Bryan Caplan  

Why Subsidize Signaling? An Open Letter to Catherine Rampell

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Dear Catherine,

I was very pleased to read your "The College Degree Has Become the New High School Degree."  I'm currently writing a book defending the signaling model of education.  You're clearly taking my favorite story seriously:
Note, though, that the skills required of college grads are not always ones they are taught in college.

Which brings me to another, potentially more troubling explanation for degree inflation: signaling.

Regardless of what you actually learn in college, graduating from a four-year institution may broadcast that you have discipline, drive and stick-to-it-iveness. In plenty of jobs -- such as I.T. help-desk positions -- there is little to no difference in skill requirements between job ads requiring a degree and those that do not, Burning Glass found. But employers still prefer college graduates.

With college attendance more routine today it was than in the past, degrees are becoming a common, if blunt, tool for screening job applicants. In 2013, 33.6 percent of 25- to 29-year-olds had a BA, vs. 24.7 percent in 1995. Bachelor's degrees are probably seen less as a gold star for those who have them than as a red flag for those who don't. If you couldn't be bothered to get a degree in this day and age, you must be lazy, unreliable or dumb.

Or so employers -- especially their HR departments -- seem to suspect.
Great stuff.  But it immediately reminded me of your earlier, "College is Not a Losing Investment."  On the surface, your two pieces are complementary: If employers strongly prefer applicants with college degrees, college pays.  But "College Is Not a Losing Investment" makes other claims that your new-found interest in signaling should make you reconsider.

First, you seem quite convinced that college (perhaps excluding the communications major) teaches valuable job skills:
One of the silver linings of the financial crisis might be that the lousy job market drove many people into, or back into, college to upgrade their skills. They are reemerging more skilled and better equipped to help expand a 21st-century economy, once it fully heals -- just as the surge in college-going enabled by the GI Bill helped grease the economy during the postwar boom.
Second, you enthusiastically support continued (expanded?) subsidies for higher education:
As for why higher ed should be subsidized: There are large, positive spillover effects from having a more educated workforce beyond the gains that accrue to the degree-holder. Research has found that having a higher concentration of college graduates in a local economy increases the wages of not only the college grads themselves but also those without bachelor's degrees. (Which is why it's especially shortsighted for states to cut higher education funds, which forces schools to raise tuition and price out the more marginal matriculants.)
I'm very skeptical of these positive spillovers; at the international level, where these effects should be plain as day, the evidence cuts the other way.  But even if you're right, signaling is an offsetting effect.  Consistent with the standard signaling model, your piece highlights a big negative spillover of education: The more education you get, the more other people need to avoid looking "lazy, unreliable, or dumb."  Without massive subsidies for higher education, could the college degree ever have become the new high school diploma?

Like Harvey Milk, I'm here to recruit you.  If you have doubts about the prevalence of educational signaling, I'd love to hear them.  I should warn you, however, that signaling is a gateway drug.  The idea sounds harmless at first.  But once you take signaling seriously, politically popular education policies - left and right - start to sound naive, if not desperate.  The white elephant in the room is that there is far too much education already.



HT: Nathaniel Bechhofer

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COMMENTS (1 to date)
Mike writes:

The value of a nontechnical college degree lies mostly in status association with and acceptance of the upper middle class attitudes of a society. The hiring manager can have some assurance that the applicant is more likely to have many of the same values, perceptions and motivations as the manager; all without outright reliance on impermissible racial or ethnic stereotyping.

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