Ignore the haters. Law school is totally worth the cash.

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kapital98
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Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 9:05 am

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/18/ignore-the-haters-law-school-is-totally-worth-the-cash/

A pretty interesting economic analysis of the value of a law degree, relative to other professions, at the 25%, 50%, and 75% earnings distribution.

"Seton Hall’s Michael Simkovic and Rutgers’s Frank McIntyre conclude, 'For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.'"

"Simkovic and McIntyre demonstrate pretty convincingly that the case that way too many people are going to law school is, at best, speculative. It requires arguing that longstanding trends in earnings numbers are all of a sudden stopping because of the recession, without much evidence that a change that large is happening."

Enjoy!

P.S. Please read the article and look at the statistics before commenting.

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guano
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Re: Ignore the haters. Law school is totally worth the cash.

Postby guano » Fri Jul 19, 2013 9:10 am

kapital98 wrote:http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/18/ignore-the-haters-law-school-is-totally-worth-the-cash/

A pretty interesting economic analysis of the value of a law degree, relative to other professions, at the 25%, 50%, and 75% earnings distribution.

"Seton Hall’s Michael Simkovic and Rutgers’s Frank McIntyre conclude, 'For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.'"

"Simkovic and McIntyre demonstrate pretty convincingly that the case that way too many people are going to law school is, at best, speculative. It requires arguing that longstanding trends in earnings numbers are all of a sudden stopping because of the recession, without much evidence that a change that large is happening."

Enjoy!

P.S. Please read the article and look at the statistics before commenting.

So professors from a TTT are advising people to go to law school?

Keep in mind there are many ways to influence where the numbers end up. There's a thread that discusses the flaws in their analysis

viewtopic.php?f=10&t=213388

Edit: quick flaw: it says that those at the 25th percentile get a lifetime earnings premium of $350k, before taking the cost of law school into account. Well, considering law school at sticker is close to a quarter million dollars, that becomes a lot less, and if you apply a tiny discount rate on that $350k, the net present value of the degree will be less than the cost of tuition, making it a losing proposition

nick417
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Re: Ignore the haters. Law school is totally worth the cash.

Postby nick417 » Fri Jul 19, 2013 9:33 am

guano wrote:
kapital98 wrote:http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/18/ignore-the-haters-law-school-is-totally-worth-the-cash/

A pretty interesting economic analysis of the value of a law degree, relative to other professions, at the 25%, 50%, and 75% earnings distribution.

"Seton Hall’s Michael Simkovic and Rutgers’s Frank McIntyre conclude, 'For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.'"

"Simkovic and McIntyre demonstrate pretty convincingly that the case that way too many people are going to law school is, at best, speculative. It requires arguing that longstanding trends in earnings numbers are all of a sudden stopping because of the recession, without much evidence that a change that large is happening."

Enjoy!

P.S. Please read the article and look at the statistics before commenting.

So professors from a TTT are advising people to go to law school?

Keep in mind there are many ways to influence where the numbers end up. There's a thread that discusses the flaws in their analysis

http://www.top-law-schools.com/forums/v ... 0&t=213388

Edit: quick flaw: it says that those at the 25th percentile get a lifetime earnings premium of $350k, before taking the cost of law school into account. Well, considering law school at sticker is close to a quarter million dollars, that becomes a lot less, and if you apply a tiny discount rate on that $350k, the net present value of the degree will be less than the cost of tuition, making it a losing proposition


Another case of haters going to hate.

RodneyRuxin
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Re: Ignore the haters. Law school is totally worth the cash.

Postby RodneyRuxin » Fri Jul 19, 2013 9:40 am

This is another one of those "I feel like trolling TLS for a while" threads.

Kudos to you, OP; but you want to be a bit less conspicuous about it.

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kapital98
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Re: Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 9:42 am

guano wrote:Keep in mind there are many ways to influence where the numbers end up. There's a thread that discusses the flaws in their analysis

http://www.top-law-schools.com/forums/v ... 0&t=213388

Edit: quick flaw: it says that those at the 25th percentile get a lifetime earnings premium of $350k, before taking the cost of law school into account. Well, considering law school at sticker is close to a quarter million dollars, that becomes a lot less, and if you apply a tiny discount rate on that $350k, the net present value of the degree will be less than the cost of tuition, making it a losing proposition


Thanks for the heads up about the previous thread. If I had seen that I wouldn't have posted a new thread.

However, your quick flaw isn't actually a flaw. The average cost of a JD is $70k. Not $250k. Even assuming the authors have not taken interest or discount rate into consideration, that's an exceptional difference. In that case the earnings premium is still justified. It's explained in the article.

