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A public policy blog from AEI
The American education system is a waste of both time and money — at least according to Bryan Caplan, author of the new book, The Case Against Education. Rather than actually impart useful skills, education’s benefits stem mainly from “signaling,” implying that as a nation we could drastically reduce years of schooling and be no worse off. It’s an explosive thesis challenging the conventional wisdom of labor economists, and he recently joined me on the podcast to convince me of its merit and explain its implications for student, parents, and society.
Bryan Caplan is a professor of economics at George Mason University, a regular blogger at EconLog, and author of the books Selfish Reasons to Have More Kids, and The Myth of the Rational Voter.
Bryan, this is a provocative title, so I’ll let you lay out the argument first. My brief version of the argument is that you believe education is mainly about something called signalling rather than improving human capital. Explain what you mean.
Sure. There is a standard story that social scientists have about why education helps you make more money and it’s called human capital. It’s basically the normal story — you go to school, they pour useful skills into you, and in the end you’re a better worker because you know how to do more stuff. This is, of course, partly true and I never deny that. So you learn some useful skills in numeracy and literacy but I say —
Are you talking about kindergarten through the end of college or are you talking about just college?
I’m talking about everything. Certainly in terms of acquiring useful skills, that starts in any halfway decent kindergarten where you at least get some reading and some math in. There is also a second story that’s been floating around but doesn’t get nearly the same respect. It’s called signalling. And it says that there is a totally different reason why education might raise your income and help you get a better job. And it’s that by getting those degrees and grades you impress employers. You show off, you look good, and you get certified — you get some stamps on your forehead. Even if what you learn in school is completely useless on the job it still might make employers look at you with favor and decide, “hey I will at least give this guy an interview and won’t throw out his application.”
By analogy, there are two totally different ways to raise the value of a diamond. You can raise the value of a diamond by cutting it perfectly to make it the greatest gemstone in the world, that works. But you can also get that guy with the little eyepiece to look at it and say, “this is a flawless diamond,” and then he puts this sticker on it that says this is a great diamond.
“From the point of view of the individual it doesn’t really matter why education pays, but I say from the point of view of taxpayers, it matters tremendously.”
Now from the point of view of the individual it doesn’t really matter why education pays, but I say from the point of view of taxpayers, it matters tremendously. Because if human capital is the whole story, if the only reason why education pays is that it is giving you skills, then taxpayers are getting a good deal for their money. They go and train you and then you produce more stuff.
On the other hand if it’s the signalling story, if that’s a big part of it, then the main thing that goes on is that people get more stickers when they get more education. That means that employers raise their expectations of how many stickers you need to be worthy of employment, and that’s really the problem — that insofar as signalling is right, when you get more education it’s still good for you, but you are not actually benefiting society with what you are doing, you are actually burning up resources just to get some more for yourself.
I’m sure you have a long list of studies that supports your position but you know what, it doesn’t feel right to me. It seems like throughout school and through college I feel like I’m learning a lot and it’s helping me. You do say you do learn; you are not saying you don’t learn anything. But you are saying that the bulk of the value does come from signalling.
Well so I would just encourage you to think back to your educational experience. How many classes did you take that you really never use on the job. How many years of foreign language did you have to take?
I took it throughout high school and I also took two years of Latin in college.
Do you use Latin on the job?
No, not at all.
Alright so that’s one example. How much time did you spend studying poetry? Do you use poetry?
I did not take poetry but I feel like, for instance, English literature has made me a better writer. Therefore my writing is better today because I read all that, and poetry too I imagine would have helped in some fashion. Maybe it’s hard to figure out the exact chain of the relationship but I feel like if I had not taken those classes I would not be as good a writer.
