Signaling and Social Justice
An excerpt taken from The Case Against Education by Bryan Caplan.
Most of us donât merely oppose shifting the cost of education from taxpayers to students. We recoil at the idea. When rising tuition curbs attendance, who is most likely to be curbed? The poor. Instead of fretting about educationâs social return, shouldnât we fix our gaze on social justiceâour commitment as a society to our least fortunate members?
These concerns would be well-founded if education were largely about teaching useful job skills. In such a world, raising tuition doesnât just make the workforce less skilled. It amplifies the inequality of skill: The poorer you are, the less you learn and the less you can earn.
Since education is mostly signaling, however, the social justice catechism is wrong. Yes, awarding a full scholarship to one poor youth makes the individual better off by helping send a fine signal to the labor market. Awarding full scholarships to all poor youths, however, changes what education signals meanâand leads to more affluent competitors to pursue further education to keep their edge. The result, as weâve seen, is credential inflation. As education rises, workersâincluding the poorâneed more education to get the same job. Whereâs the social justice in that?
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Subsidies donât just help the poor by fueling credential inflation. They reshape hiring and promotion to the poorâs detriment. Picture a society where half the population canât afford college. In this setting, reserving good jobs for college grads is bad business. âThere are plenty of qualified candidates who didnât go to collegeâ is not wishful thinking, but literal truth. Education still signals something, but lack of education is not the kiss of death. When asked, âWhy didnât you go to college?â âI couldnât afford itâ is a great excuse. Heavy subsidies take it off the table. Indeed, what excuses are left? âIâm a bad test takerâ? âI didnât feel like going to collegeâ? âI figured I could learn better on the jobâ? Once the good excuses are gone, employers have little reason to stay open-minded.
More technically, subsidies raise the correlation between education attainment and employability. By itself, this helps high-ability, low-income students⊠Unfortunately, as the correlation between education and talent rises, education becomes more convincing to employersâand hence more lucrative. Rich rewards in turn spur students to amass even more education. If parental income were the sole determinant of educational success, education would signal little to employers and therefore entice little waste.
I grant that subsidies seem to promote social justice. My best friend in my Ph.D. program came from a poor rural family. If a top state school hadnât given him a full ride for his B.A., he probably wouldnât have been sitting next to me at Princeton. Anyone who wanders a college campus will find equally visible success stories. To detect subsidiesâ downside for social justice, you must dwell on the opportunities the poor have lost because of credential inflation. When most Americans didnât finish high school, dropouts faced little stigma in the labor market. The stigma is now severe. When few Americans finished college, high school grads could plausibly work their way up the corporate ladder. No longer. The main difference isnât that âthe economy changed,â but that education rose, so workers need higher credentials to compete.Â
None of this philosophically undermines the quest for social justice. The point is that trying to speed up the academic treadmill is a misguided distraction from this quest. The planet is full of blatant social injustice: hungry kids, hopeless adults, refugees from war and tyranny. This hundreds of billions our society fritters away on education every year could make a giant dent in these dire problems. Even if your quest for social justice stops at the nationâs borders, why not fork over the hundreds of billions saved to Americaâs underclass? Human capital purists may protest that this squanders our countryâs seed grain. But letting the poor eat the seeds is better than burning the seeds signaling to each other.













