Bryan Caplan  

Charles Murray's Solution to Signaling

The Anti-Hansonian Heuristic... More on the Roots of the Bailo...

It looks like Charles Murray embraces the signaling model of education:

Outside a handful of majors -- engineering and some of the sciences -- a bachelor's degree tells an employer nothing except that the applicant has a certain amount of intellectual ability and perseverance. Even a degree in a vocational major like business administration can mean anything from a solid base of knowledge to four years of barely remembered gut courses.
My main quibble is that Murray doesn't consider why our wasteful educational system is so stable - and delivers such high financial rewards to successful students. There's even one sentence in the essay - "We will attach an economic reward to it that seldom has anything to do with what has been learned"- where Murray seems to say that employers collectively choose to overpay college grads. In an economy with millions of employers, that's crazy. (I'm not saying Murray believes in this bizarre conspiracy, just that it's easy to misinterpret him in this way).

So how can we explain the stability and pay-off of our inefficient educational system? My best guess is that educational success doesn't just signal brains and work ethic; it also signals conformity. A kid with the brains and work ethic to excel at MIT would be foolish to go to the University of Phoenix. Why? Because prospective employers would say, "What's wrong with this kid?" So I'm not optimistic about Murray's fix:

The solution is not better degrees, but no degrees. Young people entering the job market should have a known, trusted measure of their qualifications they can carry into job interviews. That measure should express what they know, not where they learned it or how long it took them. They need a certification, not a degree.
Admittedly, Murray does describe a plausible scenario in which certification stops being "weird":
If a high-profile testing company such as the Educational Testing Service were to reach a strategic decision to create definitive certification tests, it could coordinate with major employers, professional groups and nontraditional universities to make its tests the gold standard. A handful of key decisions could produce a tipping effect. Imagine if Microsoft announced it would henceforth require scores on a certain battery of certification tests from all of its programming applicants. Scores on that battery would acquire instant credibility for programming job applicants throughout the industry.
In the end, though, I'm not optimistic. Unless government slashes its subsidy to education, I think the status quo will endure.

Hopefully I'm wrong.

HT: Tyler

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COMMENTS (13 to date)
dcpi writes:

As an employer I can say that there is little my employees learn in college other than how to think logically and write well. I hold out little hope that education would ever provide more as I have met few in academia that have concept of business, much less of the technical skills most valuable to employees (and those vary from firm to firm). So it is assumed that recent grads will have to be extensively trained, which, of course, is why they are paid less than seasoned vets.

That said, experience has taught me to place great weight on a person's education background. Better schools and more difficult courses of study highly correspond to: personal responsibility, ability and willingness to learn, a general intelligence, willingness to work hard and expend effort, willingness to defer gratification for longer term rewards. All are key traits of a successful and valuable employee.

Things that are as critical that cannot be as easily to determine from the above are integrity and loyalty.

If someone has all of the above, they can usually be taught to do the job. Unfortunately, all of the above is rarely found in one person.

If I am looking for a specific skill I hire from a peer employer in the same industry. The best bets are someone whose work is already known within the professional community. If that person also has all of the above they tend to be very expensive to recruit.

So place me firmly in the "signaling" camp.

Bill writes:

If by "signalling" you mean that someone with high marks and an English degree has "signalled" an interest, aptitude, and the ability to work hard as a writer, publisher's assistant, or journalist, then I would agree.

If by "signalling," you mean that someone with a business degree with low grades but an impressive internship, that she applied for through class, and in which she sold $350,000 worth of tile flooring over the summer, has "signalled" to herself and others the ability to sell well but not do office work well, than I agree, its mostly signalling.

I think there is more to the signalling effect than just showing the ability to attend class and complete assignments. Besides, It can take years if not decades to become truly comptetent in many of the more difficult fields. Four years of training an 18 to 22 year can't realistically accomplish that without sucking the life out of the kid. The kid can learn the fundamentals, like how to write and think in those four years though.

Stuart Buck writes:

Might it be more useful to view this whole issue as not involving a "payoff" or "premium" for college education, but rather as involving a penalty for people who fail to go to college?

Ak Mike writes:

It beats me why everyone who discusses the purpose of higher education seems to view that purpose as entirely limited to vocational training.

Viewed as merely job preparation, college is incredibly wasteful. Viewed as developing individuals with a wider and deeper understanding of the world, and a capacity for hard thinking and study, it is not at all wasteful.

Felix writes:
In an economy with millions of employers, that's crazy

Maybe, though it may also be crazy to underestimate the power of the herd instinct.

Has anyone counted the number of employers who explicitly pay for college degrees? That is who pay people with the same job title differently depending upon whether they have a degree or not.

ajb writes:

An interesting question: To what extent is signalling underutilized because of discrimination law?

My guess is that it's illegal for an employer to say (out loud) they want applicants only from certain schools. But that sort of ad does appear in some other countries.

