Bryan Caplan’s stance on higher education policy

In my Warren post I wrote:

7. College free for all: Would wreck the relatively high quality of America’s state-run colleges and universities, which cover about 78 percent of all U.S. students and are the envy of other countries worldwide and furthermore a major source of American soft power.  Makes sense only if you are a Caplanian on higher ed., and furthermore like student debt forgiveness this plan isn’t that egalitarian, as many of the neediest don’t finish high school, do not wish to start college, cannot finish college, or already reject near-free local options for higher education, typically involving community colleges.

Bryan wishes me to point out that he does not favor “free tuition for all,” and indeed that is true, as I can verify from years of discussion with him.  Nonetheless I still believe such a policy would come closer to limiting educational signaling (by making so many schools worse and lowering the value of the signal) than would Bryan’s preferred policies toward higher ed.

Comments

lowering the value of the signal

How high is the value of the signal now? Maybe we need a different signal, acquired from a different place in a different way.

If you believe the college education premium is high, then the value of the signal is high. The point of the signaling model is to explain the premium. Some (many?) people seem to misunderstand Caplan. Caplan does not deny that college identifies people that are smart, hard working, persistent, and conformist nor that such traits are valuable to employers. He offers signaling for these traits as the *reason* employers pay premiums for college graduates as opposed to the alternative explanation that such graduates gain human capital by attending college.

Free tuition to college for all would be worth exactly what they students paid for it.

In France 4 years of medical school would cost one about €4000.
In Germany university education is free even to foreigner students.
How does this reconcile with zero worth based on cost?

I've never heard of medical tourism to France.

Thank you for every other great post. Where else may just
anyone get that kind of info in such an ideal manner
of writing? I've a presentation subsequent week, and I'm
on the search for such information.

I think you are right about Caplan's views. The problem remains that that signal is damned expensive, and on at least two counts. We have all these administrators that want to be fed, clothed and housed. And we have the opportunity cost of those studying the studies.

To put it differently, the value of the signal is eaten up by cost.

"The problem remains that that signal is damned expensive"

Perhaps I misunderstand, but isn't the whole point of the signal that it is expensive? It's a heavy bet on yourself. So if college was free, it would cease to be a useful signal, and it would be used less.

Now that's an oversimplification, because it still takes a ridiculous amount of time to get through college, and the time is part of the cost of the signal. You're saying "I'm so confident in my earning potential that I can throw away four years at the start of the game and still win!"

I'll throw out a prediction: make college free, and people will find a way to make college take longer, to recover the ability to signal that you've taken away.

My 2 cents as a German with a FREE M.A. working in his field: even free college is not free: you invest 3 to 7 years (most do an M.Sc.) UNPAID studying effort - instead you could have got a well paid apprenticeship (3 years, 1k € per month) with a safe job-offer afterwards (2k-4k)(nurses, car-mechatronics: in Germany that´s vocational training). 36*4=around 150.000€ in foregone income, quite some opportunity cost of a 6 year Master. Thus not really more college-students here than in the US. And definitely less PhD. (rather useless outside college). - The US-system seems mainly to suffer from a lack of high-quality vocational training: B.A.s in biology working as a gardener?! - Would get refused in Germany as he would not know a thing about gardening.

What other hooping jumping or hazing activities do you have in mind to torture future generations? Today, the lack of a degree is already a strong signal that grows stronger every year.

What have future generations ever done for me? :-)

You really should substantiate such an inflammatory argument.

American universities surpassed the rest of the world long before they were so expensive, and long before they started spending any substantial sum on the administrators that drove costs so high.

Agreed. The administrators and diversity officers need to go. Cut tuition in half and get rid of any discipline with the word 'study' in the name.

Bingo. My graduate school now has 80 faculty members and 400 bureaucrats.

What do they do, you ask? Heck if I know.

Mostly, based on personal anecdotal experience, they ask former students for money.

1. I agree it is hardly obvious to me that expensive schools are what makes the good, good in the US system.

2. I think we need a better explanation of tuition being high than fuzzy hand waving about 'administrators'. I doubt your school has huge numbers of administrators literally doing nothing. They are doing something, even if the production function has been changed in an inefficient way, this needs more clarity.

