I dont want Bryan Caplan to be right. For many years, I have worked to reform higher
education in the belief that the system is broken but ultimately repairable. Caplans new
book, The Case against Education: Why the Education System Is a Waste of Time and
Money, says otherwise.
Caplans basic premise, that our sprawling system of secondary and postsecondary
education is largely wasteful, is hard to swallow. What about the fascinating courses?
The brilliant lecturers? The breakthrough scientific innovations? The towering libraries
filled with the history and insight of the many scholars who have gone before? Surely all
of this wouldnt exist without good reason.
And what about the relentless rush of data showing that, on average, college
graduates earn significantly more money than high school graduates? And that high
school graduates, in turn, vastly out-earn their peers who dropped out of high school?
The data and the conventional wisdom apparently agree that education, if approached
seriously, is a worthwhile investment.
Caplan debunks or incorporates these arguments, as relevant, with his theory of
signaling. College, he says, is mostly a signal to employers that a graduate is intelligent,
conscientious, and conformist. Employers value these traits. Thus, they pay more for
employees who have successfully completed a degree than for those who have not. The labor market doesnt pay you for the useless subjects you master, Caplan says; it pays
you for the preexisting traits you reveal by mastering them (p. 13).
Caplan is careful to say that education is not exclusively a signal. He admits that
there is some element of human-capital creation that explains the high returns to
education. In particular, he notes that statistics and econometrics are useful in many
data-driven occupations as well as in everyday reasoning and that the simple reading,
writing, and arithmetic learned in elementary school are necessary basics for almost all
future learning and working.
But his critics maintain that education is mostly human-capital creationthat is,
education pays because students learn real skills valued in the market. Caplan uses
a simple question to demonstrate the difference between the two competing theories.
Imagine this stark dilemma: you can have either a Princeton education without
a diploma, or a Princeton diploma without an education. Which gets you further in the
job market? (p. 27).
Any sane person would choose the degree without the education. Thats because
a degree from Princeton will open the doors of the job market. It is the degree, not the
education, that confers the many benefits of college matriculation: more money,
prestige, and career stability. After all, Caplan points out, a Princeton education is
already free. Anyone can show up to Princeton coursesbut their work wont be
graded or credited.
Caplan also provides data to further bolster his claimstoo much to include it all
here. He shows that the most lucrative years of education are those that are accompanied
by a credential. The rewards for completing a single year of high school, Caplan
observes, are not uniform. Completing the senior year is far more valuable than
completing the freshman, sophomore, or junior years. The same is true for college.
Caplan calls this credential correlation the sheepskin effect and explains the data:
High school graduation has a big [pay] spike: twelfth grade pays more than grades 9,
10, and 11 combined. In percentage terms, the average study finds graduation is worth
3.4 regular years. College graduation has a huge spike: senior year of college pays over
twice as much as freshman, sophomore, and junior years combined (p. 98).
(Incidentally, this is why students with some college but no degree are among the
most likely to default on their student loans. They have incurred some of the costs but
almost none of the visible benefits of higher education. Employers treat them almost as
if they never attended college at all.)
In addition to amassing evidence for signaling, Caplan thoroughly debunks the
idea that formal education significantly contributes to human-capital creation for most
students. He cites evidence on the failed transfer of learning, the lack of durable
improvements from education, and the abysmal results of college graduates on various
measurements of critical thinking.
For example, he shows that first-year and fourth-year college students score the
same on tests of informal reasoning; that evidence attributing IQ increases to extra years
of schooling are conflating measured intelligence with genuine intelligence; and that
schools teach very few job skills that employers actually find useful. The data are
impressiveand interesting. Caplan concludes, [H]uman capital purism looks not just
overstated, but Orwellian. Most of what schools teach has no value in the labor market.
Students fail to learn most of what theyre taught. Adults forget most of what they learn.
When you mention these awkward facts, educators speak to you of miracles: studying
anything makes you better at everything. Never mind educational psychologists
century of research exposing these miracles as soothing myths (p. 68).
These data shouldnt be shocking to anyone interested in higher-education reform.
They doubtless already know that college students show little improvement on
standardized tests from freshman to senior year, know little of the scientific method, and
routinely fail man-on-the-street interviews on simple civics questions. Whats more,
college students themselves intuitively understand signaling. Thats why they skip class,
search around for professors who give easy As, and cram for tests instead of committing
the material to long-term memory. They know its the degree that matters to future
employers, not the content of their courses.
From this sobering evidence, Caplan concludes that although there are considerable
personal benefits to ever-increasing years of education (which he painstakingly
measures), there are no corresponding societal benefits (also painstakingly measured).
In fact, there are significant costs. Thats because most of the information provided by
signaling is mere redistribution: If education boosts compensation solely by raising
worker productivity, societys gain equals the workers gain; if education boosts
compensation solely by revealing worker productivity, society gains far less. For most
purposes, in fact, society gains zero (p. 167). Education is a very expensive process for
revealing worker productivityand much of it falls on the taxpayer.
Caplan maintains that education either reveals individuals tendencies toward
behaviors that benefit society (e.g., tendencies against criminal activity or toward
political participation) or changes individuals rankings relative to others with whom
they are competing. The purported health effects of education fall into the latter
category. Caplan posits that the positive effect on health is a covert effect of status on
health. He observes: Insofar as schooling makes you healthier by raising your status, its
health benefits are zero-sum: you cant raise your rank without dragging others down
(p. 171). Again, of course, Caplan painstakingly measures and documents it all.
In short, extra years of education do confer some benefits. Students do learn some
useful skills. But most of the process is an enormously wasteful shifting of resources from
some groups of people to others.
Caplan concludes his arguments with an almost heretical prescription: we need
lots less education (p. 195). Perhaps a modified version would read: we need lots less
formal education or lots less schooling. Caplans prescription stands in stark contrast
to the conventional wisdom and even most books by educational reformerswho
conclude that we still need formal education, but that were doing it all wrong.
But Caplans data are compelling. The theory of signaling aligns with much that
we know to be true about higher education. And even if signaling explains only half of the so-called gains from education, it offers reason enough to examine the whole
system. After reading and reviewing the book, I am a convert.
Anyone interested in the economy, the workforce, or education policy would do
well to pick up Caplans book but should be prepared to confront all of their former