Isegoria

In Latin, Bryan Caplan notes (in The Case Against Education), “alma mater” means “nourishing mother”:

A rich metaphor. A nourishing mother doesn’t merely teach you practical skills or help you land a well-paid job. She nurtures your whole person, teaches you right from wrong, and shows you the magic of life.

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I sincerely take the humanist critique to heart. For all my iconoclasm, I love ideas and culture. “Impractical” ideas and “uncommercial” culture are my life.

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Old-school humanists nevertheless overstate their case. Education definitely can be good for the soul. But that hardly shows actually existing education achieves this noble end. In practice, education often turns out to be a neglectful or abusive mother rather than a nourishing one.

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Modern education’s staunchest fans don’t nourish their souls by watching YouTube videos of average teachers. No one does.

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Once everyone can enrich their souls for free, government subsidies for enrichment forfeit their rationale. To object, “But most people don’t use the Internet for spiritual enrichment” is actually a damaging admission that eager students are few and far between. Subsidized education’s real aim isn’t to make ideas and culture accessible to anyone who’s interested, but to make them mandatory for everyone who isn’t interested.

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Today’s adults are the product of over a decade of mandatory exposure to abstract ideas and high culture. If educational force-feeding worked well, most educated adults would adore these nerdy realms—and eagerly tap the Internet to revisit them. To understate, they rarely do. “Kim Kardashian” gets about twenty times as many Google hits as “Richard Wagner” and about two hundred times as many as “David Hume.”

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First: the humanist case for education subsidies is flimsy today because the Internet makes enlightenment practically free. Second: the humanist case for education subsidies was flimsy all along because the Internet proves low consumption of ideas and culture stems from apathy, not poverty or inconvenience. Behold: when the price of enlightenment drops to zero, enlightenment remains embarrassingly scarce.

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Education can’t be responsible for more than 100% of the high culture our society consumes.

Let’s start with books. Consumer demand is shockingly low overall: Americans spend 0.2% of their income on all reading materials, barely more than $100 per family per year. Americans used to spend more on reading but never spent much: back in 1990, well before the rise of the web, reading absorbed 0.5% of the family budget. Today’s Americans spend about four times as much on tobacco and five times as much on alcohol as they do on reading. Within this small pond, high culture is no big fish.

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By and large, literature teachers fail to “get through” to their captive audiences: they rarely spark love of reading, much less love of the genres they urge their students to admire.

In music, pop culture’s victory over high culture is even more decisive. The Three Tenors in Concert is the best-selling classical album ever. With twelve million copies sold, it does not even break into the top fifty albums of all time. Looking at overall sales, classical music is only 1.4% of the U.S. music market. Country is eight times as popular, and rock/ pop over thirty times as popular.

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Even if American schools cause all U.S. consumption of classical music, their combined efforts boost its market share only from 0% to 1.4%.

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Anyone reading this book is probably a bird of a different feather. You may even remember the names of the teachers who opened your eyes to the finer things in life. I owe my love of classical music to Mr. Zainer (General Music, seventh grade), and my love of literature to Mrs. Ragus (Honors English, eleventh grade). A quick look at the basic facts, however, shows our experiences are abnormal. The vast majority of our classmates emerge from years of cultural force-feeding with their aesthetic palates unchanged.

In backward nations, youths work, Bryan Caplan notes (in The Case Against Education), while in advanced nations, youths study:

As civilization advances, the young spend ever more years sequestered from paid employment. The modern fear is that work might interfere with school, never that school might interfere with work. These rules are so ingrained they seem like laws of nature.

The logic is elusive. As society evolves, teaching the young different occupations is common sense. Teaching them no occupations and hoping they adapt to the job market after graduation is not. It doesn’t matter how futuristic our society becomes. Making kids study irrelevant material for a decade-plus is timelessly dysfunctional.

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Sticking with the classic curriculum instead of trying to forecast the job market is looking for your keys under the streetlight because it’s brighter there. Sure, teach the genuinely general skills: reading, writing, math. But otherwise, schools should make educated guesses about future career opportunities, measure students’ aptitudes, then expose them to plausible occupations.

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Visualize a world where 16-year-olds have real job skills and earn enough to provide for themselves. Visualize a world where academically uninclined preteens look up to apprentices instead of delinquents. Visualize a world where students find their lessons either practical or interesting.

