It's a well-known fact that college graduates make more money than high school graduates who do not go to college, but the reason is not clear. Bryan Caplan offers a typology where he splits the gap between the income of college graduates and of high school graduates into three parts: human capital, ability bias, and signaling. Caplan also warns economists of education against conflating ability bias with signaling. The (human capital + signaling) total gives the "return on education" for a college degree -- the part that is causally due to getting a college degree. The (human capital) part alone gives the return on education through the channel of improved productivity, whereas the (signaling) part gives the return on education through the channel of being able to convince potential employers that they have higher productivity. The (ability bias) part can be thought of as selection bias for pre-existing ability: people who go on to graduate from college differ from people who do not go to college in terms of their pre-existing abilities (here "pre-existing" does not mean "innate" -- but rather it means what they had before starting college, or what they would have acquired through natural maturing even if they hadn't gone to college) and these people would likely have earned more (compared to the ones who didn't go to college) even if they had chosen not to go to college.

I want to look at the signaling channel more closely. A college degree does send a signal of some sort to potential employers, and stories of college dropouts who achieve great success notwithstanding, many employers, particularly for high-skilled occupations, prefer workers with college degrees even if the degree is not directly related to the work on the job. But why, precisely, does the employer value the degree more? I can categorize the possible explanations into three categories:

1. Causally agnostic signaling: Employers are relying on either their own experience or on the conventional wisdom that people with college degrees are more productive employees than people without. They don't actually care whether this is due to pre-existing productivity or due to human capital acquired in college.
2. Signaling of human capital acquisition: Employers believe that college students acquire valuable human capital from their college experience (whether it's their coursework or other aspects of the college experience). The college degree is a signal of this human capital acquisition. Note that this story has a weak hole, namely, first, that the human capital acquired in colleges is irrelevant for many jobs, and second, that if all one has to signal is human capital, it's easy to signal this by taking a relevant test or battery of tests, as this Wall Street Journal article noted. Note that, in so far as colleges do not provide valuable human capital to students, employers are treating the college degree as an important signal based on a mistaken belief, and at least in principle, the market should punish such beliefs.
3. Signaling of pre-existing ability: Employers believe that people whoget through college have greater ability (intelligence, conscientiousness, conformism, etc.) than people who cannot or choose not to. Note that some of these abilities (such as intelligence and conscientiousness) can be signaled by taking tests. Others, such as conformism, are harder to signal directly, because to signal conformism, one has to signal it for a sufficiently lengthy period of time in the "usual" setting (namely, college), and therefore, status quo bias makes it hard to move away from the equilibrium of requiring college degrees. Note also that some of these "pre-existing abilities" may be acquired and honed in college (for instance, college may teach people better work discipline and make them more conformist). The reason I use "pre-existing ability" is that it's not the primary purpose of college to teach these skills, and it's unclear that colleges in general teach these skills to the majority of their students.

What do you think is the breakdown of signaling between (1), (2), and (3)? Any other thoughts about whether the question is well-conceived, and about alternative formulations of the question?

UPDATE: Lauren Rivera's article on how elite firms hire, which was discussed by Bryan Caplan in an EconLog blog post, is relevant.

At LessWrong we encourage people to be curious. Curiosity causes people to ask questions, but sometimes those questions get misinterpreted as social challenges or rhetorical techniques, or maybe just regular questions that you don't have a "burning itch" to know the answers for (and hence maybe not particularly worth answering). I sometimes preface a question by "I'm curious," but of course anyone could say that so it's not a very effective way to distinguish oneself as being genuinely curious. Another thing I sometimes do is to try to answer the question myself and present one or more answers as my "guesses" and ask if one of them is correct, since someone who is genuinely curious is more likely put in such effort. But unfortunately sometimes that backfires when the person you're directing the question at interprets the guesses as a way to make them look bad, because for example you failed to hypothesize the actual answer and include it as one of the guesses, and all your guesses make them look worse than the actual answer.

