Thursday, July 18, 2013
Michael Simkovic(Seton Hall) & Frank McIntyre(Rutgers Business School), The Economic Value of a Law Degree (PowerPoint):
Legal academics and journalists have marshaled statistics purporting to show that enrolling in law school is irrational. We investigate the economic value of a law degree and find the opposite: given current tuition levels, the median and even 25th percentile annual earnings premiums justify enrollment. For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.
We improve upon previous studies by tracking lifetime earnings of a large sample of law degree holders. Previous studies focused on starting salaries, generic professional degree holders, or the subset of law degree holders who practice law. We also include unemployment and disability risk rather than assume continuous full time employment.
After controlling for observable ability sorting, we find that a law degree is associated with a 60 percent median increase in monthly earnings and 50 percent increase in median hourly wages. The mean annual earnings premium of a law degree is approximately $53,300 in 2012 dollars. The law degree earnings premium is cyclical and recent years are within historic norms.
We estimate the mean pre-tax lifetime value of a law degree as approximately $1,000,000.
- Michael Simkovic (Seton Hall), The Economic Value of a Law Degree (Part 1 of About 5)
- ABA Journal, What’s the Value of a Law Degree? $1M in a Lifetime, Report Says
- Business Insider, Study: A Law Degree Is Actually an Amazingly Good Investment
- Inside Higher Ed, The Upside of Law School
- Dan Filler (Drexel), What Is a JD Worth? Study Suggests Lifetime Value of $1 Million, on Average
- Brian Leiter (Chicago), "The Economic Value of a Law Degree"
- Kyle McEntee (Law School Transparency), New Study on Economic Value of Law Degree
- Elie Mystal (Above the Law), Another Garbage Study Offering Misleading Statistics on the Value of a Law Degree
- Frank Pasquale (Maryland), "Fundamentally Changing the Conversation about the Economic Value of Legal Education"
Hat Tip to my friend Paul Caron over at TaxProf Blog.