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kapital98
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Re: Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 9:45 am

RodneyRuxin wrote:This is another one of those "I feel like trolling TLS for a while" threads.

Kudos to you, OP; but you want to be a bit less conspicuous about it.


No, it's just TLS groupthink is so prominent anything that goes against conventional wisdom is considered trolling. Admittedly, the admission threads have gotten better over the last 3-4 years since I started visiting TLS. It's more a matter of degree.

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Re: Ignore the haters. Law school is totally worth the cash.

Postby senorhosh » Fri Jul 19, 2013 9:57 am

kapital98 wrote:
guano wrote:Keep in mind there are many ways to influence where the numbers end up. There's a thread that discusses the flaws in their analysis

viewtopic.php?f=10&t=213388

Edit: quick flaw: it says that those at the 25th percentile get a lifetime earnings premium of $350k, before taking the cost of law school into account. Well, considering law school at sticker is close to a quarter million dollars, that becomes a lot less, and if you apply a tiny discount rate on that $350k, the net present value of the degree will be less than the cost of tuition, making it a losing proposition


Thanks for the heads up about the previous thread. If I had seen that I wouldn't have posted a new thread.

However, your quick flaw isn't actually a flaw. The average cost of a JD is $70k. Not $250k. Even assuming the authors have not taken interest or discount rate into consideration, that's an exceptional difference. In that case the earnings premium is still justified. It's explained in the article.


Quick skim on article but what I got:
1. If they're only using the average price, then they're basically admitting sticker price isn't worth it (they don't explicitly say it but you can extrapolate)?
2. If average is 70k, then that basically covers cost of living. That proves a free ride is worth it (which makes sense).
3. "The biggest weakness of the study, undoubtedly, is that it doesn’t include classes that graduated during the recession."
Considering that years ago you can go to TTT can pretty easily get biglaw, this is a HUGE factor. The article is proves it WAS worth it to get a law degree years ago, not that it's worth it NOW. Everybody agrees to this. The problem with the legal industry is that it was deeply affected by the economy and we don't know when/if it will be fixed.


"There’s a case to be made there. But if the last few decades were not, in fact, an anomaly, law school remains a really, really good investment for most students."

The argument is that it WAS an anomaly.

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guano
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Re: Ignore the haters. Law school is totally worth the cash.

Postby guano » Fri Jul 19, 2013 9:58 am

kapital98 wrote:
guano wrote:Keep in mind there are many ways to influence where the numbers end up. There's a thread that discusses the flaws in their analysis

viewtopic.php?f=10&t=213388

Edit: quick flaw: it says that those at the 25th percentile get a lifetime earnings premium of $350k, before taking the cost of law school into account. Well, considering law school at sticker is close to a quarter million dollars, that becomes a lot less, and if you apply a tiny discount rate on that $350k, the net present value of the degree will be less than the cost of tuition, making it a losing proposition


Thanks for the heads up about the previous thread. If I had seen that I wouldn't have posted a new thread.

However, your quick flaw isn't actually a flaw. The average cost of a JD is $70k. Not $250k. Even assuming the authors have not taken interest or discount rate into consideration, that's an exceptional difference. In that case the earnings premium is still justified. It's explained in the article.

No, it isn't. Upon applying even a conservative discount rate, the NPV won't break six figures, and with a reasonable discount rate, the returns will be negative.
There are also many other ways the study is skewed (which is quite easy to do). Read the comments on the article, they're quite good.

Look, I'm not one of the HYS or bust crowd. I performed my own analysis and will state unequivocally that a T30 at sticker has value (while it'll create winners and losers, the average is positive), but that doesn't mean that's true across the board.

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North
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Re: Ignore the haters. Law school is totally worth the cash.

Postby North » Fri Jul 19, 2013 10:06 am

Oh look, kapital is back to spew stupid shit and rail on TLS.

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kapital98
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Re: Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 10:35 am

senorhosh wrote:"There’s a case to be made there. But if the last few decades were not, in fact, an anomaly, law school remains a really, really good investment for most students."

The argument is that it WAS an anomaly.


As the article clearly points out, there is little statistical evidence to support your presumption. There is a significant amount of evidence to support the current labor market situation is largely induced by a cyclical recession. It requires far more faith to agree with the status quo (This Time Is Different) than to rely on basic macroeconomics.

We wont be able to statistically validate "This Time Is Different" for many years.

