The Case Against Education: Why the Education System Is a Waste of Time and Money
A powerful book, remarkably light on ideology given its extreme conclusions. (Caplan is not mad: he is right behind universal numeracy and literacy. So the title should be "Case Against Higher Education" but oh well.)
Here's a flavour:
What might explain the universal appeal of education?
1. learning specific facts and hard skills (private and social gain)
2. learning general rationality and meta-skills (private and social gain)
3. learning soft skills (private and social gain)
4. credentialing: showing off how smart, conscientious, conformist you are (zero-sum private gain)
5. culture fit: showing employers you are their kind of person (private gain)
6. networking (private gain)
7. assortative mating at university (near-zero-sum private gain)
8. primary schools are daycare (private gain by proxy (parents), social gain (doubling workforce))
9. it's fun (private gain)
10. conspicuous consumption (zero-sum private gain)
11. state propaganda about how developed the country is. (zero-sum and of no private or social gain)
His conclusion is that about 80% of the personal economic gains from higher education are from (4): not improving your character, knowledge, or ability, but rather from certifying yourself as a good worker (smart, conscientious, conformist). Given the vast cost, time sink, and psychological toll of education, this implies a hugely wasteful, zero-sum arms race (grade inflation, degree inflation), since the income gain doesn't reflect productivity gain, and since we could be doing signalling in less indirect and foolish ways. I'll do a proper rundown of the (many) arguments he gives to end up at this separately.
The mostly-signalling theory explains a huge number of confusing features (why do students and employers not value Ivy League MOOCs, even ten years on? Why are most of the income rewards concentrated in the instant of graduation? Why do students cheer when class is cancelled? If lectures are so economically powerful, why don't people just sit in on them without enrolling (and why doesn't the university put security on them to protect their livelihood)? How can human capital explain the income gains, when people forget almost everything about their major within 5 years and don't show very large soft skill increases?
You often see people trumpeting the large (50-60%) income premium of higher education, as if that showed that added human capital was the reason for the premium (cough, correlation / causation). But even granting that uncritical leap, there's something strange about focussing on private income gains: the kind of people who believe in the centrality of education tend also to believe that pay is a poor indicator of social value. (For instance, our incredibly low opinion of investment bankers.) Caplan's disturbing point is that the private returns do not translate into social returns. This seeming paradox could happen a few ways: if credential inflation shifts jobs from nongraduates to graduates; or if there are minor human capital gains, but swamped out by the huge financial cost and time cost of uni.
My philosophy department used to trumpet graduate income stats as evidence that critical thinking is valued in industry. (They don't anymore, possibly because philosophy is now associated with decreased earnings, at least in the UK.) This trump was an amusing triple failure of critical thinking: they confuse correlation and causation ("philosophy degree and income gain, therefore philosophy degree causes income gain"), fail to consider selection effects (philosophy students start out posher than the average student) and the Yes Minister fallacy:
A philosophy degree causes an income premium.
If something causes an income premium then it is valued in industry.
A philosophy degree causes critical thinking.
Therefore, critical thinking is valued in industry.
The big concern with the sweeping cuts Caplan recommends is: how do you stop poor people losing their ability to signal their virtues, if the state withdraws the current subsidy?
Remarkably, the book is in large part not based on economists' research: there is as much sociology, . This triangulation strikes me as the way to write lasting social science, social science with a chance of still being relevant in a decade. Who writes like this, aside from the GMU mob?
Caplan is modest, thoughtful, an admirable empiricist. If you can't accept his argument you have a lot of work to do before you break even.
Here's a flavour:
I have a long list of strange and extreme views, and I've been an arrogant hedgehog for as long as I can remember. As a rule, arrogant hedgehogs with lots of strange and extreme views are severely biased and grossly unreliable. Which raises two daunting questions.
The Reputational Challenge: Why should people take me seriously? Even if I happen to be correct, why would a reasonable person bother giving me a chance?
The Self-Referential Challenge: Why should I take myself seriously? Why should I consider myself so epistemically superior to the typical arrogant hedgehog with lots of strange and extreme views?
In all honesty, I take both challenges seriously. But it's the self-referential challenge that weighs on me. I can endure the apathy of others, but not the idea that I'm living a lie. So what should I do?
What might explain the universal appeal of education?
1. learning specific facts and hard skills (private and social gain)
2. learning general rationality and meta-skills (private and social gain)
3. learning soft skills (private and social gain)
4. credentialing: showing off how smart, conscientious, conformist you are (zero-sum private gain)
5. culture fit: showing employers you are their kind of person (private gain)
6. networking (private gain)
7. assortative mating at university (near-zero-sum private gain)
8. primary schools are daycare (private gain by proxy (parents), social gain (doubling workforce))
9. it's fun (private gain)
10. conspicuous consumption (zero-sum private gain)
11. state propaganda about how developed the country is. (zero-sum and of no private or social gain)
His conclusion is that about 80% of the personal economic gains from higher education are from (4): not improving your character, knowledge, or ability, but rather from certifying yourself as a good worker (smart, conscientious, conformist). Given the vast cost, time sink, and psychological toll of education, this implies a hugely wasteful, zero-sum arms race (grade inflation, degree inflation), since the income gain doesn't reflect productivity gain, and since we could be doing signalling in less indirect and foolish ways. I'll do a proper rundown of the (many) arguments he gives to end up at this separately.
The mostly-signalling theory explains a huge number of confusing features (why do students and employers not value Ivy League MOOCs, even ten years on? Why are most of the income rewards concentrated in the instant of graduation? Why do students cheer when class is cancelled? If lectures are so economically powerful, why don't people just sit in on them without enrolling (and why doesn't the university put security on them to protect their livelihood)? How can human capital explain the income gains, when people forget almost everything about their major within 5 years and don't show very large soft skill increases?
You often see people trumpeting the large (50-60%) income premium of higher education, as if that showed that added human capital was the reason for the premium (cough, correlation / causation). But even granting that uncritical leap, there's something strange about focussing on private income gains: the kind of people who believe in the centrality of education tend also to believe that pay is a poor indicator of social value. (For instance, our incredibly low opinion of investment bankers.) Caplan's disturbing point is that the private returns do not translate into social returns. This seeming paradox could happen a few ways: if credential inflation shifts jobs from nongraduates to graduates; or if there are minor human capital gains, but swamped out by the huge financial cost and time cost of uni.
My philosophy department used to trumpet graduate income stats as evidence that critical thinking is valued in industry. (They don't anymore, possibly because philosophy is now associated with decreased earnings, at least in the UK.) This trump was an amusing triple failure of critical thinking: they confuse correlation and causation ("philosophy degree and income gain, therefore philosophy degree causes income gain"), fail to consider selection effects (philosophy students start out posher than the average student) and the Yes Minister fallacy:
A philosophy degree causes an income premium.
If something causes an income premium then it is valued in industry.
A philosophy degree causes critical thinking.
Therefore, critical thinking is valued in industry.
The big concern with the sweeping cuts Caplan recommends is: how do you stop poor people losing their ability to signal their virtues, if the state withdraws the current subsidy?
Remarkably, the book is in large part not based on economists' research: there is as much sociology, . This triangulation strikes me as the way to write lasting social science, social science with a chance of still being relevant in a decade. Who writes like this, aside from the GMU mob?
Caplan is modest, thoughtful, an admirable empiricist. If you can't accept his argument you have a lot of work to do before you break even.