Education and Signaling: Reply to Bill Dickens
By Bryan Caplan
As you’d expect, Bill’s case against the signaling model doesn’t convince me. Here are my thoughts, point-by-point:
I take it that you think that nearly all of the value of schooling is signaling?
My best guess is that 80% of the private return of education reflects signaling, and the remaining 20% reflects genuine skill acquisition. I’d add, though, that even modest concessions to the signaling model drastically slash estimates of the social return to education. Suppose just 20% of the private return reflects signaling with zero social rate of return. Then even ignoring tuition (i.e., foregone earnings are the only cost of education), an 8% private return implies a 6.4% social return.
I used to take that view too, but the accumulation of evidence that I’ve seen leads me to believe that isn’t the case.
I’m curious to hear more about what convinced you in the first place before you changed your mind.
For one thing I find it very hard to believe that we would waste so many resources on a nearly unproductive enterprise. There are plenty of entrepreneurs out there trying to make money by selling cheaper, in time and money, versions of education and they aren’t very successful. Mainstream schools have experimented with programmed learning, lectures on video, self-paced learning, etc. and none of the methods have caught on. Why wouldn’t they if they worked?
Your objection makes great sense if school signals nothing more than intelligence. But what if school also signals conscientiousness – or, more plausibly, a blend of intelligence and conscientiousness?
Suppose you open a school that supposedly accomplishes in two years what regular schools do in four. What kind of students enroll? On average, lazy shirkers who are trying to get their degrees the easy way. And the smarter your students happen to be, the more negatively employers will rationally judge their conscientiousness. After all, a kid with a 150 IQ can easily get a four-year degree; why’s he slumming at Quickie Tech?
But what if your alternative school makes a strong effort to weed out lazy students in order to avoid this negative equilibrium? You’d still face another serious problem: Choosing an alternative school signals weirdness almost by definition. And if weird/non-conformist students make bad workers, you can easily get stuck in a “normal” but highly inefficient equilibrium.
On top of all this, conventional education has an extra edge: large government and private subsidies. You might say that donors wouldn’t support the status quo unless they valued it, but I disagree. Maybe donors support the status quo because the market for charity has very weak feedback on effectiveness, and they falsely believe that education is a great way to build human capital.
Of course its hard to believe that reading novels and poems contributes much to ones productivity on the job.
I’m delighted that you admit this point. I feel like most economists who work on education just want to download data – and throw all their first-hand knowledge about actual classrooms down the memory hole.
So how do I square curriculum content with my view that education is productive? Here goes:
1. Education isn’t mainly about learning specific subject matter. Rather education is mainly about practicing the sort of self-discipline that is necessary to be productive in a modern work environment. High school allows you to practice showing up on time and doing what you are told. College allows you to practice and work out techniques that work for you that allow you to take on and complete on time complicated multi-part tasks in an environment where you have considerable freedom about how you spend your time.
Relative to sitting around smoking pot, I agree that school inculcates some productive character traits. I’d count character development in the 20% of schooling that actually builds human capital. However, I deny that education inculcates productive character traits relative to having a job.
Work inculcates the worker ethos; school inculcates the student ethos. The two are only moderately correlated. The most obvious differences: Work offers much more tangible rewards for good performance, and much harsher punishments for bad performance, than almost any school. School teaches students the wrong life lessons: Excellence doesn’t lead to money or status, and disruptiveness won’t get you fired.
Even worse, school often indirectly inculcates counter-productive character traits. Students spend a lot of their energy trying to show their fellow students that they’re defiant, cool, etc.
2. Education is a consumption good. This should be self explanatory. At the margin school may be work, but infra-marginally at least some (if not most) people actually enjoy the reading, the lectures, the homework, etc.
It’s a consumption good for some people; it’s a consumption bad for more. Think about all the people who continue to gripe about the boredom they felt in econ classes decades after they escaped our clutches! And merely having consumption value>0 isn’t enough to make the consumption of education socially beneficial. When you estimate the consumption benefit, you need to subtract the opportunity cost of students’ time from their gross willingness to pay. I’m almost sure that’s negative in the aggregate, especially when teachers take attendance.
3. Education is not just investment in work capital, its also an investment in consumption capital and social capital. I feel much more at home in the world due to the fact I understand certain cultural references. For example I know what someone means when they refer to someone else as a Prufrock. I also understand what someone is saying about a character in a music video if their costume invokes the evil robot Maria from Metropolis. I learned those things in college. The shared culture produced by the education experience expands our common language with a lot of meaning, and that produces huge network externalities. Knowing history does help me do my job, but it is much more important that it allows me to make analogies that will be understood by acquaintances. What good does it do to talk about Vietnam Syndrome with those who didn’t live through that era if they don’t know anything about the Vietnam war and its effects on our politics? What good does it do to denigrate McCarthyism if people don’t know what that is? Obviously this list could go on and on. “The original position,” “fair game,” “zero-sum game,” “categorical imperative” etc. etc. All very commonly used expressions whose meanings would probably be completely lost on someone who had three years of trade school after grade school and then went straight to work. But anyone who attended college has probably been exposed to those ideas through conversation if not through attending classes.
On consumption capital, see my reply to #2. On social capital, I’d say that the world of work also produces social capital with network externalities. And these network externalities are a lot more useful for society than the ones that you learn in school. Frankly, most of your examples just seem like consumption concepts that siphon nerds like us away from the productive sector of the economy. What’s “the original position” ever going to do for the world?
4. Some classes are very very valuable at work. Reading, writing and numeracy are all obviously important. Most people may learn those things in grade school, but a lot of people are still advancing in HS. If you do powerpoint presentations for English you are learning skills you may very well use later on the job.
I largely agree. But if you look at a typical curriculum, reading, writing, and numeracy get a lot less time than you’d think. And much of that time is poorly spent on e.g. Shakespeare – learning how not to write in the modern world. Still, reading, writing, and numeracy belong in the productive 20% of education.
Math courses have big returns even controlling for IQ (I believe) and that would seem to indicate that they have value preparing people for a wide range of work. Its not just engineers who use math on the job these days. Many blue collar workers are programming numerically controlled machine tools and have to understand statistical quality control.
The return to math could still easily be signaling, of course. And I think that most of it is. Most college graduates do not use higher mathematics on the job, and never will. When my wife was in law school, the students practically rioted when their tax professor tried using algebra!
Bottom line, Bill: Your first instinct was correct. What students learn in the classroom appears to have little real-world application – and appearances are revealing. 🙂
P.S. If anyone naturally overestimates the on-the-job usefulness of education, it’s academics like us. After all, by definition a big part of our job is to teach students the material we learned when we were in their shoes.