Apparently it’s time for our “Is there a bubble?!?” post. We write these every few years (2015 version: Our annual “bubble” post; 2014 version: The whole “MBA bubble” thing rises again; 2011 version: The cost of education/is there a bubble? 8-part series), because apparently it’s a cyclical trend. The media gets bored, or someone (usually…
We spoke previously about how some grad school go-ers may have been switching in the past ten years from an interest in law school to an interest in business school. What if you’re that person? Over the years we have worked with a wide range of BSers, including quite a few who went for the…
You may have heard the news that over the past several years, interest in law school has tanked in this country. According to a 2015 Bloomberg article, app volumes for a three-year JD degree are at 15-year lows . Here’s the chart they posted based on data from the Law School Admissions Council:
The type of person who (originally thought she) wants to go to law school is not all that different from all of you who are interested in the MBA – in fact, one of our theories on why the interest in bschool has skyrocketed in recent years (thus putting a squeeze on admissions for everyone) is because that category of young person (the wanna-be lawyer) is now substituting business school, where they previously would have been trying for the law.
Makes sense, right? It’s the same type of motivated, up-and-comer, wanna go do something with my life person. But they’re no dumb cookies. They see the signs. Unemployment among new lawyers is really high. There was even a lawsuit recently by an alumna of Thomas Jefferson Law School (an unranked school in San Diego) who claimed that the school inflated their graduate placement numbers – she has been unable to land a job as a lawyer in the ten years since she’s been out. (She lost the suit. ) The outcomes for the Class of 2013 were abysmal; more than half of grads could not find jobs requiring the law degree (source ).
Or just the basic human response to trends: When you hear that everyone else is interested in something (or not) then frequently you decide you’re interested in it (or not) only because that’s what everyone else is doing. If you see enough articles in the media about the decline of the legal profession and you hear how much the law schools are struggling, with all the doom-and-gloom reports about how the lower-ranked schools will need to close, or how others are merging (merging! schools are merging! this article explains the economics in one region ).
Where are these kids gonna go if they’re not gonna go to law school? “Well, gee, why not an MBA instead?”
In economics they call this the “substitution effect”; it’s like when Coke is on sale at Target then that’s what dad buys, but then the next week, Pepsi is on sale, so mom stocks up on it when she’s out shopping. Those two products are seen as interchangeable by economists.
The law degree and the business degree are not exactly interchangeable (but neither are Coke and Pepsi – you cannot force the ‘Snark to drink Pepsi, thanks anyway) however they are both high-prestige graduate degrees that lead to higher incomes (or, traditionally have, at least) and it’s the same type of consumer who is interested in both.
That graph above shows about a 20,000 app decrease in law school app volumes over that 14-year period. Dang, that’s a lot. In just the past 4 years, HBS alone has seen a 7+% increase in applications, which for them represents about 1,000 more apps for the Class of 2018 over the Class of 2014. The GMAC research people reported that for the Class of 2017, 59% of full-time MBA programs in the U.S. saw an increase in domestic applications; previous-year gains had been driven much more by international applicants. Clearly not all of the formerly law-school-bound Americans decided they’d rather be bschool-bound — but we’re betting that a significant chunk of them have.
If not, then where else are all these new applicants coming from?
We also heard that applications to Teach for America are also down for the third straight year, now off 35% from a recent peak . Those who go for TFA are coming straight out of college, so they’re less likely to be substituting bschool instead, since work experience is generally a pre-req to getting in. However, more and more bschools are now offering tracks for recent college grads, and we are hearing of more and more interest in those programs. So, while certainly a much smaller chunk of the overall app pool, there is reason to believe that this trend could be driving volumes higher.
Our other theory that also cannot be proven: That these young people may be feeling smitten by status and prestige, as a by-product of our ever more appearance-based (narcissistic?) social media driven society. When you are questing for status, then how natural to be interested in the MBA. Getting into a top bschool can offer validation that you’re important. (No, nobody says this stuff out loud, but be honest. Many of you have such ideas lurking beneath the surface, if you care to examine them. We’re not criticizing that. We’re just recognizing it.)
Or, it’s related to the changes in our economy where a college degree, rather than a high school diploma, is now a bare-minimum requirement to make it in this world, and so the graduate degree is now what a college degree used to be, in terms offering opportunity.
Who knows. Presumably there are some smart academics in those ivory towers tackling these questions. It’s what EssaySnark thinks about when faced with the craziness of a competitive application season. Where are all these BSers coming from?