Bryan Caplan: belief

Transcript context

…Talk me out of this dilemma. If the speed of learning is very quick — let’s say you know in three months how good a worker is — it seems implausible that you would need 12-plus years of schooling to learn the same thing. If the speed of learning is very slow — let’s say you need 10 years to figure out who’s good and who isn’t — then it seems educational signaling is actually highly productive because it helps you slot the better workers into the better jobs. So you can kind of pick your poison, but you’ve got to choose somewhere on the spectrum. Either way, it seems the cost of signaling won’t quite be that high. Or am I wrong? Yeah, you’re wrong. Let’s just take for granted that at the end of three months, any employer can know the truth about any worker. There’s still a big problem, which is, what has to happen before you can work for someone for three months? You have to be hired. What has to happen before you’re hired? You have to actually stand out in an interview. What has to happen to stand out in the interview? You have to get interviewed. What has to happen to get interviewed? You have to have your résumé not thrown in the trash. I think of a lot of what people are signaling is just, they’re signaling to get opportunities. They’re signaling to get a time to actually talk to the employer and convince them that they are worthy. I really much like the analogy of getting your big break in Hollywood. There are a lot of actors right now, I think, who are really good. But until they actually get a chance to star in a movie, it’s very hard for them to convince anyone that they have this talent. They can go and show up to try to get an audition, but again, just to get enough of people’s attention to show them and to get them to put the energy into you. Remember, hiring people is really expensive. You’re taking the time of some of the most valuable employees at a firm, who are the people who need to be there to judge whether a person’s good enough, and you are distracting them. Think about this: Say you’ve hired somebody who’s a disappointment. At what percentile does someone have to be before it even is profitable just to fire them and then go back to the drawing broad? Obviously, somebody’s in the 45th percentile of expectation, you don’t want to fire them and go back to the drawing board. Maybe you want to go back, like maybe the 30th, the 25th percentile is there. Obviously, this is about the big cost of hiring someone and just sorting them out at that stage. The fact that employers are not in the business of giving chances, they’re in the business of making money. Chances are expensive to hand out. The other Straussian reading of Caplan: Is it just labor markets work very, very poorly? Yes, no?…

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