Human capital or signaling? No, it’s about doing the Right Thing and acquiring karma

There’s a huge de­bate among economists of ed­u­ca­tion on whether the pos­i­tive re­la­tion­ship be­tween ed­u­ca­tional at­tain­ment and in­come is due to hu­man cap­i­tal, sig­nal­ing, or abil­ity bias. But what do the stu­dents them­selves be­lieve? Bryan Ca­plan has ar­gued that stu­dents’ ac­tions (for in­stance, their not sit­ting in for free on classes and their re­joic­ing at class can­cel­la­tion) sug­gest a be­lief in the sig­nal­ing model of ed­u­ca­tion. At the same time, he notes that stu­dents may not fully be­lieve the sig­nal­ing model, and that shift­ing in the di­rec­tion of that be­lief might im­prove in­di­vi­d­ual ed­u­ca­tional at­tain­ment.

Still, some­thing seems wrong about the view that most peo­ple be­lieve in the sig­nal­ing model of ed­u­ca­tion. While their ac­tions are con­sis­tent with that view, I don’t think they frame it quite that way. I don’t think they usu­ally think of it as “ed­u­ca­tion is use­less, but I’ll go through it any­way be­cause that al­lows me to sig­nal to po­ten­tial em­ploy­ers that I have the nec­es­sary in­tel­li­gence and per­son­al­ity traits to suc­ceed on the job.” In­stead, I be­lieve that peo­ple’s model of school ed­u­ca­tion is linked to the idea of karma: they do what the Sys­tem wants them to do, be­cause that’s their duty and the Right Thing to do. Many of them also ex­pect that if they do the Right Thing, and fulfill their du­ties well, then the Sys­tem shall re­ward them with fi­nan­cial se­cu­rity and a re­ward­ing life. Others may take a more fate­ful stance, say­ing that it’s not up to them to judge what the Sys­tem has in store for them, but they still need to do the Right Thing.

The case of the de­vout Christian

Con­sider a rea­son­ably de­vout Chris­tian who goes to church reg­u­larly. For such a per­son, go­ing to church, and liv­ing a life in ac­cor­dance with (his un­der­stand­ing of) Chris­tian ethics is part of what he’s sup­posed to do. God will take care of him as long as he does his job well. In the long run, God will re­ward good be­hav­ior and do­ing the Right Thing, but it’s not for him to ques­tion God’s ac­tions.

Such a per­son might look be­mused if you asked him, “Are you a prac­tic­ing Chris­tian be­cause you be­lieve in the pru­den­tial value of Chris­tian teach­ings (the “hu­man cap­i­tal” the­ory) or be­cause you want to give God the im­pres­sion that you are wor­thy of be­ing re­warded (the “sig­nal­ing” the­ory”)?” Why? Partly, be­cause the per­son at­tributes om­ni­science, om­nipo­tence, and om­nibenev­olence to God, so that the very idea of hav­ing a con­cep­tual dis­tinc­tion be­tween what’s right and how to im­press God seems wrong. Yes, he does ex­pect that God will take care of him and re­ward him for his good­ness (the “sig­nal­ing” the­ory). Yes, he also be­lieves that the Chris­tian teach­ings are pru­dent (the “hu­man cap­i­tal” the­ory). But to him, these are not sep­a­rate the­o­ries but just parts of the gen­eral be­lief in do­ing right and let­ting God take care of the rest.

Surely not all Chris­ti­ans are like this. Some might be ex­treme sig­nalers: they may be de­liber­ately try­ing to op­ti­mize for (what they be­lieve to be) God’s fa­vor and max­i­miz­ing the prob­a­bil­ity of mak­ing the cut to Heaven. Others might be­lieve truly in the pru­dence of God’s teach­ings and think that any re­wards that flow are be­cause the ad­vice makes sense at the wor­ldly level (in terms of the non-di­v­ine con­se­quences of ac­tions) rather than be­cause God is im­pressed by the sig­nals they’re send­ing him through those ac­tions. There are also a num­ber of de­vout Chris­ti­ans I per­son­ally know who, re­gard­less of their views on the mat­ter, would be happy to en­ter­tain, ex­am­ine, and dis­cuss such hy­pothe­ses with­out feel­ing be­mused. Still, I sus­pect the ma­jor­ity of Chris­ti­ans don’t sep­a­rate the is­sue, and many might even be offended at sec­ond-guess­ing God.

