Econ Duel: Is Education Signaling or Skill Building?

[@mikedonovan9011]

I think it is very clearly a combination of both (personally I’d say maybe 20% learning 80% signaling) but I think the more interesting point is how over time, at least in the US, there has been a vast trend towards education being a signal and less about learning. College now is much more about earning a prestigious degree, passing tests, and just making it through the process. In the past, especially very early on such as in the 1800s, education very clearly seemed to be more about learning and was not as important a signal. It would have likely been seen as somewhat exotic even very early on. It seems as higher education became more widespread, starting after WW2 and really taking off from 1970 to 2010, it became more of a standard process and somewhat of an expectation for all, meant to display who in society could make it through the process.

[@singertriboscience716]

I worked for 35 years as a research scientist at a national lab, where I and all of my co-workers had to have earned PhDs to get this type of job. From my experience, there wasn't an obvious correlation between where you got your degree, e.g., Berkeley or Podunk U, and success as a scientist. This would suggest your both right, and wrong. Both signaling (sticktuitiveness to get the PhD) and Education (learned enough to get the PhD) got us in the door all right, but success required cleverness and adaptation, neither of which was taught in school.

[@kyh6767]

With due respect numbers don't lie. Most nobel prize laurates or hyper successful entrepreneurs went to top schools. And not to say Berkley isn't prestigious but it isn't a top school.

[@fufu3539]

@@kyh6767 Because both are about connections, not just ability. Ivy league is about getting into the upper class tribe. The knowledge is perhaps available even without going to a university at all.

[@matthewcory4733]

@@kyh6767 Nobel laureates are more intelligent and so attend better institutions. Certain research circles are important but college is massively oversubscribed. Memory studies show a power-law falloff. Studies on deliberate practice show very small effects. IQ has predictive power even within the upper tail. Tests of critical thinking show colleges do little to improve it. Cross-country analysis has shown almost no correlation between growth and education. South Korea and most of Asia have produced few Nobels or Fields winners.

[@nelsonomicsruns9246]

That is basically the signaling argument, the Caplan's The Case Against Education (specifically higher ed not education itself) idea etc..., that the vast majority is from the Sheepskin Effect. I was hired to sell cars (planned to be a Summer job after college before grad school) and the hiring manager told me he hired me (lasted 1 week ha) because I had a degree and he simply liked that I had completed something but clearly it did not make me a good salesman which I was not and the industry then was everything you thought it was

[@amazingbanter]

Electrical Engineering is 100% signaling! haha get it because we study signals... I'll show myself out (+1 for skill acquisition).

[@realistreset8336]

How many times did you have to derive a Fourier transform of a sinusoidal signal mixed with a square wave for a job?

[@richscott2483]

Electrical Engineering is a steady flow of questions, mostly mathematical and science. Which direction does current flow ? Does it compute with Binary 1's and 0's? Does it go faster in Series or Parallel. Is there a formula for this? What will we do Atom? Split you or make you collide? Within that spectrum, what is the frequency and / or bandwidth? Do we repeat the cycle or do we keep on asking new questions only to come to the same conclusion. Truth is, you sent me a signal and wanted someone to have a debate with you. Can't we just be friends and agree to everything? Heck, no! There's no fun in that cause if we agreed to everything then nothing would ever get accomplished or there might be no advancement in Technology. So what did you learn today? Did a "signal" go off in your tiny little brain like a lightbulb or was this educational. Quick answer. True of False, A-B-C-D or all of the above or none. I think this was a Catch 22 maybe a Trick Question ! God only knows for if God wanted us to know then we would not be debating this B.S. If you stack a pile of books are you learning or using them to climb higher above your peers and be King of the Mountain. If everyone looks up at you that must be Signaling that you are the selected One or is it that you're Smarter than everyone below you because you have a big appetite to learn and succeed. - Don't Ask - you won't like what I have to say … really! Stupid went that way ------> [that's a sign]

[@phuthumanihlope7559]

I think you're both right actually. I do however have an issue with what seems to be the view that education is over after college. I think it's important to continually self educate to build skills that you may not learn at your current work place, e.g. coding, that could increase your value. However not every employer may immediately notice or appreciate your value without a qualification endorsing your skillset.

[@DigitalOdyssey3001]

Great point. Education never really ends. You usually learn new skills when you start a new job. Some skills are transferrable while others skills are not. Some people (me included) are lifetime learners and keep building new skills.

