Few people helped me more on my new book than economist David Balan. Comments aside, he spent a whole day listening to me explain my spreadsheets. That's what I call dedication. But despite his generosity, his assessment of the project is decidedly mixed. Here's David's review, printed with his permission.Let me start by saying that the book displays the Caplanian virtues. It is thoughtful and careful and bold and fair and honest. It involves big ideas and raises important questions that others either ignore or gloss over, and it insists upon trying to answer them without letting opponents retreat into nonsense or technical mumbo-jumbo. It is also clearly and engagingly written. In addition, the
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Few people helped me more on my new book than economist David Balan. Comments aside, he spent a whole day listening to me explain my spreadsheets. That's what I call dedication. But despite his generosity, his assessment of the project is decidedly mixed. Here's David's review, printed with his permission.
Let me start by saying that the book displays the Caplanian virtues. It is thoughtful and careful and bold and fair and honest. It involves big ideas and raises important questions that others either ignore or gloss over, and it insists upon trying to answer them without letting opponents retreat into nonsense or technical mumbo-jumbo. It is also clearly and engagingly written.
In addition, the model that you have created for the book is something of true and enduring value. Other sub-disciplines have had the idea of trying to pull all relevant effects together into one single model. Computable General Equilibrium models in macro is the main example comes to mind. I hear that those are somewhat out of fashion nowadays, and I'm sure they have their flaws, but they just make too much sense not to be at least worth consulting. If you were a macroeconomist, how could you not want to at least know what such a model says? You have done something similar for education. As we discussed in your office, there are probably some technical improvements that could be made to generalize it beyond the "four archetypes" framework, and/or maybe do something like a Monte Carlo simulation to show that the existing model is a tolerably close approximation to a richer model. But even as it stands, it is a big step forward. It would be a great thing indeed if in the future every empirical researcher would be asked, as a matter of course, to indicate what parameter of Caplan's model (or its descendants) should be set to what value as a result of his or her research.
But for the model to serve that function, it would have to be given a public-facing interface. That is, it would have to be possible to take the model, plug in different parameters than the ones you choose (whether because of new information or because they disagree with your parameter estimates), and turn the crank and see what answer you get. To my mind, this is the main value of this project to the discipline of economics, regardless of the merits of the case against education.
As for the merits of the case, I must say that I am not convinced. This will come as no surprise to you, but I will try to lay out my reasoning as clearly as I can, in order to at least precisely isolate the locus of the disagreement. I hope these comments will be received in the helpful spirit in which they are intended. I am very happy to discuss any of this with you if you think it will add value.
Top Level Impression:
At the highest level, the book seems to me to suffer from a flaw similar to the one that I believe characterized that book by Michael Huemer. It goes something like this:
1. Identify real, deep, and under-discussed problems with something important that people accept so uncritically that they barely think about it (the state; mass education).
2. Propose getting rid of that important something rather than reforming it.
3. Defend the idea that it can be gotten rid of and not reformed by reference to a radical alternative that is at worst fatally flawed on its face, and at best badly under-supported (replace the state with private law enforcement agencies; replace mass education with mass private employment of teenagers.).
Your proposed alternative to mass education is an utterly radical change. It would have massive effects of all kinds throughout society. It would have tremendous distributional effects. It is radically out of sample for any empirical work that might inform what would happen. My view is that most of those effects would be much more likely to be negative than positive, but even if I'm wrong about the mean, you don't have to be much of a small-c conservative to worry about the variance of the likely effects of a change that big.
The book does next to nothing to support the claim that these effects would in fact be good. It just says that work would teach skills that are more useful than the ones gained in school, and that the socialization benefits would also be at least as large. There is nothing else that even tries to argue that the broader effects of this epochal change would be good effects.
When Huemer and David Friedman argue that we can realistically get rid of the state because markets will bring about private security agencies that will keep the peace, they are just being silly. It's a dereliction of intellectual duty, to the point that it made it hard for me to appreciate the very real virtues of some of the other things they've written. It's just a device that lets them avoid having to say something unfun and unsexy like "The state has violence at its core, and that's a big problem, and we need to worry a lot about how to reform the state to make it less of a problem" and instead be able to say "Let's get rid of the state! I have a totally great alternative that will totally work!" I don't put "Eliminate mass education" in nearly the same category as their PSAs. But I do think it's a (much) smaller version of the same problem.
I wouldn't hand the nation's teenagers over to corporate power even if I thought you were 100% right about signaling, and even if I thought there was no chance that education will improve in the future. I would pick the status quo in a heartbeat. The least of the problems is that the firms would have no incentive to invest in general (as opposed to firm-specific) human capital. That's before we even get to the moral, social, and political effects.
