by Alice Temnick

What does the “sheepskin effect” tell us about earning a college degree? Does a college education buy more than a Grade A premium employee stamp?


Bryan Caplan discusses human capital, the ability bias, and the particular importance of signaling as the reason for the greater earnings of college graduates as compared to high school graduates. In questioning the difficulty of measuring the value of a college education, host Russ Roberts steers this conversation toward how we learn, some of the shortcomings of K-12 and college education, and how we apply what we learn in practical settings.

1. Given the value of signalling and the findings of the sheepskin effect, to what extent is a college education a waste of time and/or money? What other factors, such as the acquisition of the first post-college job in one’s desired field, to their eventual career trajectory? 2. Would median income data of high school and college grads that reduces the effect of the number of outliers (extremely high income earners with college degrees) enhance or detract from the argument of the case against a college education, and why?

3. What fields of study or subject areas best challenge Caplan’s claim that little is actually learned in college that is related to relevant skills for the modern labor market? Explain.

4. Russ questions the “measurability” of the subtleties of learning, of learning how to learn (meta-learning) and the overall impact of school on one’s neural networks. Caplan believes the right test can measure any learning. How do you weigh in?

5. Caplan ends with discussion in favor of kids getting practical work experience. Since this has gone on for decades in the form of after school and summer jobs (right???), could he mean work in place of schooling? What are your thoughts about how this might or might not work in practice?

Alice Temnick teaches Economics at the United Nations International School in New York City. She is an Economics examiner for the International Baccalaureate, teaches for the Foundation for Teaching Economics and Oxford Studies Courses and is a long-time participant in Liberty Fund Conferences.