Bryan Caplan  

Murray and Me

Klein Answers the Davos Questi... Misleading Story...
Over at Cato Unbound, Murray seems to be missing how much I agree with him:

I guess I'm asking my colleagues to step back from a system that worked for them and consider the large majority of young people who are not in their position. The current system imposes severe punishments and burdens on them. We shouldn't be doing it if we don't have damned good reasons for it.
I respond:

My key problems with Murray's essay are his arguments, not his conclusion.  I don't see that Murray has a coherent story about how the BA persists despite its inefficiency.  The signaling model does tell such a story, so Murray ought to at least take it seriously, and tell us how it relates to his thesis.

If he does embrace the signaling model, though, Murray's distributional analysis will probably turn out to be wrong.  The main losers are taxpayers who subsidize the wasteful signaling competition, and consumers who pay more for the labor that colleges divert away from the productive part of the economy...
I hope we can get this all straightened out before the debate ends.  I fear that Murray's endured so much unfair criticism in his career that he has trouble believing that I want to help him make his argument stronger.  Believe me: I do!

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COMMENTS (9 to date)
Publius writes:

I disagree that there is no coherent explanation for a persistantly ienfficient BA system.

From my linked post:

"In theory, this problem should resolve itself as firms exploit this opportunity by hiring and training smart high school graduates themselves for less than they would pay the college grads. That is indeed what has happened in India: at least one software company is thriving by hiring young professionals whom others disregard. They don’t look at colleges, degrees or grades, because not everyone in India is able to go to a top-ranked engineering school, but many are smart. The firm goes to poor high schools, and hires kids who are bright but are not going to college due to pressure to start making money right away. They train them, and in nine months, they produce at the level of college grads.

This is not occuring in the US, primarily because of a coordination problem.

Good future workers know they need to go to college to signal their ability to firms and firms know that they have a much higher chance of finding good future workers in the college group. Furthermore, employers are much less likely to have their competence called into question if a hire with a degree doesn’t work out than if they hire a worker without a degree (because of the correct perception of the low likelihood of that hire being a wise choise).

For these individual decision-makers, it is wiser to pay the college premium because of this coordination problem, despite the inefficiency on a societal level.

The question is how to credibly signal to good future workers that a four-year college degree isn’t necessary to be considered as a candidate and to convince firms that there are enough good future workers without a four-year college degree to make it a wise investment to include them in their employee search.

The challenge is to develop viable alternatives to the bachelor's degree that don't confer a 'second-class' status. I'd like to see the proliferation of shorter, no-frills academic programs that focus on teaching professional skills and testing relevant capacity (take a lesson from master's programs). In addition, I do believe that CPA-like exams for different professions (or areas of competency) will allow for a more fair and open competition."

Cyberike writes:

I agree with you both. I am a firm believer in higher education, but I do not agree that a BA should be a goal for every high school graduate. A research paper prepared for the Workforce Alliance ( states that about 50% of new jobs created in the next decade will be in what they call the middle skills, meaning requiring some education past high school but not a BA. Other research points to a skilled trades worker gap of up to 7 million workers.

These middle skills require some academic skills, but a primary requirement is mechanical aptitude, along with a hefty dose of practical problem solving ability. Here is the problem: we have created a high school educational system that focuses on college prep and students are not getting the skills that are in the most demand. As a matter of fact, those students who perform poorly academically (those who might just be ideal candidates for those skilled trade careers) are subjected to an even more intensive academic program designed to "close the gap". Many of these students drop out.

Even worse than this reality is that students who are unmotivated or bored with school, who might just excel academically if motivated properly, have fewer and fewer options when it comes to alternatives to the academic focus. These are the students who "drop out" while remaining in school. These students are not reaching their potential and are being left behind.

No one is suggesting that we track students. I say lets give them viable options and let them decide for themselves. Many really good programs designed to develop mechanical aptitude involve a hefty dose of physics and include robotics, so we are not talking about an academic wasteland.

These types of skills developed in a rigorous program has the potential to eliminate the second class status of a non-degree program.

scott clark writes:

Yea, he didn't even acknowledge your points. It looks like he was looking for a confrontation, and when you were offering a clarification and a little more structure, he wasn't ready. Even though you are the only one offering a coherent theory that explains the facts.

Seems you have so many books to write, so little time.

mensarefugee writes:

The ghost of Griggs and his Power Company will come to haunt both you and Murray Caplan!

Your Days are numbered.

bgc writes:

Excellent stuff from Bryan.

Educational attainment is a product of inteligence and perseverence.

College boils down to the measurement of perseverence.

Intelligence can be accurately measured in an hour or two using IQ tests.

But measuring perseverence requires getting people to do difficult stuff that they do not want to do for long periods.

Logically, if colleges are measuring perseverence they ought to be more intensely dull - then they would not need to last four years.

The real insanity of four year degrees is using college to signal perseverence, but then making colleges so easy and such fun that they do not do require very much perseverence!

J P writes:

So let’s walk this up the ladder a little...if a four year BA is purely a signaling function...and there is no connection between the skills taught and the skills needed in the work place...then why should tenure exist!?!

Without tenure wouldn’t markets for classes and skill sets clear? Competitive forces would redistribute capital to effective teachers and needed skill sets. Four year programs would be forced to remove ridiculous courses...potentially years from the program? Does anyone really think that with the near perfect information of the internet that a professor could be coerced to teach a course they didn’t want anything other than market forces? What is left to defend tenure with? How do you stand on research alone?

ajb writes:

The real puzzle is why firms don't make greater efforts to distinguish between different college degrees. As far as I can tell, the only distinction is between harder degrees (more math based) vs. fluff. However, employers tend to punish grads from schools who major in subjects that grade correctly, thus offsetting the benefits of a harder degree except for those who get straight A's no matter what the subject. Until employers consistently prefer the C student from EE or Physics who aced the SATs over the A student from Fluffy Studies, there will always be a "lemons" problem.

That is what makes Econ such a popular major. It is hard enough to be a good signal, but not so hard as to be GPA destroying at most schools.

Anon This Time writes:

One of my long-term goals, perhaps a fantasy, is to get into state legislature. There, I will create state run health clinics. The staff will have a few doctors and many nurses, but the big chunk of employees will be fresh college grads who we train to be medical staff. ("You don't have to bother with medical school. You can work for us right now.") When the AMA tries to bully us to shut down, we respond that we're the state and buckle down for a fight.

mensarefugee writes:

The AMA and the state probably collude(the 'probably' is to spare your feelings). The left hand does not wage war against the right hand, at not to a final conclusion.

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