I've noticed examples of this happening to others on LW (or at least possibly happening, since I can't be sure whether someone else really is curious) as well as to myself, and can only imagine that the problem is even worse elsewhere, where people may not give each other as much benefit of doubt as we do around here. So my question is, what can curious people do, to signal their genuine curiosity when asking questions? Has anyone thought about this question already, or perhaps can recognize some strategies they already employ and make them explicit for the rest of us?

ETA: Perhaps I should say a bit more about the kind of situation I have in mind. Often I'll see a statement from someone that either contradicts my existing beliefs about something or is on a topic that I'm pretty ignorant about, and it doesn't come with an argument or evidence to back it up. I'd think "I don't want to just take their word since they might be wrong, but there also seems a good chance that they know something that I don't in which case I'd really like to know what it is, so let's ask why they're saying what they're saying." And unfortunately this sometimes gets interpreted as "I'm pretty sure you're wrong, and I'm going to embarrass you by asking a question that I don't think you can answer."

ETA2: The reason I use "signal" in the title is that people who do just want to embarrass the other person would want to have plausible deniability. If it was clear that's their intention and it turns out that the other person has a perfectly good answer, then they'll be the one embarrassed instead. So ideally the curious person should send a signal that can't be faked by someone who just wants to pretend to be curious.

The media, most recently The Economist and Scientific American, have been publicizing a surprising statistical finding: in the current economic climate, when more Americans than ever are poor, support for policies that redistribute wealth to the poor are at their lowest levels ever. This new-found antipathy towards aid to the poor concentrates in people who are near but not yet on the lowest rung of the social ladder. The Economist adds some related statistics: those who earn slightly more than the minimum wage are most against raising the minimum wage, and support for welfare in an area decreases as the percentage of welfare recipients in the area rises.

Both articles explain the paradoxical findings by appealing to something called "last place aversion", an observed tendency for people to overvalue not being in last place. For example, in laboratory experiments where everyone gets randomly determined amounts of money, most people are willing to help those with less money than themselves gain cash - except the person with the second to lowest amount of money, who tends to try to thwart the person in last place even if it means enriching those who already have the most.

"Last place aversion" is interesting, and certainly deserves at least a footnote in the catalogue of cognitive biases and heuristics, but I find it an unsatisfying explanation for the observations about US attitudes toward wealth redistribution. For one thing, the entire point of last place aversion is that it only affects those in last place, but in a massive country like the United States, everyone can find someone worse off than themselves (with one exception). For another, redistributive policies usually stop short of making those who need government handouts wealthier than those who do not; subsidizing more homeless shelters doesn't risk giving the homeless a nicer house than your own. Finally, many of the policies people oppose, like taxing the rich, don't directly translate to helping those in last place.

I propose a different mechanism, one based on ... wait for it ... signaling.

In a previous post, I discussed multi-level signaling and counter-signaling, where each level tries to differentiate itself from the level beneath it. For example, the nouveau riche differentiate themselves from the middle class by buying ostentatious bling, and the nobility (who are at no risk of being mistaken for the middle class) differentiate themselves from the nouveau riche by not buying ostentatious bling.

The very poor have one strong incentive to support redistribution of wealth: they need the money. They also have a second, subtler incentive: most redistributive policies come packaged with a philosophy that the poor are not personally responsible for the poverty, but are at least partially the victims of the rest of society. Therefore, these policies inflate both their pocketbook and their ego.

The lower middle class gain what status they have by not being the very poor; effective status signaling for a lower middle class person is that which proves that she is certainly not poor. One effective method is to hold opinions contrary to those of the poor: that redistribution of wealth is evil and that the poor deserve their poverty. This ideology celebrates the superiority of the lower middle class over the poor by emphasizing the biggest difference between the lower middle class and the very poor: self-reliance. By asserting this ideology, a lower middle class person can prove her lower middle class status.