The proper way forward is the way Harvard, Yale, Rice, UT-Austin, Michigan, et al handle it—free tuition for students from middle class families. Furthermore the college admissions scandal shows that well off parents (but not billionaires) are willing to pay up to $500k for their children to go to good schools which should be embraced under the condition that money goes to tuition for students from middle class families.

So I would have Harvard and Yale take the lead by refusing any gifts until the top 100 private universities have enough in additional endowment funds to provide free tuition to students from middle class families. So Harvard can tell a donor that if they donate specifically to say Emory for middle class tuition then they will take that into account when a member of that donor’s family applies to Harvard. So Bloomberg recently donated to Johns Hopkins with the money specifically for tuition for students from middle class families so that is the way forward. Student loans are an unmitigated failure so we need a new solution and wealthy people seem to like donating to universities and clearly don’t mind paying tuition for their children so that seems like a viable solution.

I wondered about the "free education for all" stance since I remember Caplan told an interview that he thought only the upper 5% should be in college.

Yes, Tyler's doing some weird twisting of Caplan's thoughts here, telling Caplan what he should be in favor of. But it requires some pretty big mental leaps and use of "second-best" principles to get to Tyler's conclusions.

Sure, but take a real example: Germany.

Yes the bachelors degree signal is worthless now. So everyone has to get a PhD.

Weakening a Positional signal only make it more extreme. Sure, it weakens bachelors. But then to differentiate everyone needs a PhD. It only exacerbates the situation and increases the deadweight loss.

Excellent point!

Ideally, employers would supplement instead with low cost tests which actually work (psychometrics) and government, realizing this, would then impose rather brutally austere and draconian cost control requirements on the colleges they then largely fund and so control.

But perhaps that's an idealistic scenario.

Absolutely. Here in Germany, a humanities Bachelor is either a guarantee that you'll afterwards work in a completely unrelated field, say headhunting coldcalls, or that you'll continue to a master's degree in order to land a rare internship in your field – at the age of 27.

The (younger) PhDs I witnessed at German bluechips, usually do (degree-unrelated) stuff that anyone could after three years of vocational training.

Wasted potential, wasted years. Precious years I might add, because they cut off their highest income paying years at career-end but also loose out on their chances of founding a successful startup, since that's usually something you do in your 20s.

A study by MIT found that the average age of startup founders is around 42, and the average age of entrepreneurs who founded high-growth companies is 45. Apr 24, 2018

So what? :-)

This is the best argument against this idea. University is a waste of time for 95% of people and a PhD is waste of time for 99.8% of people (or 95% of those who do one).

Personally I like the idea of price controls on universities that someone came up with on the previous thread. The UK has this on any students from the UK (not for overseas students) and it seems to work ok. This would at least keep students from too much debt.

Nice hypothesis, but it doesn't bite. US has a higher share of doctorates than Germany:
https://www.weforum.org/agenda/2019/10/doctoral-graduates-phd-tertiary-education/

Also you need to know a bit about the German a system before commenting on it (for our Muricans here: Other countries work differently, that does not imply better or worse, just different):

- before the Bologna reform, every university degree was 5y, the typical German firm was used to get graduates with degrees comparable to a MSc (and adjusted their processes accordingly). Compared to this standard, a BSc is subpar, therefore many Germans still pursue a MSc. A BSc is still considered as a "half degree", in partciular in engineering.

- For a long time, Germany had no MBA culture, instead people did a PhD. This is now changing somehow, but explains why some many Germans in senior management have a PhD.

Also, the fact that there is on job skill mismatch is not a German phenomenon, but common across countries.

"US has a higher share of doctorates than Germany"

That's because, in the US, the PhD is roughly 50% an immigration program, counting noses. It's a way to stay in the country and earn a long-term visa.

That's not a crazy immigration program, by the standards of such things. It has some weird consequences like making the politics of academia very different from the politics of the country.

Well, free tuition means someone aside from the consumer is paying for the service. Why, in the name of God, would anyone want to make it easier for kids to go to college to study the studies subjects, English, sociology, and so on? That's really just paying for someone else's signal.

Stop the arms race!

The dropout rate is rather high, and not just because people can't afford school. With free college you can still distinguish yourself by NOT being one of the many dropouts. And, as others pointed out, you can go beyond a bachelors to get a masters or doctorate.

