The Case Against Education – Bryan Caplan–updated with Japanese evidence

Bryan Caplan  says that:

When you actually experience education, though, it’s hard not to notice that most classes teach no job skills.

The labour market heavily rewards educational credentials even though academic curriculum is seriously disconnected from the jobs people actually do.

The best explanation for this strange fact is that education is a strong signal of pre-existing worker productivity.

Caplan argues with annoying persuasiveness that education signals desirable employee traits such as intelligence, conscientiousness, conformity and a willingness to learn boring things:

  • Most education is for sending a signal to employers that you can jump through hoops to show off your IQ, work ethic, and conformity.
  • Schools and universities do not to produce wisdom, information, critical thinking or human capital.
  • Subsidising education creates an arms race of credentialism as each student attempts to acquire more and more education than their rival job applicants.

His particular focus is the educational psychology literature on the transfer of learning. That literature started long ago with the question did learning Latin give you muscle to learn other subjects. The educational psychology literature  has been looked at the transfer of learning for 100 years.

Educational psychologist found that Latin does not help much in studying other languages and other subjects. No significant differences were found in deductive and inductive reasoning or text comprehension among students with 4 years of Latin, 2 years of Latin, and no Latin at all.

The trouble is you do this in a race and many try to win the race by lengthening the race by going to and spending more time at university such as taking honours and master’s degrees etc.

Grades do not signal anything in Japan because everyone graduates with an A. It is the lecturer’s fault if you fail.

Japanese universities and employers make up for this everyone gets a A with strict entrance exams.

Getting into a top university signals intelligence and conscientiousness in preparing for their entrance exam. Few go to graduate school in Japan, preferring to learn more on the job.

Japanese students are lazy because everyone passes and therefore grades signal little in the way of intelligence, conscientiousness, conformity to employers.

I had great trouble getting my Japanese students to come to class. Other lecturers got around this by giving marks for attendance and replacing final exams with a pop quiz at the start of every class.

Nonetheless, something of value is acquired through 4-years at a Japanese university because otherwise why not skip straight from passing a university entrance exam to the employer exams.

The crucial objection to Caplan is that if most education expenditures are primarily about signalling, it should be possible to find other, cheaper ways to signal desirable traits to employers. As Bill Dickens noted:

For one thing I find it very hard to believe that we would waste so many resources on a nearly unproductive enterprise.

There are plenty of entrepreneurs out there trying to make money by selling cheaper, in time and money, versions of education and they aren’t very successful.

Mainstream schools have experimented with programmed learning, lectures on video, self-paced learning, etc. and none of the methods have caught on. Why wouldn’t they if they worked?

The spread of charter schools is an example of the rapid diffusion of an educational innovation valued by parents.

A major driver of the doubling of college tuition fees in the U.S. is demand for greater quality. As Becker and Murphy explain:

Indeed, it appears that the increases in tuition were partly induced by the greater return to col­lege education. Pablo Peña, in a Ph.D. dissertation in progress at the University of Chicago, argues con­vincingly that tuition rose in part because students want to invest more in the quality of their education, and increased spending per student by colleges is partly financed by higher tuition levels

What specific and general skills are learnt at school and at university matters too, as Bill Dickens explains:

Education isn’t mainly about learning specific subject matter.

Rather education is mainly about practicing the sort of self-discipline that is necessary to be productive in a modern work environment.

High school allows you to practice showing up on time and doing what you are told.

College allows you to practice and work out techniques that work for you that allow you to take on and complete on time complicated multi-part tasks in an environment where you have considerable freedom about how you spend your time.

Some people may be more talented than others at this sort of thing (you come to mind as someone who is particularly talented at self-discipline), but this is also an acquired skill that one can develop with practice, and everyone needs to develop certain work habits that make one more productive at both types of tasks.

The debate really turns on the extent to which it is possible to find easier and cheaper ways to signal conscientiousness and conformity. As Bill Dickens noted as his fall-back position, which is based on comparative institutional analysis:

most of the return to education is due to it signalling desirable characteristics, but that there is no more efficient way to sort the capable from the incapable.

I also think that signalling performs a valuable sorting function that no alternative process can out-compete. But, as Caplan notes, a conventional education benefits from large government and private subsidies as compared to other sorting devices.

Table of Contents – The Case Against Education – Bryan Caplan


Chapter 1: The Magic of Education

Chapter 2: Useless Studies with Big Payoffs: The Puzzle Is Real

Chapter 3: Signalling Explained

Chapter 4: Measuring Signalling

Chapter 5: Who Cares If It’s Signalling? The Private, Familial, and Social Returns to Education

Chapter 6: Is Education Good for the Soul?

Chapter 7: We Need Lots Less Education

Chapter 8: We Need More Vocational Education


The Book’s basic plot:

The labor market heavily rewards educational credentials even though academic curriculum is seriously disconnected from the jobs people actually do.  The best explanation for this strange fact is that education is a strong signal of pre-existing worker productivity. (chapter 1)

While the return to education is often overstated, it remains high after making various statistical adjustments.  Degrees in useless subjects really do substantially raise wages. (chapter 2)

Education signals a package of desirable employee traits: intelligence of course, but also conscientiousness and conformity.  Many people dismiss the signalling model on a priori grounds, but educational signalling is at least as plausible as many widely accepted forms of of statistical discrimination. (chapter 3)

Empirically distinguishing signalling from human capital is notoriously difficult.  But literatures on the sheepskin effect, employer learning, and the international return to education confirm that signalling is moderately to highly important. (chapter 4)

How much education should you get?  The human capital-signalling distinction isn’t important at the individual level, but the policy implications are enormous. (chapter 5)

The non-pecuniary benefits of education are over-rated, and the non-pecuniary costs (especially boredom) are under-rated.  There’s a massive selection bias because the kind of people who hate school rarely publicize their complaints. (chapter 6)

The most important implication of the signalling model is that we spend way too much money on education.  Education spending at all levels should be drastically reduced, and people should enter the labor force at much younger ages. (chapter 7)

The education we offer should be more vocational.  Especially for weaker students, vocational education has a higher private and social return than traditional academic education. (chapter 8)

Caplan has also posted this nice topology below to allow you to select your starting point:

Model Effect of Education on Income Effect of Education on Productivity Notes
Pure Human Capital WYSIWYG

(What You See Is What You Get)

WYSIWYG Education may raise productivity by directly teaching job skills, but character formation, acculturation, etc. also count.
Pure Ability Bias Zero Zero “Ability” includes not just pre-existing intelligence, but pre-existing character, acculturation, etc.

Pure Ability Bias is observationally equivalent to a Pure Consumption model of education.

Pure Signalling WYSIWYG Zero Pure educational signalling can consist in (a) learning and retaining useless material, (b) learning but not retaining material regardless of usefulness, (c) simply wasting time in ways that less productive workers find relatively painful, leading to a positive correlation between education and productivity.
1/3 Pure Human Capital,
1/3 Pure Ability Bias,
1/3 Pure Signalling
2/3*WYSIWYG 1/3*WYSIWYG A good starting position for agnostics.
0.1 Pure Human Capital,
0.5 Pure Ability Bias,
0.4 Pure Signalling
.5*WYSIWYG .1*WYSIWYG Caplan’s preferred point estimates.  He knows they’re extreme, but his book will explain his reasons and try to win you over.

2 thoughts on “The Case Against Education – Bryan Caplan–updated with Japanese evidence

  1. Pingback: Charles Murray and the OECD’s Trends in Income Inequality and its Impact on Economic Growth – IQ, signalling, over-education and plain bad career advice | Utopia - you are standing in it!

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