Alex Tabarrok cleverly notes that cheating on exams would be pointless if the human capital model were the whole truth:

Cheating works best if the signaling model is true. If education were
all about increasing productivity and if employers could measure
productivity then cheating would be a waste of time.


If students perceive the situation correctly we also have an interesting
hypothesis: students should cheat more in those courses that offer the
least productivity gains.

Interesting.  But my actual classroom experience makes me skeptical.  As far as I can tell, cheating, like crime, does not pay.  The reason isn’t that grades and credentials are unimportant.  They assuredly are.  The reason, rather, is that most cheaters are incompetent cheaters.  They tend to cheat off students who know no more than they do, and end up failing anyway. 

Update: Alex reminds me that he’s made my point in the past.