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Instead of fearing a dystopian future, we should gawk at our dystopian present. In modern societies, achievement-oriented kids spend almost two decades in school. Most find the curriculum dreadfully dull. During this drawn-out ordeal, students are either poor or financially dependent on their parents. When they finally join the “real world,” graduates apply only a sliver of what they studied.

The objection that the vocational track teaches students specific skills they need for their first job, while the academic track teaches students general skills they need for every job, is confused, Bryan Caplan argues (in The Case Against Education):

While literacy and numeracy are genuinely general skills, most academic classes amount to vocational training for ultrarare vocations.

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“Traditionalists” want to train everyone for long-shot, prestigious careers like author, historian, political scientist, translator, physicist, and mathematician. So-called vocationalists want to train students for careers they’re likely to enter. The traditional route is painless for educators: teach your students whatever your teachers taught you. The vocational route is painful for educators: to follow it, we must keep tabs on student aptitudes and the job market.

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What’s the point of prepping students for the economy of 2015, when they’ll be employed in the economy of 2025 or 2050? Fair enough, but this is no argument for old-school academics. Ignorance of the future is no excuse for preparing students for occupations they almost surely won’t have. And if we know anything about the future of work, we know that demand for authors, historians, political scientists, translators, physicists, and mathematicians will stay low.

The crowd-pleasing objection to vocationalism, though, is not epistemic, but egalitarian. Placing everyone on the academic track seems more equal than sorting children by “aptitude” and assigning them to “suitable” training. You could say equality is already an illusion; despite the fiction of college prep for all, colleges count only honors and A.P. as the genuine article.

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Keeping bored, resentful kids on the academic track backfires. Instead of “downshifting” to vocational training, they settle for unskilled labor—or worse. Remember: about 20% of Americans never earn a standard high school diploma.

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Historically, teachers trained students for three specific professions: the clergy, law, and medicine. The modern curriculum is more versatile but has changed far less than educators like to think. Today’s schools prepare students for careers as authors, poets, mathematicians, scientists, artists, musicians, historians, translators, and professional athletes. Yet the fraction of students who enter these occupations is trivial. Contrary to popular proeducation rhetoric, schools devote little time to “general skills.” Instead, students spend their days training for jobs few want and even fewer get.

School is not vocational education’s only venue, Bryan Caplan points out (in The Case Against Education):

If learning job skills in the school is good, wouldn’t learning job skills on the job be better? Unfortunately, we have an innocuous yet infamous label for kids learning job skills on the job: “child labor.”

Civilized adults recoil at the name. Children with joy in their hearts don’t belong in gray workshops, toiling all day long, cogs in the machine. They’re kids, not robots! Well, unless the gray workshop is called a “school” and the cogs earn zero wages.

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Federal regulations do more than exclude minors from dangerous jobs. Outside of family businesses, farming, newspaper delivery, and performing arts, work for kids under 14 is all but prohibited. U.S. federal law caps 14-and 15-year-olds’ work at three hours a day on school days and eighteen hours a week on school weeks. Plenty of states have stricter regulations. Under California law, 16-and 17-year-olds may not work without school permission or more than four hours on a school day.

When children languish in school, adults rush to rationalize. Making kids sit at desks doing boring busywork may seem cruel, but their pain trains them for the future. Why then is child labor so reviled? Toil may not be fun, but it too trains kids for their future.

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The silliest objection is that businesses “exploit” our children, handing them a pittance for their toil. No one expects schools to pay their students; the training kids receive is payment enough. Why hold firms to a higher standard? College students ferociously compete for unpaid internships because training is valuable compensation—and total compensation, not cash alone, is what counts.

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When researchers compare working students to comparable nonworking students, work has a clear upside and no clear downside. Early job experience has durable dividends, boosting postgraduation earnings by 5, 10, or even 20% for at least a decade.

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Since the minimum wage doesn’t vary by age or experience, we shouldn’t worry that youths will be “exploited.” We should worry that youths—especially Poor Students—won’t be hired at all. Under current law, untrained workers must produce the cost of their training plus $7.25 an hour to be profitably employed. Quite a catch-22, especially for slow learners: you need training to become a productive worker, but firms won’t train you unless you already are a productive worker.

