Tweet: Education as Signaling or Skill Building?

This is a very interesting discussion on education and its fundamental purpose. It is focusing on two important paradigms of education; The Human Capital Theory and The Signaling Theory.

Human capital theory claims that education will stimulate social mobility and raises wages by increasing productivity

The signalling perspective on education suggests that education causes social mobility because it signifies the competence to the employers or other decision makers. It suggests that the asymmetric information in job market causes the decision maker to look for most trustworthy attributes of the job seeker. That is why getting into a top college sends an stronger positive signal.

In a popular Ted talk by Rory Sutherland “Life lessons from an ad man” he gives a funny explanation about the effect of signaling power of credentials on a persons confidence level which in-turn makes him more successful in life.

” I don’t know if anybody knows it. Someone was actually suggesting that you can take this concept further, and actually produce placebo education. The point is that education doesn’t actually work by teaching you things. It actually works by giving you the impression that you’ve had a very good education, which gives you an insane sense of unwarranted self-confidence, which then makes you very, very successful in later life. So, welcome to Oxford, ladies and gentlemen. “




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