It was great fun debating Eric Hanushek, truly a gentleman and a scholar.  Here’s my opening statement.

the education system really a waste of time and money, as my new book claims
right on the cover? This is a strange topic to debate with Eric Hanushek.  Why? Because if Hanushek had absolute power
to fix the education system, education might actually be worth every penny.  Hanushek
is famous for focusing on what schools teach rather than what they spend – and
documenting the vast disconnect between the two.  If you haven’t already read his dissection of
“input-based education policies,” you really ought to.  Hanushek, more than any other economist, has
taught us that measured literacy and numeracy are socially valuable – but just
making kids spend long years in well-funded schools is not.  

however, Hanushek is not our education czar. 
Instead, all levels of our education system are extremely wasteful and
ineffective.  After spending more than a
decade in class and burning up over $100,000 in taxpayer money, most Americans
know shockingly little.  About a third of
adults are barely literate or numerate.  Average
adult knowledge of the other standard academic requirements – history, social
studies, science, foreign languages – is near-zero.  The average adult with a B.A.  has the knowledge base you’d intuitively
expect of the average high school graduate. 
The average high school graduate has the knowledge base you’d
intuitively expect of the average drop-out. 
This is the fruit of a trillion taxpayer dollars a year.

economists, however, there’s a powerful objection to this condemnation.  If students really learn so little, why on
earth is education so lucrative in the labor market? Why do high school grads
outearn dropouts by 30%? Why do college grads outearn high school grads by 73%?
Explain that! Employers want profit and they aren’t dumb.  They wouldn’t pay exorbitant premia unless
education dramatically improved worker productivity, right?

Wrong.  There are TWO solid business reasons to pay
extra for educated workers.  One is that
education teaches useful skills, transforming
unskilled students into skilled workers. 
This is the standard “human capital” story.  The other reason, though, is that education certifies useful skills, helping
employers distinguish skilled workers from imposters.  This is the “signaling” story.  In the real world, naturally, it’s a
continuum.  But since Hanushek is not the
education czar, signaling explains most of education’s financial reward. 

can we know this? We should start with the massive gap between learning and
earning, combined with the fact that even the most irrelevant subjects and
majors yield decent financial rewards.  If
human capital were the whole story, why on earth would employers care if about
whether you’ve studied Shakespeare, Latin, or trigonometry?  Think about all the classroom materials you
haven’t used since the final exam. 

that doesn’t fully convince you, many other facts that every student knows cut
in the same direction.  Such as:

1.  It’s easy to unofficially attend college
classes without enrolling or paying tuition, but almost no one bothers.  Why not? Because after four years of guerilla
education, there’s one thing you won’t have: a diploma.  The central signal of our society. 

2.  Students’ focus on grades over learning, best
seen in their tireless search for “easy A’s.” Signaling has a simple
explanation: If a professor gives you a high grade for minimal work, you get a
nice seal of approval without suffering for it. 

3.  Students routinely cram for final exams, then
calmly forget everything they learn.  Signaling
provides a clean explanation: Learning, then forgetting, sends a much better
signal than failing.

In The Case Against Education, I also
review multiple major bodies of academic research to help pin down the true
human capital/signaling breakdown.  In
the end, my best estimate is that signaling explains 80% of the payoff.  Key pieces of evidence:

1.  Most of the payoff for school comes from
graduation, not mere years of study.  This
is a doozy for human capital theory to explain; do schools withhold useful
skills until senior year? But it makes perfect sense if graduation is a focal
signal of conformity to social norms. 

2.  There has been massive credential inflation
since 1940.  The education you need to do a job hasn’t changed much, but the
education you need to get any given
job has risen about three years.  Hence,
the fact that waiter, bartender, security guard, and cashier are all now common
jobs for college grads. 

3.  Though every data set yields different
estimates, the effect of national education on national income is much smaller
than the effect of personal education on personal income.  How is this possible? Signaling! Give
everyone more useful skills, and you enrich the whole nation.  Give everyone more stickers on their
foreheads, and you fritter away valuable time and tax money. 

you’ve been wondering, “What does signaling have to do with wasteful
education?,” I hope you’re starting to see the link.  Sure, it’s useful to rank workers.  But once they’re ranked, prolonging the
ranking game is a socially destructive rat race.  When education levels skyrocket, the main
result isn’t good jobs for every graduate, but credential inflation: The more
education the average worker has, the more education the average worker needs
to be employable.  And while sending
fancy signals is a great way for an individual to enrich himself, it’s a
terrible way to enrich society. 

Hanushek’s work, I’m optimistic that he’ll agree with much of what I’ve said.  It’s our remedies that starkly diverge.  My primary solution for these ills is cutting
education spending.  In a word, austerity.  Austerity: It’s word I love.  It’s a word I believe in.  If Hanushek’s bleak assessment of input-based
education policies is right, austerity will save tons of time and money with
little effect on worker skill. 

though, my opponent doesn’t seem excited by this glorious free lunch.  His primary solution for what ails us –
correct me if I’m wrong – is to take the money we currently waste and use it to
increase measured learning, especially in math and science. 

disagree on both strategic and fundamental grounds. 

spending less is easy and transparent.  We
totally know how to do it.  Spending more
effectively, in contrast, is hard and foggy. 
And to make it happen, we have to trust the very education system that’s
spent decades ripping off taxpayers and wasting students’ time. 

while I agree that measured learning is much more socially valuable than mere
years in school, Hanushek’s enormous estimates of the benefits of higher test
scores are just too good to be true.  In
his view, higher average math and science scores not only dramatically increase
our wealth, but permanently raise the economy’s rate of growth.  It’s practically a perpetual motion machine. 

how can this be true, when the typical worker uses little math and almost no
science on the job? The simplest explanation for Hanushek’s results is that
national test scores are misleading proxies for a much more crucial – and far
less malleable – cognitive skill: intelligence. 
If everyone were smarter, we would all do our jobs better.  But if everyone knew more science, most of us
would rarely encounter an opportunity to use our extra knowledge.  I use my intelligence on the job every day;
but whole months go by when I don’t use biology, chemistry, or physics.

sum, if I had to hand over a trillion dollars of taxpayer money to one stellar
researcher, I’d be sorely tempted to hand it to Eric Hanushek.  Few educational experiments would be more fun
to watch.  Nevertheless, I predict the
results of the experiment would be very disappointing.  Entrenched interests – and legions of
touchy-feely parents – would block Czar Hanushek at every turn: “Test scores?
That’s so narrow and boring.  Let’s
assign more poster projects!” And even if Czar Hanushek managed to sharply
boost math and science scores, I’d only expect a modest social payoff.  Once we admit the massive defects of the
status quo, the only remedy we can really count on is austerity.