Bryan Caplan  

Education: First Cut, Then Improve

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Taking Up Bryan's Challenge... Pension Fact of the Day...
Education can be improved; I don't deny it.  For example, I think vocationally-oriented German high school is clearly more efficient than the goofy American approach.  My first choice is a free market in education; but if government insists on subsidies, I'd rather see it subsidize the acquisition of productive skills instead of mere hoop-jumping. 

Nevertheless, the focus of my next book won't be on improving education, but on cutting education spending.  I have two main reasons: one philosophical, one strategic. 

Philosophically, I always begin by pushing the most obvious reforms.  "If government is subsidizing activities with negative externalities, stop!" is an excellent example.  Once intellectually honest people identify an obvious reform, they should pause the conversation and embrace the reform without ambiguity before they continue the discussion.

Strategically, my thinking is that a vast industry of researchers and activists is already trying to improve education.  Competing with them isn't my comparative advantage.  Instead, I should focus on the big reform that conventional researchers and activists Dare Not Name: Wasting less money on pseudo-investment in the nation's youth.

Once policy-makers actually follow my advice to massively cut spending on education, I'll be happy to discuss how to improve what's left.  Until then, though, I'll keep pushing the obvious austere implications of the signaling model.


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COMMENTS (22 to date)
Gaspard writes:

Wouldn't your advice just tend to consolidate the power of the rich? When only the George W Bushes of the world have MBAs (or private instruction on passing entrance exams), then anyone else can be 'meritocratically' excluded from consideration for powerful positions. How is this optimal for society?

Josh Weil writes:

@Gaspard

No. Getting rid of government subsidies to formal schooling will not have the effect you imagine. People in a post subsidy world will do formal schooling when it is worth it, which is less than now, reducing the amount of time underutilized. Our current system has a large opportunity cost.

Besides, Bryan's post is not the argument, which you can find in blogs posts and eventually his book. He's talking about what issues he will address the most.

CBBB writes:

People will do formal schooling if it is worthwhile AND they can afford it.
If cheaper educational institutions arise graduates from those will be discriminated against just as University of Phoenix graduates are discriminated against vis-a-vis Harvard graduates. Caplan is right about education being about signaling but removing the subsidies would just further entrench the already wealthy.

Tracy W writes:

CBB, Gaspard, but the rich can already use their wealth to buy grand education signals. Send your kid to Eton, hire private tutors for the entrance exams, then call up Harvard and discuss the size of the building you'd like to donate. All subsidises do is increase the amount of money the wealthy have to spend to show how wealthy they are, it doesn't alter the distribution.


FC writes:

Where do you think Harvard gets the money to be so generous to token minorities, er, underpriviliged youth with unconventional qualifications? Hurrah for rich donors!

Babinich writes:

Bryan says:

"My first choice is a free market in education; but if government insists on subsidies, I'd rather see it subsidize the acquisition of productive skills instead of mere hoop-jumping."

The problem here is that the government is famous for for creating hoops.

http://www.city-journal.org/mobile/story.php?s=6339

marko writes:

"For example, I think vocationally-oriented German high school is clearly more efficient than the goofy American approach."

I don't think this is true. Maybe it was true back in the old days, when you could learn in high school how to be a textile worker and work in the textile industry for the next 40 years. But I do not think that vocational high school training makes sense in the modern world. It is just too narrow and specialized. What happens if a great new technology comes and destroys the whole industry?

There are many things in a more general education that may seem redundant, but redundancy is not necessarily wasteful and inefficient - it allows more flexibility and easier career switching.

MikeDC writes:

I agree with Marko, and also I've noticed the vocationally trained in-laws I have in Europe got very little value from their vocational training.

The obvious solution to me seems to be that since human capital tends to be increasingly job specific, education should be tailored to focus on

1. basic skills that are pre-cursors to job-specific human capital development.

2. non-vocational personal and political consumption skills. If we teach appreciation of arts and letters, and especially understanding of politics and social interactions, we improve along the myth of the rational voter line, don't we?

In both respects, it's sort of a return to the "classical" education, although I'd buttress it with lots of facts and figures about what "we" actually spend our money on as the government.

Ryan writes:

Brilliant, Bryan. I'm not sure whether I agree with you about all aspects of education, but I definitely agree with you here. And this:

Once intellectually honest people identify an obvious reform, they should pause the conversation and embrace the reform without ambiguity before they continue the discussion.

is worth its weight in gold. Thanks for that.

William Barghest writes:

Having an expensive signaling procedure favors the rich. Formal education is expensive and entrenched partly because of the subsidies. If the social consensus moves away from formal schooling to a dramatically less expensive signal (like intelligence testing and work experience), then the rich will have a smaller advantage, not a greater one.

