the value of higher education

An increasing number of students are pursuing university degrees. There is a well-known correlation between higher education and earnings, so higher education seems to have value for those who receive it. But is higher education valuable in itself, for what students learn? Or is it merely a screening device?

Tim Harford, the FT’s ‘undercover economist’, has written a column on this subject for today’s newspaper.

A … sceptical view comes from Bryan Caplan, an economics professor who … points out — not unreasonably — that many students seem to learn nothing of any obvious relevance to the workplace but, on graduation, they’re rewarded with much better career prospects than non-graduates. Why?

Caplan’s answer is that education is a signal. If employers have no way to tell who is smart and diligent, a student can prove that she fits into that category by excelling in, say, Latin. The Latin is like a peacock’s tail: costly and useless in its own right but a necessary investment.

To the extent that Caplan is right, undergraduate degrees have no value to society: they enable employers to pay higher wages to smarter workers, but lower wages to everyone else — and in order to enjoy these higher wages, smart people must waste time and money going to the trouble of acquiring a degree. Everyone might be better off if the whole business was abandoned.

Who is right? My heart is with [LSE researchers Anna] Valero and [John] Van Reenen[, who find that universities boost the income of their regional economies]. But Caplan strikes an important note of discord.

Tim Harford, “Are universities worth it?“, Financial Times, 24 August 2016 (metered paywall).

George Mason University economist Bryan Caplan (born 1971) is in drafting The Case Against Education (Princeton University Press, expected in 2017).

Harford’s column has generated many long and thoughtful comments from readers (85 so far). Here are two ‘editor’s picks’. More comments can be accessed at the link above.

My impression is that Europe and the UK benefits from a more consistent level of quality in their universities… Oxford may be more prestigious than some of the “red brick” schools but I get the impression that a student will get a good education at any of them. In the US, the Harvards and Stanfords are world class but there are many schools that are, essentially, defrauding their students in varying degrees… All the way down to the abysmal low of Trump University. (Sorry, couldn’t resist 🙂 [Continues for two more paragraphs.]

My qualifications, BSc(Eng), PhD in engineering and an MBA, couldn’t be much more practical. However I have come to realise that a great, and rare skill, is the ability to take a subject, learn about it, understand it and to make sensible proposals on what to do about it.  You can learn that skill by studying just about anything from medieval Italian poetry to quantum physics and for non-vocational subjects. That is the real value of a degree.

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