Bryan Caplan  

Tyler May Not Agree With Me On Education, But His Inner Economist Does

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My next book will use the under-valued signaling model to make The Case Against Education. On his blog, Tyler hasn't been buying my story:

If education is pure signaling, just give everyone a standardized test in seventh grade and then close up the schools.

To which I've replied:
This is a straw man. Even firm believers in the signaling model like myself grant that schools teach some useful skills. But more importantly, this objection only works against specific kinds of signaling. Yes, if all that school signals is IQ, then a test is a cheap substitute. But what if school signals conscientiousness and/or conformism? Think about it this way: Would you want to hire a high school drop-out with a 150 IQ? Probably not, because you'd immediately think "This guy had the brains to do anything. Why didn't he finish high school? What's wrong with him?!"

A more recent exchange with Tyler suggests that I still haven't convinced him. So imagine my surprise to see the following in Discover Your Inner Economist:
It does not suffice to give everyone a test and hire people with the highest scores. Many general-aptitude tests are illegal in the United States because of antidiscrimination laws, but that is not the point. Doing well on a test is no guarantee of perseverance. The signal must be costly and grueling, otherwise it fails to sort out the best job candidates.

From context, Tyler definitely does not seem to be summarizing someone else's view. These thoughts about the signaling model of education are his own, as best as I can tell.

I'm stunned. Tyler's apparent change of mind makes me want to start a Spence Club for believers in the signaling model of education (analogous to Mankiw's Pigou Club) and induct Tyler - or at least his Inner Economist - as the second member.

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COMMENTS (13 to date)
Acad Ronin writes:

I would willingly join your Spence Club, but only under my nom de plume as I teach (part time) at a reasonably presitigious B-school and don't wish to be seen doing what some would see as gnawing on the hand that feeds me. Many of our students don't realize that the process is part of the program, especially the gruelling first and second halves of the first semester. When we lose students, and we lose too few in my opinion, it is rarely for an inability to do the work. Rather, it is generally for some psychological or character flaw such as bi-polar disorder, a discovered dislike of market processes, an inability to set priorities or to focus, and the like. Many of these things are not things that the GMAT can capture. Furthermore, even on intellectual ability, you can fool some of your instructors some of the time, some of them all of the time, but not all 19+ of them all of the time, and that shows up in GPAs and rankings, especially when some of your grade depends on presentation skills, teamworking skills, qualitative analysis skills, etc.

Mensarefugee writes:

If signalling were true for preserverance etc. We could just apply tougher standards in High School instead of sending everyone to university.

Steve Sailer writes:

Bryan is just reinventing the wheel. IQ researchers have been propounding the signaling theory of education for decades.

Economist really need to start reading non-economists.

Nathan Smith writes:

Human capital and signalling are the most popular economic explanations of education. But there are others. Education might be a form of consumption. There are a lot of stories you could tell here. Maybe it's just fun to tell people "I went to Harvard" all your life. Or maybe knowing more and being able to think more clearly on a wide range of subjects makes life more enjoyable.

In that case, we can explain the correlation between education and income as follows: talented people foresee a high lifetime income, and being-educated is a normal good (or perhaps a luxury good) so better-off people consume more of it than less-talented people.

Of course, there's a difference in tastes at work here too: talented people enjoy education a lot more than non-talented people.

But there's another explanation that I've never seen an attempt to model... Call it a social capital explanation of education: you go to college to meet people. People being spouses, friends, and also professionally useful contacts. I wonder: Has anyone tried to write a model of the social capital explanation of education.

Mensarefugee writes:

So many Status-Quo arguments...

Lord writes:

The difficulty with signaling is the lack of clarity about just what is signaled. Does stamina indicate perseverance or just lack of imagination? Do talented people enjoy education or just those fancying themselves such? Does what it mean for the signaled mean what it does for the signalee? I don't doubt a lot of signaling is going on but suspect even more mis-signaling.

Tom West writes: go to college to meet people...

"What a waste. He went to Harvard and all he got was a good education."

Thomas Eastman writes:

It is highly unlikely that he went to Harvard and got a good education. But he certainly can go to Harvard and become indoctrinated into politically correct monoculturalist pseudo-multiculturalism. Yes, that is likely.

Floccina writes:

Sign me up to your Spence Club. I see real harm done to low archivers by the signaling model (I call it the long test) of education. To me it seems that the signaling model undermines education, particularly the education of those who do poorly in school, because the testing often squeezes out the education and students are never taught what would be useful and beneficial in life. The stuff that we need to know for life does not make a good test. For an example in my observation people seem to learn much more history from the history channel than from school. Dates are not generally important but are easily to test. Showing the history channel and then testing on important principles would result in too many A's. To most people the principles of physics are simple and useful but the we teach quantitative physicist not just to physics majors but in most physics classes so that we can make the test rigorous. The basic principles of Chemistry are simple and would save many people from wasting money on organic produce but in order to make chemistry a good test we make people memorize and we make them do advanced math with the chemistry. What is a debit what is credit is simple. The miracle of compounding interest. The basic principles of economics are simple.

SheetWise writes:

This signaling model seems to apply better to some disciplines. Perhaps marketing, economics, finance, communications -- even philosophy, psychology, or literature.

Perhaps even mathematics.

But, in fields such as law or medicine -- I can't see it.

michael vassar writes:

Brian: Whenever I meet a person with a high school diploma and an IQ > 150 I think "not ambitious enough".

michael vassar writes:

If we want to test perseverence why not have grueling coming of age rituals like many primitive societies? Or look for people who have gone through basic military training? Or managed small businesses?

Frat-style hazing as part of the interview process could build team comradery, improve morale, increase exit costs, etc.

To become CEO you must hold onto a hot coal for 3 seconds...

PatrickO writes:

The MBA has to be the ultimate example of signaling. I recently graduated from the Chicago GSB and can say from personal experience that it is almost entirely about signaling and only remotely about developing new skills. Heck - the internship interviews start 3 months into your so-called education, and these internships quite often lead to permanent offers. It seems to me that most employers assume they'll train you on the job and use business schools as a way to simplify their recruiting process only.

I'm guessing you're already aware of this, but the Stanford professor Jeffrey Pfeffer has done some interesting research into this.

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