The upper middle class gain what status they have by not being the lower middle class; effective status signaling for an upper middle class person is that which proves that she is certainly not lower middle class. One effective way is to hold opinions contrary to those of the lower middle class: that really the poor and lower middle class are the same sort of people, but some of them got lucky and some of them got unlucky. The only people who can comfortably say "Deep down there's really no difference between myself and a poor person" are people confident that no one will actually mistake them for a poor person after they say this.

As a thought experiment, imagine your reactions to the following figures:

1. A bearded grizzled man in ripped jeans, smelling slightly of alcohol, ranting about how the government needs to give more free benefits to the poor.

2. A bearded grizzled man in ripped jeans, smelling slightly of alcohol, ranting about how the poor are lazy and he worked hard to get where he is today.

3. A well-dressed, stylish man in a business suit, ranting about how the government needs to give more free benefits to the poor.

4. A well-dressed, stylish man in a business suit, ranting about how the poor are lazy and he worked hard to get where he is today.

My gut reactions are (1, lazy guy who wants free money) (2, honorable working class salt-of-the-earth) (3, compassionate guy with good intentions) (4, insensitive guy who doesn't realize his privilege). If these are relatively common reactions, these would suffice to explain the signaling patterns in these demographics.

If this were true, it would explain the unusual trends cited in the first paragraph. An area where welfare became more common would see support for welfare drop, as it became more and more necessary for people to signal that they themselves were not welfare recipients. Support for minimum wage would be lowest among people who earn just slightly more than minimum wage, and who need to signal that they are not minimum wage earners. And since upper middle class people tend to favor redistribution as a status signal and lower middle class people tend to oppose it, a recession that drives more people into the lower middle class would cause a drop in support for redistributive policies.

This is thread where I'm trying to figure out a few things about signalling on LessWrong and need some information, so please immediately after reading about the two individuals please answer the poll. The two individuals:

A. Sees that an interpretation of reality shared by others is not correct, but tries to pretend otherwise for personal gain and/or safety.

B. Fails to see that an interpretation of reality is shared by others is flawed. He is therefore perfectly honest in sharing the interpretation of reality with others. The reward regime for outward behaviour is the same as with A.

To add a trivial inconvenience that matches the inconvenience of answering the poll before reading on, comments on what I think the two individuals signal,what the trade off is and what I speculate the results might be here versus the general population, is behind this link.

Yesterday I attended a Seattle meetup where the discussion turned to fashion for a time (because apparently the mini-camp participants were given some instructions on fashion as a useful part of instrumental rationality). (Unfortunately none of us knew much about the topic so the discussion turned into "how can we find an expert to advise us for minimal cost?") It was mentioned that dressing "badly" can be a useful signalling device, and some examples were given. Here's an attempt at a more complete list of possible signals one might be sending by dressing "badly".

1. I have better use of my time than thinking about what to wear. Since thinking about what to wear is generally a highly valuable use of time, perhaps I'm really productive at something else.
2. I'm in a profession where technical skills are valued above social skills.
3. Costly signaling is mostly a zero-sum game. I like to opt out of zero-sum games.
4. Either I'm a loner or none of my friends care about fashion either. If you care a lot about fashion, our interests are probably too different, and us socializing is probably not the best use of your time or mine.
5. I'm a member of a group or subculture where dressing "badly" is normative and used for identification/affiliation.

The idea here is, if you do decide to start dressing "well", know what you're giving up first. (Of course you're also giving up possibly implying that nobody taught you how to dress and you're not sufficiently strategic to have thought of learning it yourself. Or implying that you don't have the mental, financial, and/or social resources to keep up with fashion. A lot of signaling depends on what your audience already knows about you, or can infer from your other signals.) See also Yvain's related post, Why Real Men Wear Pink and comments there.

The signaling view of college holds that graduates of elite colleges earn high average salaries not because of what they learned in school  but rather because top colleges select for students who have highly valued traits, the two most important probably being high IQ and strong work ethic.  Since in rich countries almost every smart, hard working person attends college not going to college sends a loud negative signal to potential employers.  Elite colleges, of course, are fantastically expensive signaling devices.

