No Bubble, Just ROCK!!! Vol. 13

Mellow is the Bubble
Seldom is the season when I have nothing to say for a fortnight. I’m going to be nitro-busy this week too, but I certainly can’t deny you readers some music.

The biggest development in my wanna-be audiophilic journey is my long-deferred binge on some decent speakers, but rather than tediously plug wires into a receiver I went with a pair of SONOS PLAY:5s—I told you it was a binge. These things are awesome. Since last year, the manufacturer caved and changed the controller app to allow them to work over a generic wireless network instead of its own dedicated network. That means no need to buy a bridge and plug your music player or NAS drive into your router.

So what have I been listening to with all this hi-fi consumer electronics? … The radio!

Internet radio to be precise, but living too close to the University of Minnesota has rotted my mind into listening to the college radio station, Radio K. This, it turns out, is a genius idea because I can now monitor what all the young hipsters are listening to even though I’m approaching middle age.

So here’s Alabama’s Waxahatchee:

…And now Australia’s King Gizzard and the Lizard Wizard:

Kinda reminds me of Mr. Bill from Saturday Night Live.

Peace out folks.

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Demos: Denominators Don’t Matter for Subsidies to Public Universities

Last week Demos published a paper that carefully apportions the causes of tuition cost hikes at public universities over the last decade (2001-2011). Authored by Robert Hitonsmith, it finds that 79 percent of the increases are due to cuts in state subsidies, about $3,000 on average at four-year public universities. Hiltonsmith is known for a paper ominously titled, “How Student Debt Reduces Lifetime Wealth,” which estimates the lost lifetime personal savings due to student loans.

Reconciling these two papers might cause confusion because it’s easy to misinterpret Hiltonsmith’s first paper as arguing against widespread college attendance. It plainly says otherwise: College pays off, but the costs should be socialized. I’m not fond of this line of reasoning as it showcases a large pecuniary loss for college education without explaining where the offsetting public benefits come from. It’s hard to see an adverse selection problem in higher education as with health care or national defense.

Something similar goes on in Demos’ more recent paper, “Pulling Up the Higher-Ed Ladder: Myth and Reality in the Crisis of College Affordability.” There’s no reason to dispute Hiltonsmith’s findings: State’s aren’t subsidizing higher education as much as they used to on a per student basis, hence the tuition cost increases.

However, a quick glance at Bureau of Economic Analysis data tells us that state government spending on higher education has risen overall:

S&L GCE and GI (Higher Ed., 2009 $)

(Table 3.15.16)

…And here’s a chart of state and local higher education expenditures as a share of state spending and receipts.

S&L Higher Ed. Expenditures Share of--

(Table 3.15.5 and Table 3.3)

In constant dollars, state and local governments spent 22 percent more on higher education in 2011 than they did in 2001, and states spend about the same percentage of their budgets on higher education, so why is tuition increasing?

Answer: Fractions have denominators. College attendance grew substantially in the 2000s.

Looking at Digest of Education Statistics data, in 2011 the number of public university students was 23.5 percent higher than in 2001 (Table 303.10). Meanwhile, the total U.S. population only grew 9.5 percent between those two years. (Speaking of fractions, that’s a blunt comparison, but it’ll do.)

This is the drawback of Demos’ per-student spending analysis (and of fractions generally): It misses the systemic shift in demand for college credentials and states’ responses to it. Demos sees no diminishing marginal return to sending more and more people to college, so everyone should be subsidized equally no matter the economic conditions. Therefore, any cuts are wrong irrespective of what goes on in the denominator aggregate. In reality, people treat public higher education like unemployment insurance, except there’s a big difference: At some point higher education becomes mostly about getting ahead of everyone else. At least with unemployment insurance, marginal recipients get to stay alive and are better off finding work when it’s available.

But Demos isn’t ready to reach that insight. Indeed, the paper’s opening sentence is, “In today’s competitive economy, nothing is more important than getting a college education.” On the contrary, today’s economy isn’t competitive. If it were, then employers would bid up workers’ wages. The kind of competition that goes on in today’s economy is zero-sum squabbling. Thus, rather than advocating for positive competition, Demos is promising everything to everyone, as though we can all get ahead of everyone else simultaneously.