For free? :-)

After speaking with college co-op students who stated that they are in their program of choice because of cost, I believe you will only get the best trained people in each field if college is affordable.

One can only get the best drivers if they drive Mercs or BMW's! :-)

If everyone has a traditional college degree then nobody does. What about invigorating the tech college track?

There's no 'Free Lunch' nor free "education" -- taxpayers are already heavily gouged.

Education is in no way a legitimate function of American governmnt, but it's just so much fun for the political class.

I think your assumption is that we would not, as in European countries, condition certain types of education upon passing a minimum achievement standard in terms of grades or standardized tests.

That might promote meritocracy and improve the signal.

“... condition certain types of education upon passing a minimum achievement standard in terms of grades or standardized tests.”

That would have very disparate impact, so it would be almost impossible in America.

No. That's just your imagination. Colleges have merit standards for admissions. No different.

I know your comment was meant to be humorous, but I think you can trust most people to act as adults; if you assume otherwise, you go nowhere.

I can also see that the term "condition certain types of education" was supposed to be "certain types of free or government supported education" upon meeting passing minimum achievement standards, as in Europe.

If you want to go to college, you can find one that takes you.

There are no general standards, which may be good. Imposing standards ameliorates the cost problem, but exacerbates the selection problem.

Who says that we shouldn't have accreditation standards or have a standard based on outcomes from the institution.

This is not beyond the ability of us to work out as a problem.

Like hospitals? :-)

What are your alternatives to a hospital?

Faith based healing?

The reason we have standards and certifications is that consumers or the buyer want some minimal level of measurable quality before they purchase, and it is difficult for one person to gather the information and analyze it alone. Nor should government money be spent on fraud.

So, yes, like hospitals.

Colleges have merit standards for admissions. No different.

They have different standards for people with different skin colors. Perhaps we could have different tests, instead? Asians and Jews take a hard test, white students a slightly easier one, etc. Seems fair to me.

"Nonetheless I still believe [free college for all] would come closer to limiting educational signaling"

Yes, but Bryan Caplan's goal is not to limit education signaling as an end in itself. Rather, his point is that we should stop subsidizing higher ed so much *because* the college education premium largely reflects signaling rather than human capital formation. Implementing the policy that Caplan warns would be a huge waste of money to prove him right is hardly Caplanian.

In fact, Cowen has expressed skepticism about Caplan's signaling model, preferring an "acculturation model" instead. Cowen's critique of free college for all actually shows that he accepts, at least in part, Caplan's signaling model. Note, Cowen doesn't predict that free college for all would result in greater human capital through greater acculturation. Rather, he accepts Caplan's hypothesis that it would lead to elimination of the college education premium at great expense. We would spend a lot of money to accomplish nothing, not even identification of people that are intelligent, hard working, persistent, and conformist.

Student loans undermined education signaling because people that got degrees from expensive private colleges either had wealthy parents or were willing to take out student loans to pay for the tuition which didn’t make economic sense. So Harvard and Yale wanted to preserve the value of their degrees which is why they provide free tuition for students from middle class families. So in effect Harvard and Yale are saying we believe so much in the value of the education we provide we know our students will be successful and they will give back to their alma mater.

So the way to get back to accurate education signaling is for the top 100 private universities to provide free tuition for students from middle class families which signals to employers that students were admitted based on merit AND the university believes the education they provided has value. And the way we get to the goal is by Harvard and Yale taking the lead on raising funds so every private college can offer free tuition to students from middle class families.

"Nonetheless I still believe such a policy would come closer to limiting educational signaling (by making so many schools worse and lowering the value of the signal)..."

This is a very unclear statement because it suggests that the signal is lowered *because* the quality of education will be lower. If by "worse" one means worse in a qualitative sense, then it is the education that suffers and not necessarily the signal. I had thought the very point about signalling was that s positive signal is currently given irrespective of the actual quality of the education offered and obtained. I think what Cowen means to say is that if a college education is free, the signal of a degree is of less value merely because the degree is less exclusive (in the financial sense), not necessarily that it is of lower quality (although it may suffer from the latter as well). Nevertheless, I don't at all see how this gets us any closer to "Caplan's preferred policies" which I understood to be improving the quality (as he views it) of education and making the signal match reality.