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Unpaid internships survive because authorities hypocritically fail to enforce the letter of the law. As long as interns are college students or recent college grads learning a college-like job, government turns a blind eye. If McDonald’s hired unpaid trainees, prosecution would be swift. Unlike orthodox observers, I hasten to add, I say we need more hypocrisy. Instead of ending the unofficial exemption for college interns, we should grant it to everyone.

What else should policy makers do? Deregulate and destigmatize child labor. Early jobs are good for kids and good for society. Parental oversight isn’t a perfect way to root out abuses, but we rely on it in virtually every other sphere of life. Parents can make their kids devote their childhoods to sports and music—no matter how much they hate playing. Parents can sign their kids up for mountain climbing. Parents can take their kids to dangerous countries. Holding nonfamilial employment to stricter standards than mountain climbing is senseless.

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What about setting up a formal apprenticeship system? The best regimes are jewels, but they’re notoriously difficult to emulate. Most countries can’t be Germany.

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Before using taxpayer dollars to jumpstart apprenticeships, government should get out of the way and take stock of all the opportunities the labor market provides.

Bryan Caplan explains (in The Case Against Education) why vocational education rules:

In proponents’ eyes, vocational education raises pay, reduces un­employment, and increases high school completion. Research, though a bit sparse, supports proponents on all counts. Core insight: vocational students are typically “academic underachievers” before entering the vocational track. The right metric isn’t, “How do vocational students compare to average students?” but rather, “How do vocational students compare to comparable students who didn’t study a trade?” Vocational ed fares well by this metric. It raises pay more than academic coursework. It reduces unemployment more than academic coursework. It even boosts high school graduation: the academically uninclined are less prone to quit school when they don’t detest all their classes. Vocational education even seems to deter crime. Those who search for the most lucrative mix of academic and vocational education normally discover students are too academic for their own good. Most will earn more if they replace some—but not all—of their standard courses with vocational alternatives.

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What fraction of vocational ed’s selfish benefits stem from signaling? The lowest estimates, strangely, come from vocational education’s critics. Many inadvertently set its signaling share below zero. How so? Critics fear that vocational education bears a stigma.

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In this scenario, vocational education enriches society more than it enriches vocational students. Society gains the extra productivity, but students capture the extra productivity less the stigma.

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Vocational ed stands out because it prepares students for common jobs. According to the Bureau of Labor Statistics, the United States has roughly 900,000 carpenters, 700,000 auto mechanics, and 400,000 plumbers. Classic college-prep classes like literature, foreign language, and history fall short because they prepare students for rare jobs. The whole U.S. employs only 129,000 writers, 64,000 translators, and 3,800 historians.

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Conventional education mostly helps students by raising their status, but average status cannot rise. Vocational education mostly helps students by building their skills—and average skill can rise.

When he argues that education is largely wasteful signaling, Bryan Caplan notes (in The Case Against Education), most listeners yield:

Popular resistance doesn’t kick in until I add, “Let’s waste less by cutting government spending on education.”

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The typical reaction is to confidently state, “Education budgets should be redirected, not reduced.”

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Prudence dictates a two-step response. Step 1: Stop wasting the resources. Step 2: Save those resources until you discover a good way to spend them. Not wasting resources is simple and speedy. Don’t just stand there; do it. Finding good ways to use resources is complex and slow. Don’t just do it; think it through. Remember: you can apply saved resources anywhere. Time and money wasted on education could pave roads, cure cancer, cut taxes, subsidize childbearing, pay down government debt before our Fiscal Day of Reckoning, or allow taxpayers to buy better homes, cars, meals, and vacations.

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The signaling model highlights two desirable forms of educational austerity. The first: cutting fat from the curriculum. The second: cutting subsidies for tuition.

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Anyone who scrutinizes modern schools with a mildly cynical eye witnesses piles of material students are laughably unlikely to use in adulthood. The fat emerges in kindergarten: history, social studies, art, music, foreign language. By high school, as we’ve seen, students spend at least half their time on fat. In college, many majors are made of fat: think history, communications, or “interdisciplinary studies.” About 40% of graduates earn degrees in comically—or tragicomically—useless subjects. Even the hardest majors burn ample time on high theory and breadth requirements.

