What is the value of an education?

An education is valuable. We all know that. Statistics tell us those with higher levels of education earn more over a lifetime.

But why?

In an interview with book author and college professor Bryan Caplan, Wall Street Journal editorial features editor James Taranto elicits an apt analogy. Caplan’s book is titled “The Case Against Education.”

In answer to the question as to why employers are willing to pay more for the more highly — or all too often really just longer — educated, Caplan explains the answer is “signaling.”

Caplan’s analogy:

“There’s two ways to raise the value of a diamond. One of them is, you get an expert gemsmith to cut the diamond perfectly, to make it a wonderful diamond.” That adds value by making the stone objectively better — like human capital in the education context. The other way: “You get a guy with an eyepiece to look at it and go, ‘Oh yeah, yeah, this is great — it’s wonderful, flawless.’ Then he puts a little sticker on it saying ‘triple-A diamond.’” That’s signaling. The jewel is the same, but it’s certified.

So, a higher level of education signals to the employer that the job candidate is capable of spending long hours doing stultifying menial tasks and conforming to expectations.

That’s why we have $1.49 trillion in outstanding student loans, not because anyone is really leaning any job-related skills.

 

 

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