[@slobodanblazeski0]

+1 for signalling,

[@soeunjeon5392]

Amazing debate!! Thank you so much for your insightful analysis!!

[@zhenxie3478]

Really appreciate this video, one of the best debate I've seen between actual economists Personally I think Alex has done a great job with a rather difficuit view ：）

[@itsarendezvous]

It's about the degree not the education. We all get trained for our jobs upon hire. That training, that resume builder, grants us new oppurtunities in higher positions. If more employers were willing to hire people without degrees for entry level positions then I'm sure the lifetime earnings gap would decrease

[@DigitalOdyssey3001]

Absolutely. There is a difference between getting a generic liberal arts education and mastering a specific skill like medicine, law or engineering. The goal for most people is to earn a degree, some barely make it but are still happy in the end. That leads me to lean toward signaling as the most important factor for most people. Especially employers who never ask about grades, they just want to confirm that you graduated. Great point.

[@GustavoSilva-ny8jc]

1:15 😂😂😂😂😂😂 this is too funny, you werent kidding when you said "arguing in front us". Im loving this. I also feel between 2 marketers lol.

[@rosepumpkin]

I learn most things online, I am about to complete my associates in science, finance. But I love economics, but can't afford those private tuitions. So I learn it on my own. Good debate. KZbin is a great resource tool. Most people I know that have a BS or BA, can't get hired because they don't retain the academic experience... Depends on the person's motivation to learn the subject. Wouldn't mind going to Harvard to learn economics, haha but not everyone can get in. Regardless I learn better being self taught, without the pressure.

[@TigerLawProf]

I loved this video ... what a great way teach and learn

[@kyh6767]

I am a Korean who goes to a top university and I agree that the Korean education system did help greatly with the economy. Not only because it provided the government and companies with knowledge to make complex industries(cars, phones, ships) but it did act as a signal to weed out the less useful talents to the more useful ones. For example, if you graduated from Seoul Nat. University employers would even look at anything else in your resume. Did this always work? No, but it did provide signaling for the otherwise blind employers and look at where it took us. We are now one of the wealthiest nations in the world.

[@Antitheist98]

Tyler Asks: Would you want to drive over a bridge built by an engineer that did or did not go to Caltech? Lets say I would prefer that he did. Now is that because I know anything about Caltech's bridge building curriculum? Do I know anything about any skills at all that he may have learned in college? NO. I just know he got in, got through the classes and the tests. That is the perfect example of a signal of personal traits, and not assessment of skill.

[@bcubed72]

+Rusty Shackleford Yeah, you wouldn't want a self-taught shop owner with no formal training to build and fly the first airplane, for example...oh, wait.

[@ChoubiM]

Rusty Shackleford Bridges were built in the world way before engineering schools exist ..and some of them are still in use today

[@beamboy14526]

Civil engineer here. IMO, its the combination of the two. I doubt its possible to design structures without taking material science or statics. Likewise, no employer will hire you even if you mastered all the required knowledge without a degree.

[@realistreset8336]

Exactly. It's like asking if you would buy a piece of electronics that wasn't reviewed by Consumer Reports or Underwriter's Laboratories and then credit the review agencies for having given the companies the knowledge to create commercially viable products. Every last engineering student at Caltech can learn outside of Caltech the skills needed to construct a bridge needed for people to drive over. They all basically teach themselves that stuff out of books since they can't understand their professors, anyway. But would said Caltech students rather rather be just as competent at civil engineering as a professional engineer, yet with no degree, or would they rather know nothing about the industry, learn everything needed on the job, yet have a degree from Caltech in civil engineering? C'mon. We all know it's the signaling the universities offer the students that's immeasurably more valuable than the information.

[@MrTheelicitor]

Having listened to this great debate, I think Alex you've won the debate...the point you made resonates so much with me and I have heard a number of my friends who have recently finished their MBA say time and time again that they just learning to pass the exam and the actual learning come in the practical application of the subject matter. In the age of internet there's no need to go to school in the formal sense of the word to be schooled (it's a waste of time and money in modern times. I can see why it continues though teachers and lectures will loose their livelihood or jobs and most likely won't vote for the sitting government etc. What is the point of learning 9 to 13 subjects and in France a friend had 31 subjects to cover in her MBA degree. And you have to aim at getting a 4.0 in each one of those subjects to fill accomplished. Tyler you agreed that most times we even struggle to remember simple definition and more so we don't remember most of the things we learn. You know what Alex (Africa's 50 plus countries, have not progressed similar to the west in terms of education because this never been our way of life, we have a strong culture that doesn't allow us to do that (our educational system is with nature, not in economics, laws of physics and other theories). Maybe because we already know subconsciously that education in the way it is thought today bares no value) we have just resisted so long and even when we've tried the west has always put barriers to our growth. There're too many inequalities and bullies in the system to allow for such comparisons in education.

