Lowest Ranked School You Would Attend at Sticker? Forum

[kapital98]

My point is that just because you get a law degree that doesn't mean you get to become a lawyer in any meaningful sense of the word. A large percentage of current grads will never actually be part of the profession. A poster in this thread said that for somebody who puts a high enough value on being a lawyer any ABA law school is worth sticker. This would only be true if graduating from law school ensured that you would be a lawyer, in the same way that graduating from medical school does in fact pretty much guarantee that you'll be a doctor.

In a cost-benefit analysis the possibility of unemployment would essentially be a risk premium. You would multiple the probability of risk to expected income and this would created the expected benefit.

So, assuming no intrinsic value from the profession and a 50% chance of unemployment:

$50,000 * (1-.5) = $25,000 benefit per year.

Now, assuming intrinsic value, this can be much higher. ex:

($50,000 * .5) + $50,000 = $75,000

You would then compare that $75,000 to expected debt over "x" amount of years.

Your comment is already part of a cost-benefit analysis. I do agree with you that many 0L's do not properly consider the costs of legal education relative to the benefits. But many of the people that attend lower ranked schools at sticker do take into account these costs and benefits.

[Br3v]

with each passing post I understand justonemoregame less. Sometimes the sarcasm is strong, but sometimes just light enough that I take him serious.

[dingbat]

My point is that just because you get a law degree that doesn't mean you get to become a lawyer in any meaningful sense of the word. A large percentage of current grads will never actually be part of the profession. A poster in this thread said that for somebody who puts a high enough value on being a lawyer any ABA law school is worth sticker. This would only be true if graduating from law school ensured that you would be a lawyer, in the same way that graduating from medical school does in fact pretty much guarantee that you'll be a doctor.

In a cost-benefit analysis the possibility of unemployment would essentially be a risk premium. You would multiple the probability of risk to expected income and this would created the expected benefit.

So, assuming no intrinsic value from the profession and a 50% chance of unemployment:

$50,000 * (1-.5) = $25,000 benefit per year.

Now, assuming intrinsic value, this can be much higher. ex:

($50,000 * .5) + $50,000 = $75,000

You would then compare that $75,000 to expected debt over "x" amount of years.

Your comment is already part of a cost-benefit analysis. I do agree with you that many 0L's do not properly consider the costs of legal education relative to the benefits. But many of the people that attend lower ranked schools at sticker do take into account these costs and benefits.

As someone with a good understanding of finance/economics, I got to say what the?

[orbbs]

My point is that just because you get a law degree that doesn't mean you get to become a lawyer in any meaningful sense of the word. A large percentage of current grads will never actually be part of the profession. A poster in this thread said that for somebody who puts a high enough value on being a lawyer any ABA law school is worth sticker. This would only be true if graduating from law school ensured that you would be a lawyer, in the same way that graduating from medical school does in fact pretty much guarantee that you'll be a doctor.

In a cost-benefit analysis the possibility of unemployment would essentially be a risk premium. You would multiple the probability of risk to expected income and this would created the expected benefit.

So, assuming no intrinsic value from the profession and a 50% chance of unemployment:

$50,000 * (1-.5) = $25,000 benefit per year.

Now, assuming intrinsic value, this can be much higher. ex:

($50,000 * .5) + $50,000 = $75,000

You would then compare that $75,000 to expected debt over "x" amount of years.

Your comment is already part of a cost-benefit analysis. I do agree with you that many 0L's do not properly consider the costs of legal education relative to the benefits. But many of the people that attend lower ranked schools at sticker do take into account these costs and benefits.

As someone with a good understanding of finance/economics, I got to say what the?

I think he was trying to remove the risk of unemployment from the likelihood of a 50k/ year job...

But he totally ignored debt, variable salary, and pretty much everything useful or good.

[BruceWayne]

The funny thing about this question is that the sticker cost of the school can actually make the lower ranked option a lot better. For example, paying in state sticker at Texas, UGA, Alabama, or UNC is a better decision than paying sticker at Georgetown, UVA, or Michigan in a lot of ways.

[kapital98]

My point is that just because you get a law degree that doesn't mean you get to become a lawyer in any meaningful sense of the word. A large percentage of current grads will never actually be part of the profession. A poster in this thread said that for somebody who puts a high enough value on being a lawyer any ABA law school is worth sticker. This would only be true if graduating from law school ensured that you would be a lawyer, in the same way that graduating from medical school does in fact pretty much guarantee that you'll be a doctor.

In a cost-benefit analysis the possibility of unemployment would essentially be a risk premium. You would multiple the probability of risk to expected income and this would created the expected benefit.

