Bryan Caplan  

Signaling Tension

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Josh Barro shined his spotlight on signaling last week:

I could be wrong about Barro's intent, but he seems to be accusing education skeptics like me of living in denial. 

The thrust of his rhetorical question is that most people who believe in signaling's importance wouldn't hold their position if they hadn't learned it in college.  Hence, college plainly teaches one important lesson.  While this isn't a knockdown argument against the power of signaling, it's suspicious.  Are we really supposed to believe that signaling is an isolated exception to the rule that schools teach little of practical value?  If you have to go to school to learn reasons why school is overrated, you probably have to go to school to learn lots of great stuff.  Signaling isn't exactly self-refuting, but it definitely seems self-undermining.

Assuming I correctly divine Barro's intent, do I have a rebuttal?  Yes, a three-part rebuttal.

1. Suppose it's really true that signaling's fans were first exposed to their idée fixe in college.  Before you "sense a tension," remember that the signaling model never denies that students learn stuff in school.  What it claims, rather, is that much of that stuff fails to yield practical job skills.  To demonstrate a troublesome tension, you need to show that learning about signaling markedly increases worker productivity.

Unless you're a professional intellectual, it doesn't.  You don't need to understand the signaling model to succeed in business.  You don't even need to understand the model to succeed in school.  Once students know that doing well in school leads to career success, and employers know that good students are good workers, consciously grasping the signaling model conveys little additional selfish benefit. 

Thus, the tension is illusory.  The signaling model typifies the non-vocational focus of the curriculum.  It's like history or foreign languages.  The knowledge is genuine, and good grades help you get the career you want.  But the labor market doesn't mind if you forget such material as soon as you submit your final exam, because you rarely if ever use it on the job.

2. If signaling is socially wasteful, and students discover this truth in school, doesn't this at least show that education has major positive political externalities?  It would if education heavily undermined political support for impractical education.  Unfortunately, it doesn't.  Most students never learn about signaling, and most of those who do learn it never accept that a lot of education is socially wasteful.  Economists who teach signaling normally treat this contrarian implication as a curiosity, not a deep policy lesson. 

The central flaw in the positive political externality argument, though, is that signaling is a microscopic subset of the overall curriculum!  Run-of-the-mill K-12, college, and graduate classes strive to convince students that education is awesome and should be subsidized to the skies.  If signaling is true, this amplification of students' pro-education bias is another big negative political externality of education as we know it.

3. In any case, the main thing students learn about signaling in economics classes is its technical name.  Virtually every child swiftly grasps the idea of signaling from first-hand academic experience.  That's why students love class cancellations, seek out easy-A's, happily forget material right after the final exam, and don't think cheating is "only cheating yourself."  Sure, most kids are inarticulate - and few voters grasp signaling's policy implications.  But resigned awareness that, "To get ahead in life, I have to learn this useless material" usually emerges long before college.

P.S. Although I think Barro's rhetorical question is misguided, I commend him for appealing to people's first-hand pedagogical experiences.  Economists would see education much more clearly if they spent less time desperately searching for instrumental variables and more time vividly recalling all the junk they had to study in school.

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COMMENTS (17 to date)
Mico writes:

Not me, Mr Barrow!

Mark Brophy writes:

Like Mico, I didn't learn the word "signaling" in school; I learned it on this blog. However, it's always been obvious that most time spent in school is wasteful. Schooling is subsidized because wasteful government spending creates jobs and the people holding those jobs support politicians who help them.

Lupis42 writes:

Nor I.
I learned a little economics in school (essentially Econ 101), but mostly I learned it all on my own outside of school.

_nl writes:

I think his argument was that college gave people the grounding and vocabulary to criticize college in a distinctively educated way, not that the experience itself teaches them college is about signaling. I think that's wrong, though, since the argument is easily encountered outside college courses.

Yaakov writes:

I studied computer engineering, and I assume some of what I studied was useful throughout the years of my career. But by far, the most important think I got from college was from the professor who taught absolutely nothing in his course (philosophy of education, or something of the sort) but exposed me to Milton Friedman's book, Freedom to Choose.

Tom DeMeo writes:

This point of view hinges on the idea that the main point of education is the material. It isn't. The point is to repeatedly practice the process of mastering material, so that when we go out into the world, we are capable of mastering the material we do need. What we are signaling is that "I'm capable of figuring out a wide variety of complex topics", not that "I already know how to do a lot of important stuff".

Seth writes:

"Hence, college plainly teaches one important lesson."

But, it still isn't a practical lesson.

konshtok writes:

do you have a better signaling method than education?

Jeff writes:

Signaling is the kind of behavior most people already intuitively grasp as they observe their friends do things like buying expensive cars, name-drop the Ivy League colleges they attended, etc. I did learn that there is actually a lot more to it than overpriced retail goods, but that all came post college from reading Econlog and MR.

Swing and a miss, Barro!

DM writes:

I learned about signaling mostly via blogs like this, and I got my degree in Economics.

Very little of what I learned in college gets applied to my job as I was trained in software development, moved into software development management and now work in sales. Every once in a while I break out some cute bit of knowledge that I picked up from my education (usually it's some discussion based on the basic AS/AD curve, or something about "sunk cost". But the reality is, my education is mostly good for cocktail parties and drinks after work, and there's not much that I do apply to life today that I couldn't have picked up in some way outside of formal college.

I'm glad I went to college... it was the best time of my life.

yarbel writes:

I think your first point is *underselling* your own argument. Once you realize that education is, say, 70% signaling and that the sheepskin effect is dominant, it greatly informs your hiring policies as an employer. To give but two examples, you might be much more willing to hire 1st or 2nd year college students, or would be willing to admit much greater substitutability between work experience and formal education when you decide who to promote.

Chuck writes:

Why is signaling wasteful? People do it for a reason. You could say fashion is wasteful as well and we should all just wear mao suits.

Mr. Econotarian writes:

I had ZERO economics education in K-12, in college, or in graduate school.

Pretty much everything I've learned about economics came from blogs.

MikeDC writes:

What Barro shows is the utter paucity of high school education.

Much more so than college, a high school education should be focused on civic grounds. How do we get along in society?

Signaling answers lots of those questions, and it's a fairly obvious concept that one doesn't require an intellectual to understand it.

I'm tempted to think, in fact, it's not taught in high schools because it doesn't paint intellectuals in a very favorable light, and therefore they don't teach it.

The Ultimate Philosopher writes:

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JayT writes:

As with others in here, I first heard the technical term "signaling" by reading economics blogs. However, I definitely understood the concept well before that when I chose degrees that pay well and in school I lived by the motto "Ds get degrees".

Mark V Anderson writes:

Yes I never learned the word "signaling" in college, although the last econ course I took was decades ago. But from what I read here, they still don't teach it. In my daughter's basic college econ course she took last summer, it was never mentioned.

Is this truly in any college textbook or course? This really does go against the self interest of college professors, so I expect it is pretty rare. Has Mr Barrow ever taught it himself?

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