Michael Simkovic and Frank McIntyre are blogging at Concurring Opinions, and responding to critics. See for example, Brian Tamanaha Says We Should Look at the Below Average Outcomes (And We Did). It includes a nice summary of key findings:
As we discuss in the article, for technical reasons related to regression of earnings to the median, our 75th and 25th percentile values are probably too extreme. The “75th percentile” value is likely closer to the 80th or 85th percentile for lifetime earnings, and the “25th percentile” is likely closer to the 20th or 15th percentile.
In other words, roughly the top 15 to 20 percent of law school graduates obtain a lifetime earnings premium worth more than $1.1 million as of the start of law school. Roughly the next 30 to 35 percent obtain an earnings premium between $1.1 million and $600,000. In the lower half of the distribution, roughly the first 30 to 35 percent obtain an earnings premium between $350,000 and $600,000. Roughly the bottom 15 to 20 percent obtain an earnings premium below $350,000. These numbers are pre-tax and pre-tuition.
Even toward the bottom of the distribution, even after taxes, and even after tuition, a law degree is a profitable investment. And that is before income based repayment, which can substantially reduce the risk at the bottom of the distribution.
I think the best critiques of the study I’ve heard so far are:
1. Maybe there really is a structural shift going on in the way legal services are delivered. If so, past cycles are a poor guide for the future. (To be fair, that’s a different paper; but it may not be a different historical moment.)
2. Because it uses general averages, the study may mislead people who invest large sums in law degrees from low-quality (or even low-prestige, which isn’t necessarily the same thing) institutions. Their outcomes seem to be worse than average. (Although the authors seem to think that even here, the NPV will tend to be positive. I’m a bit dubious especially at full freight.)
3. The study doesn’t discuss bar passage. Is it perhaps the case that there’s a large difference between those who pass and fail? And if so, shouldn’t the bar pass rate at the law school you plan to attend be something to pay close attention to?
4. The study doesn’t discuss the financial, much less hedonic, consequences of carrying heavy debt from college and law school. (Again, sort of a different paper.)
Thus, the study is a useful data point for law school applicants/entrants and a useful corrective to some recent sturm und drang. But it’s not by any means 100% of the story either.
[Update: I've thought of a fifth sort-of-critique --
5. The study treats the experience of law school as neutral, neither better nor worse than the three-year alternative job. I happened to have a really good time in law school, so for me it was a net benefit; other people report hating the experience and for them it is a net cost. In some cases the cost of three years of hell may not justify a lifetime increase in net income of, say, $350K. After all, over a 40-year career, that's an average of just $8,740/year...and indeed most of it comes in the out years, not early when you are struggling to repay debt.]