The Three Theories of Why College Graduates Earn More

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The chapter explores the three main theories for why college graduates earn more than high school graduates: human capital, signaling, and ability bias. The speakers debate the value of education and discuss the evidence for the acquisition of human capital, as well as the correlation between IQ and job performance. They also delve into the flaws of industrial psychology and the argument for ability bias, before concluding with a discussion on the concept of signaling in education.

Bryan Caplan of George Mason University and the author of The Case Against Education talks about the book with EconTalk host Russ Roberts. Caplan argues that very little learning takes place in formal education and that very little of the return to college comes from skills or knowledge that is acquired in the classroom. Schooling, he concludes, as it is currently conducted is mostly a waste of time and money. Caplan bring a great deal of evidence to support his dramatic claim and much of the conversation focuses on the challenge of measuring and observing what students actually learn.