Re: AltInst: the evils of education

Anton Sherwood asks me to expand on this quote:
: ... To the extent that education
: is used to signal quality, rather than create it, education can
: actually have substantial negative externalities.

What is the function of education in our society? There are several
possibilities, all present to some extent. Education can teach you things
that are useful in your later work life. Or education can teach you things
that will enhance your non-work life later, such as by helping you better
appreciate literature.

Education can also help you to signal "quality," even if it doesn't change
any of your abilities. If people who will be more attractive employees can
better tolerate and do well at school work, then employers can want to pay
more for graduates, even if the process of education didn't change their
abilities. Similarly, if the sort of witty, clever, whatever people others
tend to want as friends or mates can do better at school, people can want to
go to school just to signal these characteristics to potential friends and
mates.

Finally, school can be a place where people collect valuable allies and
contacts. If employers expect graduates to have more powerful friends and
contacts than people who didn't go to school, then employers can want to pay
more for them, even if such graduates have no other distinguished abilities
or characteristics. It can be an equilibrium for everyone to want to pay
lots for Harvard graduates and put them in positions of influence, just
because they expect them to know lots of other Harvard graduates, who are
expected to be in positions of influence.

The first two possibilities, work and non-work productivity, are
investments that may have positive externalities, though it is not clear
those are any larger than other typical investment. Signaling quality
to employers or mates, however, has a strong negative externality. Signaling
is some type A trying to distinguish themselves from a type B for some audience
C. Succeeding helps type A but hurts type B. There may or may not be a
positive benefit to C from being able to so distinguish A from B.
The function of collecting allies and contacts also has large negative
externalities; getting into Harvard helps you but hurts the guy who didn't
get in instead of you.

So of the five possible education functions I've mentioned, three of them
have large negative externalities. Which of these functions dominate is
an open and neglected question.

Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323

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Received on Wed Sep 1 12:44:31 1999