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I like his first post on this new book idea better than his second.

I agree that the demand for education is artificially high. However, I disagree that the main reason for this is that education primarily performs a signaling function. I think that if it were all signaling, then we would observe lots of competing forms of signals in the market.

I suspect that there are multiple causal factors for the artificially high demand for education. You can start with the fact that it's compulsory. You can add in government subsidies, plus the subsidies provided by alumni donations.

Another big distortion is credentialism. Sure, you might be a good lawyer without going to law school. And you might be a good physical therapist without suffering through a liberal arts education and two or three years of post-graduate education. But try getting a license!

In addition to the state-enforced credentialism, there is informal credentialism. Lots of academic departments will not consider hiring anyone without the right credentials (not just a Ph.D, but a Ph.D from an acceptable program). Lots of alumni of top business schools look for other alumni when they fill positions.

I would also caution that most people are not autodidacts. They do not learn enough on their own initiative. Not knowing what to learn or how to go about learning, they are bound to waste a lot of time in their education process. It is possible that, as inefficient as education appears to be, for these non-autodidacts, it is less inefficient and wasteful than if they floundered trying to determine for themselves what it is that they need to learn.

CATEGORIES: Economics of Education


TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/671
The author at Modeled Behavior in a related article titled Arnold Makes a Good Point writes:
    Arnold's point about self education is well taken. There is a strong possibility that part of what students are buying is "personal training" for knowledge. That is, they need some guidance about what to learn and more importantly they need an acc... [Tracked on March 19, 2007 11:51 AM]
COMMENTS (6 to date)
Taimyoboi writes:

"In addition to the state-enforced credentialism, there is informal credentialism."

Is credentialism really that different from signaling? Wouldn't credentialism/signaling exist even if the state didn't require it for some licenses?

That educational institutions demand a signal for teaching absent state intervention seems to me to suggest that credentialism/signaling would exist anyway.

Posted March 19, 2007 8:50 AM
Tyler Kirkpatrick writes:

I think the main reason people go to get a higher education is because of the opportunities it opens up. Higher education helps people learn how to use resources around them to better themselves as well as the people they work with. Obviously people go to college for other reasons but I think the main reason is opportunity. When your credentials are right and you have the knowledge you need, you are capable of making more money.

Posted March 19, 2007 12:42 PM
aaron writes:

Easy, academia works a protection racket for high paying jobs.

Posted March 19, 2007 1:02 PM
Matt writes:

It may be biological that after the age of puberty only pathological compulsion keeps a person in the classroom.

Posted March 19, 2007 6:42 PM
Bill writes:

I would also caution that most people are not autodidacts.

True, but that's no excuse to discriminate against those that are. Creeping credentialism is anti-autodidact. Why discriminate against autodidacts? To keep the least effective educators employed.

Posted March 20, 2007 5:19 AM
Eric Wilson writes:

I like the issue of education, being in high demand in a high quanity. I believe for me, and i want to believe that this is true for most young people in America is that we want to achieve higher education to better ourseleves in the future. In todays world as we all know you have to have a college degree to achieve a nice job with good pay and lots of benefits.This is good for the economy as well because we are the future of where this country is headed economically. I think it is a good sign to see that education is in a high demand for or country's sake.

Posted March 20, 2007 10:31 AM
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