Your position makes no sense. Why should we want to make the signal worthless? Why make it harder for employers and employees to match? I think you misunderstand the implications of Caplan’s signaling hypothesis. It means we shouldn’t waste more resources on education because doing so won’t make it any better at signaling, and that’s about all education does anyway (per the theory). What you’re saying is: “this good is worthless, we overproduce and overconsume it; ergo, let’s subsidize anyone who wants it to buy as much of it as they please, thereby wasting even more resources on it.” I can’t fathom how one gets there.

Because the signal is too damned expensive!

We have all these administrators that want to be fed, clothed and housed. And we have the opportunity cost of those studying the studies.

To put it differently, the value of the signal is eaten up by cost.

You know which party should support education signaling?? The colleges. So once again the solution is to make them put their proverbial money where their mouth is—so free tuition for middle class students funded by wealthy Americans that believe having a college degree is important. So Bloomberg believes a college degree is valuable so he donated over $1 billion to Johns Hopkins specifically to cover tuition for students from middle class families.

Sincere apologies! Do you want more? :-)

A signal is only valuable to the economy or to a firm if what it signals is real.

When colleges take advantage of the value of signals to push students into value-less degrees, then eventually the signal will become useless.

And once again, we are lumping every degree together as a 'college degree'. This makes these discussions rather useless, as there is a huge difference between a degree in petroleum engineering and a degree in gender studies or communications or other degrees designed more to sop up lucrative student loan money from students who shouldn't be in college in the first place than to provide actual, useful educations.

I guarantee you that the signalling value of an engineering or hard science degree from a good college is undiminished. Degrees in 'studies' programs should be near worthless in signalling power. I would rather hire someone without any degree than one with a degree in some grievance study, as I would assume there is a risk that the latter person will be trouble for me in the future.

Until we start looking at this issues on a faculty by faculty basis, we won't be able to understand the issue. I know economists like to aggregate complexity into simplicity, but at least in this case it's not helping.

"When colleges take advantage of the value of signals to push students into value-less degrees, then eventually the signal will become useless."

1. It's easy to throw shade on 'gender studies'/ communications and other liberal arts degrees. But this is a bit overstated. No one is hiring a petroleum engineer unaware that a degree in engineering is more apt to be a better fit for the job than French poetry. However if you want someone who can attend meetings, write coherent emails, maybe evaluate copy, those liberal arts degrees are fine. They might even be better than the guy with the engineering degree, who might be weak in communication and interpersonal skills and tries to compensate by going heavy on math.

2. Let's say the signal wasn't real or was easy to counterfeit. I would say this would:

a. It would become cheaper, not more expensive. If the signal is fake why hire all the faculty and staff and charge $50K/year? Charge $10K a year and get 10 times as many students. If the signal was fake, there would be a surge in 'degree mills' lowering the cost of a degree.

b. If the signal was not as useful, then employers would stop using it. The wage differential for college degrees would fall and the incentive to put your career on hold for a few years to get a degree (versus build your experience) would decline.

What you're never going to advocate is replacing the current degree architecture with briefer and more focused programs. Or advocate more vocational training, fewer academic degrees (signals). Too many rice bowls to be broken doing that.

If college is free, might that not strengthen the negative signal of not having a degree? Furthermore, by weakening the signalling value of a bachelor's degree, it would increase the incentive to get an advanced degree.

This moves us farther away from Caplan's goal, which is to reduce wasteful expenditure on higher education.

Here at Redneck U we need to figure out that signal stuff.

Government supported (taxpayer supported) higher education should be free to the student, thereby subsiding professors, janitors, administrators, and everyone else who gets paid. At UC, UT, UM, and other state universities, of course. By "should", I mean "could". However, not for everyone or anyone (not open-admission, which can offered on a youtube basis). Private schools that elect to eschew government hand-outs can do whatever the hell they want. Higher education is either going to be elitist, or populist, or the way it is now, take your choice.
However there are various benefits as well as downsides to higher education apart from "education" and vocational preparation, that need to be considered. (Just as there are costs and benefits to military service apart from national defense). Perhaps I'm wrong but it seems that the economists are excessively focusing under the lamp-post.