Note: I se­lected Chris­ti­an­ity and a male sex just for ease of de­scrip­tion; similar ideas ap­ply to other re­li­gions and the fe­male sex. Also note that in the­ory, some re­li­gious sects em­pha­size free will and oth­ers em­pha­size de­ter­minism more, but it’s not clear to me how much effect this has on peo­ple’s men­tal mod­els on the ground.

The schoolhouse as church: why hu­man cap­i­tal and sig­nal­ing sound ridiculous

Just as many peo­ple be­lieve in fol­low­ing God’s path and let­ting Him take care of the re­wards, many peo­ple be­lieve that by do­ing the Right Thing ed­u­ca­tion­ally (be­ing a Good Stu­dent and jump­ing through the ap­pro­pri­ate hoops through cor­rectly ap­plied sincere effort) they’re do­ing their bit for the Sys­tem. Th­ese peo­ple might be be­mused at the cyn­i­cism in­volved in sep­a­rat­ing out “hu­man cap­i­tal” and “sig­nal­ing” the­o­ries of ed­u­ca­tion.

Again, not ev­ery­body is like this. Some peo­ple are ex­treme sig­nalers: they openly claim that school builds no use­ful skills, but grades are nec­es­sary to im­press fu­ture em­ploy­ers, mates, and so­ciety at large. Some are hu­man cap­i­tal ex­trem­ists: they openly claim that the main pur­pose is to ac­quire a strong foun­da­tion of knowl­edge, and they con­tinue to do so even when the in­cen­tive from the per­spec­tive of grades is low. Some are con­sump­tion ex­trem­ists: they be­lieve in learn­ing be­cause it’s fun and in­tel­lec­tu­ally stim­u­lat­ing. And some strate­gi­cally com­bine these ap­proaches. Yet, none of these cat­e­gories de­scribe most peo­ple.

I’ve had stu­dents who worked con­sid­er­ably harder on courses than the bare min­i­mum effort needed to get an A. This is de­spite the fact that they aren’t deeply in­ter­ested in the sub­ject, don’t be­lieve it will be use­ful in later life, and aren’t likely to re­mem­ber it for too long any­way. I think that the karma ex­pla­na­tion fits best: peo­ple de­velop an image of them­selves as Good Stu­dents who do their duty and fulfill their role in the sys­tem. They strive hard to fulfill that image, of­ten go­ing some­what over­board be­yond the bare min­i­mum needed for sig­nal­ing pur­poses, while still not try­ing to learn in ways that op­ti­mize for hu­man cap­i­tal ac­qui­si­tion. There are of course many other peo­ple who claim to as­pire to the la­bel of Good Stu­dent be­cause it’s the Right Thing, and con­sider it a failing of virtue that they don’t cur­rently qual­ify as Good Stu­dents. Of course, that’s what they say, and so­cial de­sir­a­bil­ity bias might play a role in in­di­vi­d­u­als’ state­ments, but the very fact that peo­ple con­sider such views so­cially de­sir­able in­di­cates the strong so­cietal be­lief in be­ing a Good Stu­dent and do­ing one’s aca­demic duty.

If you pre­sented the sig­nal­ing hy­poth­e­sis to self-iden­ti­fied Good Stu­dents they’d prob­a­bly be in­sulted. It’s like tel­ling a de­vout Chris­tian that he’s in it only to curry fa­vor with God. At the same time, the hu­man cap­i­tal hy­poth­e­sis might also seem ridicu­lous to them in light of their ac­tual ac­tions and ex­pe­riences: they know they don’t re­mem­ber or un­der­stand the ma­te­rial too well. Think­ing of it as do­ing their bit for the Sys­tem be­cause it’s the Right Thing to do seems both no­ble and re­al­is­tic.