[@pyroseed13]

Tyler argues that "Well once employers figured out they didn't know anything, markets would adjust and their wages would fall, if signaling were true." But the whole idea behind signaling is that a degree is a signal for knowing SOMETHING, or just being a smart person in general. Yes, obviously in technical fields like engineering you actually learn something, but for something like business, a degree from Harvard Business School really just signals to an employer that you are a very capable and intelligent person. This is a person that would succeed in most fields in general, not because they happened to learn something from an Ivy League business school.

[@kschep88]

With the level of information available on the internet, It should be clear that college is primarily a signaling effect. One can obtain (though not easy) an undergraduate level of education through use of the internet/books alone. that person will have a much harder time getting jobs as I read a lot of books isn't viewed the same as having a degree.

[@caiquenobreg]

I think that in the short run, degrees are very important (specially if you work as academic), but in the long run the most important is your productive efficience. I live in Brazil (where the economy is pretty less productive than US) and nowadays we can see some consequences of the "inflation" of degrees: too many post-graduated people who barely knows basic ortographic rules in their mother language. Thank you for this discussion and for the many other great contents, Tyler and Alex!

[@binsch]

Couldn't this be tested by studying long term salary differences between grads of two schools of similar quality where one school happens to be more well known (thus providing a better signal)?

[@theicedragon100]

+binsch but the school might be more well know because it provides better education.

[@binsch]

+Joseph Ahrens you can likely control for that, especially in fields where the students need to take some sort of standardised test to pass licensing requirements (FE for engineers, the bar for lawyers) but you have a good point, most school ratings are based on peer ratings and exclusivity

[@khyatichouksey8927]

I'm with Tyler on this, I find ways to use my knowledge of Economics where I hadn't imagined in my internships and even relationships. Critical Thinking skills developed during a college education years are valuable

[@bcubed72]

Question: if you take the total tuition spent, PLUS the forgone wages from studying for four years instead of working...do graduates make enough more in lifetime wages than, say, sticking it in an index fund (at 8% real income growth per annum?) A B.S. costs around $240,000 in tuition and forgone wages.

[@danielhall271]

7:50 "Our K-12 system is junk." Who trains the teachers? Who designs the curriculum? Who comes up with the principles of teaching? -The Universities The fact that the K-12 is so terrible implies that the universities are incapable of conveying good teaching practices. Which further implies that universities don't know how to teach. Point signalling theory.

[@old_romans]

Well, the invisible hand is giving us Instructional Designers for this specific reason.

[@bennguyen1313]

Would have like to have seen Tyler pressed for an answer on, if he had to choose, an online self-study Harvard education (or MRU.org), versus just the paper degree. Bryan Caplan make some great points about the resources that are wasted when everyone goes to college. Would like to hear Tyler , Eric Weinstein and Caplan have a round-table discussion!

[@walterdennisclark]

It's like width and length. Just figure out which is longer. Since, width is smaller, the length has more effect when you add them up to get the area. If you think I've made a mistake, think about what they were arguing over. It was "Which one contributes more?" Instead of which multiplying factor is more important... shouldn't they have argued over whether doing both of those things should be socialized or should those who are most well endowed intellectually be allowed to pass that endowment on in ways other than genetic and by example.

[@bq4416]

My tuppence: The positive side to signalling is trust. A qualification provides a level of trust and assurance for employers and consumers. It is also a cheaper means tester for the employer, rather than conducting numerous tests. Though, with elearning that trust no longer has to be outsourced.

[@kunlin579]

Could it also be reverse signaling for the current economy. After the push to get a degree, if you come without one, it signals that you're incompetent? Or if you enrolled but didn't finish due to some extenuating circumstances, does that also signal that there is something "wrong" with you when screening through the applications?

[@etbedtalksAOH]

sometimes this question comes down to which course you are attending so according to that the range of it varies. There are factors within like the number of degrees or how much is the scope for certain degree holders.