So, assuming no intrinsic value from the profession and a 50% chance of unemployment:

$50,000 * (1-.5) = $25,000 benefit per year.

Now, assuming intrinsic value, this can be much higher. ex:

($50,000 * .5) + $50,000 = $75,000

You would then compare that $75,000 to expected debt over "x" amount of years.

Your comment is already part of a cost-benefit analysis. I do agree with you that many 0L's do not properly consider the costs of legal education relative to the benefits. But many of the people that attend lower ranked schools at sticker do take into account these costs and benefits.

As someone with a good understanding of finance/economics, I got to say what the?

As someone with a degree in economics, this is textbook analysis. See, Rosen & Gayer, Public Finance, 8ed. (2008) p150-157 (for overview), p165-167 (for valuing intangibles), and p168-169 (valuing uncertainty). The same can be found in almost any economics textbook regarding microeconomics (ex: Perloff, Microeconomics 5th ed.; Tietenberg, Environmental Economics & Policy 5th ed.; ).

It seems like you need to update those skillz...

[kapital98]

I think he was trying to remove the risk of unemployment from the likelihood of a 50k/ year job...

But he totally ignored debt, variable salary, and pretty much everything useful or good.

No I didn't. Read my earlier posts. My argument is that the qualitative value of being an attorney is a potential benefit in a cost-benefit analysis. This is something people often ignore when considering the value of going to law school.

You should take debt and many more variables into account. How much you want to be a lawyer is just one variable. The key is to look at both sides of the equation.

[dingbat]

As someone with a degree in economics, this is textbook analysis. See, Rosen & Gayer, Public Finance, 8ed. (2008) p150-157 (for overview), p165-167 (for valuing intangibles), and p168-169 (valuing uncertainty). The same can be found in almost any economics textbook regarding microeconomics (ex: Perloff, Microeconomics 5th ed.; Tietenberg, Environmental Economics & Policy 5th ed.; ).

It seems like you need to update those skillz...

I'm not saying your analysis is wrong, just your presentation. Could you please explain with a bit more clarity (preferably including a basis for your numbers)

[Rahviveh]

I'd like to know what you're valuing at $50,000. The degree itself? Or what?

[romothesavior]

LOL kapital's gon' kapital

[Br3v]

thread makes me feel bad about paying sticker

[kapital98]

I'd like to know what you're valuing at $50,000. The degree itself? Or what?

Yearly salary for a starting attorney. To be conservative, I'm using the a starting salary slightly below the true median and significantly below the mean. Unemployment is a different variable than salary (in this case a risk premium that can be calculated through a % of employment.)

I'm not saying your analysis is wrong, just your presentation. Could you please explain with a bit more clarity (preferably including a basis for your numbers)

There are many variables that can be included depending on how complicated you want the model. A simple model would be like this:

Benefits (Salary) >=< Costs (Debt payments, Cost-of-living)

You can make the model as complicated as you want by further explaining these variables:

Benefits ((Salary*Unemployment risk)+health insurance+pension+401(k)+fringe benefits+intangible benefits) >=< Costs (law school debt, car payments, rent, food, opportunity costs). etc.. etc...


----

Even if people do not think this rationally about an option there is still a cost-benefit analysis on some remedial level. I'm just saying that being a lawyer has value to some people that is not strictly financial. I'm not trying to build a model, just add one variable to think about.

[dingbat]

Benefits (Salary) >=< Costs (Debt payments, Cost-of-living)

this is a really dumb idea (too few data points give very misleading results

Benefits ((Salary*Unemployment risk)+health insurance+pension+401(k)+fringe benefits+intangible benefits) >=< Costs (law school debt, car payments, rent, food, opportunity costs). etc.. etc...

Better, but still lol. start by using weighted average salary based on employment statistics. Then allow for irregular cash flows. Then deduct a risk premium. Better yet, allow for multiple discounted cash flows based on different salary expectations. I can keep going, but I will give you 10 points for trying.

Even if people do not think this rationally about an option there is still a cost-benefit analysis on some remedial level. I'm just saying that being a lawyer has value to some people that is not strictly financial. I'm not trying to build a model, just add one variable to think about.

I'm not sure what value to attach to the intrinsic value of being a lawyer, but I can tell you that when I proposed this a while back, and built a workable draft, there seemed to be very little interest. Unfortunately, people don't want to think about the practical aspects of law school

[kapital98]

Benefits (Salary) >=< Costs (Debt payments, Cost-of-living)

this is a really dumb idea (too few data points give very misleading results

Benefits ((Salary*Unemployment risk)+health insurance+pension+401(k)+fringe benefits+intangible benefits) >=< Costs (law school debt, car payments, rent, food, opportunity costs). etc.. etc...

