Furthering Education: Signal or Human Capital?

Apologies for leaving on a somewhat shaky note…. Although I seemed dissatisfied with teaching in general (partially true), I overstated my case as a means of emotionally disconnecting from something I really loved – similar to how novice chicken farmers deal with slaughtering their pseudo-pets.

As the world-famous Justin Lanier noted, no matter what I do next, I’ll still have that teacher hat on. Education is the lens that I’ll always analyze larger events. And while I’m still in school now, I most likely will not be working within a school next year.


I came (back) to the University of Texas at a strange time. There is a power play surfacing, where the President of the University has been forced out. The beginnings of the ouster still seem very unclear. It either had to something with the football team’s poor performance (*snicker*) or perhaps less realistically: the tension between what education has been and what it could be.

Education in America resides in a strange, directionless space: oscillating somewhere between creating good citizens and useful worker bees. Being wrapped in a capitalist country of wealth imbalance that guarantees its citizens a free education makes this tension grows louder and louder.

The local schools have gone the route of being more and more relevant to industry, while still stuck to an outdated curriculum (Biology, Algebra, World History) mandated by the state. The bureaucracy around changing state requirements in the internet age seems antiquated at best, and at worst it seems like a counterproductive borne of backdoor deals between powers that be. Here in Texas, the graduation requirements don’t require a single computer class. So while today’s students take equivalent courses as their counterparts in the early 20th century, it seems strange how we still actively avoid teaching kids how to use current technologies.

This is a seemingly disconnected way to ask my real question: at the post-high school level, should the purpose of schools be to create signals or human capital? Diplomas are signals, they tell others that a student has reached some particular milestone, gained some kind of talent, or at the very least they added to the amount of alcohol sales in the region. Human capital is the skills and talents we gain or discover through experiences (i.e. they know how to create some kind of monetary value. Here are some examples outside of the realm of education of one without the other.

Signals without Value

Value without Signals

Cargo shorts with 58 pockets – half of which could never be filled without ripping the cloth apart. Those secret pockets inside of jackets where you keep your knock-off Raybans
BMW stickers applied to a beat up Honda Civic Dropping a BMW engine in a beat up Honda Civic
This sweatshirt for $129 This shirt for free

Schools strive to create both by making kids go to class and giving them a piece of paper at the end.Most educators would like to think they create human capital and that it will show up for the students at some point in their lives. But the incentive to gain that signal is extremely strong – hell it’s spawned an entire industry dedicated to faking degrees and created scandal for more than a few. The push for more and more signals has driven up the price of tuitions and deflated the value of degrees, especially at the higher end. That goes doubly for a high school degree which is essential if one wishes to earn any income over the poverty line.

Which brings me back to thinking about the signal of college degrees. Recently on Econtalker, author Bryan Caplan described his research where he tried to disentangle the affects of signals and human capital on future earnings. His results were somewhat shocking. If getting a college degree indeed built human capital, you would expect that for every year complete, the percent of your future earnings should be somewhat linear. That is, if the school environment helps students build skills and experience that translate to higher earnings, every year would give you a fraction (around one-fourth) of that.

However, Caplan looked at the data and saw the exact opposite. As a percent of what they could earn, those who finished one year only earned a net benefit of 5 – 10%. With two years, another 5 – 10%. People who finished three years earned essentially no more than those who finished two years. Those who finished all four years earned the remaining 80 – 90%. Listen to the rest of the podcast if you want to know more.

But my question really goes even further: do traditional colleges even care about building human capital? To me, college professors in general utilize the worst form of pedagogy: direct lecture. They employ all kinds of tricks to pretend that they aren’t employing the same arcane practices as their medieval counterparts. To wit here are a few common “best practices” of professors:

Ask a question to class, answer it to yourself.

“Last time we discussed..” when we didn’t discuss anything.

Ask class entire class question; get one correct response; infer that everyone else gets it.

Stand up and read from their notes.

Proof by example.

I’m sure you can think of your own favorites. And I get it, teaching a class where you’re not in control of 100% of the movements is intimidating and scary and oh-my-god-what-if-we-don’t-get-to-that-one-important-point. Maybe they prefer the silence of their audience, like performers in a local musical? Perhaps they want to show their own intellectual prowess?

So I’m left with this question of how universities feel about building human capital. And for all of that, I obviously chose to come back to school. I don’t think I’ll ever be on board as someone who promotes college as a preparation for the job market (here’s one response to a “market-driven” university). Yet there’s no greater concentration of great minds (besides bars, which are also plentiful in college towns). But it’s really strange to expect professors to build human capital by teaching.

Are today’s colleges places to network? Learn interesting material? Or are they still places where you get that paper so you can get more papers? I’m not sure entirely. But if students are taking out huge loans to get some kind of return, their timing could kill the whole process.

But I’ll leave with one of my favorite images. image

This is a college student’s notes from Dartmouth in the late 18th century. It shows he was working on long division, surely a novel algorithm at the time. Knowledge keeps pushing downwards. Students are learning more and more at an earlier level, just ask any 12 year old how to change the wifi settings in your phone. My one desire is that we could let go of the canonical K-12 experience and find skills and experiences that local communities agree upon. In Austin Texas, where Samsung, Dell, Apple, Google and Facebook have large presences, my position is that learning to code is much more useful than learning Algebra 2. And even if you don’t agree with that premise or it’s not possible politically, let’s at least remove the barriers of the movement downwards, maybe get the kids to Calculus in middle school…