[@hotpotato644]

Looking past the fake smiles, this is a great video. I definitely thing it’s signaling. A degree is for the piece of paper. People memorize things off. The smart people I know are self taught.

[@mayowasoyinka7213]

There's some ratio that is dependent on the person, the qualification and the economic environment. The question for policy-makers is overall ratio is and how to allocate spending accordingly. My suspicion is that too much is spent on higher education in comparison primary and secondary school education.

[@DallinBunnell]

Interesting discussion to hear years later. I'd say yes, education and gaining critical thinking skills are going to help in the long run. For most people it's getting a credential to signal to the marketplace your value. That signal is becoming less and less strong. As the costs of education go up, more and more people are signaling with work experience. I think the education point is more correlation than causation. Nobody remembers very much from classes. But, if you've learned how to learn, you'll pick up all the necessary job skills along the way and throughout your career.

[@griffonos0987]

I think there are a few problems with Tyler's arguments for human capital. 1: The persistence of the college wage premium many years after graduation does not disprove signalling. The signal provided by a degree allows students to get initial good initial jobs. These jobs in turn provide great opportunities for human capital accumulation, which allows graduates to maintain and increase their wages. Thus the long term growth in wages comes from human capital acquired on the job, but getting the initial job is dependent on the signalling provided by the degree. This means that education can ultimately lead to human capital which boosts wages, without education providing any human capital itself. 2: A change in the time and coursework requirements for a degree does not just affect the human capital of the degree, it also effects the signalling. A four year degree sends a stronger signal of intelligence, work ethic, and conformity then a two year degree, and a weaker signal than an eight year degree. So the fact that Scandinavian graduates had higher wages after more years of education does not necessarily prove that signalling was responsible for their college wage premium. 3: It is true that the richest countries invest a lot in education. But it could simply be that as a society becomes richer it can afford to waste more money on signalling. And from an individual perspective, more signalling is justified as potential jobs become more lucrative. So rich countries might just spend more on education, because they are rich.

[@JosefFurg1611]

Underrated remarks.

[@divinitytarot6]

AWESOME THANKS TO BOTH OF YOU SIR, NICE DEBATE

[@Daikini0]

Personal experience, but take it: I started to work in 2007, there was a guy, who started two years before. We are both programmers, and he was very into the opinion that college degree matters, and whatever I do, without degree I won't make fortune. He is still working where we started, and my salary is about 30% higher. Simply I got more workplace, and I built up skill on selling my workforce. He never went on interviews, I did. College degree might be a good advantage when you start your career, but later on, the difference between having or not is negligible. So my opinion is: what resources you have, and how you do sell it, that matters. College education and a degree is just one resource you can have. If you can't sell it, it worth close to zero.

[@TheGanny94]

They aren't mutually exclusive.

[@TheGerogero]

+Ming Jie Gan ... Which is more important?

[@TheGanny94]

TheGerogero Depends on the goals of the individual. In the short run I think signalling is more important. But in the long, definitely skill development. Signalling is just corporations or businesses being lazy and wanting universities to create a short-cut for their analysis of potential labor.

[@TheGerogero]

Ming Jie Gan That's reasonable. To phrase the question differently, which do you think has more impact on job markets?

[@TheGanny94]

TheGerogero Skill. Long term wages and productivity will be determined by the efficiency of the market. Overtime(after you leave college) the market will sort out the skill levels of individuals, assuming of course a capitalistic society still exists. This explains why some non-graduates can become extremely successful and some ivy-league-ers don't get far from where they started. Signalling merely allows you to start the race a little bit ahead.

[@TheGerogero]

Ming Jie Gan Hail capitalism.

[@abdulfattahzaman8726]

Investment in education has two parts. First, if you invest in education in a country that is inherently corrupt, it is like dumping cash in a well. Society's influence/education can be stronger than the ciricullum's influence/education. Secondly, the quality of education matters. Education is about teaching necessary skills and knowledge to thrive both individually and collectively. For a long time, the educational system has been extremely flawed and backwards where we have to personally relearn everything we need to know once we graduate, making the educational system extremely inefficient and ineffective.