So here is what I say: Most professors, when they go through their educational career, are able to take a lot of classes where not only do they not use them but it’s pretty foreseeable that you would never use things like Latin. And the thing to remember is that if you are a professor or are working at a think tank, you do have a job that’s much more closely tied to what you learned in school than most people. So again if you work at a think tank or are a professor, maybe you do use history on the job. But if you are a business person the odds that you would ever rely upon history to make a business decision in any way that would be useful is very slim. And the same goes for so much of the academic curriculum. So you have to learn Shakespeare, the English that was spoken 500 years ago, and you have foreign language. Even higher mathematics is useful only in a narrow range of jobs. For most people, they never use what they study after the final exam, yet employers care, and that’s the key part.
Why haven’t employers figured this out? Decade after decade, they keep looking for people with high school degrees, and now more so college degrees. Couldn’t you hire all kinds of people, theoretically, for less money for the same level of productivity?
I say employers have figured out the thing that really matters, which is if they go and hire people who have jumped through a lot of hoops, they get someone that is generally pretty good. And if they try cutting corners and hire someone who dropped out of school, someone who did not jump through the hoops, they are going to be disappointed. Employers don’t really care why it works. All they need to know is that if they decide to be more open minded they wind up having to interview a ton of people who are much less likely to work out. So there is not a story that employers are making a mistake. It’s a story that employers are correctly saying that if people can do well in school then they are easier to train and they generally work out, but this doesn’t mean that this is socially worthwhile.
“Employers are correctly saying that if people can do well in school then they are easier to train and they generally work out, but this doesn’t mean that this is socially worthwhile.”
So imagine a world in which everyone had one fewer degree. Employers could still pick the people who are at the top of that pile, and then people can start their lives a lot earlier. Again, just imagine a world where most good jobs you could do straight out of high school. It’s very striking to me that in practice most people learn their job on the job, because school is so divorced from most jobs that you are ever likely to do. You kind of inevitably show up on the job like “I don’t really know how to do any of this stuff,” and then they train you. What if we could just push that forward a few years?
So employers are taking advantage of a system that is currently in place, that is working to their advantage. Your point is don’t blame them and also don’t blame the kind of choices students are making. Don’t hate the players, hate the game.
Yeah I mean that’s basically right. So again it’s not really benefiting employers because employers would be at least as happy if everyone had one fewer degree. So if everyone had one fewer degree they could still rank people, so it is sort of like a rat race, as people often describe it. I think that’s a very fair description. It’s a big contest that we are stuck with right now that doesn’t serve much in the way of a social purpose. So there are some majors in which you learn useful skills, and everything you learn is a little bit useful. But four years to get the improvement in your productivity you get from your English degree or Archaeology degree seems pretty unjustified.
But are you saying it’s just those sort of degrees? As a parent I have kids in college and when I want to give the example of majors which are perhaps not very applicable in the world I will say Archaeology and French Literature. You want a degree in those fine but then you better get another degree; double major in something else more useful. What about the so-called useful degrees, like Computer Science or Economics?
So Engineering is about 5% of all BAs so even though there are a bunch of different kinds of Engineering it adds up to a pretty small fraction of everyone who finishes college. I teach Economics, and I honestly don’t think it’s very useful for most jobs other than Econ professor or think tank staffer and things like that. You know if you honestly look at what’s in the Econ curriculum, the only two things that most people are likely to use on the job are basic statistics and knowing what a present-discount value is. The other stuff most employers aren’t really interested in, which is probably partly why Wall Street generally prefers physicists to economists when they are looking to hire new people. They are looking for the signal of have you done the most intellectually demanding quantitative thing you possibly could which will then prepare you to learn what we really do here on Wall Street.
I am not an economist; I’m a journalist by profession. But I certainly know a lot of economists, and they seem to think that taking economics gives you a certain way of thinking about the world, whether it’s concepts like opportunity cost or something else, that make you take a more rational view of the world.
That’s what we try to accomplish in class. But you mention opportunity cost. The most basic application of opportunity cost is to say if you are at a movie and you are not enjoying it, you should walk out even though you already paid for the money and can’t get it back, because you wouldn’t be there for free. That’s the most basic application. And yet the number of Econ bachelor’s degrees who have really absorbed this really basic lesson — you would be surprised if it’s even 10%. For most people there is what they learn in the classroom and there is what they do in real life. And for most people these things are very divorced.
