Bryan Caplan  

Class Dismissed and Signaling

PRINT
Unz on Immigration: A Bizarrel... Is the United States a Police ...
In Class Dismissed: Why We Cannot Teach or Learn Our Way Out of Inequality, John Marsh argues that education is overrated.  Unions and redistribution, not education, are the best remedy for poverty and inequality.  I'm clearly not Marsh's intended audience.  I don't care about equality, deem most poor Americans undeserving, frown upon unions, and oppose redistribution.  But I genuinely like Marsh's book. 

Marsh's sheer incredulity is his strongest asset.  What would a labor market composed exclusively of college graduates even look like?
[W]e cannot all be symbolic analysts.  Someone has to take care of our symbolic analyzing minds when the bodies that house them need to eat Happy Meals, get driven to the airport, wear clothes, be protected, or be taken care of when the bodies that house those minds start falling apart.  The question is not whether those jobs will exist - they will - but what they will pay.  More education would not seem to make them pay anymore.
Again:
[A]ll the education in the world - or all the world with an education - will not make [low-skilled] jobs pay any more than they do.  A waitress with a B.A. still hustles for tips.  Nor are these jobs likely to go anywhere soon.  Without them, the U.S. economy would grind to a halt.  Happy Meals would go unassembled and unserved; customer service calls unanswered; hotel rooms uncleaned; and the aged and sick would go unattended.
At times, Marsh sounds like he believes in the signaling model of education.  But it's hard to tell.  On p.19, he lists everything he's not arguing, including the view that...
[S]ince college teaches "few useful jobs skills," a degree, as the economist Bryan Caplan puts it, merely signals "to employers that graduates are smart, hard-working, and conformist"...
One page later, though, Marsh approvingly quotes me: "Going to college is a lot like standing up at a concert to see better.  Selfishly speaking, it works, but from a social point of view, we shouldn't encourage it."  His next paragraph suggests that he agrees with me, but simply has a different focus:
Unlike others who argue this point, however, my concern is not with the inefficiencies that come from everyone standing up to see better but, rather, the injustices that result.  That is, my concern is with those who cannot stand up, those who, either because of lack of ability, lack of interest, or other barriers to entry do not or cannot earn a college degree.
Unfortunately, Marsh's position on signaling never gets much clearer.  He spends a lot of time attacking Goldin and Katz's The Race Between Education and Technology.  But on the simple human capital model of the return to education, G&K are right and Marsh is wrong.  If more education genuinely makes workers more productive, then more education makes our whole society richer.  That includes people "left behind" by the education bandwagon.  If more people go to college, less-educated workers enjoy less competition and richer customers.  Lower supply and higher demand equals higher wages - even if you're serving Happy Meals and cleaning hotel rooms.

The signaling model is the only stable foundation for Marsh's incredulity.  As long as you accept that education simply causes higher worker productivity, education is a great way for individuals and societies to enrich themselves.  Indeed, education looks a lot better than unions and redistribution, because it actually creates additional wealth to distribute.  If, in contrast, education to a large extent merely certifies higher worker productivity, education is an inefficient and regressive form of redistribution.  Why can't Marsh just say that?



COMMENTS (9 to date)
PrometheeFeu writes:

The signaling model of education does not necessarily mean we can't improve on education. For one thing, it may be that the signal is noisy because initial wealth (read parent's wealth) might play a role in educational achievements. If that is the case, giving more people access to education might improve the quality of the education signal, result in a better allocation of resources and a wealthier society.

Glen writes:

First comment! And since I'm here first, I'll pose a question that I've posed to you before, but to which I haven't heard your response.

What makes you think that signaling is necessarily inefficient? Yes, it *can* be inefficient, as the standing up at a concert example shows. But just as clearly, there are potential social gains from sorting.

You might argue that more direct forms of signaling, such as testing, would do the trick at lower cost. Maybe. But if those signals were just as effective, it seems like there ought to be a market for them. My guess is that a college education does capture, to some degree, certain hard-to-test attributes.

You might then say that the state subsidizes inefficient forms of signaling at the expense of efficient ones, leading to more college education than would be justified by *efficient* signaling. But that should change the pallor of your argument, shouldn't it?

Glen writes:

D'oh, not the first comment after all. Guess I took too long writing it.

James writes:

Glen,

I can't speak for Bryan, but here's my answer to your question:

Turning a high school graduate into a college graduate means doing without about four and a half years of that high school graduate's potential output. This is already a lot of lost output, but I'd guess it's only half the cost once you include the work that the professors would be doing otherwise, the alternative uses of the facilities, etc.

Education is only an an efficient signal if (1) the information conveyed by the signal of a sheepskin is worth more than all of the associated costs and (2) there is no more efficient way to generate the same signal.

I can see the case for (2) but (1) is a hard case to make.

Glen writes:

James, I think your analysis is correct if education consists entirely of signaling. But what if education's value added includes some component of actual productivity enhancement -- say, 40 percent? (I have no idea what the actual figure would be, but I doubt it's zero.) Any amount of actual productivity effect would offset some of the cost burden.

In any case, I would rest my argument mostly on your requirement #2. And the best argument for #2 is the seeming absence of a market for alternative signals.

Peter Schaeffer writes:

Wow. Maybe would should consider immigration restriction as way to help low skill workers.

Unthinkable of course. Except to most Americans.

B writes:
Someone has to take care of our symbolic analyzing minds when the bodies that house them need to eat Happy Meals, get driven to the airport, wear clothes, be protected, or be taken care of when the bodies that house those minds start falling apart.

Someone also needs to handwash clothes, drive railroad spikes, and shovel coal into steamers.

Oh wait, that's done by machine now? You mean capital and technology is slowly displacing low skill labor?

GU writes:
"Turning a high school graduate into a college graduate means doing without about four and a half years of that high school graduate's potential output."

My understanding is that for many students today, college is a five or six year affair. And that doesn't count the students who never graduate.

lemmy caution writes:

"[W]e cannot all be symbolic analysts. Someone has to take care of our symbolic analyzing minds when the bodies that house them need to eat Happy Meals, get driven to the airport, wear clothes, be protected, or be taken care of when the bodies that house those minds start falling apart. The question is not whether those jobs will exist - they will - but what they will pay. More education would not seem to make them pay anymore."

This is happening in China now. Chinese college graduates have a real hard time getting jobs:

http://www.nytimes.com/2010/12/12/world/asia/12beijing.html?_r=1&hp=&adxnnl=1&pagewanted=1&adxnnlx=1292162475-aNx9YQu0Pn3xmLfuu/EpdA

Comments for this entry have been closed
Return to top