[@MilanSuere]

I personally think that signaling plays in the pig part in one's choice to educate himself. even before studying economics and reading Michael Spence's paper on signaling, I always saw education as a mean to show an employer what we are capable of in a universal language he can understand : a diploma. Yes people do educate themselves for the beauty of the act, but in the end, the reason people are willing to pay crazy tuition fees is because they hope for some form of return on investment. A diploma is the best way to enter the arena that the job market is and say "look, that's what I'm capable of"

[@realistreset8336]

At 4:15 that guy just asserted that people in college learn how to be conscientious and submit to authority. No, the degree selects for people who are those things. Educational psychology and common shared experience proves that people don't remember what they learn in school. They forget everything after the exam. So universities fail at doing what they're explicitly claiming to do, or at least try to do. So why are we supposed to just assume they're competent at incidentally teaching people to do all these other things? What's worse, because you have to concede that people cram for exams and forget everything afterward, the "learning how to learn and be an employee" cliche is the only ostensible source of human capital from universities. Even if we accept this on face value, this isn't good enough. Universities then have to be better at preparing people for the workforce than working an actual job. Toga parties, safe spaces, binge drinking, getting exam answers from your friends, etc. are better ways of learning "the social context"? Education is 80+% a zero-sum rat race for most degree programs, and possibly 50% for degrees like engineering where you learn differential equations and never use a Bernoulli method or any other analytical method to solve a problem in your entire career. But you can't even take electrical network analysis course or be eligible for an internship without that class. So I don't even buy the argument that STEM fields are significantly more than a preponderance of human capital.

[@OMGclueless]

Even if you assume a college education is 80% waste, 20% of four years and $200k is still over 9 months and $40,000 worth of training that you have before going into the workforce compared to a high school graduate. And while it might be more efficient if everyone went and got that training on the job, that raises all the bargaining problems firms have when training employees -- maybe it would be more efficient to learn to be an engineer while working at an engineering firm, but if they're subsidizing 9 months and $40,000 of education you can just walk out the door right after. Hence it makes sense that no engineering firm will do that, they all insist you get *most* of your training on your own dime. The reality is that this assertion is false: "Universities then have to be better at preparing people for the workforce than working an actual job." They don't. They just have to be better than any other options you have available. The only institution in the U.S. that can actually operate this way and invest significant resources training you for the job on their dime is the military, because they're the only institution that can manage to have any kind of enforceable contract that guarantees you'll provide them with X years of service after they do that. The reality is that the only efficient way for people to train for jobs is for people to make a personal investment in their own education. Which right now means universities. Maybe they're inefficient and not the best possible solution, but "Just have everyone learn while working at an actual job" is not a realistic alternative.

[@naguilar6]

The formula is X=A+B+C. I say its all three. The question is, which has more of an influence?

[@Mujangga]

People go to college to obtain a government mandated license. If the government did't control education, people would simply purchase knowledge through teachers in the Free Market or be trained by corporations directly.

[@benengelbracht633]

Thank you so much Alex and Tyler!

[@Brazbrah]

Alex sounds just like Ross from friends. It's impossible not to hear it now.

[@MarginalRevolutionUniversity]

Hahaha! The accent is a little different, but I can definitely hear it and am totally cracking up right now. We'll have to work in some dinosaur props. ;) -Meg

[@joshuaellis7121]

If the answer can be reasonably justified on both ends, to decide between one end or the other is probably the wrong endeavor.

[@Charlieafter2020]

I love this debate like Oprah loves bread! I wish I heard before I went to college!

[@WillBC23]

The synthesis position: it's both. The best biological analogy for education is not the signalling of the peacocks tail, but mimicry. There are many species which mimic others, for example some frogs are brightly colored to deter predators and have strong poisons, while other frogs have similar markings but no poison and deter predators by free-riding off the efforts of the poisonous ones. I think people get this in some sense, people have an intuition that we want engineers and surgeons to have certain skills, or that computer science and political science are different beasts where the name science is mimicry in the latter case. While I think that both make solid arguments, proscriptively in the US I side more with Alex. Tyler admitted it's not solely education that makes a nation successful, but education and other factors. I think one of those factors is the amount of mimicry in education, and I think to fix that we need to reduce the number of people getting degrees here, or somehow improve the extent to which they're skills based and weed out as much mimicry as possible.

