With their new study, “The Economic Value of a Law Degree," a pair of university professors become the latest academics to try to defend this country's troubled model of legal education. This particular attempt is especially disheartening because coauthor Michael Simkovic spent the year before he joined Seton Hall University School of Law in 2010 as an associate at Davis Polk & Wardwell. At some level, Simkovic must be aware of the difficulties confronting so many young law graduates.

Nevertheless, he and his coauthor, Rutgers Business School assistant professor of finance and economics Frank McIntyre, “reject the claim that law degrees are priced above their value” (page 41) and “estimate the mean pretax lifetime value of a law degree as approximately $1,000,000" (page 1).

As the academic debate over data and methodology continues, some professors are already relying on the study to resist necessary change. That’s bad enough. But my concern is for the most vulnerable potential victims caught in the crosshairs of the—to use a term taken from the article's original title—“Million Dollar Law Degree” headlines: today’s prelaw students. If these young people rely on an incomplete understanding of the study’s limitations to reinforce their own confirmation bias in favor of pursuing a legal career primarily for financial reasons, they will be making a serious mistake.

The Naysayers Are Wrong?

The study targets respected academics (including professors Herwig Schlunk, Bill Henderson, Jim Chen, Brian Tamanaha, and Paul Campos), along with “scambloggers” and anyone else arguing that legal education has become too expensive while failing to respond to a transformation of the profession that is reducing the value of young lawyers in particular. Professors Campos and Tamanaha have begun responses that are continuing. (Tamanaha's latest installment is here.) University of Chicago Law School professor Brian Leiter’s blog, meanwhile, has become the vehicle for Simkovic’s answers.

One obvious problem with touting the $1 million average earnings figure is that for the bimodal distribution of lawyer incomes, any average is meaningless. In a recent rebuttal to Campos that Simkovic endorsed, professor Stephen Diamond calculated the net lifetime premium at the median (midpoint) to be $330,000 over a 40-year career. That might be closer to reality. But a degree that returns, at most, a lifetime average of $687 a month in added value for half of the people who get it isn’t much of an attention-getter. As noted below, even that number depends on some questionable assumptions and, when you get down to the 25th percentile, the economic prospects are far bleaker.

Causation

In the haze of statistical jargon and the illusory objectivity of numbers, it’s tempting to forget a fundamental point: statisticians investigate correlations. Even sophisticated regression analysis can’t prove causation. Every morning, the rooster crows when the sun rises. After isolating all observable variables, that correlation may be nearly perfect, but the crowing of the rooster still doesn’t cause the sun to rise.

Statistical inference can be a useful tool. But it can’t bridge the many leaps of faith involved in taking a nonrandom sample of 1,382 J.D. degree holders—the most recent of whom graduated in 2008 (before the Great Recession) and 40 percent of whom have jobs that don’t require a J.D.—and concluding that it should guide the future of legal education in a 1.5 million–member profession (page 13 and n. 31).

Caveats

Simkovic and McIntyre provide necessary caveats throughout their analysis, but potential prelaw students (and their parents) aren’t likely to focus on them. For example, with respect to J.D. degree holders with jobs that don’t require such a degree, they “suggest” causation between the degree and lifetime income premiums, but admit they can’t prove it (page 25).

Likewise, they use recessions in the late 1990s and early 2000s as proxies for the impact of the Great Recession on current law graduates (compared to those who have only bachelor's degrees) (page 32), minimizing the importance of recent seismic shifts in the legal profession and the impact on students graduating after 2008. (Simkovic graduated from law school in 2007.)

This brings to mind the joke about a law professor who offers his rescue plan to others stranded on a deserted island: “First, assume we have a boat . . .” The study finesses that issue with this qualification: “Past performance does not guarantee future returns. The return to a law degree [sic] in 2020 can only be known in 2020” (page 38).

Similarly, the results assume: 1.) total tuition expense of $90,000 (presumably including the present value cost of law school loan interest repayments; otherwise, that number is too low and the resulting calculated premium too high); 2.) student earnings during law school of $24,000; 3.) graduation from law school at age 25 (no break after college); and 4.) employment that continues to age 65 (pages 39–41). More pessimistic assumptions would reduce the study’s calculated premiums at all income levels. At some point inside even the Simkovic-McIntyre 25th percentile, there’s no lifetime premium for a J.D.

Conclusions

After ticking off a long list of their study’s “important limitations”—including my personal favorite, the inability to “determine the earnings premium associated with attending any specific law school”—the authors conclude: “In sum, a law degree is often a good investment” (page 50). I agree. The more important inquiry is: When isn’t it?

In his Simkovic-endorsed defense of the study, Diamond offers a basic management principle: Any positive net present value means the project should be a go. But attending law school isn’t an aggregate “project.” It’s an individual undertaking for each student. After they graduate, half of them will remain below the median income level—some of them far below it.

Although the authors dismiss Bureau of Labor Statistics employment projections (pages 6–7), in 2012 alone law schools graduated 46,000 new attorneys. Nine months out, only 10 percent of law schools (20 out of 200) had long-term full-time J.D.-required job placement rates exceeding 75 percent. The overall J.D. job placement average for all law schools was 56 percent.

Some of the remaining 44 percent will do other things because they have no realistic opportunity for legal careers. Financially, it could even turn out okay for a lot of them. (In that respect, you have to admire the boldness of the authors’ footnote 8, citing the percentage of senators and CEOs with J.D.s.)

But with better information about their actual prospects as practicing attorneys, how many would have skipped their three-year investment in a J.D. and taken the alternative path at the outset? That’s the question that the Simkovic/McIntyre study doesn’t pose and that every prospective law student should consider.

More Elephants in the Room

Notwithstanding the economic benefits of a J.D. that many graduates certainly enjoy, attorney career dissatisfaction remains pervasive, even among the “winners” who land the most lucrative big-firm jobs. That leads to the most important point of all. Anyone desiring to become an attorney shouldn’t do it for the money. Even the Simkovic/Mcntyre study with its many questionable assumptions proves that for thousands of graduates every year, the money will never be there.

But the authors are undoubtedly correct about one thing: “The data suggests [sic] that law school loans are profitable for the federal government” (page 46). Law schools like them, too.

It doesn’t take a multiple regression analysis to see the problems confronting the legal profession—but it can be used to obscure them.

Steven J. Harper is an adjunct professor at Northwestern University and author of The Lawyer Bubble: A Profession in Crisis (Basic Books, April 2013), and other books. He retired as a partner at Kirkland & Ellis in 2008, after 30 years in private practice. His blog about the legal profession, The Belly of the Beast, can be found at http://thebellyofthebeast.wordpress.com/. A version of the column above was first published on The Belly of the Beast.