Education Signaling: Is Entrepreneurship a Solution?
I don’t believe the signalling story, because of the point Wilkinson makes. If it costs $200,000 for a person to go to an elite private school, and this does nothing other than provide a signal of the individual’s ability, then there is a whale of an unexploited profit opportunity sitting out there.
Let me repeat my response:
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.
Arnold then proposes his own story:
Mostly, though, I think of going to college as a cultural ritual, like a Bar Mitzvah, a confirmation, or a wedding. These rituals allow parents to impart tribal values and tribal loyalty to their children. Participating in the ritual reinforces your membership in the upper and/or upper-middle class tribe. With all of these rituals, including college, it is the parents, even more than the children, who are focused on conformity to peer expectations.
Question for Arnold: If you think that entrepreneurs can easily find a cheaper way to certify worker quality, why can’t entrepreneurs easily find a cheaper way to reinforce membership in the “upper and/or upper-middle class tribe”?