[@MrTheelicitor]

I love to see 2 intellects arguing or having a debate awesome!!, and by the way they are both professor and well respected but still have different points of views based on the education they both have and why is that. This debate is centered around education so what I'd love to do is first check my own understanding of education which is defined as follows: "the process of receiving or giving systematic instruction, especially at a school or university." So when I signal/input some instruction to someone or something (computer) I expect a result...correct? so this result is designed to create a signal (the level of certification - 1st, 2nd class etc.) to the intended jobs market that the qualities the market is looking for regards to the skills required in that market can be found in such a person but at a cost (Demand and Supply). So I will say it is both (sitting on the fence...and ain't nothing wrong with that based on my argument above), as education is serving the purpose it was designed for that's going through a process of receiving or giving systematic instruction and making those skills sets available to the job market. Lets take examples to bolster my arguments; Footballers (Ronaldo, Messi and their cohorts in premier leagues), This guys go through an academy for playing football to hone their skills sets and therefore they come out with the scoring, dribbling abilities the football market wants and in return they get paid over a million dollars a week for kicking a football. I bet Tyler and Alex with greatest respect can't kick a ball from 18 yards to safe their lives. The same goes for any other sports or even for Gladiators.

[@CollectorWorth]

this channel is awesome. keep up the good work!

[@MarginalRevolutionUniversity]

Thank you! We love the encouragement! -Roman

[@petermugambi1236]

The pioneers of education developed a pattern defining house the world operates. This is why a college degree is vital and not a signal.

[@jagratigoyal5544]

loved these econ duel! keep posting

[@rhythmandacoustics]

I think this is not a deductive answer , such as yes or no, but a probabilistic answer. I think for the very few that very motivated, they actually put to practice what they have learned, such as projects outside of the curriculum. As for the majority of people it is merely a documentation or signaling as they say. Most people are not motivated to innovate or be productive and merely are there because of the pay check. For the very few, a paycheck is not enough, they need more than a salary.I see Elon Musk as a case for neither, he wanted to build skills but never went to class and read books all the time and only showed up for exams. So he neither needed the skills nor the signaling that he was smart. Another good example is Peter Thiel , he went all the way to JD after bachelors but decided it was boring and decided to go entrepreneurial. Also only in the technical disciplines can you show skills. A physics major can show evidence or proof of how x will work but a political science major will have a hard time showing skills, perhaps Bullshi*T skills maybe.

[@mcdn6655]

great debate I have ever watched

[@JosefFurg1611]

Loved the video. I think the signaling theory is more accurate.

[@ekananda9591]

People who learn in college have higher skills and thus graduating from college is also a signal of potential worker. They go both hand in hand

[@knjjhjghhg]

isnt it obvious that the skill building/learning side of if is a signal as well, along with all the other ones like showing discipline and doing what you are told even though you don't really want to?

[@kyh6767]

Sucess isnt exclusive to those with fancy degrees but there is a very high correlation.

[@rubenduarte5024]

was not expecting it to get this heated

[@MaxGhenis]

Why no mention of the empirical research on the topic?

[@anisnajwabintimohdrodi5304]

I come here for my assignment ☺️☝🏼

[@danilobucker]

Very stimulating.

[@inaeshin1582]

As a South Korean...you will go insane if you were put into a high school in KR, staying there from 7am to 11pm...Thanks God I survived from it

[@johnbautista9209]

Nowadays in the Philippines education is signalling for big companies especially if you have a degree in a high class university. But some of the great wealthy successful people here in the Philippines doesn't have a degree in business course yet they become business tycoons millionaire.

[@tiowu]

This video is gold.

[@hocmedia3483]

How about the view that an academic degree signals one's ability to learn rather than show that the degree holder already knows everything?

[@jhonatandiaz6237]

+1 for signaling

[@mileslilly2]

Human capital. How else do you explain a wide disparity between various majors?

[@realistreset8336]

Various majors are more demanding, thus signal greater employability. Find me an engineer who ever had to derive a Fourier transform for a sinusoidal wave mixed with a modulating square wave for their job. Yet, every single electrical engineer has to take at least one class where that is the meat and potatoes of the coursework.

[@ThePettyking0.1]

I appreciate this video so much it helped me with my assignment

[@mcfinelli]

That was a fun one. Thanks, guys!

[@jackdavis8596]

Not either/or. I agree with Greg Mankiw's textbook, he argues that both these factors matter, but human capital is a more important factor.

[@poslednisoud]

As with many other debates, I believe the truth lies somewhere in the middle.

[@lucashart1904]

Whether I would want the degree or the knowledge depends on the degree. Which is why it is both human capital and signaling. If it was a liberal arts degree, give me the Harvard piece of paper. If it is in computer science, engineering, software design, networking; I'd take the knowledge. I might be able to get a job as a network administrator with that piece of paper but once I got hired I'd be screwed. I could prove myself as an engineer or prove myself with my computer skills and have a successful career without the degree.

