Education, Top Stories

Bryan Caplan’s ‘The Case Against Education’ — A Review

A review of The Case Against Education: Why the Education System Is a Waste of Time and Money by Bryan Caplan. Princeton University Press (January 2018) 416 pages. 

Almost no issue unifies commentators across the political spectrum as support for education, though their motivations strongly differ. For the left, affordable education is a great leveler for disadvantaged groups and also a force for cosmopolitanism. For the right, it represents an equality of opportunity that can substitute for a generous welfare state. But almost everyone seems to believe that more people with high-quality education means better and more productive workers. 

Among the exceptions are a minority of economists studying education. Beginning with Nobel Prize winners Kenneth Arrow and Michael Spence in the 1970s, these economists proposed that people with more years of education earn more not merely because of the skills and knowledge they accumulated during their time in school (“human capital”) but largely as a function of the information their degree signals to employers. The Case Against Education  by George Mason University economist Bryan Caplan is the most thorough and compelling synthesis of the research in favor of the signaling model of education. The essence of the book is an empirical claim — that only a fraction of the extra wages that graduates earn can be explained by skills and knowledge — and a set of policy proposals to end wasteful spending on unnecessary education.

Signaling

The signaling model is compelling to many skeptical autodidacts in part because people spend years toiling in classrooms learning things that their careers do not require. Caplan calls this puzzle the “ubiquity of useless education”, and it is not just a matter of comparative literature majors never using critical theory for their day job. Even heavily quantitative and practical majors like computer science are filled with theory courses that are never used by the vast majority of professional software engineers. Caplan even takes aim high school education, arguing that large chunks of class time are devoted to coursework which only improves job performance in very rare occupations.

Yet there is also a vast empirical literature that analyses the effect of education on wages, and at first glance, it is not kind to Caplan’s signaling model. For example, we might ask if the estimated extra earnings of more educated people (called the “wage premium” in the literature) is confounded by the fact that they also tend to have traits like higher intelligence. David Card, an economist at UC Berkeley, reviewed the literature and found that the bias in the estimate was pretty small. His most convincing evidence looks at the earning difference of identical twins with different levels of education, where the ability bias only explains about 10% of the wage difference. So the rest of the premium must be explained by skills and knowledge, right?

A shallow read of the literature might suggest so, and that education raises human capital by making workers more productive. But the virtue of The Case Against Education is that Caplan synthesizes many lines of research that approach the question with different methods. By showing that signaling is the only model consistent with all the convergent facts, his conclusion is more robust than any that comes from a thin slice of the evidence. Aside from the ubiquity of useless education, he looks at three lines of research most consistent with the signaling model.

First, he looks at how much learning students forget over time. People who take a foreign language or geometry class forget more than half of what they learned within 5 years (though the more math they took, the more they retained). Using the National Assessment of Adult Literacy survey, he shows that only about half of high school graduates achieve “intermediate” or “proficient” mastery of basic quantitative questions (an example of a task of this level is calculating the total cost of ordering specific office supplies from a catalog). Despite most high school graduates taking several years worth of science courses, less than a third know that atoms are bigger than electrons. All this leads Caplan to ask: “Why do students rejoice when the teacher cancels class?” A human capital model where the “capital” is an accumulation of classroom learning is difficult to square with these celebrations.

What if students forget the specifics but learned how to learn and think critically? Here too the evidence is shockingly bad for the human capitalist camp. In quantitative courses, students diligently learn how to solve the problems that appear in their homework sets and tests, but their ability to use this knowledge correctly is highly sensitive to contextual clues. According to one survey, just 28% of students who completed a mechanics course could identify the number of forces acting on a coin midair after it is tossed. There is strong evidence from meta-analysis that years of education raises IQ by 1 to 5 points a year. But an IQ score is just a proxy for the latent g factor, or “genuine” intelligence as Caplan calls it. It may be that students’ IQ scores go up because education trains them to answer the kinds of questions on IQ tests, while the g factor remains the same. Some research suggests this to be the case, and it is certainly consistent with the finding that improvement on cognitive training tasks does not transfer over to other tasks. 

There are other ways that more schooling could make better workers. A good education could boost “non-cognitive skills” by making students more extroverted and agreeable — that is, they’d be more socialized for white collar work. Another possible channel is that education gives people access to better jobs with more skilled peers, whose combined effect might otherwise be mistakenly attributed to the schooling itself. But these are not what education advocates typically point to in making their case for education.

