Book review: The Case Against Education

I just finished reading Bryan Caplan's The Case Against Education. The subtitle is "Why the education system is a waste of time and money". You might wonder why I would read such a book, given that I work in the higher education sector. Isn't it a book that argues against the very thing that I do? Indeed, I think my in-laws raised their eyebrows on seeing the book on our coffee table.

Caplan writes well, and is contrarian by nature, so I thought this might be an eye-opening read. The book covers both high school and university-level education (as well as graduate school, but there is less data available at that level). Essentially, Caplan argues that there are two private benefits to education that lead to a wage premium for those with more education: (1) an increase in the student's skills and knowledge (or human capital); and (2) a signal to employers that the student is worth employing (because they are intelligent, conscientious, and conformist).

None of this is particularly new, even the idea of signalling, and I have blogged about it before in exactly this context. What is new about Caplan's argument is that he breaks down how much of the education premium relates to human capital rather than signalling. He extensively reviews the literature (not just in economics, but also in educational psychology and sociology), and he contributes his own analysis based on US General Social Survey data. From this, he arrives at shares of 20% human capital and 80% signalling. That suggests that most of the benefit of education is in its ability to sort students into those who are more (or less) worthy of employment, and much less benefit derives from the skills and knowledge they are supposed to be being taught. As Caplan notes:

Most of what schools teach has no value in the labor market. Students fail to learn most of what they're taught. Adults forget most of what they learn.

And that is the inconvenient truth in the whole education sector (that might have made a good alternative title for the book, if it wasn't already taken!). The education system is not teaching skills and knowledge that students are going to make use of in the labour market. Caplan takes particular aim at clearly non-vocational subjects like the arts, music, history, social studies, civics, and physical education. The end result is that many (less able) students would probably be better off not going to university, and doing some vocational education instead (Caplan is rather more bullish about the value of vocational education).

Caplan isn't done there though. If 80% of the private gains to education are from signalling, then there is a strong case against public funding of education. While society gains from increases in students' skills and knowledge, society gains virtually nothing from signalling, since that is simply a way of sorting good and bad future employees. So Caplan argues that the social gains from education are much lower than the private gains, and therefore the costs to the public of funding education could outweigh the benefits (and certainly in the case of low-ability students). Here I think Caplan over-plays his hand, but he does a good job of making his case, even if I may not agree with it entirely (or at least, I haven't yet been able to bring myself to agree with it entirely). He even addresses social justice, which I was expecting him to have left alone (as many economists in the same position would have):

Yes, awarding a full scholarship to one poor youth makes that individual better off by helping send a fine signal to the labor market. Awarding full scholarships to all poor youths, however, changes what educational signals mean - and leads more affluent competitors to pursue further education to keep their edge. The result, as we've seen, is credential inflation. As education rises, workers - including the poor - need more education to get the same job. Where's the social justice in that?

Many readers will disagree with the points that Caplan raises, but it would do good for more people to be engaged with these ideas. There is a growing Assurance of Learning Industrial Complex, driven by accrediting agencies such as those that accredit business schools, engineering schools, and so on. If education is mostly signalling, then the majority of assurance of learning is little more than an educational equivalent of the mechanical Turk.

Caplan's libertarian values will also not appeal to many readers, who might be appalled by his willingness to engage with the idea of promoting child labour. However, he does base the policy prescription on his data and analysis - if vocational skills are mostly learned on-the-job and not in school, then if the goal of education is to provide children with vocational skills, then it would be more effective to have them working rather than at school learning history or physical education.

Overall, this was an interesting read, and my ECONS102 students can expect to see me pick up on a few of Caplan's less-outspoken ideas when we get to the economics of education later this semester. Recommended for teachers (and especially economics teachers)!

Read more:

• Why all students need to understand adverse selection and signalling