JJ123
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Re: Ignore the haters. Law school is totally worth the cash.

Postby JJ123 » Fri Jul 19, 2013 10:39 am

A JD costs $70k? Are you serious? Just giving up working for 3 years at the average wage for a college graduate is over $70k.

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nothingtosee
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Re: Ignore the haters. Law school is totally worth the cash.

Postby nothingtosee » Fri Jul 19, 2013 10:46 am

JJ123 wrote:A JD costs $70k? Are you serious? Just giving up working for 3 years at the average wage for a college graduate is over $70k.



This. I don't even see opportunity cost mentioned (correct me if it is). These bros would have more ethos if they coauthored with an Econ prof. But that would necessitate findin an Econ prof who would sign off on this foolishness.

RodneyRuxin
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Re: Ignore the haters. Law school is totally worth the cash.

Postby RodneyRuxin » Fri Jul 19, 2013 11:03 am

kapital98 wrote:
RodneyRuxin wrote:This is another one of those "I feel like trolling TLS for a while" threads.

Kudos to you, OP; but you want to be a bit less conspicuous about it.


No, it's just TLS groupthink is so prominent anything that goes against conventional wisdom is considered trolling. Admittedly, the admission threads have gotten better over the last 3-4 years since I started visiting TLS. It's more a matter of degree.


Everyone knows TLS conventional wisdom goes too far, it's a voice from one side of the spectrum with any dissent muffled out. Rather than encouraging other ideas and arguments to get to the truth, people will often just assert conclusory statements and refuse to argue to opposing views.

You are "trolling TLS" because you still (naively) think that people are going to enter into an educated discussion. My advice was that you hide what your point is and slowly open it up, that way people don't immediately disregard what you're saying and you can sneak a discussion in.

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Re: Ignore the haters. Law school is totally worth the cash.

Postby bk1 » Fri Jul 19, 2013 11:08 am

kapital98 wrote:As the article clearly points out, there is little statistical evidence to support your presumption. There is a significant amount of evidence to support the current labor market situation is largely induced by a cyclical recession. It requires far more faith to agree with the status quo (This Time Is Different) than to rely on basic macroeconomics.

We wont be able to statistically validate "This Time Is Different" for many years.

I thought the reality of searching for a job as a law student had changed your tune on how easy it is to get a job, no?

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Bronte
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Re: Ignore the haters. Law school is totally worth the cash.

Postby Bronte » Fri Jul 19, 2013 11:12 am

I am probably one of the less cynical posters on here, but the way the author of the Washington Post article gushingly endorses the tenuous and highly controversial conclusion of the study is shocking: "if the last few decades were not, in fact, an anomaly, law school remains a really, really good investment for most students." A really, really good investment?

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bk1
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Re: Ignore the haters. Law school is totally worth the cash.

Postby bk1 » Fri Jul 19, 2013 11:16 am

Bronte wrote:I am probably one of the less cynical posters on here, but the way the author of the Washington Post article gushingly endorses the tenuous and highly controversial conclusion of the study is shocking: "if the last few decades were not, in fact, an anomaly, law school remains a really, really good investment for most students." A really, really good investment?

HUNDREDS OF THOUSANDS OF DOLLARS

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kapital98
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Re: Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 11:18 am

nothingtosee wrote:
JJ123 wrote:A JD costs $70k? Are you serious? Just giving up working for 3 years at the average wage for a college graduate is over $70k.



This. I don't even see opportunity cost mentioned (correct me if it is). These bros would have more ethos if they coauthored with an Econ prof. But that would necessitate findin an Econ prof who would sign off on this foolishness.


The opportunity cost is implied in their cost-benefit analysis and comparison to other fields (ex: B.A. in Political Science). Both professors have extensive backgrounds in economics and econometrics (One is a specialist in security regulation and the other teaches at a business school). Look up their CV's.

Also, http://leiterlawschool.typepad.com/leiter/2013/07/the-economic-value-of-a-law-degree.html


Bronte wrote:I am probably one of the less cynical posters on here, but the way the author of the Washington Post article gushingly endorses the tenuous and highly controversial conclusion of the study is shocking: "if the last few decades were not, in fact, an anomaly, law school remains a really, really good investment for most students." A really, really good investment?


Dylan Matthews is an excellent economist over at the Washington Post. Their "Wonkblog" is also highly respected. I will admit the title is inflammatory.

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bk1
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Re: Ignore the haters. Law school is totally worth the cash.

