Comment by bko | Hacker News Reader

Comment by bko | Hacker News Reader

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Bryan Kaplan argues that the majority of the value of a reputable college is signaling.

> Suppose your law firm wants a summer associate. A law student with a doctorate in philosophy from Stanford applies. What do you infer? The applicant is probably brilliant, diligent, and willing to tolerate serious boredom. If you’re looking for that kind of worker—and what employer isn’t?—you’ll make an offer, knowing full well that nothing the philosopher learned at Stanford will be relevant to this job.

If the value of education was the information taught in the classes or the network, you should see a somewhat linear increase of value as you progress. For instance, after completing your second year out of four, you should receive ~50% of the college premium.

> Most of the salary payoff for college comes from crossing the graduation finish line. Suppose you drop out after a year. You’ll receive a salary bump compared with someone who’s attended no college, but it won’t be anywhere near 25 percent of the salary premium you’d get for a four-year degree. Similarly, the premium for sophomore year is nowhere near 50 percent of the return on a bachelor’s degree, and the premium for junior year is nowhere near 75 percent of that return. Indeed, in the average study, senior year of college brings more than twice the pay increase of freshman, sophomore, and junior years combined. Unless colleges delay job training until the very end, signaling is practically the only explanation

[0] https://www.theatlantic.com/magazine/archive/2018/01/whats-c...

> Most of the salary payoff for college comes from crossing the graduation finish line. [...] Unless colleges delay job training until the very end, signaling is practically the only explanation

Well, or employers think people drop out due to poor grades.

Three years of 4.0 GPA then dropping out due to pregnancy and three years of 1.0 GPA then dropping out before your expulsion hearing for cheating both put "3 years of college" on your resume.

This is very true! I believe (don't have a good reference) that companies in the past had more incentive and means to cultivate or train people on the job, and thus, a formal signal of education wasn't as important. (and until 1950s(?), wasn't as available to many)

I seem to observe that now many companies generally want to pick the already-developed crop of people who fit the bill to a T, have had education or previous employment do the job of training / filtering who to consider, and not engage in the training part of it much any more.

Maybe it's due to the increasing cost of hiring people that you must only take a chance on a sure bet, and that there is less and less appetite (financial return-wise) to spend money on training people who are just as likely to pick up and leave for another company.

> Maybe it's due to the increasing cost of hiring people

... perhaps put another way, the 'professionalization' of HR?

I also meant, when employing someone for any kind of position of responsibility costs $100k minimum, you don't make big bets on unproven people.

Especially in "tech," job tenures are generally shorter than they used to be. It wasn't at all unusual at the big computer companies of the 80s and 90s to have a fairly large group of employees who had worked at a company for a decade or two (or more).

For various reasons, on both the employer and employee side, this has changed a lot especially when you're talking startups--but also companies like Amazon from what I understand. In any case, if the expected tenure of an employee is only a couple of years, it's probably unreasonable in most cases to have a 6-12 month training period during which the employee isn't especially productive.

There is no doubt signaling at play, but one important signal conferred by graduating is “can slog all the way to completion of a multi-year, somewhat difficult, often tedious project, following somewhat arbitrary rules along the way.”

That’s close to actual job requirements in a lot of places.

That is indeed the big signaling aspect Kaplan talks about. It's still signaling, that is, what the student learns during that is considered less important.

A large amount of the value results from signaling but don't underestimate the value in taking a smart, ambitious 18 year old and putting them in a dense concentration of similar, like-minded individuals for 4 very formative years.

I really enjoyed Bryan's book. I'd always thought uni was ridiculously overpriced, but hearing it straight from the mouth of a professor really hammered the point home for me. I believe we are on the verge of the education bubble bursting, just like the housing bubble a decade earlier

Fundamentally attending college has an implied understanding of completing college. That almost completely explains the non linear gains from graduating.

It’s similar to closing a house sale. The money earned by brokers who get the buyer to sign the contract is exponentially more than the money earned by the brokers who only get 90% of the way there.

That doesn’t mean that the value of the initial 90% of the work is 0.

Of course, this is an extreme example for illustration purposes, because real estate is a step function where the returns go from 0 to 100 at a single point.

The exponentially higher earnings of grads can similarly be explained as a step function where earnings go from 50 to 100 after a certain event. And it’s not even that surprising, because the event in question is completing the thing that you actually stepped out to do.

I guess there's a case that someone who got an online degree, even from a reputable university, doesn't allow you to draw the same inferences quite as strongly?

That's what I gather. Colleges in the US have always been a bit of a gatekeeper. If its too easily accessible to students (e.g. lower costs, distance learning, ability to work while attending, etc), then the signal is weaker since more people finish college. It's kind of like an expensive bar charging a lot for drinks. The high price ensures a certain clientele.

I think that ties in to the proliferation of higher degrees, where college is not a strong enough signal so students go on to receive higher degrees that signal more time, money and investment has been spent

Which unfortunately means the most productive and creative years of their lives are spent piddling about in libraries. Woohoo.

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