Ed Bosanquet writes:

Bryan,
Your argument that education has negative externalities lacks reference or proof. In previous posts, you argue about how education is about signaling not skill acquisition but signaling is not a negative externality.

Please clarify who is harmed by education that is not party to the transaction. Even if education provides zero benefit to the government, student or institution, that wouldn't be a negative externality since it lacks both parts:

1. Zero benefit is not negative
2. The three parties are not outside of the transaction. The wasted resources in the process are accounted for internal to the transaction.


For there to be a negative externality, please show how my neighbor is harmed by my education.

Chris Koresko writes:

@Gaspard, CBBB: I am always suspicious of policy arguments based on the advantage of one social/economic class over another. That's partly because it strikes me as wrong to prefer relative benefit to overall benefit, and partly because I don't believe people who make those arguments are good at predicting the outcomes anyway.

Friedman argued in Free to Choose that higher education subsidies are a means of redistributing wealth from the poor to the rich.

@Bryan: As someone who spent most of his life in academia, your case for cutting back education spending makes me uncomfortable. But that's mostly because I suspect you're right.

ryan writes:

Ed Bosanquet,
Because when you increase your signal, my signal is immediately worth less. I'm not party to that transaction. Note that when we say "signaling has zero benefit," that's a gross number, not net of costs.

How's that? Negative net value, hitting neighbors not party to your transaction.

Rebecca Burlingame writes:

Re: The "goofy" American high school approach: looking back I realize how true this is in certain respects. In the sixties and seventies they kept teaching the same American history class over and over, and then in college we were expected to do it yet again! One high school teacher actually said, "Don't expect me to teach you anything past Eisenhower". I didn't get any state or world history until I started self-educating.

Gaspard writes:

In Europe, universities are subsidised, but more or less cheap or free. A subsidised system is a good way of increasing the ability of bright poor people to better themselves to contribute more to society, which increases their liberty and adds to society's overall prosperity.

And, in some European countries, notably the UK, most people leave with a BA or BSc and go into paid employment after 3 years, and a Phd is only a further 3-4 years, so nearly everyone is in the labour force by 25. The interesting and complicated question is how the UK has avoided this opportunity cost and how the US could do the same. And then there is broader question of how signalling, path dependency, and other factors have conspired to make youth a sort of "walled garden" filled well-meaningly by adults with activities that are designed to be given up on reaching adulthood. This really is wasteful signalling, just as the concentration on Latin & Greek was in the early 19th century, and moreover probably makes the transition out of education more traumatic than it needs to be.

I was hoping BC would be expanding his arguments in this direction, but the above move indicates he is simply repeating these arguments without really adding anything: http://www.downsizinggovernment.org/education/higher-ed-subsidies

Slex writes:

@ Ryan

Because when you increase your signal, my signal is immediately worth less. I'm not party to that transaction. Note that when we say "signaling has zero benefit," that's a gross number, not net of costs.

How's that? Negative net value, hitting neighbors not party to your transaction.

This is competition, not externality.

If that is an externality, when I create a more attractive product, it will impose negative externalities on other producers, because they will either lose clients, or lose profit if they lower their prices to keep them.

ryan writes:

Slex,
No, it's externality. In competition, the marginal value goes down, but the total value goes up. Not true with signaling. If everyone signals twice as much, we still get the same amount of total value. It's a standard coordination-game or arms-race problem; the loss to others isn't really coming about through the price-mechanism

floccina writes:

IMO the place to start with changing education is to convince people that it is impossible to subsidize the rich and middle class and so Gov. schools should charge full price (the full cost) for the rich and middle class to send their children to Gov. schools. To make it more politically palatable we could start by charging only the rich to send their children to public schools. Obama seems to think it is politically safe to tax those making over 250k/year how about we start charging them to school their kids in Gov. schools.

BTW Bryan you are already competing to educate with your blog. You are not competing in the area if schooling and credentialing.

Slex writes:

@ Ryan

Actually, when I said "attractive", I didn't necessarily meant better. I was thinking more in line of advertisement. If advertisement doesn't increase the overall demand for the good, but instead channels it between suppliers. Is it safe to say it's a negative externality then?

Josh Weil writes:

@CBBB

No. That's what loans are for. If formal schooling is worth it, an institution will offer the student a loan.

Hyena writes:

@Slex

That is manifestly untrue. For example, the internet has vastly increased the amount of signaling. This has been a major boon: the increased number and diversity of signals makes it easier to select goods more perfectly suited to our needs.

In order to say that a signal creates a negative externality, you must first establish that it is not making selection easier.

Tom West writes:

If formal schooling is worth it, an institution will offer the student a loan.

True if the *only* value of formal schooling is that which is reflected in their paycheck.

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