Although I teach at an elite college I have a proposal for an alternate much less expensive and probably even more accurate signaling mechanism.  An organization could have a one month program which only admits those who get a high score on the SATs or some other intelligence test.  Then the entire program would consist of spending sixteen hours a day solving by hand simple addition and subtraction problems.  The point of the program would be to show that its graduates can spend a huge amount of time doing extremely boring tasks with high accuracy.   Graduating from the program would signal that you had both a high IQ and strong work ethic.

If the program had a reputation for graduating valuable employees then I suspect it would become desirable to many recent high school graduates.  The challenge would be for the program to initially earn its reputation.  Perhaps it could accomplish this by having some well-known backers, by giving big cash grants to its first few graduates or by promising the first few graduates attractive jobs such as at the SIAI.  

It's surprised me that there's been very little discussion of The Long Now here on Less Wrong, as there are many similarities between the groups, although the approach and philosophy between them are quite different. At a minimum, I believe that a general awareness might be beneficial. I'll use the initials LW and LN below. My perspective on LN is simply that of someone who's kept an eye on their website from time to time and read a few of their articles, so I'd also like to admit that my knowledge is a bit shallow (a reason, in fact, I bring the topic up for discussion).

Similarities

Most critically, long-term thinking appears as a cornerstone of both the LW and LN thought, explicitly as the goal for LN, and implicitly here on LW whenever we talk about existential risk or decades-away or longer technology. It's not clear if there's an overlap between the commenters at LW and the membership of LN or not, but there's definitely a large number of people "between" the two groups -- statements by Peter Thiel and Ray Kurzweil have been recent topics on the LN blog and Hillis, who founded LN, has been involved in AI and philosophy of mind. LN has Long Bets, which I would loosely describe as to PredictionBook as InTrade is to Foresight Exchange. LN apparently had a presence at some of the past SIAI's Singularity Summits.

Differences

Signaling: LN embraces signaling like there's no tomorrow (ha!) -- their flagship project, after all, is a monumental clock to last thousands of years, the goal of which is to "lend itself to good storytelling and myth" about long-term thought. Their membership cards are stainless steel. Some of the projects LN are pursuing seem to have been chosen mostly because they sound awesome, and even those that aren't are done with some flair, IMHO. In contrast, the view among LW posts seems to be that signaling is in many cases a necessary evil, in some cases just an evolutionary leftover, and reducing signaling a potential source for efficiency gains. There may be something to be learned here -- we already know FAI would be an easier sell if we described it as project to create robots that are Presidents of the United States by day, crime-fighters by night, and cat-people by late-night.

Structure: While LW is a project of SIAI, they're not the same, so by extension the comparison between LN and LW is just a bit apples-to-kumquats. It'd be a lot easier to compare LW to a LN discussion board, if it existed.

The Future: Here on LW, we want our nuclear-powered flying cars, dammit! Bad future scenarios that are discussed on LW tend to be irrevocably and undeniably bad -- the world is turned into tang or paperclips and no life exists anymore, for example. LN seems more concerned with recovery from, rather than prevention of, "collapse of civilization" scenarios. Many of the projects both undertaken and linked to by LN focus on preserving knowledge in a such a scenario. Between the overlap in the LW community and cryonics, SENS, etc, the mental relationship between the median LW poster and the future seems more personal and less abstract.

Politics: The predominant thinking on LW seems to be a (very slightly left-leaning) technolibertarianism, although since it's open to anyone who wanders in from the Internet, there's a lot of variation (if either SIAI or FHI have an especially strong political stance per se, I've not noticed it). There's also a general skepticism here regarding the soundness of most political thought and of many political processes.  LN seems further left on average and more comfortable with politics in general (although calling it a political organization would be a bit of a stretch). Keeping with this, LW seems to have more emphasis on individual decision making and improvement than LN.

Thoughts?