[@edixonbalzan1142]

what a video, i loved it both of them have fair points of views

[@aoeu256]

People who flunked their senior year have much worse outcomes than those who complete it. This high margin return for the degree proves the signaling theory of education.

[@gemsandi]

I think college education is a combination of signalling and skill building, but the relative importance of each differs by the person's ability. The value of college as a signal declines as ability goes up. The skill building increases with ability because learning is gets easier with a higher initial aptitude. Therefore, high ability types would succeed without a college education but could also benefit a lot from just a little schooling (e.g. Bill Gates & Steve Jobs). Low ability types benefit from the signal of a college education but may not gain a lot in terms of skill building. For medium ability types, college is just right: they gain the most from education in both signalling and skill building. Insight inspired by Goldilocks :)

[@adamthornton7880]

All three?

[@kevinclass2010]

If the human capital theory is true, shouldn't the income gains differ between majors?

[@bla2220]

Both are correct.

[@davidnalepa6030]

An engineer who went to Caltech? And dropped out after 2 weeks (from HSS English major track) , then got a job as a "Maintenance Engineer"? Compared with a Licensed engineer who didn't go to Caltech, but has designed 54 traffic bearing bridges, and built 123 during her career?? Not a tough choice. Is Caltech better than MIT or a dozen other Schools of Engineering? Seems like an off-the-cuff (short-hand?) ill considered example...

[@fufu3539]

7:09 the answer isn't so elusive.

[@feigbuneogmlwefger9402]

In college I've noticed that the vast majority of students look at their classes as a means to an end, rather than also being an end in and of itself. Their outlook fits the "signaling" model, while I see education as a tool that allows me to better understand the world. Although it's likely that I could have learned the same things I did at college on the internet, it's undeniable that a degree sends a signal to potential employers that "I learnt it on KZbin, trust me" just doesn't. Humans want to know what to expect from others, so we seek information that will tell us about their underlying talent. The problem is actually obtaining this information on an individual basis would be incredibly costly/time-consuming. Instead of going through the lengths of verifying individual skill levels, things like degrees amalgamate this information. Humans love to summarize information, to simplify things. Unfortunately, in doing so we often overlook nuance and group things together that should be separate: while everyone in my graduating class received a degree, only some developed the analytical and critical thinking skills that employers want. This isn't to say that those students learned nothing, took nothing from their experience, but this disparity is obvious in the fact that employers, grad schools, etc. look at more than just whether or not you have a degree.

[@MarginalRevolutionUniversity]

Well said! -Roman

[@feigbuneogmlwefger9402]

Thanks Roman, love MRU!! Recent grad here--need an intern?

[@MarginalRevolutionUniversity]

We're always looking for talent to join our band of econ nerds! Open roles are here, which gives you an idea of the skills we're seeking: learn.mruniversity.com/join-the-team/ We do have interns - drop me an email at roman AT mruniversity dot com w/ your resume, etc.

[@Mister.Psychology]

You are talking about the whole education system. Let's take my study, psychology. Do we actually learn something in 5 years that any regular Joe couldn't learn in 6 months? No. Ask a social scientist about concrete studies and proven things. They won't tell you that much about these things. They learn a certain way of thinking. A way of seeing things, but it's not something that should take 5 years to learn. Then let's take programming. Could people learn it by themselves? Yes, that's what they actually do. But is learning it a good thing? Yes. So learning programming at an university is not just signaling. In one case it is pretty much 100% just signaling in the other case it is useful knowledge that the university does not have a patent on, but is only 50-60% signaling as employers also check what you actually can do.

[@JayAlejandro]

this is an awesome vid, great job gents!

[@BarkelsLifts]

epic enon battles of history!

[@khairulimran1269]

I think it's a mix and depends on the degree itself. The bright students don't need to go to college, they can just take 4-5 different internships/working under a mentor for 2 years, and they will still be successful. For e.g. Steve Jobs dropped out of college. But what most people don't know is his dad taught him a lot about mechanics. By the time he was 10, Jobs was deeply involved in electronics and befriended many of the engineers who lived in the neighborhood. When he was 12, he cold-called Hewlett-Packard's co-founder Bill Hewlett to ask for parts for an electronics project and later got a summer job.

