Here's a fascinating dialogue on the economics of education from Anna Karenina. Two country gentlemen - Levin and Sviiazhsky - are arguing about how to raise farm productivity. Sviiazhsky's answer: `To educate the people three things are needed: schools, and schools, and schools.' Levin objects:
`But how do schools help matters?'
`They give the peasant fresh wants.'
`Well, that's a thing I've never understood,' Levin replied with heat. `In what way are schools going to help the people to improve their material position? You say schools, education, will give them fresh wants. So much the worse, since they won't be capable of satisfying them. And in what way a knowledge of addition and subtraction and the catechism is going to improve their material condition, I never could make out. The day before yesterday I met a peasant woman in the evening with a little baby, and asked her where she was going. She said she was going to the wisewoman; her boy had screaming fits, so she was taking him to be doctored. I asked, ``Why, how does the wisewoman cure screaming fits?' ``She puts the child on the hen roost and repeats some charm....''
`Well, you're saying it yourself! What's wanted to prevent her taking her child to the hen roost to cure it of screaming fits is just...' Sviiazhsky said, smiling good-humoredly.
`Oh, no!' said Levin with annoyance; `that method of doctoring I merely meant as a simile for doctoring the people with schools. The people are poor and ignorant - that we see as surely as the peasant woman sees the baby has fits because it screams. But in what way this trouble of poverty and ignorance is to be cured by schools is as incomprehensible as how the hen roost affects the screaming. What has to be cured is what makes him poor.'
`Well, in that, at least, you're in agreement with Spencer, whom you dislike so much. He says, too, that education may be the consequence of greater prosperity and comfort, of more frequent washing, as he says, but not of being able to read and write....'
`Well, then, I'm very glad - or the contrary, very sorry - that I'm in agreement with Spencer; only I've known it a long while. Schools can do no good; what will do good is an economic organization in which the people will become richer, will have more leisure - and then there will be schools.'
I'm tempted to say that Tolstoy (or at least Tolstoy wearing the mask of Spencer) anticipates the signaling model, but that's not quite right. As far as I can tell, he's actually defending the pure consumption model of education: Education is not an investment that causes wealth; education is consumption caused by wealth. Hmm.