Bryan Caplan  

Education: Economic vs. Academic Perspectives

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The more I read about education, the more I realize that social scientists have two radically different approaches. 

The first is the economic approach: Judging education by pecuniary return.  According to the economic approach, education is a great success.  The tragedy is that so few people take advantage of the golden investment opportunity that education provides.  A prime example: Goldin and Katz's The Race Between Education and Technology.   

The second is the academic approach: Judging education by learning.  According to the academic approach, education is disappointing at best, and a disgrace at worst.  The tragedy is that so few students take advantage of the golden intellectual opportunity that education provides.  A prime example: Arum and Roksa's Academically Adrift: Limited Learning on College Campuses.

If you're reading this blog, you're probably already familiar with the economic approach to education, so I'm going to focus on the academic approach.  The academic approach is just as data-driven as the economic approach, but builds on different data: what you know (and learn), instead of how much money you make (and gain).  Academically Adrift, which focuses on learning during the first two years of college, reaches typical results for this literature:
[M]any students are only minimally improving their skills in critical thinking, complex reasoning, and writing during their journeys through higher education.  From their freshman entrance to the end of their sophomore year, students in our sample on average have improved these skills, as measured by the CLA [Collegiate Learning Assessment], by only 0.18 standard deviations...

With a large sample of more than 2,300 students, we observe no statistically significant gains in critical thinking, complex reasoning, and writing skills for at least 45 percent of the students in our study. 
This is hardly surprising considering the fact that college students spend little time studying and avoid challenging classes like the plague:
[O]n average, [students] report spending only 12 hours per week studying... Even more alarming, 37 percent of students reported spending less than five hours per week preparing for their courses.
In fact:
If we presume that students are sleeping eight hours a night, which is a generous assumption given their tardiness and at times disheveled appearance in early morning classes, that leaves 85 hours a week for other activities... What is this additional time spent on?  It seems to be spent mostly on socializing and recreation.
On the surface, the economic and academic perspectives on education are irreconcilable.  The economic perspective: "Since education sharply raises income, how can it fail to mold students into sharply more productive workers?"  The academic perspective: "Since education fails to noticeably raise skill, how can it possibly mold students into noticeably more productive workers?" 

In my book in progress, The Case Against Education, a running theme will be that both perspectives are right about the variables that excite them.  Education sharply raises income despite the fact that it fails to make students much more productive.  Impossible?  Hardly.  The signaling model of education can explain both facts without breaking a sweat.  Long story short: As long as low-productivity people are less likely to attend and complete school, and employers lack perfect information, remaining in school can causally boost your earnings even if you fail to learn anything useful - or anything at all.  That's all it takes. 

At the same time, The Case Against Education will argue that both the economic and academic perspectives are wrong to glorify education.*  A modern society can survive and thrive even if most people don't master academic skills.  How do we know?  Because the vast majority of the population has failed to master academic skills - and modern societies survive and thrive nonetheless. 

It is only a slight exaggeration to compare academia to opera.  Both are great for the small minority with the intellect and inclination to appreciate them.  The rest of the population has little use for either - and there's no good reason to force it down their throats.  In fact, there are good reasons not to do so.  Imagine forcing everyone in Yankee stadium to attend the Metropolitan Opera instead.  For every Yankee fan who discovered the magic of opera, a hundred or more would be horribly bored and resentful.  In their boredom and resentment, they'd complain and fidget, marring the experience for the genuine opera fans. 

The same principle is at work in classrooms all over the world.  Educators pressure or compel students to study high culture they're never going to use in real life, then wonder why it's so hard to teach them anything.  Meanwhile, the students who actually want to learn are bored by the slow pace and endure their disgruntled peers' emotional abuse.  What a waste.

* At times, Academically Adrift seems to embrace the signaling model:
While in the long term this country's global competitiveness is likely weakened by a white-collar workforce that is not uniformly trained at a rigorous level, colleges where limited academic learning occurs in the short term can still fulfill their primary social functions: students are allocated to occupational positions based on their credentials, not their skills...
But the embrace is far from consistent:
Occupational destinations in modern economies are increasingly dependent on an individual's academic achievements.  The attainment of long-term occupational success in the economy requires not only academic credentials, but likely also academic skills.

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COMMENTS (9 to date)
Steve Sailer writes:

Besides signaling, there's an acculturation effect: well educated people today have mostly absorbed a rather genteel personal style that makes working with them fairly pleasant for other genteel people.