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Return the hours we seize from the young at great taxpayer expense. When they’re too little to release on their own recognizance, schools can still save a bundle by giving students more active time on the playground or more quiet time in the library. Once they no longer need babysitting, society can save even more by ending the school day the minute useful learning is done.

A moderate reform is to stop requiring useless coursework. Make history, social studies, art, music, and foreign language optional. The main problem with this moderation: pursuing material you’re allowed to skip sends a favorable signal. Many students—urged on by their parents—will leap to outshine their peers. To defuse this wasteful arms race, we must do more than make armaments optional. We must constrain opportunities for combat.

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The cleanest approach, naturally, is to discontinue classes that teach impractical material at taxpayer expense. There really is no need for K–12 to teach history, social studies, art, music, or foreign languages. This is especially clear if you recall how much students forget: despite years of schoolwork, American adults can’t date the Civil War, name their congressman, draw, sing, or speak French.

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Why should taxpayers fund the option to study fine arts at public expense? Instead, shut down the impractical departments at public colleges, and make impractical majors at private colleges ineligible for government grants and loans. Deprived of impractical options, some students will switch to practical subjects.

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As fat disappears from the curriculum, students will inevitably find other ways to signal excellence to the labor market. Does this make curriculum reform self-defeating? No, because some forms of signaling are less socially wasteful than others.

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Raise tuition for public colleges. Cut subsidies. Turn grants into loans. Charge borrowers market interest rates. Impose at least some tuition for public high school. From a normal perspective, such proposals provoke the horrified reaction, “Attendance could fall!” From a signaling perspective, the right response is, “Lower attendance is what we’re going for.”

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The more attendance falls, the scarcer educated labor becomes, and the pricier it gets. Owing to signaling, the social benefit rises less than the selfish benefit, but social and selfish benefits still move in tandem. At some point, the education premium gets high enough to transform the marginal student into a good social investment.

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If we’re not getting good value for our educational investments, we shouldn’t call deep cuts “draconian.” We should call the status quo “profligate.”

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The trillions we spend boring youths might cure cancer, buy driverless cars, or end world hunger. Collective complacency seems harmless, but it kills by omission.

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Contrary to populists, student loan programs are one of the least dysfunctional parts of the status quo. Subsidized loans definitely encourage college attendance, but subsidies are too low to encourage it much. Compared to overall taxpayer support for education, loan programs are a rounding error—in part, no doubt, because student debt survives bankruptcy.

Every government on earth supports education., Bryan Caplan notes (in The Case Against Education):

They support it rhetorically with high praise, and financially with tax dollars. The ideal of “free and compulsory education”—schooling kids free of charge whether they like it or not—spans the globe.

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In a major international survey, clear majorities in every country favor bigger education budgets.

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In the General Social Survey, 74% favor more education funding, 21% favor the status quo, and only 5% favor cuts. Education enjoys bipartisan allegiance.

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Avowed opponents of Big Government make an exception for education: 60% of strong Republicans hew to the conventional pro-spending wisdom, and only 12% are contrarian enough to claim we overspend.

Even my fellow education critics normally argue against spending more, not for spending less.

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“We need to invest in people!” (Reply: We usually rely on the free market to provide crucial investments. We can do the same for education.) “Nothing is more important than education!” (Reply: Food’s more important, and we rely on the free market for that.) “Government has to make sure even the poorest children receive a good education!” (Reply: Means-tested vouchers can cheaply handle this problem. There’s no need for government to run schools or subsidize tuition for kids who aren’t poor.) Laymen’s arguments almost never confront the question, “At what point would education spending be excessive?” “We’ve done enough for education” is as heretical as “We’ve done enough for paralyzed veterans.”

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The Onion, the best parody site ever, once ran an article titled, “U.S. Government to Discontinue Long-Term, Low-Yield Investment in Nation’s Youth.”

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Since no government leaves education to the free market, there is no straightforward way to evaluate the case for the very existence of pro-education policies.

