Economists tend to be big fans of education, which is perhaps not surprising given how much of it they consume and how well their textbooks can do. Alfred Marshall, writing in 1873, hoped that education would help erase the “distinction between working men and gentlemen”. Gary Becker of the University of Chicago reimagined education as an investment in “human capital” that would earn a return in the market much like other assets. Harvard University’s Greg Mankiw, whose books have educated more than most, once calculated that differences in human capital between countries could account for much of their otherwise inexplicable differences in prosperity.
But economics can also be scathing about schooling. The theory of signalling likens many educational credentials to peacock’s tails: costly encumbrances, useful only as conspicuous proof that their owners are intellectually strong enough to bear them. And in “The Social Limits to Growth”, a book published in 1976, Fred Hirsch, once a writer for this newspaper, pointed out that education is often “positional” in nature. What matters is not only how much you have, but whether you have more than the next person. For many students it is not enough merely to acquire a good education. They must obtain a better education than the people jostling with them in the queue for sought-after jobs.
Positional goods are, by their nature, in strictly limited supply. Everyone can in principle live in a good neighbourhood, attend a good school, and work in a good job. But logic sadly dictates that not everyone can enjoy the nicest neighbourhoods, best schools or most prestigious jobs. As Hirsch pointed out, “what each of us can achieve, all cannot.”
An unhappy corollary is that one family’s outlays on schooling raise the bar for everyone else. Families are drawn, often unwittingly, into educational arms races. They spend money and time on after-school tutoring or extra-curricular activities (so-called shadow education) in the expectation that it will improve their child’s position in the queue for advancement. But they quickly discover that everyone else is doing the same, leaving them in the same position as before. They are in fact worse off, because of the costs and frustration incurred. “If everyone stands on tiptoe, no one sees better,” Hirsch noted. And their feet also hurt.
These arms races are often particularly ferocious in East Asia. In China and South Korea, schoolchildren face nationwide “high-stakes” tests—the gaokao in China and the suneung in South Korea—that play a big role in determining whether and where they can go to university. In China’s cities, pupils spent 10.6 hours a week on after-school tutoring, according to a report by Frost & Sullivan, a market-research firm.
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The arms race is notably less intense in parts of Europe. In Norway and Sweden parents show little demand for tutoring—the wealthy even less than others, according to Steve Entrich of the University of Potsdam. And overeducation is less common in Germany and other countries that sort children early into academic or vocational schools, with little mobility between the two, according to a study by Valentina Di Stasio of Utrecht University together with Thijs Bol and Herman Van de Werfhorst of the University of Amsterdam. Vocational schools are supposed to teach what employers want recruits to know. That may limit the scope for credential inflation. For better or worse, they also remove large numbers of students from the race for more academic laurels…