For example, 25 years ago, I hired as a PC technician a guy who had never gone to college but was obviously smarter than I was. (A farm boy, he had enlisted straight from high school into the Navy's nuclear sub program.) He solved an amazing number of problems for the company, but he also caused me, as his boss, all sorts of office politics problems in part because he tended to rub other managers, who were all college grads, MBAs, or Ph.D.'s, the wrong way with his non-genteel personal style. He was worth it, but a lot of my colleagues didn't think so because of the acculturation gap.

ATF writes:
Meanwhile, the students who actually want to learn are bored by the slow pace and endure their disgruntled peers' emotional abuse.  What a waste.

I don't believe this problem really exists — at least not in colleges. Students that are disappointed with the general lack of rigor of many college classes have an obvious solution — take science classes. (That's been my solution, at least). Unless someone is a true genius, they'll be able to find challenging courses in math and the sciences.

I suppose it may be different at some places (for example, small liberal arts colleges that don't offer certain classes very often), but at the big state school I'm attending right now I could work literally as hard as I want — because there is nothing to stop me from taking five or six math classes at once.

Mark Little writes:

Great post.

Bryan is my favorite thinker on this issue, and perhaps I shouldn't quibble, but it's important to recognize that the quality signalling model has limitation. Not because it is in any way wrong, but because other factors also come into play.

Steve gives a good example of the social status signaling value of college, which in part takes the form of the acculturation effect Steve notes. I know that Bryan doesn't buy the importance of credentialing in the private sector, but I make my living hiring and supervising talent in the software development industry, ranging from the PhD to the BS level, and I know that today HR would not let me hire Steve's technician, no matter how highly I thought of him.

This is largely driven by anti-discrimination laws and regulations. Firms are now forbidden to freely assess applicant quality, and so fall back on credentialing as a means of screening applicants that will not get them in trouble.

I haven't read The Race Between Education and Technology, so I can't comment directly. (If guys like Alan Krueger and Tyler Cowen recommend it, it must be good. But see Devin Finbarr's review in the linked Amazon page, which has in part a similar flavor to my thinking.) However, I do think the Human Capital model, as relates to education and economic growth, is badly flawed.

Technology and economic growth do not require that everyone acquire ever-higher levels of educational attainment. Growth is based on a growing articulation of the division of labor. We all need to know LESS to be successful in a high tech civilization than in a less advanced world. (I think I'm agreeing with Bryan here.)

Which leads me to a second quibble. The opera example refers to diversity of consumption preferences. This is an appropriate argument with respect to the consumption aspects of higher education, but the context here is the "real" education/human capital investment model. For that, the illustration needs to be on the supply side--think Smith's pin factory writ large.

The (quality) signalling model of education is surely correct. But the besetting sin of economic theorizing is to take one factor (which may indeed be the dominant factor) and beat it to death while dismissing other relevant factors.

These other factors are of course not orthogonal. It is difficult (impossible?) in practice to separate the credentialing and signaling effects, as they act as mutually reinforcing incentives. But it is usually wrong to dismiss the role of rent seeking and monopoly profits in explaining economic inefficiencies. When other quality-signalling channels are restricted, control of the credential signal is of great value. (Thus the higher education "bubble".) There is a lot more that inefficient signalling going on.

In any case, I'm looking forward to reading The Case Against Education.

(P.S. Bryan, you know much more about this than me, so if you think 10% is the expected growth, I'll go with that and not take the bet at 20%.)

Bryan, I suggest The Case Against Schooling rather than The Case Against Education. One shouldn't conflate "education" with "schooling".

Steve Sailer writes:

Dear Mark Little:


I recall when I was working for Dun & Bradstreet in 1993. I needed to hire a computer programmer, so I went to HR and asked for their computer programmer hiring test. They said they had no such thing because if they put anything down on paper, it would be used in court. But, I should feel free to orally ask questions about programming. So, I made up some, and all the people I interviewed did very badly on answering them. Were they bad potential employees or did I make up bad questions? Who knows? But, the questions couldn't be used in court because they weren't written down.

mike shupp writes:

For comparison ... in the mid-1960's, programming shops or companies which hired programmers routinely gave IBM's Programmer Aptitude Test to just about everyone who walked into the door. If you scored 70% or better, they wanted you, and filling out the application form or waving a college degree were optional exercises.

Floccina writes:

@Steve Sailor
Does college make one more genteel or do only the genteel get a degree.

KO55 writes:

"Don't teach a pig to sing. It's a waste of your time and annoys the pig"

I read this on a coffee mug referring to "Murphy's Law" along with several other witticisms.

Kind of like "Pearls before swine"

We cannot force education on people that cannot appreciate it or use it.

Slim934 writes:


Any scheduled release date for The Case Against Education (I agree with a previous poster that Case Against Schooling would be more appropriate)?


This phenomenon is much more common in the public education system. From experience though I have seen it in college.

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