I've written before about the value of signalling for university students (see here). The issue is one of asymmetric information and adverse selection. Students have private information about their quality as a future employee - the student knows whether they are high quality or not, but potential employers do not know. This is asymmetric information. That asymmetric information potentially leads to an adverse selection problem. Since employers don't know which job applicants are high quality, and which are low quality, it makes sense for employers to assume that all job applicants are low quality (otherwise, they are taking a gamble). This is what we call a pooling equilibrium - employers would make no job offers, because they think that every applicant is low quality. That is the adverse selection problem - the market fails (especially for high quality job applicants).
Of course, job markets and applicant processes have evolved to reduce this adverse selection problem. As I noted in that earlier post:
One way this problem has been overcome is through job applicants credibly revealing their quality to prospective employers - that is, by job applicants providing a signal of their quality. In order for a signal to be effective, it must be costly (otherwise everyone, even those who are lower quality applicants, would provide the signal), and it must be costly in a way that makes it unattractive for the lower quality applicants to do so (such as being more costly for them to engage in).
Qualifications (degrees, diplomas, etc.) provide an effective signal (they are costly, and more costly for lower quality applicants who may have to attempt papers multiple times in order to pass, or work much harder in order to pass). So by engaging in university-level study, students are providing a signal of their quality to future employers. The qualification signals to the employer that the student is high quality, since a low-quality applicant wouldn't have put in the hard work required to get the qualification. Qualifications confer what we call a sheepskin effect - they have value to the graduate over and above the explicit learning and the skills that the student has developed during their study.
That brings me to this article in The Conversation from last week, by David Carroll, Kris Ryan, and Susan Elliott (all Monash University):
Our research shows double degrees (students study for two degrees at once) can greatly improve new graduates’ prospects of finding full-time work.
Some combinations increased the success rate by as much as 40% compared to students with a single “generalist” degree. The gains were biggest for students in the arts and sciences.
Carroll et al. conclude that:
So, why do double degrees give graduates such an advantage in the labour market? This is a much harder question to answer.
There is likely to be a human capital benefit, in that double-degree holders have gained a greater depth and breadth of skills than those with single degrees. The labour market recognises this through a greater likelihood of receiving a job offer.
There is likely also to be a signalling benefit as employers, faced with very little information on the productivity of the graduates sitting opposite them in job interviews, use the double degree as a sign of their productivity. It’s likely they make offers to graduates on this basis.
There is likely to be a signalling benefit of a double degree, over and above the benefit of completing a single degree. In order to be effective, a signal needs to meet two conditions:
- It must be costly; and
- It must be costly in such a way that those with low quality attributes would not be willing to attempt the signal.
A university degree meets these conditions. It is costly, and it is more costly for lower quality students, who have to spend more time studying, or may fail papers and have to re-sit them. Does a double degree provide a signal of higher quality than a single degree? It would need to be more costly than a single degree (which it obviously is, as it takes longer to complete). It would also need to be costly in a way that it would dissuade lower-quality students from attempting.
A few years ago, I had a summer research student dig into the data on degree completions at Waikato Management School. They were trying to identify statistically the factors that were associated with students dropping out of their degree. There isn't a published research paper on this, but if you are interested and on campus, there is a copy of the student's research poster on the wall opposite my office. Anyway, one of the key findings was that students enrolled in a conjoint degree (our version of a double-degree) were twice as likely to not complete their degrees as students in a single degree, and the result was highly statistically significant. That suggests that enrolling in a double degree is costly in a way (lower chance of completion) that should dissuade lower quality students.
Taken altogether, the analysis of Carroll et al. and my summer research student suggest that a double degree is a double-edged sword. It has signalling value for employers, but by enrolling a student increases their risk of not completing.
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