People with more education earn more money. How might the causal structure look?

  1. Education works ie education => ability => money
  2. Education signals ability AND ability leads to more money ie ability => education, ability => money
  3. Education signals ability which leads to more money ie ability => education => money

Obviously, none of these are 100% true, but we can talk about the relative contribution.

The book beats up on 1 pretty early eg:

It acknowledges that some core skills (reading, writing, arithmetic) are effectively learned. Also that the contribution may vary for technical subjects (eg engineering), but even there the teaching methods are inefficient and there is a large opportunity cost vs eg apprenticeships.

The bulk of the book is spent arguing for 3 over 2. The core idea being:

This means that if you can fake the signals to get in you can make it in the job world - you won’t be detected and filtered out. 3 makes education a zero-sum competition to produce the best signal, leading to a successful arc relatively independent of actual ability.

But the bulk of the argument doesn’t seem that important once we’ve discard 1. 1 is the sole argument for education in it’s current form. If all we care about is signaling conscientiousness we can just make people copy books by hand for four years at much less expense to society.

A more interesting question is how the signaling argument relates to new schools like Minerva. Is it possible to improve education, or does signaling entrench the current players?