Half as many students at half the price

I wrote and then accidentally deleted a heartbreaking post of staggering genius this morning, so this is going to be a shorter version of that.  (It was somehow deleted while I was trying to copy and paste the words of a Cooley law school administrator. Coincidence? I think not).  Update: I've just been advised that there is a thing in the toolbar called the "undo" button. If only life itself came with one . . . 

One critical issue at the core of the current crisis of the American law school is the extent to which that crisis is amenable to market self-correction.  The strong version of this view is that the crisis is largely if not wholly a product of poor information, and that the market for law school admissions will self-correct as buyers punish sellers for failing to provide adequate information about what they're selling.

There is a good deal of evidence that something along these lines is beginning to happen.  The law school applicant pool has shrunk by nearly 25% over the past two years, despite the comparatively poor alternatives available to recent college graduates, which keep the opportunity cost of continuing their education relatively low.  In addition there's evidence that law school applicants are getting increasingly price sensitive.

For example I've gathered from various sources that seat deposits at a number of schools are way down.  (A seat deposit is the several-hundred dollar payment that an admitted prospective student must make by a certain date in order to reserve his or her place in a law school's entering class.)  In particular it appears that something like panic may be breaking out in some admissions offices of what could be called legal academia's upper middle class -- "top tier" schools outside the semi-charmed Top 14.

Certain sub-elite schools that feature large entering classes, high tuition, and especially squirrelly recent employment numbers are admitting unusually large numbers of people off their wait lists, and more significantly still are offering steep tuition discounts to many of these prospective students, who until a week or two ago they had not deigned to even admit, let alone admit at half price.

Indeed it may make sense for applicants to employ a kind of Priceline strategy, in which they wait until late in the cycle to make lowball offers to schools which are in danger of having significant numbers of unfilled seats in their entering classes.  Sticker price tuition at some schools is coming to resemble the initial offered price of items at a suburban garage sale: that is, it increasingly bears little relation to what buyers eventually pay.

All this indicates that, to a certain extent (a crucial caveat which I want to emphasize), a kind of market correction seems to be happening. Sites like Law School Transparency and Law School Numbers are arming sophisticated consumers, to the extent that prospective law students fall into that category, with more information than ever regarding both the actual price at which they can buy seats in law school classes, and the actual likely expected return on that investment.

But the situation remains complex. For one thing, many prospective law students and their families are far from sophisticated consumers.  They remain in thrall to the powerful culture myth that greatly exaggerates the extent to which being an attorney means being a highly-paid high-status professional who does interesting and socially useful work.  This helps explain such otherwise inexplicable facts as that, at least according to its administrators, Thomas M. Cooley's new Florida campus (the school's fifth) has just admitted a first class nearly twice as large as that which the school anticipated admitting.  According to the campus's associate dean,  "these numbers indicate the Tampa Bay area was ready for a law school."  Well that's one interpretation.

Another is that, despite all the very real progress that's being made on the transparency front, the various "market distortions" at work are still powerful enough to ensure that law schools are still admitting twice as many students, and charging them twice as much, as what a well-functioning market for legal education in America would yield.

When the number of law school graduates, and the average tuition they pay, have both been cut in half, we will begin to be able to say that "the market is working."  Until then, we will still be dealing with the product of a massive mis-allocation of social and human capital, which is only in part a product of informational failures in the classical economic sense.