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The Signs of Signaling

The Signs of Signaling. Prof. Bryan Caplan Department of Economics and Mercatus Center George Mason University bcaplan@gmu.edu. The Case Against Education. My magnum opus on education is forthcoming in 2017 from Princeton University Press.

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The Signs of Signaling

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  1. The Signs of Signaling Prof. Bryan CaplanDepartment of Economics and Mercatus CenterGeorge Mason Universitybcaplan@gmu.edu

  2. The Case Against Education • My magnum opus on education is forthcoming in 2017 from Princeton University Press. • Central thesis: The signaling model of education is much more empirically relevant than mainstream labor and education economists think. • For conceptual clarity, let’s start with a review.

  3. Signaling vs. the Competition • Pure human capital view: Education raises income by raising skill. • Pure signaling view: Education raises income by certifying skill. • Extreme education skepticism (a.k.a. “pure ability bias view”): Education raises neither skill nor income.

  4. The Ubiquity of Useless Education • Strongest reason to believe in power of signaling: look at curricula. • In U.S., only 30% of high school course hours spent on English and math. Over 40% on arts, foreign language, history, social studies… • Similar patterns for U.S. college majors: <25% of graduates have credibly vocational majors. Engineers ~5%. • Measured learning: In U.S., researchers who measure adult literacy, numeracy, and knowledge of civics, history, science, and foreign languages find shockingly low scores.

  5. Level and Origin of Foreign Language Competence • Typical U.S. high school student does 3 full years of foreign language. • Look at self-reported foreign language competence of U.S. adults:

  6. The Relevance of Relevance • Common response: “Irrelevant” studies teach students “how to think,” “how to learn,” or raise their general intelligence. • Transfer of learning and expertise literatures. • Measuring informal reasoning. • Fade-out and hollowness of IQ gains. • Discipline/socialization.

  7. The Handsome Rewards of Useless Education • Ubiquity of useless education is not puzzling if market rewards education poorly. • But at least in U.S., market rewards education very well. • Remains true after making array of adjustments: • Ability bias • Wheat vs. chaff • Government credentialism/licensing/“IQ laundering”

  8. Further Evidence • Sheepskin effect • Malemployment and credential inflation • Speed of employer learning • Education premium: personal vs. national

  9. First-Hand Experience Counts: You Might Be Signaling If… • You bother to enroll or pay tuition. • You worry about failing the final exam, but not subsequently forgetting what you learned. • You don’t think cheating is “only cheating yourself.” • You seek out “easy A’s.” • You rejoice when teachers cancel class.

  10. What’s Wrong With Signaling? • Question: Who cares if education builds human capital or just signals it? • Answer: Signaling models imply education has negative externalities. Social return<<private return. • Concert analogy. • Policy implications: • Drastically cut education spending. • Make education much more vocational.

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