that more years will always (or even generally) reduce the earnings premium. He points to 1992-95 specifically because they were bad years.

We'll put that point aside though, and look at the question of whether extending the study to 1992-95 would decrease the earnings premium. Tamanaha argues that lawyers were earning less in 1992-95, and therefor there would be a lower earning premium. Simkovic, quite rightly, points out that law grad salaries are not the only thing at issue here -- we must also look at what other degree holders are earning:

The issue is not simply the state of the legal market or entry level legal hiring—we must also consider how our control group of bachelor’s degree holders (who appear to be similar to the law degree holders but for the law degree) were doing. To measure the value of a law degree, we must measure earnings premiums, not absolute earnings levels.

That makes perfect sense. If the median JD salary drops from $75,000 to $65,000, but the median BA salary drops from $45,000 to $35,000, then the JD has maintained its premium. You're earning less than you would have gotten during a boom year, but in either case you're earning $30,000 than you would have without the JD. We completely agree with this line of reasoning.

The problem is that Simkovic has ignored one premise of Tamanaha's argument:

Had S&M extended their study by just four years—to 1992, covering twenty years in all—they would have found reduced “earnings premium” for law grads. This is because the legal job market suffered a severe recession from 1992 to 1998, while the general economic recession had ended in early 1992. [Emphasis added]

Simkovic is right that the earnings premium can be maintained when salaries go down across the board. And, he'd be right if he said that if you just picked an extra year at random to add to the study, you'd be as likely to increase the premium as to decrease it. Neither of those points address Tamanaha's criticism, which is that in three years, specifically the ones preceding the data used by Simkovic, lawyer salaries were depressed while salaries at large were on the rise.

Finally, in all the talk about what years are the right data to use, one thing has to be kept in mind: As the author of the study Simkovic and his co-author McIntyre bear the burden of proof. It's up to them to argue why their 16-year historical span is a reliable predictor of future economic trends.

A Tale of Two Butthurt Profs

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Two butthurt professors took to the pages of Brian Leiter's blog to talk about just how butthurt they were over all the criticism of Michael Simkovic and Frank McIntyre's article about the economic value of a law degree.

The first butthurt comment comes from Simkovic himself, guest blogging on Leiter's wobsite. He discusses in detail how Above the Law didn't do a good enough job reading and understanding the paper that he and his guest author poured so much time and effort in to. Here's Simkovic's first of six complaints:

ATL Claim: The article doesn’t present any earnings data after 2008 and ignores changes since the financial crisis.

And Simkovic's response:

Facts: We present earnings data from 1996 to 2011.  We also check for trends.  As shown in the figure below, the earnings premiums in recent years are within historical norms. [...]

We note in the article that the most recent college and law graduates in our sample graduated in 2008.  This is because the Census Bureau reports educational attainment at the start of each Panel and the most recent panel started in 2008.  Each panel tracks earnings for several years.

The last class to be studied was the class of 2008, but earnings data continued through 2011, so part of the recession was reflected in the data. Sure looks like ATL's claim that the article didn't present any earnings data after 2008 is flat out wrong.

Yeah, okay. Except that ATL never made that claim. Here is what ATL actually said:

Cutting your study off in 2008, before the market significantly changed, means that your study HAS NO CREDIBILITY. NONE.

ATL's language is a bit ambiguous; it's not clear if they mean the authors didn't look at classes graduating after 2008 (which they didn't) or if they didn't look at salaries after 2008 (which they did). Fortunately, there's this little thing called context. ATL previously quoted a bit from the ABA Journal's coverage of the paper:

The data covers four panels of graduates from 1996 through 2008 and looks at salaries through 2011.

We're pretty sure there some fancy Latin legal phrase used to express the idea that you have to interpret things in context, but we don't have any reference materials within reach, so let's just say dolium volvitur. Here's a screencap of the two sections quoted from the ATL article. A screencap. Singular. Meaning you can see both sections at the same time. That means a reader of ordinary intelligence would understand ATL's complaint to be not that salaries were no looked at post-2008, but that the study did not take into consideration the graduating classes of 2009, 2010, and 2011.

Some of the other criticisms of ATL's piece have more meat to them, but when you title your blog post "Above the Law Needs to Read More," perhaps your first complaint shouldn't be quite so reading impaired.

Before turning to the other butthurt professor, there's one other problem with Simkovic's response we want to point out. This part comes in a discussion about the role of tuition in the article:

Mr. Mystal is correct that the $1 million figure is pre-tax and pre-tuition—the article says as much. However, after deducting taxes, and tuition, and even close to the bottom of the distribution, it appears that a law degree is very often a profitable investment.

