Why we need to stop wasting public funds on education
Despite being immensely popularand immensely lucrativeeducation is grossly overrated. Now with a new afterword by Bryan Caplan, this explosive book argues that the primary function of education is not to enhance students' skills but to signal the qualities of a good employee. Learn why students hunt for easy As only to forget most of what they learn after the final exam, why decades of growing access to education have not resulted in better jobs for average workers, how employers reward workers for costly schooling they rarely ever use, and why cutting education spending is the best remedy. Romantic notions about education being "good for the soul" must yield to careful research and common senseThe Case against Education points the way.
|Publisher:||Princeton University Press|
|Product dimensions:||5.20(w) x 7.90(h) x 1.20(d)|
About the Author
Bryan Caplan is professor of economics at George Mason University. His books include Selfish Reasons to Have More Kids: Why Being a Great Parent Is Less Work and More Fun Than You Think. Twitter @bryan_caplan
Read an Excerpt
The Magic of Education
Don't tell fish stories where the people know you; but particularly, don't tell them where they know the fish.
— Mark Twain
For an economics professor I have broad interests. Economics aside, I read widely in philosophy, political science, history, psychology, and education. But what do I really know how to do?
In all honesty, not much. In junior high and high school, I worked a few hours a week manually collating sections of the Los Angeles Times. In 1990, I had a summer data-entry job with a homebuilder. I haven't had a real job since. People pay me to lecture, write, and think my thoughts. These are virtually my only marketable skills. I'm hardly unique. The stereotype of the head-in-the-clouds Ivory Tower academic is funny because it's true.
The Ivory Tower routinely ignores the real world. Strangely, though, the disinterest is not mutual. Employers care deeply about professors' opinions. Not, of course, our opinions about epistemology or immigration. But employers throughout the economy defer to teachers' opinions when they decide whom to interview, whom to hire, and how much to pay them. Students with straight As from top schools write their own tickets. A single F in a required course prevents graduation — closing the door to most well-paid jobs.
Every now and then, foolhardy critics of the education industry flatly deny the financial benefits. Since all statistics are against them, they turn to anecdotes. "I know a girl who finished her B.A. four years ago, but still works at Starbucks." "My son has a Ph.D. in philosophy — and he drives a cab." "I can't get a job with my M.F.A. in puppetry." While such things do happen, the world is vast. The key question is whether anecdotes about failed investments in education are the exception or the rule.
Statistics give a clear answer: as a rule, education pays. High school graduates earn more than dropouts, college grads earn more than high school grads, and holders of advanced degrees do better still. Enduring another year of school will, on average, get you a raise for the rest of your career. What kind of raise? A standard figure is about 10%. Better-educated workers also enjoy higher noncash benefits, better quality of life, and lower unemployment. Apparent rewards shrink after various statistical corrections; we'll see how later on. Still, no matter what corrections you make, schooling pays in the labor market.
Most actual job skills are acquired informally through on-the-job training after a worker finds an entry job and a position on the associated promotional ladder.
— Lester Thurow, "Education and Economic Equality"
The key question isn't whether employers care a lot about grades and diplomas, but why. The simple, popular answer is that schools teach their students useful job skills. Low grades, no diploma, few skills. This simple, popular answer is not utterly wrong. Literacy and numeracy are crucial in most occupations. Yet the education-as-skills story — better known to social scientists as "human capital theory" — dodges puzzling questions.
First and foremost: from kindergarten on, students spend thousands of hours studying subjects irrelevant to the modern labor market. How can this be? Why do English classes focus on literature and poetry instead of business and technical writing? Why do advanced math classes bother with proofs almost no student can follow? When will the typical student use history? Trigonometry? Art? Music? Physics? "Physical Education"? Spanish? French? Latin! (High schools still teach it, believe it or not.) The class clown who snarks, "What does this have to do with real life?," is on to something.
The disconnect between curriculum and job market has a banal explanation: educators teach what they know — and most have as little firsthand knowledge of the modern workplace as I do. Yet this merely amplifies the puzzle. If schools boost students' income by teaching useful job skills, why do they entrust students' education to people so detached from the real world? How are educators supposed to foster our students' ability to do the countless jobs we can't do ourselves?
Anyone who thinks I exaggerate the gap between the skills students learn and the skills workers use can look at the current graduation requirements for my alma mater, Granada Hills High School (now Granada Hills Charter High School). Students need four years of English, two years of algebra, two years of the same foreign language, two years of physical education, and a year in each of the following: geometry, biology, physical science, world history, American history, economics/government, and a visual or performing art. Students also have to complete ten to fourteen elective classes. If you fail more than two classes, you do not graduate.
Passing all this coursework serves one practical function: college entry. Granada's high school graduation requirements almost perfectly match admission requirements for the University of California and California State University systems. But what additional practical function do these requirements serve? For college-bound students, the honest answer is "not much"; few college graduates use higher mathematics, foreign languages, history, or the arts on the job. For students who aren't college bound, the honest answer is "virtually none." If you don't go to college, your job almost certainly won't require knowledge of geometry, French, world history, or drama.
