I disagree with Caplan though that employer decisions already prove the BA is a trustworthy signal. He has a naive Beckerish view on the efficiency of markets (e.g. employers who racially discriminate would go out of business). As far as I know, no employers have ever collected data on IQ tests vs. humanities degrees. I think it's very doubtful that college is screening out “lazy” people in such a way that college wage premium is maximally profitable.

It's a very real possibility that the whole inflated BA system is based on bad, inefficient. and costly selection decisions by employers. If employers are acting a certain way before there is data to justify it, then I think there is a good possibility that they aren't acting on some indirectly obtained knowledge, but on habit and tradition. This is why good data really can improve markets.

Also…

“You can try jawboning Microsoft into switching to certification tests. But can we really believe that Murray has seen a profit opportunity that Bill Gates hasn’t?”

Gates is notorious for relying on IQ tests, so this was a bad example. Also I don't know how important college is in MS hiring decisions, but I think it hasn't been denied yet that technical degrees like engineering actually do usefully signal job-applicable knowledge, unlike, e.g., an English degree.

I disagree with Caplan though that employer decisions already prove the BA is a trustworthy signal. He has a naive Beckerish view on the efficiency of markets (e.g. employers who racially discriminate would go out of business). As far as I know, no employers have ever collected data on IQ tests vs. humanities degrees. I think it's very doubtful that college is screening out “lazy” people in such a way that college wage premium is maximally profitable.

It's a very real possibility that the whole inflated BA system is based on bad, inefficient. and costly selection decisions by employers. If employers are acting a certain way before there is data to justify it, then I think there is a good possibility that they aren't acting on some indirectly obtained knowledge, but on habit and tradition. This is why good data really can improve markets.

Also…

“You can try jawboning Microsoft into switching to certification tests. But can we really believe that Murray has seen a profit opportunity that Bill Gates hasn’t?”

Gates is notorious for relying on IQ tests, so this was a bad example. Also I don't know how important college is in MS hiring decisions, but I think it hasn't been denied yet that technical degrees like engineering actually do usefully signal job-applicable knowledge, unlike, e.g., an English degree.

This is why in previous articles he has hinted that lower ability people would get a bigger financial return from trade school rather than college. But since that isn't true, his argument is a harder sell.

Similarly he argues that employers would do better with a CPA type of exam than going by a degree. This could be true (And in fact certain ridiculous anti-discrimination laws might be one reason the system is so inefficient). But it could also not be true, as Bryan Caplan suggests.

So if it hurts the young person to defect, and if it hurts the employer to defect, this makes Murray's pitch a hard sell. He needs to more fruitfully come up with a plan about how things can change. And that will require appealing to those with the power to change it that it is in their best interest to do so.

Specifically, if he could convince employers that an IQ test or a CPA type exam would be the legally safest, most efficient, and most profitable route, the value of the BA for the low ability person would indeed drop dramatically.

Unfortunately this would overwhelmingly help rich, smart people at the expense of poor, stupid people. (if the BA system truly is currently elevating tons of underqualified dumb people into the ranks of the middle and upper middle class). And this undercuts what I think Murray has always wanted: the best deal for the left half of the bell curve.

This is a silly statement I’ve heard repeated multiple times. You don’t have to assume that firms or students are irrational to argue that the “BA is not teaching anything to their potential recruits.”

Theoretically, it’s pretty straightforward. Good future workers know they need to go to college to signal their ability to firms and firms know that they have a much higher chance of finding good future workers in the college group. Furthermore, employers are much less likely to have their competence called into question if a hire with a degree doesn’t work out than if they hire a worker without a degree (because of the correct perception of the low likelihood of that hire being a wise choise).

Turning to a hypothetical example, if college ended tomorrow, I am confident that firms would quickly snap up smart young men and women. At first, firms would still prefer candidates with a degree, and it would take about a year and some nice magazine features before they end up being able to sell to corporate that they can hire and train smarter 18-year-olds for less money and in place of 4-year colleges we’d have colleges more like master’s programs competing to show their value-added.

The question is how to credibly signal to good future workers that a four-year college degree isn’t necessary to be considered as a candidate and to convince firms that there are enough good future workers without a four-year college degree to make it a wise investment. This critical mass exists in some places outside the US. An Indian software company hires kids who are bright but are not going to college due to pressure to start making money right away. They train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, they can code just as well as the rest. Often, better.

I’ll be writing up an overview of education shortly, and was interested in reading the opinions of this group. But I find the first quote to be repeated far too often.