For this reason, I think there would be value in talking a little bit about some of the less radical (but still pretty radical) educational ideas that you have discussed on your blog over the years. You could pitch them both to people like me, who favor mass education, as well as to people who would prefer to get rid of it but think their efforts are better spent on pushing reforms. That way, you can bring along at least part of your audience for a while, even if you are going to lose them on a real push for getting rid of mass education.
This would include much more vocational education, letting kids have more access to the library, letting them have more self-directed time, exposing them to currently-low-status enrichment, like what it might be like to be a plumber, basically just recognizing that a big part of the school day is really day care. At a summer camp I used to work at, on Saturday afternoons we had "optional mandatories" which meant that there were a number of activities, and you could do any one you wanted but you had to do one. I have always thought that that would be a great idea for a significant fraction of school time. I know you have more.
In addition to all of this, I am only very partially persuaded by the arguments and evidence about the magnitude of the signaling portion of the return to education. When I was in your office, you said that 1/3 was the lowest fraction that any halfway sensible person could possibly believe. I am not sure what number I would offer, but I am inclined to think that 1/3 is much more like a ceiling than a floor. Below are my reasons why.
To my mind, the most compelling empirical fact that you present in the book is the gap between individual-level and country-level returns to education. Something is clearly going on there. And as you point out, it's not clear whether the country-level returns are even positive, though they do appear to be (they are positive in my paper with Steve Knack, for just one example). But as we have discussed in the past, signaling is not the only possible explanation for this. Another one is rent-seeking; some of that privately valuable education is deployed for rent-seeking, which reduces its productive value for society. To be clear, this story does not require that the education be for rent-seeking. We're not talking about pickpocketing classes. It can perfectly well just be general education, that is either accompanied by a rent-seeking ethos or more likely just being provided to people who are likely to become rent-seekers anyway (e.g., children of corrupt oligarchs). As you've pointed out, this story does not work if the education is so bad that no skills are imparted at all; if there are no skills they cannot be used for production or for rent-seeking. But most education is not like that.
This idea has a real pedigree, and I don't understand why you are so confident that it is not playing a role in generating those cross-country results. And if rent-seeking is in fact important, it has a somewhat subtle implication. It can still be part of a case against education, but only if you think that mass education is largely used for rent-seeking in the contemporary United States. I don't know how the U.S. compares to other countries in this regard, and there is a very good paper to be written that compares the individual-level vs. country-level returns to education across countries with bigger or smaller rent-seeking problems. But I would guess that the U.S. would do pretty well on this score, meaning that an increment of education is a lot more likely to go for production than for rent-seeking. And even if not, once we're talking about radical change, a mass campaign against rent-seeking would be a better bet than eliminating mass education.
A big part of your argument for signaling is to look at the (low) level of skills that people actually have, and argue that this represents an upper bound on the human capital value of education by observing that education cannot have provided more than 100% of those skills. This is accompanied by evidence from the psychology literature about skill transfer; people learn narrow things and can only apply them narrowly and temporarily. You dismiss as wishful thinking all versions of the idea that they're "learning how to learn" and or otherwise indirectly gaining valuable hard-to-measure skills that were not the direct object of instruction when they are getting so little (or at least retaining so little) of the easy-to-measure skills that were the direct object of instruction.
But I believe in soft skills even when there are no hard skills. At the most basic level, I think the existence of those soft skills can be inferred from the fact that we have any kind of advanced liberal society at all. Think for a moment about what society would look like without mass education. As you point out, many people wouldn't (couldn't) know much less about science or history than they do now. And yet, the society would be totally different. We don't have too many contemporary Americans who believe in witches? I mean really believe in witches. Why not? People have in the past, and some people in the world do today. Most contemporary Americans believe that if you lose an election you should turn over power to the winner, even if you think you might be able to get the military on your side. Why? Why do most Americans believe that you should vaccinate your kids? Why do most Americans know a little something about how to prevent pregnancy and the spread of STDs? Do you really think that things would work this way without mass education? Do you believe any version of the idea that the existence of novels (which have only been around for a few hundred years) has fundamentally changed human nature because for the first time just about everyone in the society has spent at least a little while in the other fellow's shoes? And that this can be valuable even if you've completely forgotten the plot of the handful of novels that you grazed in high school? I really think I do.
I know that in your world everyone would at least be literate, but would that be enough? Will people get these things from their on-the-job training in corporate America? This is a version of the "beasts into men" argument. It is hard for me even to imagine a truly uneducated society that would not be beastly.