Graduation requirements for the University of California, Berkeley, where I earned my bachelor's degree, are similarly otherworldly. Suppose you're in the College of Letters and Science. To graduate, you need a total of 120 credits — roughly four courses a semester for four years. You have to pass your "Breadth Requirements" — one course in each of the following: Arts and Literature, Biological Science, Historical Studies, International Studies, Philosophy and Values, Physical Science, and Social and Behavioral Sciences. You also have to complete your major requirements. Suppose you major in economics, widely seen as a "practical," "realistic" subject. Graduates need introductory economics, statistics, intermediate microeconomics, intermediate macroeconomics, econometrics, five upper-division courses, and a year of calculus. While this coursework is decent preparation for econ graduate school, students are likely to use only two — statistics and econometrics — in a nonacademic job. Even that shouldn't be overstated: statistics and econometrics courses at elite colleges emphasize mathematical proofs, not hands-on statistical training.
Permanent residents of the Ivory Tower often congratulate themselves for broadening students' horizons. For the most part, however, "broaden" means "expose students to yet another subject they'll never use in real life." Put yourself in the shoes of a Martian sociologist. Your mission: given our curriculum, make an educated guess about what our economy looks like. The Martian would plausibly work backward from the premise that the curriculum prepares students to be productive adults. Since students study reading, writing, and math, you would correctly infer that the modern economy requires literacy and numeracy. So far, so good.
From then on, however, the Martian would leap from one erroneous inference to another. Students spend years studying foreign languages, so there must be lots of translators. Teachers emphasize classic literature and poetry. A thriving market in literary criticism is the logical explanation. Every student has to take algebra and geometry. The Martian sociologist will conclude the typical worker occasionally solves quadratic equations and checks triangles for congruence. While we can picture an economy that fits our curriculum like a glove, that economy is out of this world.
If education boosts income by improving students' skills, we shouldn't be puzzled merely by the impractical subjects students have to study. We should be equally puzzled by the eminently practical subjects they don't have to study. Why don't educators familiarize students with compensation and job satisfaction in common occupations? Strategies for breaking into various industries? Sectors with rapidly changing employment? Why don't schools make students spend a full year learning how to write a resume or affect a can-do attitude? Dire sins of omission.
The puzzle isn't merely the weak tie between curriculum and labor market. The puzzle is the weak tie between curriculum and labor market combined with the strong tie between educational success and professional success. The way our education system transforms students into paid workers seems like magic. Governments delegate vast power to a caste of Ivory Tower academics. The caste wields its power as expected: Every child has to study teachers' pet subjects. Educators then rank students on their mastery of the material. Students rapidly forget most of what they learn because "they'll never need to know it again." Employers are free to discount or disregard the Ivory Tower's verdicts. Yet they use academic track records to decide whom to hire and how much to pay.
The process seems even more magical when you're one of the wizards. I go to class and talk to students about my exotic interests: everything from the market for marriage, to the economics of the Mafia, to the self-interested voter hypothesis. At the end of the semester, I test their knowledge. As far as I can tell, the only marketable skill I teach is "how to be an economics professor." Yet employers seemingly disagree.
Anyone who's not dumbstruck should be. Do students need to understand the market for marriage, the economics of the Mafia, or the self-interested voter hypothesis to be a competent manager, banker, or salesman? No. But because I decide these topics are worth teaching, employers decide students who fail my class aren't worth interviewing. Abracadabra.
Unlike many magic tricks, this is not a case of "the hand is quicker than the eye." The mystery doesn't go away when you review the process in slow motion:
Step 1: I talk about topics I find thought-provoking.
Step 2: Students learn something about the topics I cover.
Step 3: Magic?
Step 4: My students' prospects in management, banking, sales, etc. slightly improve.
When I train Ph.D. students to become economics professors, there's no magic. They want to do my job; I show them how it's done. But the vast majority of my students won't be professors of economics. They won't be professors of anything. How then do my classes make my students more employable? I can't teach what I don't know, and I don't know how to do the jobs most of my students are going to have. Few professors do.
Making Magic Pay
Magic isn't real. There has to be a logical explanation for the effect of Ivory Tower achievement on Real World success. And here it is: despite the chasm between what students learn and what workers do, academic success is a strong signal of worker productivity. The labor market doesn't pay you for the useless subjects you master; it pays you for the preexisting traits you reveal by mastering them.
Certifying preexisting skills is so easy that, despite my life-long sequestration in the Ivory Tower, I know how to do it. How? By acting like a typical professor. I lecture about my nerdy obsessions. I make my students do some homework and take some tests. When the semester ends, I grade them based on their mastery of the material. Absent a miracle, my students will never apply the economics of the Mafia on the job. No matter. As long as the right stuff to succeed in my class overlaps with the right stuff to succeed on the job, employers are wise to prefer my A students to my F students.
