Bryan Caplan  

How Does Belief in the Signaling Model Affect Educational Attainment?

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Lectures about the signaling model of education usually provoke excellent reactions from the audience.  But they also provoke some truly obtuse questions.  The worst of the worst: "So I might as well just drop out of school?"

No!  A thousand times no.  The signaling model says that education pays despite its uselessness.  That's the whole point of the model.

Still, this obtuse question raises an interesting issue.  If you believed that the signaling model was true, how would this affect your educational attainment?  I can think of two credible, mutually offsetting mechanisms.

If you're narrowly self-interested, belief in signaling should actually increase your educational attainment.  The mechanism: Suppose you harbor doubts about the usefulness of some of the curriculum.  Every marginally observant student occasionally asks himself, "Am I really going to use this stuff after graduation?"  The signaling model silences these inner doubts: "The market rewards academic performance even if you are studying utterly useless material.  So suck it up and stay in school."

If you're ethically minded, however, belief in signaling does indeed tend to suppress educational attainment.  Suppose you're somewhat utilitarian.  Then when you decide whether to pursue another degree, you won't just ask yourself, "Will it benefit me?"  You'll also ponder the effect on all your rivals in the labor market, who will look slightly worse in comparison.  As a result, you'll be a little less eager to continue your education.

As an economist, my strong prior is that self-interest usually overpowers ethics.  On balance, then, an individual's belief in the signaling model probably increases educational attainment by quelling doubts about the practical relevance of the curriculum.  The offsetting ethical effect is small by comparison.  Depressing?  Slightly.  But that's life.

COMMENTS (16 to date)
Roger Sweeny writes:

I don't think it is an exaggeration to say that this is how most teachers feel about a Masters of Arts in Teaching. It doesn't make you a better teacher but it gives you a substantial pay bump, so it's worth doing.

jason braswell writes:

Even more self-interested...cheat and/or falsify credentials!

Peter H writes:

The people you want to give the speech to aren't college students, they're business owners or hiring managers. Their behaviours could be expected to materially change based on belief in the signaling model. I know I highly discounted educational attainment when I was hiring for my last position.

Kevin writes:

@Roger Sweeny

That's why I'm going back for a MSc (not in teaching, though). I can already do everything that graduates of the program can do and more, but they still make ~30% more than I do when hired. So screw it. Tuition and a year of my time is worth it for a 30% increase in salary as far as I'm concerned. I take it for a given that I will learn next to nothing, and until reading this post I didn't even think of the effects of my embracing the signal of education on my competitors.

blink writes:

Since the real-world is populated with a multitude of "types", one expects multiple signaling equilibria to exists. So perhaps the best question is: Can we find a better equilibrium? If so, how can we get there?

The teaching degree that Roger mentions seems to be part of a robust equilibrium -- it is supported by strong, vested interests (teacher unions) and codified in labor contracts and state laws requiring certification. Other areas may be more fragile, however.

Jason mentions cheating. That has more to do with risk preferences. Perhaps, though, by turning a blind eye to such tactics we could reduce the value of signaling and lower the quantity. Of course, this could backfire and push individuals to pursue even higher levels of education.

Steven writes:

I was too dumb in high school to even contemplate something like the signaling model. I believed that the point of college was to become educated, to learn things. It didn't make sense to me that an elite college could actually teach more or better things than any other college. So I went to state school and handicapped myself for life.

gwern writes:
If you're narrowly self-interested, belief in signaling should actually increase your educational attainment....

This is the funniest argument I've seen all day. Well done!

Doug writes:

If the cost to terminating an employee was lowered (by reducing government regulation and threat of litigation for wrongful termination) the signaling benefit of education would be weakened.

Much of the reason employees prefer education over tested certification or other alternatives is that education signals conformity. Potential employees with high conformity are less risky than brilliant but non-conformist candidates. They could turn out to be excellent, but also turn out to be disasters.

If the cost to termination was lower firms would be less risk-adverse about hiring, because it would be lower cost to terminate if the employee didn't work out.

