Bryan Caplan Joins the Pigou Club

If only there were some mechanism for assigning the authority to tax these types of negative externalities to the private institutions that had the best information about the magnitude and impact of the externalities...

oh wait... that's what the tax to fund school vouchers does.

I get it.

Does he propose to quantify the portion of an education that is mere signalling and only tax that?

I am earning a Ph.D. in physics and plan to pursue a career in either quantitative finance or management consulting. If I go into quant finance, much of my graduate education is producing "real" value, but is mostly signaling if I go into consulting.

Horatio,

I know you're not asking for advice from me here, but can I recommend that you stay away from the Martingales and study accounting theory instead?

The best quantitative finance starts with the information provided in financial statements. Seems like many of the quants I know have focused on price charts. Price is too rich a phenomena to be worth studying quantitatively until we understand how firms work better.

As it's every bit as much about avoiding certain children, why not tax the children (or their parents) that are being avoided?

Personally, I'm not a big fan of Pigovian taxes. It's too hard to quantify the externalities because there's generally an infinite # of interacting effects.

I think the only real "benefit" of Pigovian taxes is they give economic cover to those of the "Reform Mindset".

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Is there any way to reduce the benefit of the signal? For instance, by making it illegal for the employer to consider which school an applicant graduated from?

Okay, that particular example wouldn't work, but why not encourage employers to use selection methods that don't depend so much on the signal?

lol! I can't believe you posted that! You have my vote if it's ever needed.

I digress a little. From your article of 8 years ago you mentioned having cities own major league baseball teams. Really? Have you ever written in more detail on this? Sounds to me like a perfect way to destroy a great game by having a government entity get involved. Maybe you were just proving a point using sarcasm?

Phil, the government actually does that. A degree is a degree.

Aaron: Thanks, I didn't know that! So what does the government do instead to distinguish between candidates with the same nominal degree? Just interviews?