Although I’m an economist I spend a lot of time reading psychology and seeing what they have to say about this. And there is basically a bunch of big problems with the way that learning works, not just in the current system but in any system. The simplest one is of course that students don’t really learn most of what you teach, which you can see when you grade the exams.
But there is another problem that students pretty rapidly forget stuff that they knew on the day of the final exam. And then there is the problem that even if they remember, a lot of what you teach isn’t really applicable to anything that they are going to do. And then the last problem is that even when finally all the stars align and they learned it and they remember it and it’s relevant, people are just really bad at noticing that something they learned in the class can be used in the real world. There is a lot of experimental work on this.
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Part of the reason why I take this work so seriously is that someone goes into educational psychology wanting to find that education is great, and then they come in and say “wow, a lot of these subtle benefits that we took for granted are very hard to detect in the real world. Maybe if I go and do it in a very different way then I will find that they are there.” Almost all of these guys come away shell shocked after 20 years saying “wow, I cannot find the benefits that we imagined had to be there.”
So how in the world do people get good at anything if this is all true? By practice, learning by doing. The way you get to be a pilot isn’t by going and getting a lecture about critical reasoning skills so that then you can apply them if lightning ever strikes your plane. You actually get very specific training about how to fly a plane in different weather conditions and practice, practice, practice. And that’s the way people really learn how to do things well.
Speaking of research, there is research out there showing that if you increase the country’s education level, that will translate into faster economic growth. That would argue that we should be educating people more in more traditional settings. Is that research wrong?
I would say your summary is wrong. When I started the book I basically believed what you are saying, and I said, “well I’m going to have to figure out what to say about that; that’s a tough challenge.” When I actually went and delved into all of the empirical work I could find on the connection between education and national prosperity, what I discovered is that all the main people working in it aren’t finding much relationship, and then they are trying to figure out why not.
“Education is a pathway to personal prosperity, but not a pathway to national prosperity.”
And the idea that maybe it’s just because increasing years of schooling doesn’t really enrich countries, that wasn’t really considered. There is one paper where they actually went over all eight existing datasets and looked for the estimates. And what every single dataset said was that the effect of national education on national income is a lot smaller than the effect of personal education on personal income, which is exactly what I say is going on.
So I would say that every one of the main papers, even most of the minor ones, are exactly consistent with what I’ve been saying — which is just that education is a pathway to personal prosperity but not a pathway to national prosperity.
I’m sure at this point in our conversation, every parent here is thinking, “What should I do? What should I be telling my kids? Should I be doing anything different?” If you assume that our educational system is what it is and employer expectations are going to stay the same for the foreseeable future, should parents be doing anything differently as far as thinking about the education of their children?
That’s a great question. Selfishly speaking, my basic story is that people are doing the right thing for themselves and for their kids. And the main problem is that we need to figure out a way to change education policy. So this is not really saying that individuals are making mistakes.
But along the way I did find a bunch of other bodies of research on narrower errors that some people are making. So the biggest error that people are making for themselves and for their kids is sending people who did poorly in high school to college. Because this is the usual rule — the best predictor of future performance is past performance. There is a very high non-completion rate for college. So again, only about 40% of full-time college students finish in four years. And if you go up to five years for a 4-year degree, you’re at maybe 55% — a lot never finish.
So an important point: most of the payoff for college comes from graduation. Three years and then flunking out gives you very little. What this means is that if you or you have a kid who did very poorly in high school, then I would say you should really think very seriously about some other path. Because the likely scenario is that you are going to go to college and then you are just going to fail out.
And you are going to have a bunch of debt.
