October 22, 2014

Do you really need all that education?

And now for something completely different, let’s ask ourselves the question: DO YOU REALLY NEED ALL THAT EDUCATION?

Arnold Kling doesn’t necessarily think so. Rather, education just separates the “wheat from the chaff. ”

There’s a great debate going on between a some economists over at Econlog.com.  Their question? Does more education endows more benefit, or is it just “signaling” to employers to select the smarter, harder working workers. It’s called “signal theory” and Bryan Caplan explains it like this:

If you haven’t heard, the signaling theory says that to a significant extent, education does not increase workers’ productivity. Instead, the fact that you obtain an education shows that you were more productive all along, which makes employers want to hire you.

Here’s a simple thought experiment to illustrate the distinction. Which would do more for your career: A Princeton education, but no diploma, or a Princeton diploma, but no education?

Does that mean we all take standardized tests in seventh grade and call it good? Enter the workforce at our level of IQ or productivity?  Not necessarily (though there are those who would say that standardized tests already do that):

Even firm believers in the signaling model like myself grant that schools teach some useful skills. But more importantly, this objection only works against specific kinds of signaling. Yes, if all that school signals is IQ, then a test is a cheap substitute. But what if school signals conscientiousness and/orconformism? Think about it this way: Would you want to hire a high school drop-out with a 150 IQ? Probably not, because you’d immediately think “This guy had the brains to do anything. Why didn’t he finish high school? What’s wrong with him?!”

But what about college? That graduate degree?  Necessary. Because it’s part of what differentiates the dumb from the smart, the lazy from the industrious. Academia may be so many hoops to jump through, result in a lot of social waste, but still provide the utility of helping employers find the best workers. It’s a conundrum, but not a contradiction.

You can believe that IQ matters quite a lot for earnings, but still think that education teaches nothing but bona fide job market skills. If this is so, then comparing the earnings of college graduates to high school graduates overstates the private benefit of education. Why? College graduates were smarter to begin with, so they would have earned more money than the typical high school graduate even if they didn’t go to college. Labor economists call this “ability bias.”

Similarly, you can believe that a lot of education is mere signaling, without thinking that IQ by itself puts money in your pocket. Suppose that the world is rigidly credentialist, so that no one will even consider a person without a degree for anything beyond a low-skilled job. If this is so, then comparing the earnings of college graduates to high school graduates overstates the social benefit of education. Why? Because part of the effect of education is just to make yourself look better compared to other people without increasing production.

As a high school drop out with less than a full five years of k-12 public education under my belt, I tend to lean towards the theory that much of public education is time wasted. Even as a high school dropout, I managed to earn a bachelors and a law degree. Neither degree came from Ivy League institutions, but nor were they bottom feeders, either. Quite the contrary. All without the full thirteen years of public education.

I don’t say this to toot my horn, but rather to note that it may not be necessary to attend the full gamut of public education to succeed. On the contrary, it is innate ability (aka IQ) and work ethic that is a greater indicator of success.

That said, I love learning, and I would never have turned down my years of study at Brigham Young or at the University of Utah’s College of Law for anything. Both were very enriching experiences, albeit a bit expensive, and I found them to be personally valuable.

High school, though, I could have done without. Even the year and a half I did attend. Waste. Of. Time.

Check out Bryan Caplan’s posts on the topic here and here.

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