On a more prosaic level, I think you're looking for evidence of soft skills in the wrong place. It is an interesting and troubling fact that people often cannot apply skills across domains, and that they tend not to retain many of the skills that they do acquire. But some people can, at least some of the time. A pretty fair number of people. And when they can, it's really valuable. In your office, you seemed to suggest that someone could become a brain surgeon via on-the-job training. I don't know what to make of this. Being a brain surgeon clearly requires a wide of general thinking skills. General thinking skills that they assume you have, or at least have the rudiments of, before you start training. Some people have those skills. And where did they learn them if not school? You could argue that school could be way better at teaching those things. And you could argue for a more vocationally-oriented program for future brain surgeons. But that training would still have a big non-vocational component unless you simply defined those skills as occupational skills. But this would be an error. Moreover, I think Caplan-style introspection reveals that such skills are reasonably abundant among at least a substantial minority of students, and that a lot of valuable activity could not get off the ground without them being reasonably abundant. These are not hard skills that get transferred from one domain to another; they are soft skills that inform and support real hard skills for real jobs. It would be better if more people had them, but they're difficult to learn and difficult to teach! The fact that a bunch of people to have them, at least to some extent, is a big deal.
I can think of other examples. I know a lot more microeconomics than I did in my first semester of graduate school. But I could not walk into the exam that I took then and pass it right this minute. Heck, I would be a halfway decently qualified candidate to teach such a class, and I probably couldn't walk in this minute and pass the exam that I would write for that class if I was teaching it! Another example comes from your book, which is the sports statistics example. Nobody who took the statistics class could reproduce the formulas, but at least some of them would have a sense of the Law of Large Numbers or regression to the mean. It's a fair question whether making them manipulate the formulas is the best way to achieve that sense. Maybe it's really scaffolding for really getting the lessons (you need it to build the ideas but not afterwards), or maybe it would be better to just spend more time talking directly about errors that can come from not knowing these concepts. I don't know. But either way, that's exactly the kind of soft learning even when the hard learning was forgotten that I believe in. Maybe making Daniel San paint the fence and wax the car is the best way to teach karate and maybe it isn't (although I could never see the value in not telling him that it was part of his training). But either way, it's easy to imagine some exercise that would help in a stage of training that was never needed again, and hence forgotten.
Not too long ago, I had occasion to need to use a Lagrange Multiplier for something. I don't think I used one since graduate school. And I had to look up how to use it. I could not have passed an exam about it. But I knew what one was, and when a particular problem arose, I knew that it was what I needed.
Bottom line: There are some things that most people pick up, where civilization would be impossible if they didn't. Then there are some things that a lot of people pick up, even if not most, where real productivity would be impossible if they didn't. And those things get picked up mostly in school.
Aside from the above claim that most of at least many people benefits from certain "soft" aspects of education, there are also the benefits that accrue to only a few people, but are really big. I remember the teacher who first taught me about supply and demand in I think third grade. She is mentioned in the acknowledgments to my dissertation. I'm not saying that that's the reason I became an economist, but something was the reason, and that something was some kind of school. And the same is true for just about everyone who ends up with high human capital. Take any highly productive person you like. Even if most people don't learn a lot of science in school, future scientists sure do. And it's hard to know who the future scientists are going to be without making everybody learn some science. And the ones who don't will at least vaccinate their kids.
Every future scientist saw his first science in school. Same for every future arts lover (not art teacher!). Same for every everything. This doesn't mean that the exposure was of the right kind or in the right amount for the right kids. There is plenty to argue about here. But most enthusiasm, whether productive or personally enriching or both, started in school, and it's not easy to see where else it would come from. Certainly that's true for me. In school, from teachers. More from good teachers than from bad ones, but not mostly from superheroes.
Future Improvements in Education:
You dismiss as wishful thinking the idea that education is likely to be better in the future. Rather, you propose cutting now and adding later if education manages to improve enough to justify it. But this is not the kind of thing that can be reversed quickly. If you dismantle the education system it will take decades to rebuild.
Moreover, I do believe that major future improvements are likely. The whole idea of rigorously evaluating education and basing policy on the findings of those evaluations is only a few decades old. Everything else gets better with rational inquiry, why wouldn't education? To give one small example, my cousin recently retired from a career in special education. He told me that the whole idea of doing anything at all for kids with special needs is about as old as his career. Before that, they were just labeled as dumb and that was it. We've just barely started even trying.
The Educational Experience:
You have some material on the idea that human capital can be had in lots of places besides formal education. You can learn online, or you can even walk into a college class for no credit. From this you conclude that formal school credentials can add no additional value. This seems like a straw man to me. Totally self-directed education is something that was always possible for superheroes. There is that mathematician from a poor Indian village who turned himself into a world-class genius from a few old math books that he found lying around. Today, you wouldn't need to be quite the superman that he was, but learning with no framework, no context, and no guidance is simply not within the capabilities of most people. It certainly wouldn't have been possible for me. The same point goes for the ability of people to appreciate high culture via the Internet; they need some instruction and curating.