Yes, you will have a bunch of debt and wasted years. So people say, “Oh you would never say that for your kid,” but you don’t know me. If I had a kid who was a C student in high school, I would say, “Look I wish you had worked harder and done better but I’m your father and I want you to shape up. But if that’s not gonna happen we need to think of something else to do besides college. We need to go and train you to have some kind of job that you are good at that appeals to you and we are going to start shopping around looking at possibilities here because based upon your performance in high school you are not going to be able to finish college.”
So around a third of Americans have at least a bachelor’s degree. Is that too many or about right? Should we have dramatically fewer people who go to traditional four year brick-and-mortar classic colleges?
My back of the envelope answer is that ideally about 5 to 10% of Americans should get a bachelor’s degree. I think that for the vast majority of the rest it is really neither useful preparation for their jobs nor do they actually enjoy it very much, certainly not the academic side. It might be much better to move to a world where average education levels are a lot lower and people start adult life at an earlier age. So people often think of this as such a dystopian story, but how about this for utopia: What about a world where you finish high school and you are ready for a good job? Sounds like a pretty good world compared to what we have today to me.
But we are nowhere close to that. In fact we seem to be moving in the opposite direction culturally. We are going to be encouraging more kids to go to college. The message of something like free college tuition is saying that this is so important that you go to college that we need more societal resources to make that happen.
Exactly, so I think that’s a terrible approach. I think we need to accept that the main effect of rising education hasn’t been that everyone gets good jobs. The main effect has been that employers jack up their expectations for the education you need to be employable. So the special word for that is called credential inflation. And what it means is that over time the amount of education you need for the same job has risen by a lot.
“How about this for utopia: What about a world where you finish high school and you are ready for a good job? Sounds like a pretty good world compared to what we have today to me.”
The research going back to 1940 basically says that for one of the same jobs you now need about three more years of education to get it. So there has also been a modern shift toward more intellectually demanding jobs like Computer Science, IT, that kind of thing. But the main way that the economy has changed is that just to get the same job that your dad or grandfather had, you need almost a full additional degree. This is a pretty strong sign that what I’m saying is true. Because, again, if the only reason why education paid off was that they were going to get useful skills, why would employers say now you need more skills to be a waiter? The job is no different than it was in the past, maybe easier because you don’t have to do math at your customers’ tables anymore.
So rather than encouraging more people to get an additional 4-year degree, you would actually make it a lot harder in a number of ways. I mean assuming that we could gather the public support to make these things happen, what are some of the ways you would make it harder?
Right. So by the way, you don’t have to do anything radical with my ideas. You cut education spending by 1% and I would consider that an amazing accomplishment for just one little book to actually have done. But there is an enormous number of things like raising tuition, reducing subsidies on student loans, these are some basic ones. Then there are things like cutting requirements especially in high school for things that you are unlikely to ever use again.
“Suppose you could either have a Princeton diploma without any Princeton education or you could have a Princeton education without any diploma. Which one would you rather have?”
One of my pet peeves is foreign language requirements, for two reasons. One of course is that in the US hardly anyone ever uses foreign languages that they learn in school. But secondly, we also have good numbers on how well Americans learn foreign languages in school. The answer is essentially zero people learn how to speak a foreign language in school. So you are making people spend years of their lives for what? I think the state of Washington lets you do computer language instead of a foreign language, so that seems like a great small reform.
By the way going back to what you were saying earlier, just trying to convince you how plausible this is, here is a little thought experiment that I like to ask. Suppose you could either have a Princeton diploma without any Princeton education or you could have a Princeton education without any diploma. Which one would you rather have?
Does it at all matter what I studied? I’ll say in my undergrad I was a history and political science major. I suppose I’d rather have the Princeton sheepskin.
Right, what I have to say is that if you have to think about the question before answering you already kind of agree with me. In fact, you agree with me to a large extent. If you were on an island and you needed to figure out a way to get off the island, and someone said would you rather have a boat building degree without knowledge of boat building or knowledge of boat building without a boat building degree, on the island you know which one you want for sure. I want knowledge of boat building — who cares about a stupid degree. But in the labor market on the other hand, it’s a very tough question, which on the ground is more important. Which is very hard to escape. The signalling has got to be very important if you have to think about that question.
