Ending Education Subsidies

C1: Human Capital?The idea behind subsidizing education is that since education improves human capital (makes people more productive), subsidies will pay for themselves. We’ve all heard the statistic that college graduates earn $1 million more over their lifetimes than non-graduates. But is that income differential caused by the education? It’s hard to believe the knowledge learned at college directly translates into higher productivity—very little learned in school has anything to do with real world work. Some things learned in school obviously translate into higher productivity—basic literacy, numeracy, and computer skills, for example. But it’s hard to believe that anyone uses the skills they learned in a Sociology class in their job. College isn’t completely useless of course, but the majority of classes have no application in the real world.Ah, but educators usually don’t claim that the stuff they teach will ever be used in the “real world.” They’re supposedly teaching you how to think—by learning math and literature, you’ll be better at learning other, work-related things, and therefore be more productive. It turns out educational psychologists have tried to test and measure this theory—the literature on the subject is called ‘transfer of learning theory.’ And they found that your teachers were wrong, and that learning is highly specific. There is specific transfer of learning—learning algebra will help you learn calculus. But there is no empirical evidence of general transfer of learning—learning calculus won’t help you be more productive at a job that has nothing to do with math. [1] Studies on this subject date back to E.L. Thorndike’s 1901 study, where "Subjects estimated the area of rectangles between 10 and 100 sq cm...After sufficient practice to produce improvement (1,000 to 2,000 trials) on the original series, subjects got two test series. The first test series consisted of rectangles between 20 and 90 sq cm not included in the original training series. The second test series consisted of shapes other than rectangles, like triangles and circles. On the second test series, errors after training were about 90% as large as errors before training. Thorndike and Woodworth concluded that there was practically no improvement on the general skill level of judging the area of figures." [1] In addition, “Since the classic Thorndike and Woodworth (1901) experiment, there have been literally hundreds, if not thousands, of experiments reaffirming the same point.” [1] A review of these studies from Thorndike to the present found that while there was evidence of ‘near’ transfer (specific transfer, like algebra helping with calculus), "there has been no positive evidence of general transfer besides a few highly questionable studies." [2] C2: SignallingBut then why do college graduates earn more than non-graduates? Part of the reason is that college graduates were already more productive than non-graduates before they went to college. People that go to college tend to be smarter and harder-working than those that don’t—so they would probably earn more even if there was no such thing as college.But that can’t be the whole answer. If it was, smart kids could skip college and expect to earn just as much as if they went. That might be the case for a few exceptional people—Bill Gates, Steve Jobs, etc, but for most people, it likely isn’t true. The other part of the answer is that a degree is a signal. It signals traits that employers value—intelligence, conscientiousness, and conformity. Someone without a degree could have those traits, and someone with a degree could lack them, but on average, people with degrees are smart, conscientious, conformists—people who will be good workers. If employers require a college degree for a job, they will get applicants who are, on average, better workers, and will be less likely to have wasted money hiring someone who turns out to be a bad worker. If this is true, then the case for subsidizing education falls apart. Improvements in human capital have social benefits, but signaling doesn’t. Signaling benefits the person with the signal at the expense of everyone else competing for that job—it doesn’t benefit society overall. The billions spent subsidizing education are thus wasted—in addition to the opportunity costs of the students going to college when they could have been doing productive work instead.C3: Useful EducationWhile I think most of school is socially useless signaling, obviously some education is actually useful. Medical schools teach the skills necessary to be a doctor, for example. But that doesn’t mean these things should be subsidized. If something is actually useful, then it doesn’t need to be subsidized—the monetary return on getting that degree is enough. People that can’t afford medical school can take out loans and pay them back with the higher income medical school will help them get. People that can’t afford to get Sociology degrees probably won’t get loans without the government being involved, since private lenders would be unwilling to lend to someone who couldn’t pay them back.[1] Detterman, D.K. (1993) 'The case for the prosecution: transfer as an epiphenomenon', in D.K. Detterman and R.J. Sternberg (eds) Transfer on Trial: Intelligence, Cognition, and Instruction, Norwood, NJ: Alex Publishing Corporation.http://cms.educ.ttu.edu...[2] Singley, M.K., & Anderson, J.R. (1989). The Transfer of cognitive skill. Cambridge, MA: Harvard University Press.