Relatedly, the book does not address the idea that school not only provides human capital, but also certifies human capital. This is not the same as signaling. Imagine a world where school really does provide lots of skills, but those skills can also be fully gotten on your own online (i.e., you discount everything immediately above). How would employers know that you have those skills? You could probably give the answer that you reject as an argument against signaling: why not just give people a test instead of requiring a degree? But even if you think that a test can evaluate skills as effectively as course grades underneath a real teacher, this isn't a very strong response. Because in this world, unlike in the signaling world, real, hard-to-acquire skills are being gained. So it's not 4 years vs. 3 hours. It's 4 years minus the amount of time that you'd have to take to learn the skills on your own vs. 3 hours. That's maybe still a big hump, but a much more manageable hump for school to get over in order to justify itself.
Some people object to the signaling story on the grounds that school has passed the market test. You reasonably reply that it's no market test with a trillion dollar subsidy, plus you give a story for why the equilibrium with high returns to schooling is stable (any deviator will send a very bad signal and be way worse off). But there is another version of this objection that I do not believe you have addressed. Even if the equilibrium is stable with education being mostly signaling, that doesn't mean that the school has to give a worthless education. Once all those kids are stuck in school because of fear of market punishment if they don't go, there's nothing to stop the school from actually teaching them something, or the parents from demanding it. And even you don't claim that there's nothing worthwhile to teach. So if schools could deviate from the standard curriculum but do not, does that imply some kind of market judgment that the curriculum has value?
I don't want to take this point too far. I am not saying that the curriculum we have is optimal, or even good. I actually agree with many of your specific criticisms. But it is a little hard to imagine that a curriculum that is a total disaster has persisted this long.
And to whatever extent you don't believe that such an inference is justified, there is room to change the curriculum to improve school. This is true regardless of how much of education you think is signaling; it's always better to improve it unless you really think that you should and can try get rid of it instead.
A big part of your argument rests on sheepskin effects. How could it be human capital if the rewards are so discontinuous? Signaling does make sense to me here. But even here there is a human capital story. The student who goes to college for three years and then doesn't finish is probably the person who didn't learn anything during those three years. It's still signaling, but it's not signaling the presence of a fixed attribute like smarts or conscientiousness or conformity. It's signaling the fact that this student didn't learn what most other students learned in school, despite managing to not fail out for three years.
Odds and Ends:
1. You favor the 3Rs, but you disfavor subjects like history. But you have to 3Rs about something. It might as well be things that are thought to have other kinds of merit, even if that merit is fairly low. How much business writing can a kid do?2. While other important issues are addressed later in the book, early on it is presented as being all about what skills are valuable for jobs. I would say up front that other issues will be addressed.
3. I think you underestimate the consumption value of the college experience, if not necessarily college classes. Relatedly, what you think of as a bug of college I think of as a feature. Coddled college students who get an inflated sense of their own importance can be annoying. But I see great value in there being a time in a young life when you are not accountable to a hierarchy, when you can explore and grow and turn into your own person without having to sing for your supper. You'll have 45 years for that, and that's plenty of time. I think of the recent college graduates that we hire as RAs and paralegals at my job. A year earlier, they were college seniors studying the rise and fall of empires or real analysis or whatever, and now they are doing drudgery for me and for the lawyers for little money. And you know what, they do it! The fact that they've been coddled doesn't seem to hurt them at all.
4. As for the gleeful reaction of students when the teacher cancels class, I do not draw the same inference that you do. It's just a self-discipline issue. To give one trivial example, I remember taking a non-credit karate class in college. I signed up for it of my own free will, and yet I was happy when class was cancelled, because it meant I could slack off. In some grand sense, I was worse off, and I knew it; I'd know less karate and I'd get less exercise. In the moment I was happy.
5. The refutation of the Tyler's "the market will figure out your true human capital" objection was strong, but I still think it puts a significant bite in the signaling story.
6. As we discussed in your office, the amount that people are willing to pay for an increment of health is probably concave in the level of health. This might be relevant for your calculations.
7. The material about peer effects on page 330 says that if one extra kid goes to college and becomes less religious as a result, that the effect on religiosity of society is ambiguous. Why would that be? You could tell exotic stories to the contrary, but wouldn't the simplest and most intuitive story be that you've moved one person from the religion bucket to the non-religion bucket and that's it?
8. When we were in your office we talked about the Rosenwald schools. It might be worth knowing that story.
9. Have you ever heard of someone named Daniel Lilienthal? Someone told me that he wrote an anti-education book of some kind. Might be worth looking into.
It is a very impressive work, and it has a lot of virtues. I don't believe the basic story, but I am not likely to change your mind about that. So my backup suggestion is to spend some effort on carving out the parts of the work that can still be of value to people who are not convinced, including a public-facing version of the model as well as some discussion of less radical alternative reforms.