Wednesday, July 24, 2013

Simkovic's Response to Tamanaha on "The Economic Value of a Law Degree"

Frank Pasquale

Michael Simkovic has posted his first two responses to Brian Tamanaha's post from yesterday.  Here are some highlights of the first response
Brian Tamanaha previously told Inside Higher Education that our research only looked at average earnings premiums and did not consider the low end of the distribution.  Dylan Matthews at the Washington Post reported that Professor Tamanaha’s description of our research was “false.”
Tamanaha’s description of our approach to ability sorting constitutes a gross misreading of our research.  Tamanaha also references the wrong chart for earnings premium trends and misinterprets confidence intervals.  And his description of our present value calculations is way off the mark. 
The second response addresses Tamanaha's accusations that the paper cherrypicks years to study:
SIPP was substantially redesigned in 1996 to increase sample size and improve data quality.  Combining different versions of SIPP could have introduced methodological problems. 
Though the paper's window misses a legal recession in the early 1990s, some commenters have noted that it also misses a boom in the 1980s.  But the critical point here is that Simkovic & McIntyre focus on the earnings premium from a law degree, not absolute figures. The brutality of recessions for the lower and lower middle classes may well increase that premium, not dent it.  

Today's post indicates that Tamanaha may be beginning to confine his economic critique to Thomas Jefferson, New York Law School, California Western, and "others like" them.  He may also want to reconsider his criticism of income-based repayment as an improper subsidy, given that "CBO estimates that the government will generate $184 billion in profit for new loans made this fiscal year through 2023."  If anything, IBR terms should be better than they are now for law students.  Those who speculate about their lack of earning power or unwillingness to pay may well provoke banks and policymakers to raise interest rates and impose harsher terms.