I realize that perhaps this wasn’t the primary focus but you may have run across a study. To what extent do you think our current education system is efficient? Let’s say maybe only 10% of students should be getting a college education. To what extent is our education system currently efficient at finding those people? Are there kids in lower-income areas that we are just not finding that could be going to those schools but aren’t?
So there is the narrower question and there is a broader question.
The narrower question is, are there people who would be good at college that don’t go? And all the research I looked at says very few of those people are left now. Almost everyone who would be good at college goes just because we send 70% of graduating high school seniors to some kind of college now. So there are very few people that would have done well in school and just don’t go anymore.
But there is the deeper question which is, but how many good people who would be good workers end up in good jobs? And I think that one is harder because while education is a good way of finding whether someone would be a good worker, it’s far from a perfect way. There are a lot of people who just resent the whole way that school works and find it very frustrating because they are practical people. They are doers. I would say that our current system is probably missing a good number of people like that, where even if employers could really watch them do a job for several months then they are most likely to say, “Oh wow there is this person who doesn’t have this credential but is still good.”
But the problem is that in the current system in order to have a boss watch you for three months you first have to get hired. To get hired you have to get interviewed. To get interviewed your application can’t go in the trash. But the main way to keep your application out of the trash is with your degree. So think about this as the diamonds in the rough problem. What does someone do who would really be a good worker but who doesn’t have the degree? I think we are missing 5 or 10% of the people who would be qualified for better jobs because it’s so hard to sort them out from the pile.
Let’s say policymakers have really bought into your thesis and made big changes. What is the education system, the work-training system, however you want to describe it? What does that look like?
So the main difference is just that people spend fewer years in school. And when you are a little kid you learn the stuff that you need like reading, writing, literacy, numeracy but you have a lot more free time to enjoy your childhood. But then anyways the people who are going to be doing cognitively demanding jobs, they are going to be needing to do something similar to at least high school. I think for a lot of other people they are just going to get vocational education when they are in their mid-teens like countries like Germany and Switzerland often do. And then finally of course there is always going to be a small number of people who are going and doing your very traditional college education, you know especially people that are going to be doing vocational majors, or if you have parents who just want to go and spend an enormous pile of money for you to go and have a hobby for a few years. There are some people like that; that was true in the 19th century.
Basically the main picture is that people start adult life at a much earlier age and parents do not have to support people until they are 30.
I read a lot about technology and the changing economy, and every policy prescription that I read from anybody mentions education — that the good jobs of the future are going to be the more complex, abstract thinking jobs. Do we have an education system capable of educating people for those jobs, or does it need to look a lot different?
There is good news and bad news. The bad news is that our current education system doesn’t prepare people for jobs like that, but the good news is that it’s hard to see that anything does other than doing. So you know the idea that we are going to teach abstract thinking skills which are useful in any area has a lot of researchers who have tried. They really want to find the magic bullet that will do that, but in the end what they realize is you need to just teach one skill at a time. The idea that you are going to go and give someone super intelligence like we are just going to go and use these general techniques that can crack any problem — those techniques, if they are out there, are very hard to find. Or maybe it’s just that they don’t exist.
But the good news is that human beings got to the moon. How? Not by going to take critical reasoning classes; they got it by having a lot of people specializing in one task or a few tasks, getting really good at it, and then working together in order to accomplish something great. And that’s really the secret of the modern economy. It’s not that we are creating people with superpowers, it’s that we are getting a lot of people with very specific powers. If we could just do that that would be great.
One of the main things I say about the current system is never mind that you are teaching critical thinking. I think it would be great if we could just teach reading and writing properly. When you look at American adults, about a third are close to illiterate and innumerate. They know the letters and numbers, but they are not even able to do very simple problems like fill out a registered mail form correctly.
Why is that? Is that because of how the school is structured, or is it because we don’t have good enough people becoming teachers? Why?