Better, but still lol. start by using weighted average salary based on employment statistics. Then allow for irregular cash flows. Then deduct a risk premium. Better yet, allow for multiple discounted cash flows based on different salary expectations. I can keep going, but I will give you 10 points for trying.

Even if people do not think this rationally about an option there is still a cost-benefit analysis on some remedial level. I'm just saying that being a lawyer has value to some people that is not strictly financial. I'm not trying to build a model, just add one variable to think about.

I'm not sure what value to attach to the intrinsic value of being a lawyer, but I can tell you that when I proposed this a while back, and built a workable draft, there seemed to be very little interest. Unfortunately, people don't want to think about the practical aspects of law school

Did you miss the entire point of my post? You're criticizing things that I didn't attempt to model. I gave those examples as mere suggestions on how you would go about modeling a cost-benefit analysis.

The last thing you said was actually interesting. Do you mind giving a link to your proposal? It doesn't matter if other people are not interested. The intrinsic value of being an attorney is still an important variable (one of many).

[Justin Genious]

The funny thing about this question is that the sticker cost of the school can actually make the lower ranked option a lot better. For example, paying in state sticker at Texas, UGA, Alabama, or UNC is a better decision than paying sticker at Georgetown, UVA, or Michigan in a lot of ways.

No way Jose. GT (33.5% biglaw, 3.9% fed clerkship), UVA (37% Biglaw, 10.6% fed clerkship) , and MI (34% biglaw, 10.6% fed clerkship) are all much better choices than UGA (8.8% biglaw, 7.5% fed clerkship), Alabama (9.8% biglaw, 8.5% fed clerkship), UNC (13% biglaw, 4.5% fed clerkship). In-state tuition does not justify the ~20% difference between the two "tiers."

[Rahviveh]

Yearly salary for a starting attorney. To be conservative, I'm using the a starting salary slightly below the true median and significantly below the mean. Unemployment is a different variable than salary (in this case a risk premium that can be calculated through a % of employment.)

I was referring to the 50,000 you seem to have for "instrinsic value" that you add on in the second equation. Is that just the intrinsic value of the JD piece of paper? Or just working in any legal capacity period? (including part-time, temporary, shitlaw, etc).

[dkb17xzx]

Texas

[kapital98]

Yearly salary for a starting attorney. To be conservative, I'm using the a starting salary slightly below the true median and significantly below the mean. Unemployment is a different variable than salary (in this case a risk premium that can be calculated through a % of employment.)

I was referring to the 50,000 you seem to have for "instrinsic value" that you add on in the second equation. Is that just the intrinsic value of the JD piece of paper? Or just working in any legal capacity period? (including part-time, temporary, shitlaw, etc).

That 50,000 was just a random number for the sake of an example. I get your question now.

All of the above I'm adding all of the non-financial parts about being an attorney together. This can be anything from being able to call yourself a "professional", to getting to work with clients, to doing just about anything else. This is a 'catch-all' for mushy-feely type things that are hard to measure through traditional financial variables.

[rad lulz]

LOL kapital's gon' kapital

[bizzybone1313]

The funny thing about this question is that the sticker cost of the school can actually make the lower ranked option a lot better. For example, paying in state sticker at Texas, UGA, Alabama, or UNC is a better decision than paying sticker at Georgetown, UVA, or Michigan in a lot of ways.

No way Jose. GT (33.5% biglaw, 3.9% fed clerkship), UVA (37% Biglaw, 10.6% fed clerkship) , and MI (34% biglaw, 10.6% fed clerkship) are all much better choices than UGA (8.8% biglaw, 7.5% fed clerkship), Alabama (9.8% biglaw, 8.5% fed clerkship), UNC (13% biglaw, 4.5% fed clerkship). In-state tuition does not justify the ~20% difference between the two "tiers."

Where did you get those GT and UVA stats? They don't look too impressive.

[rad lulz]

The funny thing about this question is that the sticker cost of the school can actually make the lower ranked option a lot better. For example, paying in state sticker at Texas, UGA, Alabama, or UNC is a better decision than paying sticker at Georgetown, UVA, or Michigan in a lot of ways.

No way Jose. GT (33.5% biglaw, 3.9% fed clerkship), UVA (37% Biglaw, 10.6% fed clerkship) , and MI (34% biglaw, 10.6% fed clerkship) are all much better choices than UGA (8.8% biglaw, 7.5% fed clerkship), Alabama (9.8% biglaw, 8.5% fed clerkship), UNC (13% biglaw, 4.5% fed clerkship). In-state tuition does not justify the ~20% difference between the two "tiers."

