Law School Costs at the Margin

Yesterday, the GAO released a report, reported on in the Chronicle of Higher Education, finding that the rising cost of law school was attributable to rankings and competition, rather than accreditation. Critics of the American Bar Association's accreditation scheme had pointed to accreditation requirements as the cause of increased costs. The report is based on surveys of law schools, and it concludes that although some critics had claimed that accreditation standards were a major factor in the cost of law schools, "officials for more than half of the ABA-accredited schools we spoke with stated that they would meet or exceed some ABA accreditation standards even if they were not required." The report and the conclusion miss the point.

When we say, for example, that obesity is the cause of higher medical costs, we do not mean that with no obesity there would be no visits to the doctor. Rather, we mean that it is an important explanation for varying costs, or that it is a controllable cause of higher costs. It is true that competition has raised the cost of legal education, and US News rankings, by spreading a certain kind of information has intensified this effect. Thus, a school will rank higher if its incoming LSATs are higher, and this causes schools to offer financial aid to attract high-LSAT applicants (even beyond any pre-existing preference for those students) because with these students in place the ranking will improve, which will in turn attract better students (perhaps at lower cost eventually) in the future, because on average students will prefer to go to higher ranked schools. The most obvious variable that affects costs is expenditures. The rankings give points for greater expenditures per pupil (on grounds that higher spending is likely correlated with a better education or perhaps a plusher environment). This encourages expenditures for the same reason.

But the costs that can be traced to competition ("come to my law school we have smaller classes, our own swimming pool, and subsidized public interest programs") are there, for the most part, in the absence of regulation. If a school competes by exceeding 80% of the accreditation requirements, it might still object to having bookshelves that are not needed, assistant deans who fill out required reports, and faculty or non-faculty who are tenured not because the school thinks that tenure is the right way to attract talent but rather because tenure was required by the regulators. In this as in so many other things, it is marginal analysis that matters. On the margin, ABA regulations might raise costs; evidence that something else, like rankings or competition, matters more, is a bit beside the point.