The Elephant in the Brain: Hidden Motives in Everyday Life

by Kevin Simler

Caplan offers a helpful analogy. Suppose you inherit a diamond from your grandma, and you want to turn around and sell it. What can you do to fetch a good price? On the one hand, you could take steps to improve the diamond, perhaps by polishing it or cutting it into a more attractive shape. On the other hand, you could take the diamond to be inspected by a professional, who will then issue a certificate attesting to its quality. This will also raise the price, since most buyers can’t judge a diamond themselves, and without a certificate, they’re worried about getting swindled. The traditional view of education is that it raises a student’s value via improvement—by taking in rough, raw material and making it more attractive by reshaping and polishing it. The signaling model says that education raises a student’s value via certification—by taking an unknown specimen, subjecting it to tests and measurements, and then issuing a grade that makes its value clear to buyers. Of course, these two processes aren’t mutually exclusive.