Arnold Kling

Education and Signaling

Arnold Kling, Great Questions of Economics
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Is education more beneficial to the individual than to society? If most of the return to education comes from signaling, rather than from actual increases in productivity, then there is a case that the private benefit is higher than the social benefit. However, David Card says,

My reading of the evidence is that education is much more than a rat race, and that signaling effects--if they exist at all--account for only a small fraction of the private return to schooling.

Discussion Question. To justify public funding for education, should not the social benefit for education exceed the private benefit?

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