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A classic bumper sticker muses, “It will be a great day when our schools get all the money they need and the air force has to hold a bake sale to buy a bomber.” By most measures, this great day arrived in the United States long ago. The air force may not hold bake sales, but total education spending far surpasses total military spending. For the 2010–11 school year, education was 7.5% of the American economy, versus 4.7% for defense. Spending came to over $1.1 trillion on education, and a bit over $700 billion on defense. Schools overtook the military back in 1972 and sharply widened their lead after the Cold War.

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$1.1 trillion a year is a royal sum—$1,100,000,000,000 in longhand. That’s nearly $3,600 for every person in America—not every student, mind you, but every person. Chanting “investment” doesn’t make it so. If half is wasteful signaling, we’re wasting over half a trillion dollars a year. And that’s only budgetary cost. A full damage report would include tens of billions of emotionally taxing, socially fruitless classroom hours.

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Like a rich uncle, government helps us waste. Whenever we can’t or won’t waste our own money on schooling, federal, state, and local governments are standing by to waste taxpayers’ money on our behalf.

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Direct federal education spending is hard to pin down, but probably small enough to ignore. Federal assistance to individuals, in contrast, exceeds $100 billion. Main complication: the federal government chiefly offers loans, not grants. If it charged market interest rates, you could claim student loans cost taxpayers nothing. Yet despite loud complaints about usury, even “unsubsidized” student rates are well below market. Loan guarantees have no visible upfront cost, but you probably don’t want to cosign my personal loans for free. The Congressional Budget Office finds an average subsidy rate of 12%: every dollar of student “loan” contains a hidden taxpayer gift of 12 cents.

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Many Americans imagine public education operates on a shoestring budget. Private education, in contrast, looks so pricey it’s implausible government does much to make it affordable. Both perceptions are wildly at odds with the facts.

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Government provides more than four-fifths of all education spending. Government support for education comfortably exceeds notoriously bloated defense spending. Even at the height of the War on Terror, there was more government money for education than the military. Government spending on education is about 6% of the whole economy.

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In 2010–11, government spent at least $565 billion on K through 12—that’s 87% of the total—and at least $317 billion on higher education—67% of the total.

Trying a year of school never ensures success, Bryan Caplan explains (in The Case Against Education):

Students can and do pay tuition, kill a year, and flunk their finals. A small risk of failing a year of school, like a small risk of defaulting on a loan, sharply depresses education’s return. Any respectable estimate of the return to education must account for these academic “bankruptcies.”

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Of course, schools often allow students to repeat a failed year, but this gives students who waste a year’s time and tuition only the chance to gamble another year’s time and tuition. Every casino offers the same deal.

Unreflective researchers naturally overlook noncompletion because it falls far outside their personal experience. The researchers finished their degrees. So did almost everyone they personally know. How bad can attrition be? Dismal. Overall dropout or “noncompletion” rates are high at all levels of American education. About 25% of high school students fail to finish in four years. About 60% of full-time college students fail to finish in four years. Half of advanced degree students never finish at all.

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After reviewing available evidence, the Technical Appendix ends up assigning Good Students the following probabilities: 92.3% to finish high school in four years, 43.5% to finish a bachelor’s degree in four years, and 32.7% to finish a master’s in two years.

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In terms of measured cognitive ability, Excellent Students are around the 82nd percentile, Good Students the 73rd, Fair Students the 41st, and Poor Students the 24th.

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Results closely match common sense. High school is lucrative for all four archetypes. Even Poor Students can reasonably expect the resources they invest in high school to out-perform high-yield bonds. College, in contrast, is a solid deal only for Excellent and Good Students. Largely owing to their high failure rate, Fair Students who start college should foresee a low 2.3% return on their investment. For Poor Students, it’s a paltry 1%. Master’s degrees, finally, are a so-so deal for Excellent Students, a bad deal for Good Students, and a money pit for Fair and Poor Students.

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The results are parental wisdom incarnate. The electrical engineering degree pays very well, especially for stronger students. The fine arts degree pays very poorly, especially for weaker students. Remember: zero and negative returns don’t mean fine arts degrees are worthless in the labor market. A fine art degree raises expected income over 20%. What zero and negative returns mean, rather, is that capturing that raise is more trouble for Fair and Poor Students than it’s worth.

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Measured by Barron’s ratings or average SAT scores, many public schools—such as UC Berkeley, the University of Virginia, and the University of Michigan—approach the top of the pecking order. As long as your state’s best public school admits you, there’s no solid reason to pay more.

