Bryan Caplan  

Thiel's Priceless Publicity

Where's the State of the Free?... Why is College Expensive?...
I hereby nominate Peter Thiel as the world's most creative philanthropist.  After lending his name and money to seasteading, he's now trying to reform education by discouraging it:

Thiel is starting a new initiative that will offer grants of up to $100,000 for kids to drop out of school. Yes, you read that right. Though that's not how Thiel puts it. Instead, he calls it "stopping out of school."

The basic gist is that he will fund up to 20 kids under the age of 20 who apply for this grant. His hope, obviously, isn't to ruin their lives, but instead to find the best minds thinking about big things early in life. This is where true disruption comes from, Thiel believes.

As a proponent of the signaling model of education, I couldn't be happier.  Sure, school pays at the individual level.  But from a social point of view, Thiel's right: The world would be a better place if smart, motivated kids tried to please billions of consumers instead of a few dozen professors.

As expected, Thiel's audacity provoked a lot of venom - a.k.a. "the kind of publicity that money can't buy."  I bet that Thiel will have thousands of awesome applicants... largely thanks to criticism like this:

In announcing the program, Thiel made clear his contempt for U.S. universities, which, like governments, he believes, cost more than they're worth and get in the way of what really matters in life, namely tech startups.

Where to start with this nasty idea? A basic feature of Thiel's world view is its narcissism. Thiel fellows will have the opportunity to emulate their sponsor by halting their intellectual development around the onset of adulthood, maintaining a narrow-minded focus on getting rich as young as possible and thereby avoid the siren lure of helping others or pursuing knowledge for its own sake.

Accurate summary plus impotent fuming - could Thiel ask for more?  Still, there is a more substantive criticism:

Thiel's premise is that America suffers from a deficiency of entrepreneurship. In fact, we may be on the verge of the opposite: a startup bubble in which too many weak ideas find funding and every kid dreams of being the next Mark Zuckerberg.

This objection is plausible on the surface.  In all honesty, most of the aspiring entrepreneurs I've met seem pathetically deluded.  Starting a business?  They'd be better-off betting their life savings in Vegas. 

What's special about Thiel's initiative, though, is that it financially and morally encourages talented young people to redirect their attention.  He isn't handing out money to random dreamers who want to open their own restaurants; he's searching for creative kids who'd otherwise run the safe, sure, sterile educational marathon.  When he finds them - and find them he shall - billions of consumers will have Thiel's iconoclastic benevolence to thank.

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COMMENTS (12 to date)
FC writes:

Nonsense. We should all go deeply into debt and be taught fashionable nonsense in the hope that one day we too might ascend to "Chairman of the Slate Group."

Nic Smith writes:

I think this is actually better than Patri Friedman's response* to the Weisberg/Slate hit piece. Although I am saddened that there's no mention of LessWrong and the Singularity Institute. C'mon, it'd be soooo easy to claim Thiel is trying to create an AI god; I can't believe they missed that.

*Which is also quite good.

Raja writes:

if these supposed businesses are good ideas, why do they need a 100k handout?

Hyena writes:

So far as I recall, there was never an evidentiary answer on the signaling model question. There's also the small issue that, even for people who dropped out of college, they used their college social network to build the product while there.

The actual biography of these firms indicates, as Paul Graham constantly insists, that being in a place where you're surrounded by bright, capable people is massively important.

Russ writes:

The only problem with Thiel's proposal is that it's not the exceptionally bright and motivated that should be discouraged from going to school but the not-bright, not-motivated who should be discouraged.

Educational reform should start at the bottom. I'm hoping that the current fiscal crisis will cause a few community colleges to go completely on-line.

Luke G. writes:

Bryan, there’s a question I’ve been meaning to ask you for a long time. Let’s assume the signaling model of education, where what the university student learns is 80 percent signaling/20 percent substance.

Now, suppose you are a college professor who is aware of this and still wants to do the best he possibly can for his students. How do you approach teaching class? What if the class is teaching sophomores American Literature? What if it is teaching graduate students microeconomics?

Rebecca Burlingame writes:

What is at stake in all this is the changing idea of what "product" actually is, and what any business can actually provide that anyone can actually pay for with what disposable income they may still have. Education appears to have such diminishing returns now because it is tied to the disconnect reality between business and the public.

Floccina writes:

"he's now trying to reform education by discouraging it:"

I would like to discourage the use of Government schools. I would like to see the Government schools directly charge the rich and middle class for schooling. User fees. This might decreases the incentive to send your kids to school at all but I think that it might encourage other, hopefully more efficient, methods of educating. Making us all better off.

science writes:

I am convinced that Jacob Weisberg is an character invented by some Ayn Rand fan trying to make a real life version of Ellsworth Toohey

Daniel writes:

The idea makes sense in principle, but ignores the network externalities that are promoted on and near high profile college campuses. Bright kids meet each other at great schools. Some go on to create things.

Yes, even at top schools most of education is signaling. But would someone like Zuckerburg reach out to a dropout who promises to be smart? Even if test scores, grades, etc. showed the compensated dropout to be brilliant, the social stigma seems virtually insurmountable. If you're trying to start a biotech company (maybe you've studied science your whole life out of curiosity) and all the biology and engineering students are in school, your business plan is pretty much SOL. Who wants to trek off to a respectably furnished off campus (or 200 mile away) condo (made possible by the 100k subsidy) when you can just hang out in the school cafeteria and talk with plenty of other smart folks? Nevermind that investors rely heavily on signaling; it would take a lot of risk-loving investors before the proposed program could develop a reputation for selecting stellar minds who can produce high returns.

While I agree with Bryan that most education is signaling, top campuses probably serve as mini-cities that incubate the ideas of the brightest of the bright.

Unless the status-consciousness of the bright can be overcome by making it cool to talk to non-college kids about big things, I think that starting at the bottom makes much, much more sense. Encourage low IQ kids to go to technical or trade schools.

Hyena writes:


Why would you say "even at" top schools? We should expect the highest amount of signaling from the most selective institutions, both in admissions and retentions, because that's what generates the signal.

Troy Camplin writes:

I went to Thiel's group's website. There is nothing in the description that says the people have to drop out of college. Further, part of the deal is that he will teach them how to start their own business. So education is central to it.

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