Most of the rewards of education come in the final year

Caplan’s second (and strongest) line of evidence of signaling are “sheepskin effects”: the tendency for the bulk of the rewards of education to come in the final year. (The name comes from the fact that old diplomas used to be made with sheepskin.) In the human capital model, returns should be fairly linear and steady within classes of degrees, since a high school or college senior takes about the same course load as a freshman. A steady increase in human capital should lead to steady increases in wages. But surveying ten studies, Caplan finds that for 9th through 11th grade, each extra year of education raises wages only by about 4%, while finishing the 12th grade raises wages by 16%. Similarly, each of the first three years of college only raise wages by about 6%, while the last year raises them by 30%.

The results are more consistent with a model where students who fail to finish their degree signal a lack of work ethic, conscientiousness, or some other set of traits employers want to avoid. Alternatively, it represents a bias in the kinds of people who drop out, but Caplan cites studies that cast doubt on this possibility.

Last, Caplan looks at the effect of increased years of education on national income. If signaling explains the bulk of the education premium, then more degrees mostly just means inflating away the relative significance of credentials. What we would expect if this was true is that the national return on education would be lower than the return to the individual. Caplan reviews the evidence and finds consistently that an extra year of national education brings a “puny” 1.3% in extra income to a nation (though there are exceptions in this line of research, some careful work finds national returns can exceed private returns under certain conditions). The implication here is that the gains from education are mostly zero-sum, where credentials help educated workers at the expense of others rather than adding much to the economy as a whole.

This arms race for educational credentials in most apparent in Taiwan and South Korea where college attainment has exploded in recent decades. Thirty years ago, about 20% of South Koreans had some tertiary education; today about 70% of 25-34 year olds do. Rather than unleashing extraordinary growth as a human capital model would predict, the results have been devastating to lower skilled Koreans who thought college was their ticket to a better life:

Seongho Lee, a professor of education at Chung-Ang University, criticizes what he calls “college education inflation.” Not all students are suited for college, he says, and across institutions, their experience can be inconsistent. “It’s not higher education anymore,” he says. “It’s just an extension of high school.” And subpar institutions leave graduates ill prepared for the job market.

A 2013 study by McKinsey Global Institute, the economic-research arm of the international consulting firm, found that lifetime earnings for graduates of Korean private colleges were less than for workers with just a high-school diploma. In recent years, the unemployment rate for new graduates has topped 30 percent.

Equally convincing is research that looks at the effect on students when the number of years to achieve an equivalent credential is suddenly reduced or increased for everyone. For example, in the German state of Saxony-Anhalt, the duration of secondary school was reduced by a year. Women’s wages went up and men’s went down only by 2-4%. The opposite of this experiment occurred in China, which added a year of schooling to achieve the same credentials in the 1980s. Economists found only a 2% increase in wages from this change. There are also well-designed studies with the opposite conclusion in more limited contexts: Colombian economics students whose post-university wages dropped significantly after their university eliminated some rigorous quantitative courses as a requirement for graduation.

Policy Implications

The signaling model gives us a fresh perspective on the rapid rise in the cost of university tuition, which have tripled in price over the last few decades (though it is less severe than it looks, since many students don’t pay the full cost). This rise is sometimes blamed on Baumol’s Cost Disease, a phenomenon where salaries of workers who do not become more productive over time still go up because employers are in competition with industries whose workers are becoming more productive. The problem with this characterization is that professors’ salaries have mostly stagnated at the same time, while the number of administrators — who are not so central to building students’ human capital — has exploded. According to the best research on the topic, the rise in tuition is most related to the rise in the college wage premium and availability of student loans. If true, a free college for all plan might just allow university administrators to capture a substantial portion of the subsidies.    

But Caplan is not just content to end the gravy train for useless administrative bloat. He gives a series of policy suggestions. First: remove from graduation requirements “useless” school subjects. Second, remove subsidies for education so that their unsubsidized price greatly reduces the supply of students. He even toys with the idea of taxing education, though he dismisses out of hand on libertarian concerns. His most plausible proposal is to vastly increase enrollment in vocational training programs.

