Rethinking Education

Is Education a Waste of Time & Money?

These days, it’s a near-universal belief that more education (and more education spending) is a good thing.

But is this true?

In this essay, I want to look at some counter-intuitive thoughts on education from two books: Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism and Bryan Caplan’s The Case Against Education.

“Overwhelming Evidence”

Here’s the standard story about education.

“Look at the following graph,” people will say.


As you can see, there’s a strong relationship between education and economic prosperity.

Some people will see this chart and say, “Clearly, economic prosperity goes up with more education. Therefore, we should invest more in education to raise our country’s prosperity.”

This sounds sensible, but — if you were lucky enough to have a high school statistics class — you might remember that correlation is not causation.

In his #1 bestseller 23 Things They Don’t Tell You About Capitalism, economist Ha-Joon Chang writes:

“Self-evident though the importance of education in raising an economy’s productivity may seem, there is actually a lot of evidence that questions this piece of conventional wisdom. … Lant Pritchett, a Harvard economist who worked at the World Bank for a long time…[concluded in an article] that there is very little evidence to support the view that increased education leads to higher economic growth.”

The education-prosperity relationship seems to be the reverse: Countries get rich first, then they devote more resources towards education.

What’s going on here?

The Great Disconnect

“We learn not in the school, but in life.” -Seneca

I remember the first time I ever walked out of a class.

One teacher — not even a professor — said, “I’m going to teach you exactly how be successful in business. Everything you need to know.”

I looked him up. He’d never left the university his whole life.

This is one reason why education fails. Most of what we learn in school isn’t all that useful, says Chang:

“There are many subjects that have no impact, even indirectly on most workers’ productivity — literature, history, philosophy and music, for example. From a strictly economic point of view, teaching these subjects is a waste of time … Moreover, even subjects like mathematics or sciences, which are supposed to be important for raising productivity, are not relevant for most workers. … The importance of apprenticeship and on-the-job training in many professions testifies to [this]…”

Take geometry, for example. I can’t think of a single instance in the last five years where I used any concepts from geometry. Or take language classes. I took four years of Spanish in high school. What do I remember? Nada.

What’s more, there’s a strong case that jobs in developed countries require less skill today than they did, say, 100 years ago:

“…with the continuous rise in manufacturing productivity, a greater proportion of the workforce in rich countries now works in low-skilled service jobs that do not require much education — stacking shelves in supermarkets, frying burgers in fast food restaurants and cleaning offices. Insofar as the proportion of people in such professions increases, we may actually do with increasingly less, not more, educated labor force…”

It’s true that knowledge is more important than ever. However, this doesn’t mean that this knowledge needs to be carried by individuals. Collective knowledge does not equal individual knowledge:

“Moreover, with economic development, a higher proportion of knowledge becomes embodied in machines. This means that the economy-wide productivity increases despite individual workers having less understanding of what they do than their counterparts in the past. For the most striking example, these days most shop assistants in rich countries do not even need to know how to add…”

To summarize: (a) education does a poor job of providing real-world knowledge, and (b) there’s no guarantee that more individual knowledge is what we need, anyway.

Now let’s move to my favorite part of this essay.

Signaling: The Elephant in the Room

There’s another mystery to consider.

Take a look at this chart:


Clearly, people with bigger degrees get paid more.

What’s more, this is not random — “well-educated” people perform better and keep their jobs longer.

So here’s the paradox: Education doesn’t do a good job of providing on-the-job skills. Yet, educated people are better on the job.

What’s going on?

The Sorting Hat of Education

Illustration by Nancy Herbert

One possible explanation for this paradox is the signaling theory of education.

In The Case Against Education, Bryan Caplan — an economist at George Mason University — writes:

“The answer is a single word I seek to burn into your mind: signaling. Even if what a student learned in school is utterly useless, employers will happily pay extra if their scholastic achievement provides information about their productivity. Suppose your law firm wants a summer associate. A law student with a Ph.D. in philosophy from Stanford applies. What do you infer? The applicant is probably brilliant, diligent, and willing to tolerate serious boredom. If you’re looking for that kind of worker — and what employer isn’t? — you’ll make a generous offer.”

In other words, education works a lot like the sorting hat in the Harry Potter novels, which separates students into different “houses” by their qualities.

To make it through a four-year college, you need a certain set of qualities — general intelligence, conformity, and diligence (sounds a lot like Ravenclaw to me):

“The road to academic success is paved with the trinity of intelligence, conscientiousness, and conformity. The stronger your academic record, the greater employers’ confidence you have the whole package…. Education signals a package of socially desirable strengths. People at the top of their class usually have the trifecta: intelligent, conscientious, and conformist.”

Of course, nobody is saying education is all signaling.

Many parts of a basic education, like numeracy and literacy, are incredibly valuable. And there’s no doubt that some parts of a university education do provide real skills.

Still, Caplan says that up to 80% of education could be signaling. Chang comes in at a more conservative 50%.

For a four-year graduate of NYU, this means that you spend over $100,000 (plus four years of lost salary) on showing employers you have qualities that you already had.

“I need to get a PhD now because everyone else has a bachelors.”

One last thing to consider.

What happens in a world where everyone goes to college?

Chang writes:

“Once the proportion of people going to university goes over a critical threshold, people have to go to university in order to get a decent job. When, say, 50 per cent of the population goes to university, not going to university is implicitly declaring that you are in the bottom half of the ability distribution. So, people go to university, fully knowing that they will ‘waste time’ studying things that they will never need for their work.”

If I stand up in the front row of a soccer stadium, the person behind me will have to stand too. This creates a chain reaction — soon, everybody is standing up. Yet, nobody has a better view.

Education may be stuck in this kind of vicious spiral. To be competitive, we need to get bigger degrees. But what happens in a world where everyone has a meaty degree? We need to get even meatier.

Before we know it, all of us will be in school for the rest of our lives ;)

If what education does is “raise the bar” (like standing up in a stadium), then we could — in theory — lower the bar (say, by having everyone go to school for 4 years fewer) and get similar results.

So What?

So what does this mean for us? What should we do?

Well, if you want to be employable, nothing changes. You go to school and get a good degree; that’s what employers want.

But if you care about society, these ideas let us ask some interesting questions. Is education as important as we thought it was? Should we consider alternatives — vocational school, perhaps? If people with certain “qualities” are more employable, what should people who don’t have those qualities do? And so on.

I’ve tried to make the ideas from these books intuitive and easy to understand. Because I had no space, I’ve also left out the important topic of the humanities and education’s other, non-economic values.

For the full arguments, see 23 Things They Don’t Tell You About Capitalism (especially chapter 17) and The Case Against Education (especially the first 3 chapters and the debates in the back). Also see Alison Wolf’s Does Education Matter?

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