Murray Is Selling His Own Argument Short

Murray misunderstands me.  Yes, I freely admit that the current system works great for me, but I nevertheless see it as a massive waste of time and resources.  I am delighted to hear Murray’s charge that the BA is the work of the devil.  If I were on the jury, I would vote to convict.

My key problems with Murray’s essay are his arguments, not his conclusion.  I don’t see that Murray has a coherent story about how the BA persists despite its inefficiency.  The signaling model does tell such a story, so Murray ought to at least take it seriously, and tell us how it relates to his thesis.

If he does embrace the signaling model, though, Murray’s distributional analysis will probably turn out to be wrong.  The main losers are taxpayers who subsidize the wasteful signaling competition, and consumers who pay more for the labor that colleges divert away from the productive part of the economy.  Murray is right, of course, that talented workers without BAs suffer, too; but we should not forget that below-average people without BAs actually benefit from employers’ imperfect information about their productivity.

If this isn’t clear, think about auto insurance premia.  Teenage boys pay more than teenage girls.  But in a world of perfect information, the average teenage boy would still pay a higher premium, because boys really are, on average, riskier drivers.  So who suffers as a result of imperfect information?  Above-average members of observable groups.  And who benefits?  Below-average members of observable groups.  The same goes for education.  Above-average high school graduates suffer a social punishment for their lack of a degree.  But below-average high school graduates actually enjoy a social benefit relative to a perfect information meritocracy.

The punch line: Murray is selling his own argument short.  The problem with the BA isn’t that it helps some people and hurts others.  The problem is that it burns up valuable resources, and (at least at the margin) gives society next to nothing in return.

Also from this issue

Lead Essay

  • In this month’s provocative lead essay, the American Enterprise Institute’s Charles Murray draws from his new book, Real Education: Four Simple Truths for Bringing America’s Schools Back to Reality, to argue against America’s obsession with the four-year BA degree. Murray argues that the BA “wreaks harm on a majority of young people, is grotesquely inefficient as a source of information for employers, and is implicated in the emergence of a class-riven America.” Murray contends that vocational training and a new regime of certification testing would provide a superior alternative to a college degree for many high school grads.

Response Essays

  • Economist Pedro Carneiro of University College London — an authority on the relationship between education, human capital, and wages — agrees with much of Murray’s argument, but questions its relevance. Some people may be making a mistake in pursuing a BA, but it’s not a very big mistake, Carneiro says. “For most of those enrolling in college, a BA has a good expected return, but there is some risk,” and not notably more risk than with other investments. The real worry, Carneiro argues, is that stagnation in college enrollments “may cause problems for [economic] growth in the years to come.”

  • George Mason University economist Bryan Caplan agrees with Charles Murray’s claims that not everyone is suited to college, that four years is too long, and that few career-relevant skills are learned there. But then what explains the wage premium for college grads? Caplan notes that Murray flirts with a “signaling” model but argues he needs to take it more seriously. But then why haven’t certification test already caught on, Caplan wonders. Why don’t employers already cut out the college middle man and directly hire top high school grads? “An unfortunate implication of the signaling model is that cutting the BA down to size will be a lot harder than Murray thinks. As far as employers are concerned, the BA works.”

  • Kevin Carey, research and policy manager for Education Sector, argues that the “mass production of bachelor’s degrees” in the 20th century gave the United States one of the world’s best-educated labor forces, and all signs point to the stunning success of mass higher education. Carey says that Murray “does not come close” to showing that the “BA is the work of the devil.” If an alternative system of certification testing made sense, Carey argues, we would expect to see it already, but we don’t because “employers value the bachelor’s degree.” The flexibility of the American system, which allows students to get a good general education without committing to narrow vocational training, is one of its strengths. And so many drop out of college, Cary maintains, not because they are unprepared or unable to benefit, but because the academic environment and teaching are often discouragingly low. “The bachelor’s degree represents the best of American opportunity,” Carey writes. “We need to make it better, not tear it down.”