For a single individual, education pays. On this point, the standard “education as skill creation” and the “education as signaling” theories agree. The theories make different predictions, however, about what happens if average education levels decline. If education is all skill creation, a fall in average education saps our skills, impoverishing the world. If education is all signaling, however, a fall in average education leaves our skills—and the wealth of the world—unchanged. In fact, cutbacks enrich the world by conserving valuable time and resources.