Even for those of us convinced by his empirical arguments about signaling, these policy suggestions are unsatisfying and scary because we have no model of what a developed country without useless coursework and education subsidies looks like. In Switzerland, with its extensive vocational training programs, about 30% of young people still graduate from university. There is some evidence that education accelerated the industrialization process, and without a counter-example, it is not hard to imagine that a less educated population might miss out on future waves of innovation.

Thanks to Caplan’s excellent point that education signals conformity and conscientiousness, not just intelligence, we know what a replacement for the current model won’t look like: a decentralized system of learning with certification tests. This is the hope of many autodidacts who dislike the gatekeeping power universities have over us. But it won’t work in the current equilibrium: these certificates might signal social dysfunction, just like GEDs (General Equivalency Diplomas) are inferior replacements to high school diplomas. One exception is a field like software engineering, where students could put up examples of their code on Github and demonstrate their skills quickly in a technical interview (and where traits like conformity are less important.) In this case, a “teacherless university” is possible, but it is likely impossible to scale to all other fields.

The most politically viable route to defunding higher education arises from the culture wars. Thanks to the rising level of political extremism and hostility to political diversity in the academy, Republican support for these institutions has plummeted. The leftist commentator Freddie deBoer has written: “I am increasingly convinced that a mass defunding of public higher education is coming to an unprecedented degree and at an unprecedented scale…the monsters are coming, and I am afraid.” He might be right, but if The Case Against Education is to be believed, we have a lot less to lose than deBoer thinks.

 

Follow Noam on Twitter @NoamJStein

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22 Comments

  1. When even the New York Times starts running not completely hostile pieces on this subject, you know the worm has turned.

  2. stephen buhner says

    A very well done article, thank you. A couple of comments. You are conflating education with schooling. What you are in fact talking about is schooling, not education. (And . . . schooling is what we do with dogs and horses, it’s behavioral training.)

    As to degree costs. Since the republicans began to dominate the political world since 1980 they have been removing more and more funding from all schools including the universities. This is so bad that, as an example, the University of Kansas School of Social Work has to apply for grants every year to pay their secretaries. And the photos of the school books used by students in high school in Oklahoma are revealing.

    The universities dealt with this by raising tuition far more than the rate of inflation. (Another factor you rightly discuss is the incredible rise of administrative positions.) Interestingly one of the few groups that cannot expunge debt through bankruptcy are students. Student debt levels are massive. It is revealing however that one of the major investments of universities and teachers unions is in . . . student debt which is now being bundled as mortgages were before the collapse.

    And finally, one of the problems that the right identified, quite correctly, was the ability of the young to become highly active politically. To turn them into a generation of indentured servants through the implementation of such indebtedness was a stroke of genius (as well as being morally objectionable).

    Universities now are an industry, they are not primarily interested in education. It is telling that some of the most important contributions to our understanding of the world the past 50 years has come from independent scholars such as James Lovelock and Barbara McClintock. Lovelock himself noted that he could never go through the Ph.D. programs they have now simply because they are so narrow and so negatively impact the sense of wonder and love of learning that was root to his studies when he began.

    It is in fact true that the entire university system is dysfunctional and no longer serving the public good. In time, as these things always seem to do, it will collapse under its own weight and need to be reconfigured. Until then we are in for some difficult years.

    • Val says

      Blaming “Republicans” for our schools’ failure is invoking the progressive excuse — that is the real culprit of our nation’s education failure. Indeed, since 1992, there have been more Democrat presidents at the helm than Republicans (albeit the latter have wrecked more damage overall domestically and globally). More crucially, it is indeed a progressive spin to not acknowledge that not only are more Americans under liberal democrat (state) jurisdictions, but even more decisively, “education” in America is governed mostly by state control than presidential fiat.

      It is always the progressive spin that shrewdly acknowledges faults — but only to propagate anti-traditional stone-throwing.

  3. Caplan presents a compelling case for the elimination of business schools, including moronic ideas like majors in advertising. If you want a degree because you are an idiot who needs a job, then the state shouldn’t help you. That is not, however, Caplan’s point. He thinks that any brain space not directly devoted to one’s immediate job is wasted; that people are nothing more than cogs in the Great Corporate Machine and should be fed into as as possible and as long as possible. He dreams of a world of Babbits, shuffling from job to TV and back to job, without history, without literature, without anything but the diversions of corporate-crap entertainment.