Elites pay shocking sums for education, Bryan Caplan explains (in The Case Against Education):

Annual tuition and fees for high school students at Phillips Exeter Academy now run $37,000. Harvard University’s list price exceeds $45,000 a year. Students who live on campus pay even more. A child of privilege can easily consume a half million dollars of education before landing their first job.

The cost for a Good Student, who by assumption attends nearby public schools, is drastically lower. Instead of $37,000 a year for Exeter, he attends high school free of charge. Instead of $45,000 a year for Harvard, he pays in-state tuition at his local college—and unlike the elite, receives a lot of financial aid. For the bottom line, turn to the College Board’s annual Trends in College Pricing. This report tabulates the list price of college, then subtracts average financial aid to yield “net tuition.” For our Good Student, the final numbers are shockingly affordable. The out-of-pocket cost of a year of four-year college—tuition, fees, books, and supplies minus aid—sums to $3,662.59

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If you’re elite or near-elite, $3,662 per year for college sounds like con artistry. You might scoff, “I don’t know anyone who paid that.” Rather than dismiss the numbers, though, know you live in a bubble. When folks like you go to public universities, you pay close to list price. That doesn’t stop other kids from getting four-year degrees for less than the cost of a semester at Harvard.

People who hear he’s a college professor, Bryan Caplan explains (in The Case Against Education), often reminisce about their time in school, living the life of the mind:

Few tell me, “I’m happy now because I went to college.” But many yearn for the good old days: “How wonderful to be a student again, savoring fascinating new ideas every day!” When I look at college students, though, I see little savoring. Excruciatingly bored students fill the classrooms. Well, “fill” isn’t quite right, because so many don’t bother to show up.

Objecting, “Some students love school, some hate it. The end,” is a cop-out. On average, students are painfully bored. The High School Survey of Student Engagement, probably the single best study of how high school students feel about school, reports that 66% of high school students say they’re bored in class every day. Seventeen percent say they’re bored in every class every day. Only 2% claim they’re never bored in class. Why so bored? Eighty-two percent say the material isn’t interesting; 41% say the material isn’t relevant. Another research team gave beepers to middle school students to capture their feelings in real time. During schoolwork, students were bored 36% of the time, versus 17% for all other activities.

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Research on college boredom is thin but confirms the continuity of pain. A study of British college students found 59% were bored in half or more of their lectures. Only 2% claimed to find none of their lectures boring. Since classroom attendance is usually optional in college, we can also reason from students’ behavior rather than merely inquiring about their feelings. Look at attendance. Students loathe class so much that 25–40% don’t show up.

One could protest that for every disgruntled student who cuts class, there’s an enthusiastic student sucking the marrow out of college. Wishful thinking. Remember: even though college students are generally free to unofficially attend any course, cutting classes is far more common than crashing classes. My teaching is highly rated, and I publicly announce all my courses are open to everyone on earth. Yet guests fill under 5% of my seats.

Bryan Caplan explains (in The Case Against Education), the sheepskin effect:

Graduation tells employers, “I take social norms seriously—and have the brains and work ethic to comply.” Quitting tells employers, “I scorn social norms—or lack the brains and work ethic to comply.” If you graduate, the signaling model says the market will lump you with the winners and pay you a special diploma bonus—often called a “sheepskin effect” because diplomas used to be printed on sheepskin. If you quit, the signaling model says the market will lump you with the losers and withhold the sheepskin’s reward. After all, employers won’t know why you failed to finish your degree. They’ll only know you failed.

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High school graduation has a big spike: twelfth grade pays more than grades 9, 10, and 11 combined. In percentage terms, the average study finds graduation year is worth 3.4 regular years. College graduation has a huge spike: senior year of college pays over twice as much as freshman, sophomore, and junior years combined. In percentage terms, the average study finds graduation year is worth 6.7 regular years. Results are similar for advanced degrees; in several studies, their payoff is nothing but a sheepskin effect.

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One-third of the U.S. population spends 12 years in school, gets a high school diploma, then stops. Only 2% quit high school right after eleventh grade. One-seventh spends 16 years in school, gets a bachelor’s degree, then stops. Only 2% quit college right after their junior year.

