The Case Against Education: Why the Education System Is a Waste of Time and Money

by Bryan Caplan

Once college begins, however, you’ll probably never differentiate another equation unless you pursue a degree in math, science, or engineering.7 Knowledge of statistics, in contrast, is useful whether or not you go to college. Nobel Prize winner Daniel Kahneman shows that statistical illiteracy underpins many foolish real-world choices.8 Yet only 7.7% of high school students pass a stats class.

First, IQ pays. Holding education constant, an extra point of IQ raises earnings by about 1%.6 Second, holding IQ constant, the education premium shrinks but never vanishes. In 1999, a comprehensive review of earlier studies found that correcting for IQ reduces the education premium by an average of 18%.7 When researchers correct for scores on the Armed Forces Qualification Test (AFQT), an especially high-quality IQ test, the education premium typically declines by 20–30%.8 Correcting for mathematical ability may tilt the scales even more; the most prominent researchers to do so report a 40–50% decline in the education premium for men and a 30–40% decline for women.9 Internationally, correcting for cognitive skill cuts the payoff for years of education by 20%, leaving clear rewards of mere years of schooling in all 23 countries studied.10 The highest serious estimate finds the education premium falls 50% after correcting for students’ twelfth-grade math, reading, and vocabulary scores, self-perception, perceived teacher ranking, family background, and location.

Human capital purists often protest, “Why on earth do workers signal ability with a four-year degree instead of a three-hour IQ test?” My response: employers reasonably fear high-IQ, low-education applicants’ low conscientiousness and conformity. Other critics of the education industry, however, have a more streamlined response: American employers rely on educational credentials rather than IQ tests because IQ tests are effectively illegal. Thanks to the landmark 1971 Griggs vs. Duke Power case, later codified in the 1991 Civil Rights Act, anyone who hires by IQ risks pricey lawsuits. Why? Because IQ tests have a “disparate impact” on black and Hispanic applicants. To escape liability, employers must prove IQ testing is a “business necessity.”

The less reliably you measure X, counterintuitively, the greater X’s true effect.96 Ignoring mismeasurement lets competing factors “steal” credit from education, leading us to underestimate how valuable education really is. Imagine a world where five workers have high school diplomas, and five have college degrees. Workers with high school degrees earn $50,000 a year. Workers with college degrees earn twice as much. Yet neither high school nor college teaches students to carefully complete surveys. When the census inquires about their education, one of each group checks the wrong box. What happens? The data overstate earnings for high school grads and understate earnings for college grads. Measured earnings are $60,000 for high school grads (because one alleged high school grad went to college), and $90,000 for college grads (because one alleged college grad didn’t go to college). The true difference in earnings is $50,000; the true college premium is +100%. Yet thanks to human error, the measured difference is only $30,000, and the measured premium is only +50%.