The im­pres­sive suc­cess of this approach

At the in­di­vi­d­ual level, this works! Re­gard­less of the rel­a­tive roles of hu­man cap­i­tal, sig­nal­ing, and abil­ity bias, peo­ple who go through higher lev­els of ed­u­ca­tion and get bet­ter grades tend to earn bet­ter and get more high-sta­tus jobs than oth­ers. Peo­ple who trans­form them­selves from be­ing bad stu­dents to good stu­dents of­ten see re­wards both aca­dem­i­cally and in later life in the form of bet­ter jobs. This could again be hu­man cap­i­tal, sig­nal­ing, or abil­ity bias. The abil­ity bias ex­pla­na­tion is plau­si­ble be­cause it re­quires a lot of abil­ity to turn from a bad stu­dent into a good stu­dent, about the same as it does to be a good stu­dent from the get-go or per­haps even more be­cause trans­form­ing one­self is a difficult task.

Can one do bet­ter?

Do­ing what the Sys­tem com­mands can be rea­son­ably satis­fy­ing, and even re­ward­ing. But for many peo­ple, and par­tic­u­larly for the peo­ple who do the most im­pres­sive things, it’s not nec­es­sar­ily the op­ti­mal path. This is be­cause the Sys­tem isn’t de­signed to max­i­mize ev­ery in­di­vi­d­ual’s suc­cess or life satis­fac­tion, or even to op­ti­mize things for so­ciety as a whole. It’s based on a se­ries of ad­just­ments driven by squab­bling be­tween com­pet­ing in­ter­ests. It could be a lot worse, but a mo­ti­vated per­son could do bet­ter.

Also note that be­ing a Good Stu­dent is fun­da­men­tally differ­ent from be­ing a Good Worker. A worker, whether di­rectly serv­ing cus­tomers or re­port­ing to a boss, is pro­duc­ing stuff that other peo­ple value. So, at least in prin­ci­ple, be­ing a bet­ter worker trans­lates to more gains for the cus­tomers. This means that a Good Worker is con­tribut­ing to the Sys­tem in a literal sense, and by do­ing a bet­ter job, di­rectly adds more value. But this sort of rea­son­ing doesn’t ap­ply to Good Stu­dents, be­cause the ac­tions of stu­dents qua stu­dents aren’t pro­duc­ing di­rect value. Their value is largely their con­sump­tion value to the stu­dents them­selves and their in­stru­men­tal value to the stu­dents’ cur­rent and later life choices.

Many of the qual­ities that define a Good Stu­dent are qual­ities that are de­sir­able in other con­texts as well. In par­tic­u­lar, good study habits are valuable not just in school but in any form of re­search that re­lies on in­tel­lec­tual com­pre­hen­sion and syn­the­sis (this may be an ex­am­ple of the hu­man cap­i­tal gains from ed­u­ca­tion, ex­cept that I don’t think most stu­dents ac­quire good study habits). So, one thing to learn from the Good Stu­dent model is good study habits. Gen­eral traits of con­scien­tious­ness, hard­work, and will­ing­ness to work be­yond the bare min­i­mum needed for sig­nal­ing pur­poses are also valuable to learn and prac­tice.

But the Good Stu­dent model breaks down when it comes to ac­quiring per­spec­tive about how to pri­ori­tize be­tween differ­ent sub­jects, and how to ac­tu­ally learn and do things of di­rect value. A com­mon ex­am­ple is perfec­tion­ism. The Good Stu­dent may spend hours prac­tic­ing calcu­lus to get a perfect score in the test, far be­yond what’s nec­es­sary to get an A in the class or an AP BC 5, and yet not ac­quire a con­cep­tual un­der­stand­ing of calcu­lus or learn calcu­lus in a way that would stick. Such a stu­dent has ac­quired a lot of karma, but has failed from both the hu­man cap­i­tal per­spec­tive (in not ac­quiring durable hu­man cap­i­tal) and the sig­nal­ing per­spec­tive (in spend­ing more effort than is needed for the sig­nal). In an ideal world, ma­te­rial would be taught in a way that one can score highly on tests if and only if it serves use­ful hu­man cap­i­tal or sig­nal­ing func­tions, but this is of­ten not the case.

