Signaling Work Potential

“In 2001, the Nobel Prize was awarded to economist Michael Spence for a mathematical model of one explanation for these puzzles: signaling. The basic idea is that students go to school not so much to learn useful job skills as to show off their work potential to future employers. In other words, the value of education isn’t just about learning; it’s also about credentialing.”

 

The quote above is from Kevin Simler and Robin Hanson’s book The Elephant in the Brain when the authors talk about why we go to school and what purpose education is serving for our society and for us as individuals. Education costs have been rising and we continue to encourage everyone to go to college. Several presidential candidates on the Democratic side have even put forward plans for free tuition. The idea at play as college tuition rises, as we push everyone toward college, and as our candidates outline plans for everyone to be able to afford college is the idea that higher education is all about learning useful and valuable knowledge that will help every individual and our entire society become more productive and better functioning. We want smart people with extensive education to drive our society forward, and college is the way to make that happen.

 

However, if much of our education is about signaling, then what will happen if we push everyone to go to college? Some students will learning useful information, important skills, and will develop in ways that they could not if they hadn’t pursued higher education, but will it benefit all students? If much of our higher education is about attaining credentials to stand out and show off, then won’t we simply diminish the status and credentials of those who do go to college? There are arguments to be made for and against free college tuition and it is important to understand what is happening with each to develop a better argument and discussion around higher education.

 

First, we must admit that sometimes college is just about signaling and getting a piece of paper to check a box on a job application. By acknowledging that piece, we can start to move forward and think about what opportunities we want to help provide to people. It seems to me that everyone should have a chance to move forward and pursue the education benefits we applaud, but it also seems reasonable to say that we should not overly subsidize what is often just signaling behavior.

 

For those who simply want the credential and don’t care much for the knowledge opportunities along the way, perhaps a greater development in training and education specific to a technical trade or craft would be a better option. Perhaps a less costly signal that focuses more on doing than learning is a valid alternative to the standard higher education model. With an alternative avenue in place, perhaps we can appropriately decide what level of subsidy should be provided to those who do want to go the traditional college rout. Perhaps existing colleges can also adjust to make their signals stronger, while also encouraging more learning as a side goal.

 

I’m not sure what a perfect path forward looks like, but I know we won’t move in the right direction if we believe that education is only about learning and growth. Some of us will learn a lot and demonstrate clear growth in college, but many of us will simply lose time as we strive for more credentials and attempt to signal to future employers that we are the kind of person they should hire.