Where did you get those GT and UVA stats? They don't look too impressive.

Dems the truf. Lawschooltransparency.com

[bizzybone1313]

The funny thing about this question is that the sticker cost of the school can actually make the lower ranked option a lot better. For example, paying in state sticker at Texas, UGA, Alabama, or UNC is a better decision than paying sticker at Georgetown, UVA, or Michigan in a lot of ways.

No way Jose. GT (33.5% biglaw, 3.9% fed clerkship), UVA (37% Biglaw, 10.6% fed clerkship) , and MI (34% biglaw, 10.6% fed clerkship) are all much better choices than UGA (8.8% biglaw, 7.5% fed clerkship), Alabama (9.8% biglaw, 8.5% fed clerkship), UNC (13% biglaw, 4.5% fed clerkship). In-state tuition does not justify the ~20% difference between the two "tiers."

Where did you get those GT and UVA stats? They don't look too impressive.

Dems the truf. Lawschooltransparency.com

Everyone is always talking about how Georgetown is a TTT. If we are to follow that logic, then UVA is a TTT as well. A 10% difference between the two is not all that much.

[sinfiery]

Yearly salary for a starting attorney. To be conservative, I'm using the a starting salary slightly below the true median and significantly below the mean. Unemployment is a different variable than salary (in this case a risk premium that can be calculated through a % of employment.)

I was referring to the 50,000 you seem to have for "instrinsic value" that you add on in the second equation. Is that just the intrinsic value of the JD piece of paper? Or just working in any legal capacity period? (including part-time, temporary, shitlaw, etc).

That 50,000 was just a random number for the sake of an example. I get your question now.

All of the above I'm adding all of the non-financial parts about being an attorney together. This can be anything from being able to call yourself a "professional", to getting to work with clients, to doing just about anything else. This is a 'catch-all' for mushy-feely type things that are hard to measure through traditional financial variables.

The 50,000 proved it's point but the fact that you made it an anuual number and so ridiculously high probably confused people.


It's more likely to be anywhere between -15,000 to 15000 in the most extreme cases with the average being at or near 0-$5,000.

[kapital98]

That 50,000 was just a random number for the sake of an example. I get your question now.

All of the above I'm adding all of the non-financial parts about being an attorney together. This can be anything from being able to call yourself a "professional", to getting to work with clients, to doing just about anything else. This is a 'catch-all' for mushy-feely type things that are hard to measure through traditional financial variables.

The 50,000 proved it's point but the fact that you made it an anuual number and so ridiculously high probably confused people.


It's more likely to be anywhere between -15,000 to 15000 in the most extreme cases with the average being at or near 0-$5,000.

This is valid.

[sinfiery]

At least UT.

Let's see:
In-state tuition
Assumptions: I have a 1% chance to be at the top 1% of the class and a 1% chance to be at the 50th% of the class. (I still don't believe but I am a 0L)
Biglaw chances = based on NLJ250 chances = 145k salary situated in Texas = 4 year stint
8% IR on loans
4.5% IR on FV
UT: 22% chance at biglaw

Debt at the end of year 3: 154.268928 (44x1.08^3+44x1.08^2+44x1.08)

Current job prospects: Year 1: 18,000 Year 2: 35,000 Year 3: 40,000
COL: 11k/year
Savings: 7k/24k/29k
after Taxes savings: 4k/17.5k/21k


4000 x 1.045 ^2 + 17,500x 1.045 + 21,000 = $43655.6 savings lost due to attendance, accounted for interest and taxes and COL

So cost of attendance (including debt)= 154k + 43.5k = 198k

I don't know anything at all about employment prospects during the summers of LS but that could cause a giant dent to this number in both principle and taxes.


198k

Biglaw chance = 22%.
145,000 after tax = 104k
COL = 11k
93k after tax income savings

Assumption for other job: ~24k

69,000/1.045
69,000/1.045^2
69,000/1.045^3
69,000/1.045^4

= $187,135 x .22 =

Worth 41,169 after interest and probability are accounted for

198 - 41 = 157,000

45 year lifespan of work
157,000 to pay off (I don't want to do it by hand and make the first 4 variables @ 80%, so deal with the slight overassumption of value)


http://www.investopedia.com/calculator/ ... z2E4EnnuWY
n = 45
r = 4.5
payment = 8000
PV = 153,000
Let's make it 8500 to account for the lack of .8 variable for the first 4 periods


So on average, will you make $8,500 more dollars per year from your job after biglaw/nonbiglaw job from graduation than if you didn't attend lawschool?

Considering with my current degree, my best job prospects are sales related to life planning, I would say this is not even a question.

UT at sticker, in-state is a no-brainer for me