Market failure

I had a conversation last week with a 2010 grad who finished near the top of his class at a second-tier school, and who has gotten run over subsequently by the job market for lawyers (graduated with $165,000 in debt, then things got bad and things got worse, I guess you know the tune).  We ended up arguing about the extent to which people enrolling in law school right now should be held responsible down the line for the consequences of that decision.

My view at that moment -- it tends to change from day to day -- was that anybody who googles "law school graduate employment" will find that the first 20 hits include 19 stories about how bad the market is for new law grads, plus one new "study" from the good people at the Thomas M. Cooley School of Law, arguing that everything is actually just fine.  (If I were at Miller Canfield I'd tell these guys that they may not want to push their luck quite this far, but I suppose Cooley has been on the outright grift for so long that this stuff comes naturally to them by now).

Plus at this point even the ABA Section of Legal Education has been forced to cough up semi-meaningful employment data, and a lot of law schools (about a quarter) have gone all the way and released their 2010 NALP forms per Law School Transparency's request, while many others have put fairly transparent numbers up on their websites.  In other words anybody who does two hours of research before dropping $200K on law school will discover how bad the situation is generally, and people who under these conditions apply to any law school that doesn't disclose something like accurate employment and salary data should realize they're being quite reckless, given how bad the data look at the large number of schools who have now disclosed such data.

My correspondent disagreed.  He said I was underestimating the general naivete of young people, and specifically the extent to which they've been socialized to believe that respectable social institutions don't just rip people off.

At this moment I feel torn between the two views -- between the view that at this point you have to be willfully blind to ignore what a bad deal law school has become for most people, and the view that law schools, even more than higher education in general, still have a huge amount of cultural capital to run through before the society in general really catches on to what's happening.

Part of what's happening here is an ongoing massive market failure -- although one that, given sharply declining applications, and to a lesser extent, enrollment numbers, seems to be slowly working towards at least some correction.  And part of that failure is that another thing young people have been socialized to believe is that "the market works."

One reason why people tend to believe the market works is because in many contexts it clearly does.  There's a scene in Pulp Fiction where a character is shocked that a milkshake at a restaurant costs five dollars (about $8.50 in present dollars).  He then discovers it's a truly amazing milkshake. ("This one's a little more expensive. But when you shoot it, you'll know where that extra money went.") That's a well-functioning market: if something costs a lot, it's because it's unambiguously better than a similar product that costs less.  And most of the time, we can rely on prices to accurately reflect this.  You don't go to a car dealer and find somebody trying to sell you a nine-year-old Chevy Malibu with 137,000 miles on it for $49,000, when a brand new Lexus costs $51,000.

Meanwhile:

Tuition and fees, New York Law School:  $49,225

Tuition and fees, Stanford Law School:  $50,802