Postby bk1 » Fri Jul 19, 2013 11:20 am

kapital98 wrote:Both professors have extensive backgrounds in economics and econometrics (One is a specialist in security regulation and the other teaches at a business school). Look up their CV's.

Yet as professors of low ranked schools they have an inherent conflict of interest.

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guano
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Re: Ignore the haters. Law school is totally worth the cash.

Postby guano » Fri Jul 19, 2013 11:28 am

bk1 wrote:
kapital98 wrote:Both professors have extensive backgrounds in economics and econometrics (One is a specialist in security regulation and the other teaches at a business school). Look up their CV's.

Yet as professors of low ranked schools they have an inherent conflict of interest.

As such experts, they are especially adept at manipulating data.

I've performed in depth financial analysis professionally, and on many occasions reviewed other peoples' analysis to find the flaw, or the manipulation, or whatever was done to get the analysis to skew a certain way.

It's very easy to manipulate data to achieve the result you want. And that is what was done here. I'm not so cynical as to believe they are trying to scam people, but they probably had a particular viewpoint to start with, set out to prove their point, and tailored their analysis toward achieving their goals.

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kapital98
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Re: Ignore the haters. Law school is totally worth the cash.

Postby kapital98 » Fri Jul 19, 2013 11:55 am

guano wrote:It's very easy to manipulate data to achieve the result you want. And that is what was done here. I'm not so cynical as to believe they are trying to scam people, but they probably had a particular viewpoint to start with, set out to prove their point, and tailored their analysis toward achieving their goals.


I agree with both you and BK. I'm constantly reading academic papers by prestigious authors who use dubious assumptions, datamine, or use disingenuous statements. However, this accusation can be applied to 95% of academic research.

It's really a matter of looking at specifically looking at their assumptions, data, and models to determine reliability. If there are serious econometric problems don't be surprised if other bloggers bring them to light.

Paul Campos
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Re: Ignore the haters. Law school is totally worth the cash.

Postby Paul Campos » Fri Jul 19, 2013 5:22 pm

I've written a three-part analysis of the study for anyone who is interested. http://www.lawyersgunsmoneyblog.com/2013/07/if-i-had-a-million-dollars-part-iii

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Rahviveh
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Re: Ignore the haters. Law school is totally worth the cash.

Postby Rahviveh » Fri Jul 19, 2013 5:40 pm

kapital98 wrote:
guano wrote:It's very easy to manipulate data to achieve the result you want. And that is what was done here. I'm not so cynical as to believe they are trying to scam people, but they probably had a particular viewpoint to start with, set out to prove their point, and tailored their analysis toward achieving their goals.


I agree with both you and BK. I'm constantly reading academic papers by prestigious authors who use dubious assumptions, datamine, or use disingenuous statements. However, this accusation can be applied to 95% of academic research.

It's really a matter of looking at specifically looking at their assumptions, data, and models to determine reliability. If there are serious econometric problems don't be surprised if other bloggers bring them to light.


You sound like a true scholar :roll:

20141023
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Re: Ignore the haters. Law school is totally worth the cash.

Postby 20141023 » Fri Jul 19, 2013 6:15 pm

.
Last edited by 20141023 on Sun Feb 15, 2015 10:41 pm, edited 1 time in total.

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guano
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Re: Ignore the haters. Law school is totally worth the cash.

Postby guano » Fri Jul 19, 2013 7:06 pm

kappycaft1 wrote:
guano wrote:So professors from a TTT are advising people to go to law school?

Not that this doesn't mean that their article isn't BS, but I previously had a long conversation via PM with sf_39 about this article in early June, and I remember Google-ing the authors. Although they might currently be working at TTT's, Michael Simkovic got his law degree from Harvard, and Frank McIntyre has a Ph.D. from Stanford, so I don't think these guys are idiots; rather, they are probably just smart people bending the facts in their favor. If you actually read their paper it is difficult to refute their points because they have a lot of data backing it up, but overall, it just "feels" wrong, especially if you are someone who has been up and down LST and all kinds of other sites about law employment statistics.

I never said they were dumb. I actually said they manipulated the data to suit their purpose.

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Re: Ignore the haters. Law school is totally worth the cash.

Postby jbagelboy » Fri Jul 19, 2013 7:18 pm

This is a totally pointless study. Ignoring recession data is like pretending your parents had the same stock portfolio in 2011 as they did in 2007, or that myspace is still really cool and a highly popular social networking site based on pre-zuckerberg site visit data. TLS (and the educated legal community's) entire shtick is that the legal industry has fundamentally changed, and law school is no longer the same investment it was 10 years ago.




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