So that’s a great question. A lot of it is just that the schools are not using techniques that work. There are a lot of verified techniques that are better. There is direct instruction. I won’t go into that but there are a bunch of better techniques for teaching literacy and numeracy. And I think that a big thing is that we just don’t do enough time on tasks.
“When kids are so distracted by so many different subjects it’s not surprising that many students are weak in the most important subjects.”
So at schools in Northern Virginia, kids have eight periods, seven classes. When kids are so distracted by so many different subjects it’s not surprising that many students are weak in the most important subjects. So I’d say a better system would be one that really puts a lot of time and effort into getting everyone up to literacy and numeracy. And then maybe after that we could think about other things. But time on task and not distracting people with subjects that they are probably not going to need to know anyway are the most important.
But in any case they need to go and master the basics first. I would say this is why I’m generally so down on just improving the education system rather than just cutting spending. You give the schools kids for 13 years and a lot of those kids come away still not really proficient at literacy and numeracy. Given that there is a lot of research about how to do it better, just the fact that they are still doing poorly makes me not trust them.
Is there anywhere where this is being done better?
So in terms of literacy and numeracy there are a number of countries that do better than the US. Singapore, South Korea, and I think Scandinavian countries.
And do they teach differently there?
I think at least they do more time on task, and have higher standards. You know of course there are other issues where it may just be that the students just show up better prepared than the US, so it is worth pointing that out. I guess I would say that the main place where we see clear proof that a better way is possible is from experiments. There are experiments comparing the standard ways of teaching reading to other methods, such as this direct instruction method, which is a very military-style way of teaching where the kids are all working together the whole time. But it’s demonstratively more effective. It’s not very fun for teachers so I understand why teachers don’t adopt it. At the same time when you see a lot of kids go through 13 years of education and come out not really literate and numerate —
It sounds like a good idea for some startup or something to use technology to teach that. Do you know some companies or startups who are doing that kind of thing?
It’s a good question. There are a lot of educational firms, but it might be that mostly what they are offering is “edu-tainment” rather than something that really competes with conventional education. It’s more like something fun. If you compare the number of people that sign up for one of these things versus the number that do all the work, take all the tests, and demonstrate their knowledge, it’s just a tiny minority that are really doing the second thing which is so important.
Another problem going on is that by the time that someone emerges from American high school not really proficient in literacy and numeracy, they are in no mood to go do some online education at that point. They are frustrated, they are angry, and of course mostly male and are like “No I’m not going to go and try some other kind of school now. I am sick of this.” This to me is one of the biggest failures of the US education system compared to something like Germany and Switzerland. There are the kinds of kids that would end up permanently unemployed or in jail and are much more likely to learn a useful trade to be an independent adult. Better for the kid and better for society.
Last question, real talk. I have some kids who have completed college and I have some kids in college and I have a daughter who will be going to college in the fall. I’m pretty sure that I’m not going to stop her from going to college. She is still going to go to college. What should she major in? What is the magic major?
Alright, so I will say that even though I am an Econ professor I’m just going to go and say Economics is the best major. Why? Well what I tell my students is it’s the highest paying of all the easy majors.
It doesn’t pay as much as Engineering or Computer Science but it is in the same ballpark and you get to have a fun time in school. As I said if we are looking at my students, I see that a lot of them don’t even really walk away with the basics. But if you are a curious person it is a great framework for understanding the world. So put it all together and I know it sounds a little comical for an Econ professor to say Economics is the way to go, but again look at it yourself — highest paid of all the easy majors, can you go wrong?
Bryan that is exactly the right answer because I also have a daughter who is a freshman who is an Econ major and I feel so much better, as I have gently and fatherly nudged her in that direction. So well done, I appreciate that last answer. We’d love to have you back. Do you have another book coming up in the future?
Next year I have a non-fiction graphic novel that should be coming out called “All Roads Lead to Open Borders,” on the philosophy and social science of immigration.
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