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The GSS is ideal for isolating sheepskin effects: 99.5% of participants declare both their years of education and their highest completed degree. Ignoring degrees, the GSS features a large education premium: take another year of school, get a 10.9% raise. Correcting for degrees, however, this annual payoff plummets to 4.5%. Over 60% of the education premium turns out to be a sheepskin effect. High school and four-year college diplomas are especially lucrative: crossing each of these thresholds boosts income by almost a third. As expected, the most lucrative years are also the most popular. Thirty percent have a high school diploma with exactly 12 years of schooling; only 5% finish 11 years but not 12. Eleven percent have a bachelor’s degree with exactly 16 years of school; only 3% finish their junior year but not their senior year.

In 2011, Bryan Caplan explains (in The Case Against Education), holders of advanced degrees made almost three times as much as high school dropouts:

Each step up the educational ladder seems to count. A high school diploma may sound unworthy of mention in our Information Age, but high school graduates out-earn dropouts by 30%.

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Mainstream defenders of education tend to take the numbers at face value. Since college grads earn 73% more than high school grads, expect a 73% raise when you finish college. Contrarian detractors of education tend to take the numbers at no value. For all we know, college grads would have made 73% extra even if they never set foot on a college campus.

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To properly measure the effect of education on earnings, to avoid what economists call “ability bias,” you must compare workers with equal ability but unequal education.

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The typical high school dropout was a below-average high school student. Dropouts who wonder how much they would have earned if they’d stayed in school should not, therefore, compare themselves to average high school graduates. They should compare themselves to below-average high school graduates.

The typical college grad, similarly, was an above-average high school student. B.A.s who wonder what they owe to their college diploma should not compare themselves to average high school graduates. They should compare themselves to above-average high school graduates.

The effect of education on income is like the effect of athletic practice on athletic prowess. People who practice more play better. Professional athletes practice the most and play the best. This doesn’t mean I can be a professional football player if I practice enough.

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To properly measure the benefit of football practice, to avoid ability bias, you shouldn’t compare me to pros who practice a lot. You should compare me to 165-pound 46-year-old nerds with bad knees who practice a lot.

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First, IQ pays. Holding education constant, an extra point of IQ raises earnings by about 1%.

Second, holding IQ constant, the education premium shrinks but never vanishes. In 1999, a comprehensive review of earlier studies found that correcting for IQ reduces the education premium by an average of 18%. When researchers correct for scores on the Armed Forces Qualification Test (AFQT), an especially high-quality IQ test, the education premium typically declines by 20–30%. Correcting for mathematical ability may tilt the scales even more; the most prominent researchers to do so report a 40–50% decline in the education premium for men and a 30–40% decline for women.

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The highest serious estimate finds the education premium falls 50% after correcting for students’ twelfth-grade math, reading, and vocabulary scores, self-perception, perceived teacher ranking, family background, and location.

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Correcting for AFQT, self-esteem, and fatalism (belief about the importance of luck versus effort) reduces the education premium by a total of 30%. The sole study correcting for detailed personality tests finds the education premium falls 13%. The highest serious estimate says that once you correct for intelligence and background, correcting for attitudes (such as fear of failure, personal efficacy, and trust) and personal behavior (such as church attendance, television viewing, and cleanliness) further cuts the education premium by 37%.

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Correcting for mathematical ability in the senior year of high school shaves 25–32% off the male college premium and 4–20% off the female college premium.

[…]

The mechanism is hard to nail down, but most researchers find correcting for family background reduces the education premium by 0–15%.

On reflection, though, correcting for family background probably “double-counts.” Both cognitive and noncognitive ability are moderately to highly hereditary, so you should correct for individual ability before you conclude family background overstates school’s payoff. This caveat matters. Rare studies that correct for intelligence and family background find that correcting for intelligence alone suffices.

[…]

For cognitive ability bias, 20% is a cautious estimate, and 30% is reasonable. For noncognitive ability bias, 5% is cautious, and 15% is reasonable.

[…]

On the reasonable assumption of 30% cognitive plus 15% noncognitive ability bias, dropping out of high school cuts income by almost 15%, a college degree boosts income by 40%, and a master’s degree boosts income by almost 70%.