Question: There have been some claims in recent years that the increase in law school tuition (and the perceived value of a law school education) is a bubble. Do you agree with this statement? Why or why not?

A bubble for any sector, business, or economic activity arises when people invest more and more in the project, believing that it will yield positive returns. It generally happens when people start overestimating the rate of return from the bubble. It may happen to a positive response or informational cascade in the early chain of investments.

For example, a sudden increase in the stock prices of many internet companies during 1995-2000 is a bubble. Many investors believed that internet companies would always grow due to the unparallel and limitless potential of the internet and virtual world. It pulled investments heavily in the IT sector and created the bubble.

Rising law school tuition cannot be a bubble because there is no guarantee that law school education will always yield benefits. The success in the profession of law depends on the candidate's practice after the official education. It yields positive returns for some and negative returns for others. There is not much evidence to prove the success of law school tuition.

Thus, the false belief does not significantly impact the demand for investments in law school tuition. Thus, the increase in law school tuition is not a bubble.