Continuing Conversation... Bryan Caplan on College, Signaling, and Human Capital
By Amy Willis
Questions below the fold:
Check Your Knowledge:
1. What is the earning premium to college relative to high school, and how has it changed over time? What “psychological changes in the economy” have accounted for this change, according to Caplan?
2. In discussing the college premium, Roberts points out that the heterogeneity of the variables involved makes this figure problematic. Yet he still maintains that this figure can tell us something. What can it tell us, and what can we deduce from it?
3. Caplan analogizes the return to education with both marriage and bank loans. How does each compare to education? What other analogies might you suggest?
4. Caplan offers some suggestions for fruitful further research. In doing so, he poses the “puzzle” of why students are happy when their professor cancels class. How would someone who believes in the human capital model explain this puzzle? The signaling model? Which one do you find more convincing with this example?
5. Throughout the interview, Roberts and Caplan discuss labor economists’ typical rejection of the signaling model. Roberts challenges Caplan as follows:
Here you have all this evidence that should have convinced all these labor economists. It hasn’t. Either they have a terrible confirmation bias…Or you do. And the information is not quite as decisive as it appears to you.
What evidence does Caplan offer to buttress his point, and why do you think this hasn’t been accepted by most labor economists? To what extent is their rejection justified? Who suffers more confirmation bias?
6. At the end of the interview, Caplan describes education as an “arms race.” What does he mean by this? To what extent is there a social return to education? Do you agree that “too many people go to college?” Explain.
7. In your opinion, should colleges offer refunds? If so, under what circumstances, and what exactly would they be refunding? If not, why not?
8. Approximately halfway through the episode, Roberts argues that it may be possible to “get the best education in the world for free.” This same notion was discussed in a recent episode with John Cochrane on MOOCs. After listening to Cochrane’s MOOC experience, would you classify Cochrane as an adherent of the human capital or signaling model of education? Explain.