Let’s say that education signals conscientiousness. A purely on-line class, with no ogre standing over your shoulder to discipline you, should be blown off by those who are not conscientiousness. The on-line class would seem to offer a better signal and a cleaner separation of types.
Alternatively, let’s say education signals IQ or some other notion of “smarts.” On-line education would seem to offer less opportunity to get through by buttering up the teacher, spouting mumbo-jumbo in basket-weaving classes, and so on. For better or worse, a lot of on-line education seems to be based on relatively objective tests. Then on-line education would seem to offer a better signal of smarts.
One possible application of Bryan’s model might be this. Income inequality is rising, so there is greater care to get the signal, selection, and screening right for top jobs. Relatively high levels of education should be all the more discriminatory, and that may mean more on-line education. In fact, in normative terms that might well be a problem with on-line education, namely its inegalitarian nature with regard to curiosity and effort and smarts.
Oddly, the signaling model could be true, but through an invisible hand mechanism — schools competing to separate quality in the most effective ways — you can end up with a state of affairs where upfront signaling costs are fairly low. Imagine a chess school, needing to sort talent, and unable to teach its students very much, but setting up a quite cheap on-line tournament and declaring some winners. Aren’t the Khan Academy users some really talented people?
Alternatively, through an invisible hand mechanism, if the learning model is correct, you could end up with an equilibrium in which upfront signaling costs appear to be relatively high, namely that you impose “taxes” to make sure people end up learning what they need to know. Think Paris Island or KIPP schools.
It is important not to confuse “seeing high upfront signaling costs” with “the signaling model of education is essentially correct.” They sound like they should go together, but quite possibly they don’t.