    Of course, the children of the privileged, including dimwits like the Trump and Kushner offspring, would still learn languages, literature, and history. All of the pleasures of thinking and learning would be hoarded by the 1% while the rest of us dissolved into duck-speaking mush.

    • JB says

      “dissolved into duck speaking mush”
      Have you seen what passes for modern music, TV and film acting and most written work?
      You don’t need to be rich to benefit from thinking and learning, it’s just that poor people must spend more of their time working to pay their bills.

    • markbul says

      You have done your signalling well. Unfortunately for you, you haven’t made a cogent argument. If you can afford to spend (many) tens of thousands of dollars on improving your appreciation of poetry and philosophy, enjoy your 1%er life. For the rest of us, we actually have to put food in our bellies and a roofs over our heads. Your post sounds like a direct quote from a 19th century British landed gentry-crat. They could afford those ideas, because they were gentlemen – read they didn’t have to work for a living. Those of us who do damn well better figure out how to fit into corporations like cogs. If we don’t, we’ll be on welfare and voting whatever party gives us the most goodies.

    • I prefer (and lived) the Mr. Money Mustache model: School/educate yourself to make the most possible $$$ right out of the gate. Spend next to nothing by living in extreme frugality. Save everything. Always look to increase your income. Invest all you save immediately and wisely.

      Then when you comfortably retire between the ages of 35-40, you can spend the rest of your life reading the great books, studying/writing poetry, music, art, architecture, whatever….

      You don’t have to start out with any wealth, nor bow down to corporate overlords for more than 10-15 years, waste away for years at signaling school, or put yourself into any form of lifelong indentured servitude. Caveat: I’m not sure how this works if you are low in conscientiousness or low in openness to new experiences. I suspect that all the people living the ‘Early Retirement Extreme’ lifestyle have both very high conscientiousness and are very open to new experiences. They also view money as a tool, not a symbol of prestige.

      You can spend your early years living Caplans capitalist-efficiency archetype, then spend your final 40-60 years living in karenjo12’s world.

      • Ivor says

        +1 for Mr Money Mustache life. Education and schooling / vs wanting to be a cog, wanting to want the material goods our culture programs us to consume. It’s hard to break free.

  4. ab says

    one of caplan’s solutions sounds like an adaption of the european university model (no general ed requirements) and that’d be great. however i thought it’s possible to finish a lot of european degree programs in 3 years is because skills like critical thinking and writing are acquired before university… or it’s assumed anyway. only an AP or honors program would prepare a student for that kind of rigor.

    also to echo karenjo12’s comment: i’m not sure we need to create more american philistines, despite the best efforts (e.g. rejecting the canon, the toxicity in the humanities) of those in academia. i feel very fortunate to have attended a high school that taught the canon in both english and art history – can’t imagine being deprived of that experience. as a fan of dr camille pagila, i believe she’s correct when she talks about the dismal state of the humanities and the ways in which colleges & universities have adopted a parental role to the demands of adult students who want to be infantilized.

    • Thank you. We NEED more people to learn what you call ‘the canon.’ I agree that Leftist criticism has been misplaced, although I think the worst of that was done before 1990. (Lots of guys in the 60’s wanted classes to be, like, RELEVANT, man, which they could do because they themselves learned history and literature and languages, whereas women and everyone with dark skin had been shunted into Practical classes.) If Caplan had also advocated for free or dirt cheap classes in academic subjects that working people could take after high school — real classes, not on-line scams — I wouldn’t find him so odious.

  5. Laurence Rottle says

    Is this the Noam Stein of Medium/Vox/Murray/Turkheimer/Harris/Cherry fame?

  6. doug deeper says

    The author writes, “… we know what a replacement for the current model won’t look like: a decentralized system of learning with certification tests. This is the hope of many autodidacts who dislike the gatekeeping power universities have over us. But it won’t work in the current equilibrium: these certificates might signal social dysfunction,… ”

    He suggests it might work in software engineering, but it is not scalable to other areas of study. I disagree, this is precisely what is happening in many fields. Udacity and countless other online schools and bootcamps are developing many career-ready grads in almost every computer related field. The same is happening in dozens of the most promising health care fields. As manufacturing is coming back to the US in a highly automated way, there are countless careers where earning certificates is a far more efficient path to an excellent career. Slowly certificates in many business fields are proving a cheaper, quicker path to a great career.