[@muskduh]

this is great

[@Floccini]

You can audit classes for free, education is free it is diplomas that cost the money.

[@seanbrown3000]

The problem with Tyler's argument is that all of the social skills he is talking about could also be learned through apprenticeships, internships or jobs. Of course there are some things you actually learn and need to learn, especially early on or if you are in a highly technical job, but even then the vast majority of your education is wasteful signaling at taxpayer expense.

[@oiausdlkasuldhflaksjdhoiausydo]

The peackock argument is pretty weak but nonetheless, I'm on the side of signalling. He convinced me.

[@sunilmujumdar9549]

skill building. unless it is something like a liberal arts degree. Accounting, finance, science, technology, law, medicine, all build knowledge. for everyone else vocational school should be enough if we could get better K-12. Even in K-12, the reason everyone has to learn quadratic equations is so that they can go into a math/physics field.

[@27jyp]

Sorry to say, though I am Korean, I have to say that ironically, having so much education in paper degree in South Korea is more of a curse than a blessing as well as stagnating economy and aging demographics. Plus, they do not know about financial education and might screw up the economy just like the oil curse for not diversifying the economy much with short term gain from 1970s to the present day. I really lament what is going to happen to my country that it will become poorer in the long run.

[@jcpunongbayanphd]

I think the signaling view won here.

[@Ryan-kh9xn]

Signaling. It makes you wonder if it could be human capital, if it were better

[@davidwilson6829]

Sorry Tyler, I've learned that the signaling theory is true the hard way. Sure, some people go to college to learn what they can't figure out how to Google, but in the end, if you aren't entrepreneurial and looking for an employer, they don't want to risk taking you without that stupid piece of paper...

[@aaateam111]

Why are they arguing about two things that doesn't contradict each other? They both true and its especially pronounced in country like south Korea...

[@MinuMat]

The notion that we have to pay to develop social skill sets which can only be obtained in post secondary schooling is a farce. If you observe brain development from children to adults the greatest development in social understanding occurs in infancy. Opportunities to develop respecting authority (subservience), critical thinking and problem solving are most effectively taught to younger children rather than teenagers and young adults. Those who choose to further their education are either interested in particular areas of learning or are financially indebted with high overhanging costs meaning that a change in action will leave them destitute and in financial ruin. The fact that the argument is that 100k degrees are substitutes for people to develop how to interact with others in a professional landscape means that something is broken.

[@daligharbi3063]

I give it to tyler this time😂

[@nelsonomicsruns9246]

Has Tyler hanged his mind given the last few years? People learn all about the new genders, how to be an SJW, to be an activist etc... These things are incredibly valuable to ...... politicians sure but to the business?

[@BNK2442]

Alex is right, you know? =P

[@BNK2442]

Not only high education is a scam, education is a scam. R.I.P. John Taylor Gatto

[@BNK2442]

Also, college doesn't teach critical thinking, or else feminism woudn't be so popular.

[@BNK2442]

Tyler, how can you be so wrong, it doesn't work and you know it.

[@papunsahu6519]

Sir, What is the conclussion according to u ? There are a lots of people even they are not entering to college still earn billion of dollar. Talent is more important than a degree.😇 Please sir say that what is the conclussion according to you.

[@teukubahran]

This is a dillemma for sure. But I guess in the last two minutes of the video sum it up very well with reality

[@Andy-em8xt]

Education should be more vocational. Yes teach some general skills but you should only be studying in the field if you intend to get a job or its an expensive hobby you can justify. This is a problem on the side of the students too. Hate to say it but some degrees have higher economic values than others. University shouldn't be High School 2.0 but a place where people actually obtain specialized skills.

[@aga1nst]

Somebody turn the air conditioning on :)

[@GustavoSilva-ny8jc]

That was better than i thought, it got more heated than i thought and Alex had great point that were essential to amplify the view (even tho they didnt explain why those countries succed or failed and ridiculously focused on 1 element, thats like comparing japan growth to middle east and forgetting the GODDAMN RELIGION), his major mistake was to discredit education completely. Bro, it's so fucking obvious, a smart person without the degree is INFINITELY better off than a stupid person, in the wild the Senkus of the world will not only survive the lion but eventually wipe them out if they want. You may not get job X or Y but you can find your way with wisdom, why so many rich people are stupid AND have no degree??? Cause they have something people value. Also not remembering is GODDAMN LEARNING FLAW!!!! You're not teaching them appropriate study methods.