Thus, I be­lieve it makes sense to crit­i­cally ex­am­ine the ac­tivi­ties one is pur­su­ing as a stu­dent, and ask: “does this serve a use­ful pur­pose for me?” The pur­pose could be hu­man cap­i­tal. sig­nal­ing, pure con­sump­tion, or some­thing else (such as net­work­ing). Con­sider the fol­low­ing four ex­treme an­swers a stu­dent may give to why a par­tic­u­lar high school or col­lege course mat­ters:

  • Pure sig­nal­ing: A fol­low-up might be: “how much effort would I need to put in to get a good re­turn on in­vest­ment as far as the sig­nal­ing benefits go?” And then one has to stop at that level, rather than over­shoot or un­der­shoot.
  • Pure hu­man cap­i­tal: A fol­low-up might be: “how do I learn to max­i­mize the long-term hu­man cap­i­tal ac­quired and re­tained?” In this world, test perfor­mance mat­ters only as feed­back rather than as the ul­ti­mate goal of one’s ac­tions. Rather than try­ing to prac­tice for hours on end to get a perfect score on a test, more effort will go into learn­ing in ways that in­crease the prob­a­bil­ity of long-term re­ten­tion in ways that are likely to prove use­ful later on. (As men­tioned above, in an ideal world, these goals would con­verge).

  • Pure con­sump­tion: A fol­low-up might be: “how much effort should I put in in or­der to get the max­i­mum en­joy­ment and stim­u­la­tion (or other forms of con­sump­tive ex­pe­rience), with­out feel­ing stressed or bur­dened by the ma­te­rial?”

  • Pure net­work­ing: A fol­low-up might be: “how do I op­ti­mize my course ex­pe­rience to max­i­mize the ex­tent to which I’m able to net­work with fel­low stu­dents and in­struc­tors?”

One might also be­lieve that some com­bi­na­tion of these ex­pla­na­tions ap­plies. For in­stance, a mixed hu­man cap­i­tal-cum-sig­nal­ing ex­pla­na­tion might recom­mend that one study all top­ics well enough to get an A, and then con­cen­trate on ac­quiring a durable un­der­stand­ing of the few subtopics that one be­lieves are needed for long-term knowl­edge and skills. For in­stance, a mas­tery of frac­tions mat­ters a lot more than a mas­tery of quadratic equa­tions, so a stu­dent prepar­ing for a mid­dle school or high school alge­bra course might choose to learn both at a ba­sic level but get a re­ally deep un­der­stand­ing of frac­tions. Similarly, in calcu­lus, hav­ing a clear idea of what a func­tion and deriva­tive means mat­ters a lot more than know­ing how to differ­en­ti­ate tri­gono­met­ric func­tions, so a stu­dent may su­perfi­cially un­der­stand all as­pects (to get the sig­nal­ing benefits of a good grade) but dig deep into the con­cept of func­tions and the con­cep­tual defi­ni­tion of deriva­tives (to ac­quire use­ful hu­man cap­i­tal). By think­ing clearly about this, one may re­al­ize that perfect­ing one’s abil­ity to differ­en­ti­ate com­pli­cated tri­gono­met­ric func­tion ex­pres­sions or in­te­grate com­pli­cated ra­tio­nal func­tions may not be valuable from ei­ther a hu­man cap­i­tal per­spec­tive or a sig­nal­ing per­spec­tive.

Ul­ti­mately, the changes wrought by con­sciously think­ing about these is­sues are not too dra­matic. Even though the Sys­tem is sub­op­ti­mal, it’s lo­cally op­ti­mal in small ways and one is con­strained in one’s ac­tions in any case. But the changes can nev­er­the­less add up to lead one to be more strate­gic and less stressed, do bet­ter on all fronts (hu­man cap­i­tal, sig­nal­ing, and con­sump­tion), and dis­cover op­por­tu­ni­ties one might oth­er­wise have missed.