Steve Diamond, academic fraud

Updated below

Friend of LGM Steve Diamond has once again turned his attention to our blog:

[Campos] argues in a recent post at the equally notorious website “Lawyers, Guns and Money” which Professor Campos uses as his home base (Guardian journo and Edward Snowden interviewer Glenn Greenwald refers to LGM as a “filthy cesspool” and a “cesspool of unprincipled partisan hackdom”) that the discounted value of a JD at the median is something north of $100,000. He concludes that he has therefore succeeded in “critiquing” the paper by Simkovic and McIntyre.

He has, however, done nothing of the sort.

He has simply done exactly what the paper implies all analysts of the value of a JD should do – apply relevant costs such as potential debt and taxes and subtract those from the expected and discounted future cash flows. Sure enough, even with his inputs (like the implication that students must borrow $200,000 to go to law school) the result Professor Campos comes up with is a NPV of $109,000, i.e., positive . . . So, far from undermining the Million Dollar JD Value paper, Professor Campos simply confirms its fundamental insight: law school is a positive net present value project for the vast majority of law students even when tested by the institution’s leading opponent.

This is completely dishonest and hackish. It’s a grotesque mischaracterization of my critique of the Simkovic and McIntyre paper.

(tl;dr: Even accepting all of their data, methods, and interpretations as sound for the purposes of argument, S&M overstate the net present value of a law degree by nearly ten-fold, since going forward the typical law student will have to invest $311,000 in present dollars to get a $420,000 liftetime return in NPV (minus investment costs) terms. But their data, methods, and interpretations are in fact highly suspect, because in the face of compelling evidence to the contrary they assume no long-term changes in the labor market for law degree holders, they have no data on recent graduates, their sample of law degree holders not practicing law is highly vulnerable to self-selection bias, they must assume correlation equals causation, and they do not stratify their data by type of law school).

Diamond is well aware that the vast majority of readers don’t click through to a linked article, so he’s simply lying about what I have to say about the paper, in the knowledge that most readers will take his word that his characterization is fair.

In one sense Diamond is at the right institution: Santa Clara’s law school has engaged in, even by the abysmal standards of its peers, what certainly appears to be egregiously fraudulent mischaracterization of its graduate employment outcomes, by for example classifying 90% of its vast numbers of unemployed graduates as unemployed by choice. He also likes to out anonymous critics and inappropriately reference their personal lives. His comments in that vein in this thread were so shameless that Dan Filler decided to delete them.

Update: For a sense of what Santa Clara’s $70,000 annual cost of attendance is buying its students, check out this comment regarding what this professor of corporate finance teaches his students about the “fundamental rules of net present value.”