Thus the state encourages education by regulating the labor market and promoting job security.

AS writes:

I question your assertion that a utilitarian would be less willing to continue getting a degree. From a utilitarian standpoint, if you have a situation with a lot of signaling, it's important for the people most fit to work as a banker/manager/etc. to get the best signals. If the utilitarian believes that he is probably better than his rivals, then this could lead to him pursuing more education as well and the ethical consideration fails.

Bernie writes:

How common is it for employers to verify a college degree?

Slim934 writes:

Isn't part of the problem here that employers are generally very constrained in how they are able to objectively test prospective employee intelligence?

I seem to recall a supreme court case from the 70s (I think it's Griggs vs. Duke Power) where the court more or less said "If an independent intelligence test even implies racism in any way (because blacks tended to score lower than whites), then the test is considered race discriminatory by law and therefore illegal"?

If congress were to change the law such that this were not the case, would we not expect a much greater use of these sorts of tests?

guthrie writes:

When I was introduced to the signaling concept (by Bryan on this blog), I was exceedingly skeptical of it. Surely there must be some human advantage to attending and completing college, right? What better way to improve as a ‘whole person’ (whatever that means)? Well, I was ignoring my own story. I stopped going to college after 2 years to (eventually) pursue acting in Los Angeles. I have become rather well-read along the way, and have acquired a broad skillset, due to my wide array of interests... but I have nothing 'official' to show for my self-learning. It would seem that my decision to pursue the arts (and to educate myself in my own way) is 'non-conformist', which I suppose is mostly true. The result: I am now in my early 40's and earn barely over 20K a year (customer service, not acting). I can’t even walk into the door of most jobs I would be suited for because of the education requirements. I will for sure be returning to school to get some kind of credential. My thanks to Bryan for helping open my eyes to this concept.

MingoV writes:

I believe that the signaling aspect of higher education will fail soon. A college diploma no longer signals that the bearer is significantly smarter and more diligent than average. (It still signals that the bearer is adequately conformist.) Curricula have been watered down to the point where many college courses are easier than high school classes. Staying in college doesn't signal diligence because each semester resembles a four month long social activities camp for young adults.

Most masters and PhD degree programs (with the exceptions of hard sciences and engineering) also have watered-down curricula and reduced (or absent) requirements for writing and defending a thesis. My daughter is getting a masters in education. Her "peers" are mostly from the bottom fourth of college grads. The courses are not seminars but spoon-feeding lectures from professors who use lots of big words and fancy phrases that don't convey any meanings. But, she needs the diploma to get the state government credentials that are required to teach. This isn't signalling; it's jumping through hoops designed by teachers unions to minimize the number of new teachers.

James writes:

I'm not sure that utilitarianism says getting a degree has a net negative impact on the world, or even that getting a degree has a negative impact on all the world besides you. For example, a highly talented engineering student probably isn't costing any other engineers their job by graduating and finding a job. Even if they are, you could plausibly argue that they're most likely taking the job of a less able engineer, which is surely a positive for the world. (School prestige and actual ability are correlated, I'm sure, even if it's a noisy correlation.)

Floccina writes:

You will seek the easiest path to a diploma. You would take the easier teacher of the one you learn most from. You would look at school as an obstacle course to be beat. Spend more time studying the teachers and the classes and minimum requirements etc.

lemmy caution writes:

According to wikipedia, in Griggs vs. Duke Power, "the Supreme Court ruled that under Title VII of the Civil Rights Act, if such tests disparately impact ethnic minority groups, businesses must demonstrate that such tests are "reasonably related" to the job for which the test is required".

Duke Power was pretty clearly using the aptitude tests in order to keep out black applicants:

"The Company added a further requirement for new employees on July 2, 1965, the date on which Title VII became effective. To qualify for placement in any but the Labor Department, it became necessary to register satisfactory scores on two professionally prepared aptitude tests, as well as to have a high school education."

The same day. What a coincidence!

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