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

by Bryan Caplan

To calculate education’s social return, then, you must know why education raises pay and benefits. If education boosts compensation solely by raising worker productivity, society’s gain equals the worker’s gain. If education boosts compensation solely by revealing worker productivity, society gains far less. For most purposes, in fact, society gains zero. True, the economy is more productive—and society richer—when employers know which workers are good and which workers aren’t.3 Knowledge is wealth, so ranking students has social value. But once students have been properly ranked, the social value ends. Employer’s knowledge of worker quality would be essentially identical if everyone had one less degree, right? In economic jargon, the marginal social benefit of signaling is roughly zero even though its total social benefit is substantial.