Free college for all by giving professors the mandate plus a total budget would result in professors allocating 50% of the budget to administrators, etc, 30% to real estate, eg, stadiums, pools, recreation, single room dorms, and 20% to teaching and research?

It's odd how budgets were so different back in the 50s and 60s when post high school education was free to most students, either in trade programs, employer training, military to veteran job preferences, and State college education, GI Bill private, and large scholarship aid for the rest, plus spartan housing while getting educated.

The spartan housing likely promoted the animal house culture: run down living quarters didn't make fists and heads smashed through walls, vomit everywhere,seem destructive or out of place.

Most students go to public colleges. They usually weren't free, but they could be pretty cheap by modern standard. In 1975, for example, average in-state undergraduate tuition was about $550 which is about $2,700 today. The minimum wage was about $2/hour back then, so we're talking 275 hours or maybe two months close to full time. It's more like $11,000 now, or over 700 hours at $15/hour or over 1,000 hours at federal minimum wage.

Why does it cost so much more? Sure, there are a lot more deans and better facilities, but the big driver has been dropping public support. Colleges used to be heavily subsidized and no one thought twice about it back when the US was economically competitive and living standards were rising. Now, people would rather have their boss's boss's boss get more money for driving their company into bankruptcy and their company's shareholders have more money from stock buybacks. I think they call it revealed preferences.

I have no idea of why people get so upset at the idea of free tuition. My father went to a school with free tuition (CCNY) and I have friends who went to a private school with free tuition (Cooper Union). A huge number of GIs came home from World War II and they got free tuition. The veterans from World War I got shell shock and run out of town by the army, so this was a new fangled thing.

Alas, friend, free only means that someone else is paying for it.

I'm pretty sure that is Kaleberg's point. Tuition/fees used to be lower because public financial support was higher.

Public financial support was higher because people believed that schools' educational value was worth it. (The general public is largely disinterested in higher education's non-technical "research.")

Support for public education at all levels has declined dramatically. Now, getting your child into a "good" public elementary school requires you to buy an expensive house. (People who do this and say they support public education are unable to hear the Orwellian doublespeak that comes out of their mouths.) . The message is, you get what you pay for.

The trust has been lost, or perhaps more accurately, squandered. I wish I knew how to get it back.

Actually, Dismalist, if you have children, they will benefit from it; if they have children, they will benefit from it; and if you want to take courses, you will benefit from it.

And, we all benefit from education of someone else because there is an externality from even you having a better education.

This is no different than someone who pays property taxes to support grade schools and high schools--at some stage of your life, you benefited; at other stages of your life, you contribute.

Simple, but often a point missed when people only think of the now, not the past or the future.

When bankers no longer place the customer, society, etc above shareholders like back in the 50s and 60s, bankers will encourage student borrowers to invest in luxury student housing, working for free, eating steaks and seafood, and luxury recreation, because the higher the student debt, the higher the shareholder profit, thus banker promote wise investment in consumption as students before the graduate is faced with working as a low wage worker eating on food stamps and soup kitchens, living in cheap housing they build under bridges or on the sidewalk, which conservatives want bulldozed quickly under NIMFY?

Collage living was spartan for my parents generation, as for most boomers.

Then conservatives argued colleges and universities should compete by offering a better consumer experience, meaning luxury real estate, big sports stadiums and sports programs in luxury facilities.

What did not sell well at high return was the trade school with big training labs filled with welding machines, lathes, milling machines, wood shops, fields where buildings are framed and closed in.

The support for free tuition was higher because at that point in time newborns in the states were 80+% white. Now they are barely 50% white - and if you remove fake whites like jews and arabs, more like 45% white.

This is what the likes of caplan want and this is what they will get - a low-trust, atomized society organized on quasi-tribal rules.

Enjoy, liberal morons.

Weird argument. Compared to UK/US, Germany has tuition fees and a largely "free" university system (free in the sense that it is provided by tax-payers), still they have relatively less doctorates per graduate and more STEM students per total students than UK/US.

https://stats.oecd.org/Index.aspx?DataSetCode=EAG_GRAD_ENTR_FIELD#

Caplan wrote a book "The Failure of Education" that clearly most of the commenters here haven't read. He presents evidence that society gains very little from much of high school and university. Individual students do gain (in a zero-sum manner) because employers rely on degrees to signal who to hire for valuable jobs, even though high school and college do little to prepare those students for jobs.