How profitable varies from person to person. There are surely a few individuals who do not benefit at all or even do worse. If we had a way to identify these unlucky people before law school we would encourage them to avoid law school. Judging from student loan default rates, this is a relatively rare outcome. Further, income based repayment of loans should substantially mitigate this downside, even as it makes it difficult for us to nail down exactly how much a given person pays for law school.

Simkovic has repeatedly cited law school graduates' low student loan default rates, both to show that they don't struggle as much as other grads with higher default rates, and to argue that law school student loans are a good investment for the federal government (6.8% interest + low default rate = profit! ...plus a very serious question about why the interest rate doesn't reflect the low default rate...).

Simkovic has ignored the very real possibility that law school default rates could be lower because law school grads are more apt to take advantage of deferment, forbearance, and IBR and PAYE programs. Seems pretty reasonable to think law school grads are a bit better at wading through complex contract terms and government regulations, especially when you consider the degree to which law schools are advertising these programs.

When it comes to student loans being profitable for the federal government, again the story doesn't end at default. If you graduate with the average debt of $100,000 at 6.8% interest, you need to earn $156,000 to not be classified as being in "partial financial hardship" and being eligible for PAYE. At $150,000 in law school debt, a grad needs to earn $225,000 a year. Even at the low end, with just $50,000 in debt, a salary less than $87,000 makes you eligible for monthly payments. The default rate might be low, but so is the number of people the government is collecting 6.8% interest from.

A law school grad with $100,000 in debt needs to earn $59,000 a year just to pay the interest on the loan. Below that amount, the principle is never touched. So what happens at the end of 20 years if you're right at that threshold? The government collects it's 6.8%, which comes out to a total of $83,000. It then forgives the principal of $100,000. Doesn't look like such a good investment now, but please Mr. Simkovic, tell us more about how important the low default rate is.

 

Moving on, the second butthurt professor is the philosophy professor of law himself, Brian Leiter. He complains that The New Republic ran an article about how to fix law schools without consulting any real experts. The six people TNR talked to here, as Leiter describes them:

[O]ne gossip columnist who went to law school, one longtime law professor, two journalists who went to law school, one "journalist moonlighting as a law professor", and one in-house counsel. In short, they asked no experts on legal pedagogy, the economics of legal education, or the legal profession, just a group of pontificators (plus one lawyer) with varying degrees of familiarity with law schools.

The "gossip columnist who went to law school," is ATL's David Lat. Leiter leaves out of his description that Lat also worked at a clerk for a judge on the Ninth Circuit Court of Appeals, as an associate at Wachtell, and as a federal prosecutor.

The longtime law professor is Alan Derschowitz. He was a clerk to the chief judge of the U.S. Court of Appeals for the District of Columbia Circuit, then to SCOTUS Justice Goldberg (yeah, never heard of him either, but whatever). After clerking, he went into academia, but has also practiced law off and on (seems to be mostly off), working as a criminal appellate lawyer on some high profile cases.

The "two journalists who went to law school," are Mike Kinsley, TNR's editor-at-large, and Dahlia Lithwick, a senior editor and legal correspondent for Slate. Kinsley graduated from Harvard Law in the 1970s and has been in journalism ever since. Lithwick clerked for a judge on the Ninth Circuit, and also practiced family law for a short time (her bio isn't clear on for how long, but likely no more than 4 years).

The "journalist moonlighting as a law professor," is Paul Campos, and the "moonlighting" bit is supposed to be a dig at Campos for having a blog.

Lastly, the in-house counsel is Mark Chandler of Cisco Systems. Leiter fails to mention that he is on the Dean's Advisory Committee at Stanford Law School.

The "varying degrees of familiarity with law schools" includes for each of the "pontificators" having actually attended law school. And while he doesn't like that "journalist moonlighting as a law professor," Leiter himself isn't even a real law professor. He is a philosophy professor who happens to work at a law school and teaches Evidence for two months of the year. His CV is filled with publications on Neitzche, Legal Realism, and Legal Positivism, but light on law (his writing on Evidence is more about epistemology). He is nothing more than a very highly paid pontificator, and one that isn't even recognized by other pontificators (ie: philosophy professors) as being particularly good at what he does.

[Editor's Note: An earlier version mistakenly said Leiter had no legal education and does not teach law. He holds a JD from Michigan, regularly teaches Evidence during Chicago's 2 month Winter term.]

Diamond me no diamonds! Raise me tuitions no tuition raises!