I have a few more points worth making in passing. One, the average inflation-adjusted full tuition price at private four-year institutions rose 36 percent from 2001 to 2011 (Digest table 330.10). I am not studious enough to figure out what the net tuition is, but I’m skeptical that this increase hasn’t affected public universities in some way. If the big private research universities spend more money on superstar faculty, for example, I’d be surprised if their public counterparts did not try to keep up. This goes on in law schools all the time. Likewise, I would also not characterize this Demos article as falsifying the Bennett hypothesis just because state subsidies per student play a larger role for tuition price increases at public institutions. I don’t think anyone ever said that.

Two, there are other arguments in favor of public higher education I haven’t addressed. For example, running a large research university in a large metropolitan area can be a magnet for young people and supporting private sector innovation. The for-profit world isn’t all Thomas Edison stuff.

Finally, I’m a fan of the soft, lovey-dovey, bleeding-heart humanities. (They’re also super cheap to produce.) The point here is not that higher education is solely positional competition. It’s that when Demos decries rising public college prices when incomes are stagnant, it’s not seeing a causal relationship. Stagnant incomes are motivating people to go to college, which strains public higher education systems, and state and local governments don’t want to cover everyone. Much of this is undoubtedly due to ideological Scott-Walkerist anti-intellectual budget arsonism, but what’s important are the causes of stagnant incomes. Funding everyone’s college degrees will not create college jobs for everyone.

‘Human Capital’ Theory Doesn’t Explain Law Grad Earnings

…Is on The American Lawyer.

You can take a wild guess as to its topic.

2015-05-03 Site Update

There are three pages or posts that I’ve updated recently.

(1)  Everyone’s favorite: Lawyers Per Capita by State, thanks to the ABA’s new data on state-level lawyer counts.

(2)  The “leaked” edition of the class of 2014’s employment report has been updated with the ABA’s newer data. I figured it wasn’t worthwhile to post on that twice. The original version is at the bottom but is struck out. (Sorry to e-mail subscribers for accidentally spamming your inbox with the separate updated post. I meant to delete it, not publish it.)

(3)  Finally, the Student Debt Data page is the beneficiary of a long overdue overhaul. It now leans more on the New York Fed’s research.

That’s all.

CLASS OF 2014 EMPLOYMENT REPORT (Updated)

The ABA released the class of 2014’s employment information last week, and there are enough differences to warrant an update to this post, namely that I’d forgotten that the ABA accredited Lincoln Memorial University late last fall. Most of the figures remain the same, but to keep Web traffic to one post, I’m retaining the original “leaked” version at the bottom but striking it out. I’ve also changed the title.

We have 43,195 people who graduated from an ABA-accredited law school outside of Puerto Rico between September 1, 2013, and August 31, 2014. The employment information is good as of March 15, 2015. Readers likely know that the ABA now collects data as of ten months from the typical graduation date rather than nine. I don’t think there’s too much of an impact by the change except to applicants this year who might have wanted to rely on the data.

The tables are below the fold to conserve blog space.

Continue reading

Michael Simkovic Has a Big Fan on Wikipedia

Wikipedia readers interested in higher education, student loans, and related topics in the United States might be interested to know why so many Wikipedia pages rely so heavily on law professor Michael Simkovic’s paper “Risk-Based Student Loans.” The same goes for those interested in the future of legal education, given Simkovic’s prominence in that field.

A few examples:

  • The page on the “National Defense Education Act” cites “Risk-Based Student Loans” as evidence that the act “followed a growing national sense that U.S. scientists were falling behind scientists in the Soviet Union, catalyzed, arguably, by early Soviet success in the Space Race, notably the launch of the first-ever satellite, Sputnik, the previous year.”
  • The first paragraph of “Bankruptcy Discharge” ends with the statement, “Discharge is also believed to play an important role in credit markets by encouraging lenders, who may be more sophisticated and have better information than debtors, to monitor debtors and limit risk-taking,” and then cites “Risk-Based Student Loans.”
  • The “Higher Education Act of 1965” ends with a citation to Simkovic’s work as well. “The HEA has been criticized for establishing statutory pricing of federal student loans based on political considerations rather than pricing based on risk.”
  • In “Human Capital,” “Risk-Based Student Loans” tells us, “According to signaling theory, education does not lead to increased human capital, but rather acts as a mechanism by which workers with superior innate abilities can signal those abilities to prospective employers and so gain above average wages.”
  • Student Loans in the United States” contains six references to “Risk-Based Student Loans.” Here’s one:

Both subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guaranty agencies. Nearly all students are eligible to receive federal loans (regardless of credit score or other financial issues). Federal student loans are not priced according to any individualized measure of risk, nor are loan limits determined based on risk. Rather, pricing and loan limits are politically determined by Congress. Undergraduates typically receive lower interest rates, but graduate students typically can borrow more. This lack of risk-based pricing has been criticized by scholars as contributing to inefficiency in higher education. [Emphasis added.]

