Using Signals: The Value of a Higher Education

How many of us remember what we studied in college? Unless your degree is a technical degree, and years later, you are in a field that calls directly upon that knowledge, the chances are strong that you have forgotten even the most basic information in your college textbooks. Even technical students are most unlikely to remember the exact details of how they proved a particular theorem or how they derived a certain result.

If no one remembers their college education, why is it prized so much? Is is really valuable, or is it only socially acceptable to have a college degree, and why?

Welcome to the world of signaling. In real life, it is often extremely difficult to make accurate judgments about anything. Is a person good or bad? Is a second hand laptop going to die out on you as soon as the sale is completed? Is a candidate for a job really as qualified as he says he is? How strong is a competitor for a market? However, in spite of the difficulty of making these judgments, we are called on to do it every day. So what do we do in these situations? What strategy do we employ to maximize the chances of  a correct decision?

College Education

Image Credit: MacIomhair

The truth is, even if we could take all the trouble to make an accurate decision, we usually don’t have the time for it. So in real life, we look for signals. Signals are indications that give us a quick idea of the item or person that we’re trying to evaluate. Haven’t you ever judged a book by a cover? Often it’s very difficult to tell in advance how good a book is going to be. We simply have to judge it based on the limited information that we have – and that happens to be it’s cover.

When gazelles are frightened by the roar of a predator, they give a little jump into the air. This is meant to  signal to the predator that they are very fit and can easily outrun it if it decides to give chase. The predator can use the limited information in the jump to make the assessment of which gazelle is the slowest or least fit in a particular group so that he can chase it down and not make the mistake of attacking a fit one.

Coming back to our discussion of the college education, even though none of us remember or make use of the information in college in real life, we all know that college is difficult to go through. A person who has gone through college has signaled that they are at least hard working and smart enough to have done so. Conversely, we must assume that a person who doesn’t have a college education hasn’t been smart or hard working enough to do so. If a person is indeed good enough and motivated enough to pass college, then why haven’t they gone ahead with it? This is the real value of going through college, not that the knowledge will help you in later life. It won’t. But it’s a signal to the outside world that you are fit.

Since people rely on signals so much, it then becomes very important to manipulate signals to ensure that people assess you correctly. Unfortunately, the most reliable signals are reliable simply because they are difficult to manipulate. It would be impossible for an unfit gazelle to jump to a good height. However, sometimes, it is possible to send out a signal deliberately at a cost to yourself to make your assessor obtain an erroneous impression of your true capabilities. More on how to do this in my next article.

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