Caplan's remedy is to stop all public funding for high school and college, in the hopes that a better system would emerge from the wreckage. This is foolish. He uses data to show that only 20-30% of education delivers anything valuable, but fails to even suggest a system where greater than 20-30% would be valuable. Given that the American economy deeply needs that 20-30%, a more sensible (and Burkian rather than libertarian) goal would be to raise the percentage to 50%, and call that a success. This suggests reform, rather than abandonment of the current system.

When Tyler talks about a Caplanesque solution to education, he is referring to Caplan's recommendation to simply abandon the current system and see what emerges from the ruins. That solution is better described as Anarchist rather than Libertarian; willful destruction of something valuable in pursuit of lofty but probably unattainable goals. Despite that conclusion, "The Failure of Education" is a great read because of the data presented, in exactly the same way Pickety's "Capital in the 21st century" was well worth reading despite some dubious conclusions and recommendations.

So you call a policy "Caplanian" even though it bears no resemblance to a policy actually favored by Bryan Caplan. Kinda like what happened with the Niskanen Center.

I don't know what it means to be on the advisory board at the Niskanen Center, but I do notice that TC is there. Is this a consistent aspect of TC's approach to rhetoric?

Can't we just cut out the middleman and offer everyone a free college degree? Printed on high quality paper and displaying an impressive seal?

Few enjoy exams, lectures are boring, reading and studying are hard (but for those who like it there's plenty of free courseware available online): so why just hand out degrees to anyone who requests one?

And if anyone questions the value of such degrees, well, what's to prevent employers and others from demanding suitable tests to determine if the college grad. actually knows something?

(Other than 'disparate impact' legal precedent, of course.)

I would be interested in knowing your opinion about the Brazilian college system, in which the best universities are tuition-free and state-owned, and private colleges usually cater to the lower strata of the population, for being easier to get in and graduate. Can't say it produces intellectual elites by the thousands, or that it doesn't waste resources, but it clearly goes against the specific predictions presented here.

Given post high school education was as close as free as possible prior to circa 1980 as a matter of public policy, how has making post grade 12 education more costly to students promoted more/better economic growth?

Has increasing the cost to students for post grade 12 been such a success that the 30s policy of making grade 9-12 universal and free something to reverse so students are required to pay to attend high school, or enter the workforce gaining broad support from business and industry?

Has business and industry delivering revolutionary goods faster than before circa 1980?

Eg, is housing being built faster and cheaper than the gains in building housing faster and cheaper in the 50s and 60s, a la Levittown?

Is transportation improving faster and with new options than in the 50s and 60s which produced widespread commercial air, jet planes, space craft, super sonic, Interstates? Why hasn't making post secondary education cost much costlier to students resulted in the US being a leader in high speed rail, but instead a leader in slower speed rail, or no rail, thus moving to undeveloped nation transportation infrastructure?

Before 1980, post grade 12 education was more diverse and low cost yo students. The post 1980 move to high cost to students for education has cut the number of education options for students. Far fewer trade school options, for example, and trade schools were funded by legislatures to serve a broader spectrum of taxpayers before cutting taxes became the number one economic policy of the GOP, and increasing business revenue not paid to workers second in priority.

" Nonetheless I still believe such a policy would come closer to limiting educational signaling (by making so many schools worse and lowering the value of the signal) "

Serious question here, what exactly is the 'education signal'? Is it that you read a good number of books and crafted some various essays on different topics? In that case you wouldn't be making the 'signal' worth less, the signal would work just as well as before. If you increased the number of people who did that, you'd have more people that did that. The value of doing that might go down but as an input to production it could benefit the economy. In other words, having a college degree might pay less but having two people who did those things rather than one means there's more for the economy to work with.

Or does the 'education signal' mean if you're really smart, it is harder to stand out if everyone else has a college degree? Not sure this makes sense. Suppose every father wants his son to play football. HS and college football will be huge. Why that's kind of today's world! Wait is it hard to know who the NFL level football players are if 'everyone' tried their hand at football? No. In fact the NFL, for the future of the sport, would rather more boys try football than fewer. So the 'signal' idea doesn't seem to be a problem.

Comments for this post are closed