A variation on the higher education bubble theory suggests that there is no general bubble in higher education—that is, on average, higher education really does boost income and employment by more than enough to make it a good investment—but that degrees in some specific fields may be overvalued because they do little to boost income or improve job prospects, while degrees in other fields may in fact be undervalued because students do not appreciate the extent to which these degrees could benefit their employment prospects and future income. Proponents of this theory have noted that schools charge equal prices for tuition regardless of what students study, the interest rate on federal student loans is not adjusted according to risk, and there is evidence that undergraduate students in their first 3 years of college are not very good at predicting future wages by major. [Underlined & italicized emphasis added.]

As of Sunday, April 19, 2015, I’ve found at least 13 pages on Wikipedia that cite “Risk-Based Student Loans.” I don’t intend to find them all.

I discovered the edits after one of them popped out to me. Readers will probably agree that many of the citations appear to be either (a) statements for which “Risk-Based Student Loans” at best serves as a tertiary source, or (b) interpolations into the articles that promote “Risk-Based Student Loans” more than inform the reader on the topic. After sleuthing one of these page’s history sections, and then using Wikipedia’s cruelly titled “WikiBlame” feature to establish who altered these pages, I traced them to two anonymous IP addresses: 108.46.277.251 (May 5, 2012, through May 10, 2012, by my interpretation) and 71.190.187.89 (May 15, 2012, through June 11, 2012). Both are located in Midtown Manhattan, and the links include lists of the altered pages. Most of the edits occurred by May 15.

The current pages have benefited from nearly three years of improvement (although it’s troubling that so many of the pages’ headers carry content alerts given the topics’ importance), but the initial edits evidenced surprising devotion to Simkovic’s work, especially since he wasn’t so prominent then. For instance “Student Loan” received as many as twenty-one citations to “Risk-Based Student Loans,” and twenty were added to Student Loans in the United States. Sometimes it appears as the very first authority listed.

Here’s “Student Loan” early on May 5, 2012:

Click to enlarge. It's unclear why the citation date is 2013.

Click to enlarge. It’s unclear why the citation date is 2013.

Click to enlarge.

Click to enlarge.

The intensity of the edits quickly caught the eyes of some Wikipedia editors. On the evening of May 5, 2012, editor ElKevbo contacted whom I’ll call “Simkovic’s Fan” to inform him (yes, he’s a dude) that using an unreviewed, “self-published source” ran afoul of Wikipedia policies. At the time, “Risk-Based Student Loans” had not been published in an academic journal. Simkovic’s Fan defended his namesake, claiming Simkovic was “an established bankruptcy and credit scholar” with numerous prominent publications to his name. ElKevbo asked to continue the discussion on the Talk page for “Student Loans in the United States,” and added, “I object to widespread use of an unpublished work that has not undergone any sort of peer review.”

There, the dialogue resumed with ElKevbo reiterating that if “Risk-Based Student Loans” stood for the propositions for which Simkovic’s Fan claimed, then more appropriate sources would be available. ElKevbo also condemned “the manner in which this unregistered editor is attempting to ram these edits through without consensus.” Editor Nstrauss also criticized Simkovic’s Fan for un-reverting the restored article to replace his numerous citations to “Risk-Based Student Loans.” (Nstrauss refers to Simkovic’s Fan as “the anon Virginia editor.” I believe that’s a reference to the location of Simkovic’s Fan’s Internet service provider, Verizon, which is in Virginia. The IP address was in New York City.)

Undaunted, Simkovic’s Fan continued inserting citations to “Risk-Based Student Loans” in various related articles. No other Wikipedia editors appear to have noticed the widespread changes.

