What Does Education Signal? Answering Arnold's Challenge
My problem with the signalling model of education is that it suggests that there is a huge unexploited profit opportunity for employers and employees who can come up with alternative signals. And yet nobody tries to set up a system for identifying and hiring smart high school graduates.
This is a powerful objection against the view that education is purely a signal of intelligence. But there is a lot more to being a good worker than being smart. It is also important for employees to be conscientious and conformist. And while we can accurately assess someone’s intelligence with a short IQ test, it’s a lot harder to find out how conscientious and conformist someone is. Only Jack Black or Homer Simpson would admit in an interview that he’s lazy or weird.
Oh no, in interviews, the only character flaw that anyone owns up to is being a “workaholic” or a “perfectionist”!
But why does school have to go on for years? Simple: Even a lazy weirdo can pretend to be hard-working and conformist for a few months. Now suppose an employer wants people at the 90th percentile of conscientiousness and conformity. He’s got to set the educational bar high enough that 89% of people give up despite the rewards. Especially in an environment where government heavily subsidizes education, that could easily mean you have to get years and years of school to distinguish yourself from the pack.
An interesting implication is that high-IQ people who don’t go to college are actually signaling that they are unusually lazy and/or weird. It’s easy for a high-IQ person to breeze through school. If one fails to do so, a sensible employer will naturally ask “What’s wrong with him?” It’s not surprising, then, that few employers will give an eighteen-year-old genius a responsible job. The very fact that you refuse to go to college suggests that you aren’t going to be as good at your job as your test scores would normally indicate.
I hasten to add that I don’t mean to disparage my self-taught readers. I’d probably really enjoy meeting you. But I’d be lying if I said I’d be eager to hire you. No offense intended – if I were running a business, I wouldn’t hire myself either!