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Back in January there was a bit of a spat with a Santa Clara professor by the name Steve Diamond that you may recall. Among the many wildly untrue statements he made, such as that Law School Transparency is only in it for the money, is that the faculty at Santa Clara are responding to the crisis in the legal industry with financial responsibility:

At SCU we have already committed, and have been committed for several decades, to all of the things you suggest - lower salaries, more teaching, more administrative work by faculty and lower tuition than is the norm at schools like Stanford. [...]

We constantly debate those choices and try to find the right balance - which has included in the last few years decisions to freeze salaries, not raise tuition and increase administrative work for faculty. [Emphasis added]

When we pointed out that SCU had raised tuition every year since 2005, Diamond responded:

The SCU faculty did vote to block a proposed tuition increase recently. Nothing was made up.

Perhaps nothing was made up, perhaps there really was a vote to block a tuition increase. If so, Steve Diamond neglected to include one of two pertinent facts: (1) the vote failed, or (2) the vote was ineffective.

The tuition rate at SCU was $43,680 for the 2012-13 school year. The new tuition rate for the 2013-14 school year is an even $45,000. That's just a hair over a 3% increase. That's better than the 4.5% increase from 11-12 to 12-13, or the 6.2% increase the year before that, but it's still an increase to tuition. There was a decision not to raise tuition, and a vote to block a tuition increase, and yet up, up, up it goes. We know what's happened.

You see, Santa Clara could have increased tuition by the same 4.5% rate, and so by increasing it only by 3% it's really decreased tuition by $645. In fact, Santa Clara has over two years brought tuition down $2,132 ...from the amount it would have been at if it maintained the 6.2% increase.

Houston professor complains about the volume of bad literature out there

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University of Houston Law professor Jacqueline Lipton has a problem. Ordinarily around this time of year she posts a list of summer reading for anyone who happens to be interested in her summer reading recommendations. This year she isn't doing it, and instead posted on Faculty Lounge a short rant about how hard it is to find good books to read:

But I wanted to also raise the question of how to FIND good books to read other than Goodreads, word of mouth and the NYT best-seller list. I used to rely on what was getting good reviews at Amazon, but I've found that increasingly difficult because so many works have four and five star reviews on Amazon that really aren't very good, and I don't mean that in a subjective sense. A bunch of self-published books in particular simply have editorial errors all over them, inconsistencies in plots and characters etc and still get four and five star reviews, often from hundreds and occasionally from thousands of readers. I'm at a bit of a loss to know how this comes to pass. Even if friends of the author are writing the reviews, who has that many friends? Or are there services folks can pay to get good reviews posted on Amazon?

I don't mean to be negative about self-publishing because I think it's terrific that authors can self-publish, particularly as the traditional publishers are consolidating and it's getting so much harder to publish in the traditional mode. But as a reader, I now find it difficult to sort through the morass of available tomes in e-book format. It's one of those areas where digital tech has created information overload and it's increasingly difficult for me as a reader to separate the wheat from the chaff. How do other people manage? Some folks must want to read interesting books that aren't NYT bestsellers. But how do you find them now?

We can understand the hipster-instinct to avoid things on the NYT list, but we're a bit at a loss as to what's wrong with Goodreads (which functions a bit like Pandora for identifying books you might like). Word of mouth seems like an even worse thing to complain about, since part of the enjoyment of reading a book is being able to share the experience with other people, ...and because her normal summer reading list is nothing but word of mouth recommendations.

Anyways, we're a law blog, and we have a law bloggy type angle to this, and not just pointing out the ridiculously trite things law professors go to the internet to complain about.

For however bad Lipton thinks the mainstream publishing world is about letting the signal to noise ratio get completely screwed up by a mountain of sub-literate self published texts, the legal industry is far worse.

Legal academics produce roughly 10,000 journal articles every year, and it's not just that many of them aren't interesting, but that 80% of them are crap. How is anyone supposed to locate the best articles from that mountain of paper? If you wanted to read only the top 1%, truly separate the wheat from the chaff, you'd still have to read 1 article every 3 days. And that wouldn't even allow you to start working on the backlog of articles published before you started your reading binge.

If you didn't see the an ironic twist coming from the start, fair warning, ironic twist ahead.

We took a look at professor Lipton's CV, and in her 20 years in academia she has written more than 80 articles. Four per year. Is there anyone out there who thinks professor Lipton has four publication-worthy ideas each year? Does anyone really think that extraordinary level of insight is coming from someone who can't figure out how to get book recommendations?

[PS: All four of her recommendations from last year appeared on the NYT bestseller list. But leave it to a law professor to look for a solution without a problem, and then fail to find it.]

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