    Karenjo12 and ab are concerned we will end up with a nation of Babbitts and philistines. I would argue that that ship has long sailed. There no longer is a “great, western civilization, liberal education.” Philistines would be an improvement compared to the vulgar, slogan-slinging SJWs who are not only unemployable but a real drag and danger to civil society.

    • Mazzakim says

      Since most college-aged SJWs come from solidly middle-class households, they are never truly “unemployable.” Most of them will eventually find their way into perfectly reasonable and productive careers.

      I lived in South Korea for nine years, Part of the issue there is not necessarily just the percentage of the 25~34 cohort that has tertiary degrees, but the familial expectations that come with being a college graduate. There is no possible way they can even consider taking jobs that are beneath them, and no society on Earth really needs that many college graduates.

      I’m torn on the question of liberal education. Those nine years in Korea are the only times I’ve even come close to “using” my Literature degree in the 25 years since I graduated. And even though I’m a veritable font of “useless” knowledge, I do think my life would qualitatively be much poorer without it. But I’m not sure general education requirements should be mandatory. Complicated question.

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  8. cphollis says

    I can only speak from my own experience.

    Higher education — for me — was like an intellectual Sunday buffet. Yummy goodies everywhere.

    Math, physics, political science, philosophy, linguistics, economics, statistics.. I sampled deeply at every table. I wish I could have inhaled more, but life called.

    Some topics spoke to me right away, some not until much later in life (e.g. psychology). I felt I built a framework to engage and learn fast.

    The intellectual curiosity instilled in me persists to this day. But I made sure to graduate with a degree that made me employable (computer science).

    Should we re-think higher ed? Definitely. But I would think of its primary goal as helping to unlock human potential vs. direct economic benefit. And, yes, much more vocational training is a good thing for so many people.

    The world needs people who know how to do things in the physical world, which isn’t going away anytime soon.

  9. Laurence Rottle says

    To all you commenters who haven’t read the book, all I can say is hahaha, Caplan has a comeback to all these objections. To people who “cherish the college experience,” Caplan has research quantifying that, in dollars. You’d be amazed at how cheaply people value their college experience when is converted to dollars, in various ingenious research.

    Caplan’s approach lets you take time off, travel, learn a trade, work and put money in the bank, take online courses or audit classroom classes, and so on, during the four or five years that you in the current world you’d be skipping classes and running up debt that is not dischargable in bankruptcy.

  10. Carl Wolfson says

    Caplan’s argument closely fits my life experience. I am now comfortably retired with ample resources to do virtually anything I want. Almost nothing beyond the basics learned up through high school ever advantaged me in work life. My degrees served only as a signal to employers. I acquired my skill (software development) on my own, not through any classes.

    During my many years at school, I avoided as much coursework not in STEM fields as possible, while ironically never taking a computer science course. Though I graduated a “cultural ignoramus,” I’ve since acquired and read a couple thousand serious books. I can unmodestly assert my knowledge and understanding is deep and wide.

    Caplan is dead on in my case. The diploma was only a ticket. My advantages are the genetics and life experiences I got. I am lucky.

  11. here’s my two cents. I’m 48 yrs old, and earned a BA in English Literature. Yes, it was interesting. Yes, I enjoyed it. But I have to be blunt here: it has irrevocably damaged my life, inasmuch as I found it very difficult obtaining meaningful work. Perhaps I was under the impression I would even find “meaningful” work. I never did. I became a deckhand on a tugboat, and that is what I have done for 20 years. When I tell co-workers I have a degree in Literature, they look at me as though I have two heads. I was under so much of a delusion that I would one day find “meaningful” work that I delayed marriage for so long that when my son graduates from high school, I will be filing my retirement papers.

    You can probably see what I’m saying. Prior to world war 2, only the upper class sent their kids to school. Might it not be wise to go back to this? I could have still enjoyed my books without attending college.

  12. mapman says

    It’s not higher education anymore,” he says. “It’s just an extension of high school.

    That is exactly the case in the USA now too. The most obvious policy implication is that 80% of colleges need to close down. The sooner they cease to exist, the more society as a whole will benefit from the elimination of a massive parasitic outgrowth.

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