What Does a Degree Signal?

There are plenty of critics of college.  It’s not uncommon to hear prominent pundits challenge the prevailing narrative that everyone should go to college.  Many contrarians say that too many young people are going to college, not too few.  They say that higher education is well-suited for the smart, hard-working, above average types, but too many mediocre students are attending.  They say it works better when only the best and brightest attend.  I think most of these critics have it backwards.

A degree is a signal.  It is well established that higher education’s primary value, and hence business model, is as a sorting mechanism rather than a forming mechanism.  Sure, you learn and change and gain things through the typical four year experience.  But all of those things could be had without being a registered student.  The only reason people keep paying to make the experience official is because of the signalling value of a transcript.  Given this fact, it follows that the signal would provide the most value for the marginal students, and the least value for the smartest, hardest working, highest achieving (not merely academic achievement, which doesn’t always mirror what matters in the world outside the walls of the classroom).  In other words, college is far more valuable to an average person who is content to put in less effort it than an above average talent who is very ambitious.

Considering how widespread the granting of degrees is, and considering the talent level of the typical college classroom, the degree doesn’t signal much.  It signals that you are average.  You’re like most other people.  If you’re at or below average, it can be valuable to have a way to let people know this.  If you’re above average, you want signals that demonstrate that you are, not merely those that lump you in with average.  Look around a college classroom and remember; what you’re purchasing is a signal that says, “I’m about the same as these people.”  For many of the sharpest, hardest working students, a degree signal greatly undersells them.

So much so that degrees have actually become a reverse signal in some circles.  In the venture capital world, it’s not uncommon for investors to count skipping or dropping out of college as a big plus for founders they want to invest in.  Entrepreneurs who have the courage to pursue their vision in the face of social pressure signal something really powerful.  Some of the most interesting people and opportunities in the world want an answer to the question, “Why did you go to college?”, rather than why didn’t you.  If you’ve got drive, creativity, and smarts above average, why did you choose the relatively easy, prevailing path?  Why did you wait four years to get started on the really good stuff?

Like most critics, I agree that college is not for everyone.  Where I disagree is that I think those who benefit least from it are those who are smartest and hardest working and most able to do more without it.  College is a least common-denominator signal.