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.