I naturally have to share influence with my fellow educators. I can tip my students' Grade Point Average by only a decimal point. Still, mild influence adds up; I've taught thousands of students over the years. And my condemnation is devastating. A single F can derail graduation — and prompt employers to trash your resume. Students who value worldly success therefore strive to impress educators with their brilliance and industry — or at least avoid appalling us with their stupidity and sloth. Practical relevance makes little difference: you won't use Shakespeare on the job, but without the right credentials, the job you crave will forever elude you.
Basics of Signaling
Signaling is no fringe idea. Michael Spence, Kenneth Arrow, Joseph Stiglitz, Thomas Schelling, and Edmund Phelps — all Nobel laureates in economics — made seminal contributions. The Nobel committee hailed Michael Spence's work on signaling as his prize-winning discovery and added:
An important example is education as a signal of high individual productivity in the labor market. It is not necessary for education to have intrinsic value. Costly investment in education as such signals high ability.
Signaling models have three basic elements. First, there must be different types of people. Types could differ in intelligence, conscientiousness, conformity, whatever. Second, an individual's type must be nonobvious. You can't discover a person's true work ethic with a glance. You certainly can't ask, "How good is your work ethic?" and expect candor. Third, types must visibly differ on average; in technical terms, "send a different signal." Deviations from average are okay. A signal doesn't have to be definitive, just better than nothing.
Given these three basic elements, employers' honest answer to "Who's truly the best worker for the job?" will always be, "I'm stumped." The question's unanswerable with available information. Fortunately, employers can bypass their ignorance by answering an easier question: "Which worker sends the best signals?" There's no cheap way to directly measure conformity. But perhaps people with crew cuts are, on average, more conformist than people with mohawks. If so, prudent employers treat hairstyle as a signal of conformity. As long as short-haired rebels and compliant hippies are exceptions that prove the rule, hiring by hair beats hiring by coin flip.
Once employers reward mere signals of productivity, would-be workers have a clear incentive to modify the signal they send — to tailor their behavior to make a good impression. To what end? Getting favorable treatment. If suspected conformists make more money, and conformists are more likely to have crew cuts, crew cuts pay. They pay even if you're a rebel at heart: the rebellious worker with a crew cut impersonates a conformist.
You might jump to the conclusion that signaling sows the seeds of its own destruction. If a crew cut creates a favorable impression and elicits favorable treatment, why wouldn't every worker head straight to the barber? The signaling model contains a simple answer: viable signals must be less costly for types in higher demand. This cost could be measured in money or time. Or it could be purely emotional: if rebels detest "square" haircuts, and conformists don't, hairstyle is an excellent signal of conformity. Once every worker has a crew cut, you can "top-up" your conformity signal with a gray flannel suit. The rat race stabilizes when impersonating a conformist is, on average, such a chore that rebels stop pretending to be something they're not.
The "on average" qualifier is crucial. Suppose 10% of good workers can't afford a suit. If employers can't figure out why you're underdressed for your interview, a good worker who doesn't have a suit to wear will be treated the same as a bad worker who can't bear to wear one. As the fraction of good workers who can't afford a suit rises, however, the less your attire shows about you — and the less employers care about what you wear. Clear signals carry a strong stigma, fuzzy signals a weak stigma.
Critics often paint the signaling model of education as weird or implausible. But the model is just a special case of what economists call "statistical discrimination": using true-on-average stereotypes to save time and money. Statistical discrimination is everywhere. The elderly pay higher life insurance premiums because the elderly tend to die sooner. Cab drivers are more willing to pick up a young man in a suit than a young man in gang colors because the latter is more likely to rob him. Statistical discrimination may be unfair and ugly, but it's hardly weird or implausible. Why is it any more weird or implausible to claim employers statistically discriminate on the basis of educational credentials?
What Does Education Signal?
From the standpoint of most teachers, right up to and including the level of teachers of college undergraduates, the ideal student is well behaved, unaggressive, docile, patient, meticulous, and empathetic in the sense of intuiting the response to the teacher that is most likely to please the teacher.
— Richard Posner, "The New Gender Gap in Education"
Excerpted from "The Case Against Education"
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Table of Contents
List of Illustrations ix
List of Tables xi
1 The Magic of Education 9
2 The Puzzle Is Real: The Ubiquity of Useless Education 31
3 The Puzzle Is Real: The Handsome Rewards of Useless Education 69
4 The Signs of Signaling: In Case You’re Still Not Convinced 96
5 Who Cares If It’s Signaling? The Selfish Return to Education 124
6 We Care If It’s Signaling: The Social Return to Education 165
7 The White Elephant in the Room: We Need Lots Less Education 195
8 1 > 0: We Need More Vocational Education 225
9 Nourishing Mother: Is Education Good for the Soul? 238
10 Five Chats on Education and Enlightenment 262
Technical Appendix: Completion Probability and Student Quality 291
What People are Saying About This
"The Case against Education . . . is a case of Caplan being right."Charles Fain Lehman, Washington Free Beacon
"A wake-up call for all Americans."Ian Lindquist, Weekly Standard
"[Caplan] argues devastatingly . . . that college is, for many of those who go there, a boondoggle."Kyle Smith, National Review