Tom Wood of the National Association of Scholars has done a masterful job analyzing the human-capital and cognitive-skills economics literature in an article on the “sheepskin effect.” His question: Does college education lead to greater job success because it teaches important cognitive skills, or because it is a “signaling” device that employers use to screen applicants, regardless of whether earning their degree has taught them much or not?
Wood's conclusion is that college education leads to increased cognitive skills, it is not merely a credential.
In Shaw's post she makes some very interesting points about different ways of interpreting the data.
Wood asks:
George Leef responds as well:
The big omission in the essay, I think, was acknowledgement of the fact that large numbers of people with college degrees end up with jobs that could be done by people with far less formal education — jobs such as customer-service representative or rental-car clerk. Sometimes employers insist on college credentials for applicants, and that seems strong evidence that college degrees are often valuable only because they get you past the employer's initial screening device. Not much of a return on investment in such cases. And where college grads are hired for jobs that are also done by people with lower formal education attainment (e.g., pizza deliverers), it's hard to see any pecuniary value in the educational "investment." Perhaps there are non-pecuniary benefits that make the sheepskin worthwhile, though.
The reason many employers insist on a college degree, or give precedence to it is, I think, two-fold. One is that a high school diploma is increasingly a worthless piece of fraud. One ought to be able to assume the possessor of a high school diploma can read, write, and cipher. But tragically, one cannot.
Employers could address this problem by administering literacy tests, but, again tragically, this option is barred to them. Wood acknowledges this:
employers in the U.S. of any size have been effectively barred by law from testing job applicants for their cognitive skills if these tests have a disparate impact on protected groups. (The Ricci case that has figured so prominently in Judge Sotomayor’s nomination to the Supreme Court illustrates the legal situation well.) But, the critics have argued, the law does not bar colleges and universities from such testing. These institutions have available to them a whole array of aptitude and skills tests like the ACT, SAT, academic achievement tests, and so on that employers themselves cannot use to evaluate prospective employees. Employers take advantage of this fact, according to the screening or credentialing theory of higher education, letting a college degree serve as a proxy for those skills. Employers reason that if a job applicant has been admitted by a college, has completed the degree requirements, and has the credential, she is more likely than a job applicant who does not have the credential to have the kinds of skills that the employer needs and wants. The credential will therefore have considerable value to the degree holder and to the employer even if college has added nothing to the labor force productivity of the college graduate. It has value to the individual and to the employer purely as a screen or as a filter. (The value to the general society that has thereby conferred value on this otherwise meaningless credential is less obvious.)College may have added something to the labor force productivity as well, but it's not clear to me that four years in the military or any other sort of transitional program between high school and the grown up world wouldn't add something to the labor force productivity of an employee as well.
Another reason is that it is a credential of a different sort- it shows some level of commitment, the ability to get up on time and be where you are supposed to be on time and complete the work you are asked to do in a somewhat timely manner at some level of competence. It's expensive to hire somebody and find out that you've made a mistake, this is not a person with a work ethic after all. Firing somebody actually costs the employer a lot of money, unless they can document the reasons for the firing, and this documentation takes time, too. Quite often a shoddy, poor, worker is kept on for six months past their expiration date (that is, considerably past the time the employer realized this worker is not interested in actually earning his paycheck) in order to build the paper trail necessary to cushion the employer from lawsuits and unemployment claims, and meanwhile, they cannot often afford to pay out for yet another person to do the work this employee isn't doing. A college diploma indicates that the holder has some history of sticking to something.
That indicates to me that for many degrees, the second rate, cheap college nearest home would do just as well as the Ivy League school which charges five times the national average in tuition (20 percent of schools charge over 100,000).
Not all jobs requiring a diploma require it for these reasons, of course, but plenty do.
But Wood doesn't really believe that the value of a college education is primarily the credential:
For some critics, empirical findings supporting the intrinsic value of higher education like the ones above are beyond counterintuitive: they are unbelievable. A good example of this reaction is a comment on one of my earlier postings (mentioning the CLA) by Kevin M. James:
"The CLA study looks interesting and I shall give it a read (despite its gaudy color and layout scheme that hurt my eyes and dredge up unpleasant memories of the late 1970s).
But I must confess that, regardless of the strength of the evidence contained therein, I shall have a hard time believing that virtually any student, of virtually any level of native intelligence and academic aptitude, can benefit from a college education. Unless said benefit is defined downward to the point where, say, a semester in remedial English that brings a student's writing from a 6th-grade to a 9th-grade level is counted as success in collegiate learning.
The experiences I had in my own college career, and that I now have every day in dealing with today's undergraduates, simply cannot be reconciled with this thesis."
In such an environment and in the face of such criticisms, it is important not to lose sight of our own experiences of college, however long ago that was. That is why part of James’ comment surprises me. It has been decades since I have taught in a college classroom, and I am therefore not in a position to judge today’s college students. However, I must question James’ statement that the experiences he had in his own college career cannot be reconciled with the thesis that virtually any student, of virtually any level of native intelligence and academic aptitude, can benefit from a college education. That was certainly not my experience of college, and I dare say it was not the experience of any of my friends in college. Was it yours? Think back and consider what your intellectual skills and general fund of knowledge were when you graduated from high school, and compare them with what they were when you graduated. Was there no value added in your college experience? I would be surprised if very many of those who read this essay would agree with James and say Yes. I certainly wouldn’t. In fact, the proposition that there is no intrinsic value to higher education, at least when I apply it to my own experience, seems patently false.
My own experience has been that higher education can have enormous value to the individual and to the culture and society. It is important for those of us who have had this experience to keep it well in mind. At the same time, personal experience and recollections are not enough. The defense of higher education requires much more than this, including good objective data in the present. That is why studies like the ones considered in this essay are important.
As difficult as it might be for some critics of higher education to admit, the evidence is clear that for a very large segment of our society, a high school education is not enough. If we are to have a literate, informed, intellectually competent electorate and work force in an increasingly complicated and confusing world, in which cognitive skills will be at a very high premium, pre-collegiate education will not be sufficient.
I agree that for a large segment of society a high school education is not enough- but is that because college bestows such a bonus in the area of cognitive development, or because high schools have increasingly failed in this area? I believe it is the second.
I am pretty sure my husband, who has a degree, would agree more with James than with Woods. My daughter, who just graduated with a degree in history thoroughly enjoyed her last two years and is deeply indebted to a couple of professors in particular who really opened up certain areas of history and research for her and made her experiences there a delight. However, she went to school for free. She graduated with no debts, no outstanding fees, and without being out of pocket more than a few hundred dollars for gas and books (sometimes even her books were covered, which is why the book fees were so low). As much as she values her experiences, she is not sure she would have found them worth, say, $20,000 dollars in debt (the average undergrad leaves college with 18,000 in debt).
And that link leads to another data point on why the college degree might result in more income, it may well be connected but in a very different fashion than people assume. The lede to the story is the tale of a young man who intended to teach when he graduated, but looking at his student loans, he realized it would take forever to get out of debt on a teacher's salary, so he changed his career plans and took a high paying job as an investment banker in New York.
The high cost of getting a college degree in the first place requires graduates to search out for higher paying jobs- jobs they would not necessarily have chosen and would not need without the college debt load they carry. Pin It
Almost 1 in 5 college and professional school graduates says he has changed his career plans because of student debt, according to the 2002 National Student Loan Survey from government-backed lender Nellie Mae.