It seems there's multiple types of signalling: college vs no-degree, elite vs. non-elite school, regional vs. national, hard core sci/eng/math degrees vs. squishy majors, conformity and diligence vs. non-conformist ability, high vs. low iq. etc.

Murray's idea would help with college vs. no college and jobs where raw ability is highly valued. It would also help new schools overcome the reputation problem by producing lots of grads who do well on the test thus differentiating them from a better-known school with poorer outcomes.

dcpi writes:

Bill: I am entirely in agreement with you. Sales is one area where demonstrated track record clearly trumps academics. We rarely hire sales people who have not sold before, however, as most people do not really want to sell or know if they can do it before they have tried.

Send me over the person who sold the tile. They would be hired (assuming we could afford them, good sales people are valuable and most are already paid that way).

BTW: I am not aware any courses of study in "sales". (As opposed to marketing theory).

I also overlooked mentioning something that is so fundamental to success that it resides in my subconcious mind: someone must desire to succeed in the job. Going through a college course of study or successfully selling tiles can help prove that the candidate has that desire to me.

Steve Sailer writes:

Discrimination law plays a big role.

Dr. T writes:
The solution is not better degrees, but no degrees. Young people entering the job market should have a known, trusted measure of their qualifications they can carry into job interviews.
When I got my Bachelor of Science degree in Chemistry in 1978, that was the trusted measure of my qualifications. I had a 3.97 GPA at a good school, and I could have gotten into any chemistry graduate program in the country or into any chemistry-related industry.

Today, colleges, including my alma mater, have watered down their courses so much that Bachelor degrees mean little. So how would a qualification certificate matter? Schools that give A grades in watered down courses would be just as happy to issue qualifications based on wimpy standards. Perhaps Charles Murray expects some type of test-based qualification. But, he probably doesn't realize that these exist in dozens of fields: law and paralegal, medicine, dentistry, pharmacy, medical technology, nursing, fitness professionals, accounting, engineering, computing and informatics, dieticians, architecture, etc. I don't see the value of breaking down qualifications into subsets such as computing-software design, computing-networking, computing-databases, computing-security.

Instead of side-stepping the problem, I believe we should fix the problem. Returning appropriate value to college degrees requires that more rigorous standards be enforced. This would result in many students leaving or flunking out of college, so colleges would not want to toughen standards. The incentive would have to come from businesses, who are the ultimate customers: businesses would have to hire only students who graduated from schools with high standards. If businesses publicized this policy, schools with low standards would get fewer applicants. Improving college standards this way would take many years, but I see no faster way to fix the problem.

floccina writes:

Bryan, home schooling has more people realizing that schooling is un-productive. One of the interesting things about that is that home schoolers often start our as reactionaries but once they get going they get very progressive.

floccina writes:

@AK Mike
Viewed as merely job preparation, college is incredibly wasteful. Viewed as developing individuals with a wider and deeper understanding of the world, and a capacity for hard thinking and study, it is not at all wasteful.

The question is does schooling increase the capacity for hard thinking and study or does schooling mostly just test for capacity for hard thinking and study.

It beats me why everyone who discusses the purpose of higher education seems to view that purpose as entirely limited to vocational training.

Becuase you can education cheaper through books and auditing classes for much cheaper. Even at our best universities the education is free it is the diploma that costs.

The federal government could initiate major reform in the K-PhD education industry without imposing any mandates on State and local government. The US government exercises legitimate authority over three K-12 school systems: the US DOD schools, the US Embassy schools (for diplomatic dependents), and the BIA schools. The US government exercises legitimate authority over four colleges: the Naval Academy, West Point, the Air Force Academy, and the Merchant Marine academy. All the President has to do to transform the US education system is...
1) order these schools to develop a sequence of exams which satisfy graduation requitements,
2) license private-sector organzations to administer these exams,
3) grant credit to anyone who passes,
4) require that US government agencies recognize these degrees in employment decisions.

Tax subsidies sustain the current system, but the current US K-PhD system would collapse even if these subsidies remain in place in the institutional environment I describe above. The largest cost of school in the current legal environment is the opportunity cost to students of the time they spend in school. This cost falls most heavily on the children of poor parents. Students and parents would not subsidize the current system if the law did not compel them to do so, through compulsory attendance statutes, child labor laws, minimum wage laws, and occupational licensure.

Rick Stewart writes:

I still am not convinced the correlation is between education and income, as opposed to IQ and income. As an employer I used college degrees as a filter when I had too many applicants for a job (too many to read all the resumes, too many to interview, etc.). Once a person was working inside my company I didn't give a hoot about a degree - we knew what s/he knew. Higher IQ was certainly a predictor of success, but it was not a guarantee. Likewise for relentless pursuit of excellence. Sometimes, it just isn't enough.

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