Bryan Caplan  

Babcock-Marks and Signaling

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After summarizing the Babcock-Marks' evidence on declining study time, I pointed out that the return to education rose heavily during the same period, then remarked:
Babcock and Marks could reply, of course, that the return to college would have been even greater if schools had maintained standards.  But the more natural inference is that studying is mostly wasteful signaling.  If one student cuts his effort by 40%, he gets low grades and looks bad.  But students in general can still cut their effort by 40% without noticeably impairing their future productivity in the real world.
Philip Babcock objects that "Falling Study Times Don't Imply College Is a Wasteful Signal":
[I]t's simply not the case that, as Bryan Caplan suggests, "the natural inference" to be drawn from a rising college wage premium in the presence of declining study time is that college is just "wasteful signaling." ... [A]ny of these explanations could be right even though study time is declining... This could simply mean, for example, that the effect of skill-biased technical change is larger than previously thought, so that even more modest increases in human capital now generate significant wage gains.
To be clear, I never said that falling study times imply that college is signaling.  Indeed, I specifically mentioned that a human capital theorist could simply insist that the return to education would have risen even more if student effort hadn't declined.  My claim, rather, is that the Babcock-Marks' findings make the signaling model more probable.  Here's why:

Imagine that Babcock and Marks had found that study time declined by 100%.  College students ceased studying altogether.  Suppose further that the return to education still sharply increased during the same period.  This would be exceedingly difficult for a human capital story to explain.  After all, its central thesis is that students acquire job skills by studying! 

While you could still posit a massive countervailing skill-biased technical change, it strains credulity.  In contrast, it's quite a bit easier for a signaling model to explain why the market might reward students who don't study.  Maybe they can show off their quality merely by gaining admission to college, then failing to get expelled for moral turpitude.

Of course, Babcock and Marks don't find that studying disappeared entirely.  But probabilistically, my point still holds.  If studying sharply declines, and the labor market doesn't care, this raises the probability that something other than straightforward human capital acquisition is at work.

Babcock concludes:
Most of us believe that productivity-enhancing skills can be learned in college (I certainly wouldn't want to go to a doctor who hadn't gone to college.) We also believe there may be a signaling component to education, as well. In our piece, we simply note that if learning is a part of the university mission, or if studying leads to any meaningful increase in human capital, then these declining study times should be disturbing.
I completely agree that actual education is a mix of job skill acquisition and signaling.*  The most precise way of stating my point is that, given Babcock and Marks' findings, we should upwardly revise our estimate of signaling's share of the mix.  But Babcock's wrong to conclude that "declining study times should be disturbing" either way. 

It depends on the human capital/signaling mix.  Even if you think that human capital acquisition has positive externalities, you have to weigh these against the negative externalities of signaling.  And if you don't think that human capital acquisition has positive externalities, then a voluntary fall in study time is reassuring, not disturbing.  Students internalize the cost of lower human capital acquisition, and society reaps the benefit of lower negative externalities of wasteful displays of scholarship.
* However, for most ailments I would be happy to go to a doctor who went to a trade school rather than college - at least in a society where this wasn't too weird.

Comments and Sharing

COMMENTS (7 to date)
hacs writes:

Is it possible that a higher concentration in high skilled jobs (a shock) could generate a discontinuity (a cutoff point) in the curve of required labor skills (for future market jobs) such that many people are experiencing some kind of regret?

Noah Yetter writes:

Most of us believe that productivity-enhancing skills can be learned in college...

I think we need to emphasize the "can" in this sentence. I'm a software engineer with a degree in economics. When I'm actually writing code, none of the "skills" I learned in college matter one tiny little bit, though I do use them in the other parts of my job.

Also I have to say college was really easy. At no time did I spend anywhere close to 14 hours studying during a week. I was more capable when I started college than most of my peers when they finished. Though I did learn some valuable stuff, acquiring a degree was almost pure signalling.

Hyena writes:

Why do we assume that college is mostly wasteful signaling as opposed to study.

Isn't it possible that studying did not produce any significant benefits or represented wasteful signaling? What's the marginal value of an hour of study?

The countervailing trend is for people to spend more time in college. So it's possible that study times have actually increased over the relevant period through additional time in school rather than additional hours at the library.

The explanation would be that the addition of courses increases student value more than additional hours of study in the same course. That seems very plausible, especially given that many formerly "high standards" really just replicated results known from SAT scores or demonstrated memory.

marko writes:

Isn't another story possible - that kids simply take less time to learn the same amount of knowledge as before? Think how much search time has reduced as a result of Google, how much easier it is to write an essay, how much easier it is to clarify some issue.

Lets say that 20 years ago I took intro micro class and was trying to understand income and substitution effects. Back then my only option would be to stare at the graph and try to make some sense out of it. Now I can type "income and substitution effect" into Google and read 10 different explanations with different examples. I may even find a video of a lecture as well as someone's Power Point presentation with animated graphs and, instead of "studying" for 2 hours, I "studied" just for 15 minutes.

So, my point is that studying is maybe more productive than it used to be, meaning that less time studying does not necessarily translate to less knowledge.

Robert Johnson writes:

Hyena's suggestion jives with my experience. The breadth of courses I took has generally been more useful to me in my career than has the depth of particular courses. This is mostly true because the depth was often in technical content that I haven't had an opportunity to apply, but broad familiarity with many concepts gives me a place to start studying when I encounter problems at work that I don't know how to solve.

I'm a mechanical engineer.

Hyena writes:


Precisely. The more specific your knowledge, the less likely you are to use it (seriously, roll dice on it). Broader, shallower knowledge provides you with pathways into more areas.

One explanation might be that course range increases the value of degrees by increasing the number of employment pathways.

Duna writes:

I definitely agree with marko. As a current college student, I can attest to the huge role the internet plays in my education. This is especially true for Mathematics and Science majors. These majors tend to have very standardized curriculums. For example, I can study for my real analysis course by reading lecture notes from a professor at a university across the world.

It is not only the availability of information that has increased; the delivery to the student has improved. Look at any economics textbook from the 1960's. The graphics will be very few in number and will be in black and white. Contrast this with the textbooks of today, which tend to to incorporate much more visual information. Further, computers are extremely helpful at visualizing mathematics (think plotting a cobb-douglas production function in matlab or graphing the normal distribution in R).

The modern student has definitely adapted as we are very comfortable with the internet and more broadly technology. I find the argument that my generation of college students is simply lazy to be somewhat humorous given my own experiences with the cutthroat competition that goes on in my classes.

As far as signaling goes, completion of the degree is not the only signal. In fact, internships and real world experience are very high of the list of potential employers. Thus, as a college student, my goal is to utilize technology in order to increase my studying productivity, which frees up time to participate in interships.

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