Does Portugal Show the Signaling Model Is Wrong?
By Bryan Caplan
Tyler mischievously taunts me on Twitter:
Good thing the Portuguese saved all those resources which Sweden wasted on signaling.
On MR he adds:
In 2009, only 30 percent of Portuguese adults had completed high school
or its equivalent, according to figures from the Organization for
Economic Cooperation and Development.
Which got me wondering. What exactly is Portuguese education like? Some basic facts:
1. Primary and secondary education in Portugal is free. Attendance is compulsory until 18. (source)
2. Portugal spends a slightly higher percentage of its GDP on education than the U.S.
3. Portugal’s PISA scores in 2009 were close to the OECD mean.
Portugal admittedly spends a smaller share of GDP on education than Sweden. But it’s hard to see what on earth Tyler’s example is supposed to prove. Portugal’s hardly a case of a country that “invested” way less than normal in education and ended in disaster. Instead, it looks like a country with roughly normal education policies, roughly normal literacy and numeracy, and moderately disappointing economic performance.
Maybe the reason is that Portugal’s policies were bad on other margins. And maybe Portuguese human capital is subpar for non-educational reasons. Remember: even in a pure signaling model, low educational attainment remains a symptom – though not a cause – of low-quality human capital (holding education policy constant).
Bottom line: While I don’t pose as an expert on the Portuguese economy, there isn’t the slightest reason to see it as a walking refutation of the signaling model.