Why Useless Degrees STILL Pay.

American higher education has a signaling problem...

Every student has thought it, "Am I ever going to use this?"

Teachers despise the question, and students despise that they have to pay thousands of dollars to attend classes where they feel they need to ask it.

Sometimes, the answer is yes, but far too often, it's honestly no.

Out of the 120 credits required to get an undergraduate degree, only 30-35 count towards someone's major. The rest are consumed by core requirements and other classes, which often aren't directly related to what someone wants to do in their professional career.

Over half of college graduates report they do not currently work in their field of study.

Across the board studies consistently show that much of the information we learn is not retained unless we are consistently reminded of it. So, while coursework that is directly related to someone's personal interests or professional career can be expected to have significant retention, the substantial share of coursework that is related to neither cannot.

In other words, for many students, a large share of the knowledge they acquire in college does not prove enriching, either because it is not practically useful in any way or because it has been forgotten.

One would think this would indicate college is a scam, a waste of money. Yet counterintuitively, a college education is still very much worth the price.

A college graduate, on average, will make 1.2 million dollars more over their lifetime than a non-graduate.

But how could this be? How could it be that people who spend years out of the workforce attending institutions where they broadly don't gain a significant amount of useful information get paid such a premium over those who don't?

The answer is signaling.

A degree sends a signal to employers that you are more capable than other workers, as acquiring a degree requires a certain level of diligence and consistency. In a sense, colleges act in part like a very long and expensive sorting mechanism, or at least that is a primary utility of them in the eyes of employers.

They sort the disproportionately dedicated and organized from the not so much.

Thus, even when a college education doesn't teach you much useful, it still has substantial value as a signal of capability and propensity to consistently perform.

Signaling explains why people with degrees, even in areas that do not have any practical importance to where they work, still manage to get paid more than their non-college-educated peers.

It explains why medical schools and law schools are far more concerned with the fact that someone has an undergraduate degree (and, to a lesser extent, how difficult it was) than precisely how well that degree prepares them for their program. They, like employers, view holding an undergraduate degree as a proxy for applicant abilities more than a demonstration of having certain valuable, applicable knowledge.

It also makes sense of why college degrees are falling in value over time. As more and more people have an undergraduate degree to their name, setting oneself apart requires yet higher levels of credentials.

AI-generated image of Michael Spence, the Nobel Prize-winning economist who first established the theory of economic signaling

Given this information, the question arises: is there not a better way to do things?

It seems that it would be much better if people's times within higher education was focused on teaching them exclusively useful information that they will mostly retain and that the signaling function of education, which appears to be consuming a large part of students' time, would be best be replaced with a shorter more time efficient and effective mechanism.

Surely, we don't want to regress to a state where a masters becomes the new undergraduate degree, forcing yet more of the population into even deeper debt and draining the workforce of badly needed workers.

This has been, in part, the conclusion of much of the rest of the world, where there has been a concerted effort to connect people to the most time and cost-effective education for their desired profession in a manner that is efficient and standardized.

In Europe, reform has largely occurred under the banner of the Bologna Process, which saw countries around the continent shorten their bachelor's degree length from 5 to 3 years and make a concerted effort to focus coursework on producing high-demand, professionally relevant skills.

Concurrently, countries around Europe have also expanded more vocational opportunities, whether they be in trade schools, high-quality apprenticeships, or on-the-job training for the areas where hands-on experience proves more useful and effective than room and board-style education.

Unlike America, in many peer countries, the pipeline into specialized areas like healthcare and law starts directly after secondary school, further cutting down on the time cost and financial cost of education.

If America is serious about addressing the growing burden higher education is placing on young people and addressing the shortage of specialized labor in many areas of the economy, it ought to consider similar reforms.

It ought to focus our education system on fostering human capital and helping people gain exposure to what a variety of professions are like and less on tedious coursework that is unrelated to their professional aspirations and almost sure to be quickly forgotten. Ultimately, if it does so, all involved parties will be richer for it, and professors will never again have to hear the dreadful words, "Am I ever going to use this?"