The Case Against Education on Who You Know

The noble Vipul Naik has been prodding me to address the social networking benefits of education.  Here’s my first take on the subject from the current draft of The Case Against Education.

Who You Know

About half of all workers used contacts – relatives,
friends, acquaintances – to get their current job.[1]  You could argue that education pays despite
“low measured learning” because the measures focus on what you know instead who
you know.  If you want to get ahead,
studying is overrated.  Instead, the
upwardly mobile student should strive to win friends and influence people.  The better your school, the more your friends
and people can do for you after graduation.

This story has a kernel of truth, and may occasionally be dead
right.  Overall, though, the case is
weak.  The modern economy is vast and
diverse.  Few of the students you meet will
end up in your line of work – even if they share your major.  As a result, they’ll probably never be in a
position to help you.  If you’re looking
for a good job, you don’t want generic contacts.  You want relevant
contacts.[2]

Empirically, friends in your narrowly-defined occupation
seem quite lucrative.[3]  So are older male relatives (father, uncle, grandfather)
who know the boss or vouch for you.[4]  When researchers estimate the average benefit
of “contacts” or “social networks,” though, some find a positive effect on
employment and wages, some no effect, and others a negative effect.[5]  If this seems implausible, bear in mind: Even
if your cousin or college roommate plainly “got you your job,” you might soon have
found as good or better a job on your own.

Who does meet
useful contacts in school?  If you want a
job in education, school is the ideal place to network.  Once I decided to become an economics
professor, I strove to meet other economics professors.  One of them, Tyler Cowen, got me my job.  (I also met many philosophy, history, and law
professors.  Career payoff so far: zero).  If you’re earning a professional degree in
law or medicine, or majoring in relatively vocational subjects like
engineering, you and your classmates could plausibly trade career favors down
the line.  Stanford’s computer science
program could be a great entree to Silicon Valley.  At some elite schools, fraternities funnel
their brothers into finance and consulting.[6]  Hell Week really could land you on Wall
Street.  For most students, however,
lucrative networking begins only after they graduate and find their niche in
the sprawling modern economy.

Final point: Suppose making connections in school were the path to career success.  Would this rescue human capital
extremism?  Not really.  The key claim of the human capital model is
that school makes students more productive from a social point of view.  But much
of the career benefit of “knowing the right people” – often known as “nepotism”
– is redistributive.  If every applicant
for a dream job has a contact, this doesn’t mean that every applicant gets his
dream job.  What it means, rather, is
that applicants need better contacts
than the competition.

You could object
that friends work better together.  Yet every
teacher knows that friends are more likely to cover for and distract each other;
that’s the rationale for seating kids boy-girl. 
A cordial workplace is
probably more productive than a friendly one. 
You could argue that contacts provide valuable information, improving
the match between workers and jobs.  But
to make this argument, you must abandon human capital extremism and admit the
central premise of the signaling model: worker productivity is hard to discover.  Once you admit that informal information from
school peers pays off, how can you deny that formal information from school
teachers pays off?  The “who you know”
story ends up as a version of the signaling model of education – not an
alternative.