I’ll be upfront, I suspect Simkovic’s Fan is in fact Michael Simkovic, given the location of the IP addresses and the fact that it’s highly implausible that anyone would have read “Risk-Based Student Loans” in mid-2012 and been so convinced by it as to regard it as a comprehensive, Wiki-worthy treatise on higher education, student loans, bankruptcy, etc. I also think only Simkovic would exaggerate his prominence as “an established bankruptcy and credit scholar.” I’m open to alternative candidates.

There are a few reasons I’m raising this discovery.

One, I have no desire to become an expert on Wikipedia policies, but “Risk-Based Student Loans” is probably inappropriate for nearly all the statements it purports to validate. Wikipedia prefers its articles to be based on secondary sources. Going by its title and abstract, “Risk-Based Student Loans” is not, for example, a secondary source on the National Defense Education Act or signaling theory. In these contexts, “Risk-Based Student Loans” is a tertiary source and it should be substituted for better ones. Moreover, as tertiary sources go, it may not be a neutral one.

Two, many of the remaining citations use passively voiced or weasely worded phrases that just advance Simkovic’s arguments in “Risk-Based Student Loans,” as in “Student Loans in the United States” or “Higher Education Bubble.” When properly rephrased these aren’t “scholars'” or “proponents'” consensus opinions; rather, they’re Simkovic’s, and his positions on these issues are probably too specialized to be relevant to the articles’ topics.

The only place “Risk-Based Student Loans” really ought to be cited is in articles on risk-based lending, and arguably Simkovic is not a sufficiently noteworthy scholar for his opinions to appear there—and certainly not as the first citation. Again, it may not pass Wikipedia’s neutrality requirements.

Three, Simkovic’s Fan has disserved Simkovic’s research efforts by concealing the sources “Risk-Based Student Loans” relies on to make its arguments. To the extent that those authors’ points are relevant to the altered articles’ topics, they are the ones who should be cited, not Simkovic. Simkovic’s Fan should not have treated “Risk-Based Student Loans” as a comprehensive secondary source on anything.

Four, it’s more believable than not that Simkovic himself is the one who in 2012 edited Wikipedia to promote his own expertise and scholarship. If so, he certainly overstepped Wikipedia’s conflict of interest policies on self-citation in a shamefully vain and unprofessional manner, particularly for the reasons stated in the previous point and given ElKevbo’s objection that “Risk-Based Student Loans” hadn’t even been published yet. If true, Simkovic should apologize, and Wikipedia’s editors should reevaluate all references to his article.

Five, I’m not knowledgeable about law schools’ or universities’ policies regarding their instructors’ activities on Wikipedia or similar venues, but even if Simkovic’s Fan happens to not be Simkovic, I really hope academics absorb the lesson established here of watching how their work is used in publicly available Web sites like Wikipedia. Hopefully Wikipedia will also do a better job of monitoring wanton edits to its articles and tighten its requirements on secondary and tertiary sources so other academics’ works aren’t misused this way again.

Finally, I acknowledge that this post might be construed as an “off-wiki attack” of Simkovic that Wikipedians may perceive as harmful to their community. I believe, however, that the harm is minimal given that the edits are nearly three years old and Simkovic’s Fan was not a registered user. I also will not edit any of Simkovic’s Fan’s citations myself.

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Even though I’m not the topic of this article, I stipulate that I have never and do not intend to alter any Wikipedia pages to promote this blog, my articles on The American Lawyer, or anything else I have written or will write. I also take this time to thank those who have linked to my work in Wikipedia pages. It means a lot to me that my readers consider my work noteworthy enough for citation for the masses.

Law School Diversity Improves at Schools With Worst Job Outcomes

…Is available for your reading on The American Lawyer.

As a side note, irrespective of what you think of Aaron Taylor’s research, please realize that his or those like will not be possible in the future if the ABA Section of Legal Education and Admissions to the Bar’s Data Policy and Collection Committee changes law schools’ entering credentials reporting requirements (pdf). The committee wants to replace matriculants’ 75th, 50th, and 25th percentile LSAT and GPA data with large tables. This change will make the new data incompatible with the years of previous information that was presented in the Official Guide. I’m in favor of backwards compatibility for data, and I sent the committee a comment saying as much, but if the committee decides to make the changes anyway, much will be lost.

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