Gap Year & Signaling Value

Harvard or Gap Year?

I’ve noticed 2 things.

  1. It’s fashionable to encourage 18-year-olds to take a gap year instead of dropping $50k for a remote year at Harvard.
  2. The delta between Harvard or “Stansbury” (Jessie Spano anyone?) and a state school is “signaling value” not education value.

People have mixed feelings about #2. There are two poles.

  • Idealists recoil at its imperfect sorting and potential biases. The stakes are high, this is understandable.
  • Pragmatists accept the rules of the game “as is”. They have no time for normative arguments, they have SATs to study for (unless you are applying to a UC!). Every non-rich parent feels this way, a choice Maslow would have easily predicted.

Like those Venn diagrams that all overlap at a”you can be here” center, I suspect most people reconcile idealism and pragmatism effectively enough. By that, I mean pragmatism wins out but idealism gets all the civilized talk when you and your friends are drinking wine around the kitchen island.

But when an idealist uses their contempt for #2 to justify #1 they are confusing their beliefs with reality. In the trading world, these are the same people who care about being right over making money. In law, it would be like being a brilliant litigator who always loses on a technicality. Eventually you will need a new job, preferably one without a scoreboard.

When the idealist argues for a gap year instead of the Harvard Zoom semester they need more than “college admissions is a dog and pony show”. That’s not an argument for opting out. Similarly, we all agree that facetime at work is a sham, while we continue to work late. That’s how Nash equilibriums work. While suboptimal in aggregate, your move is the same one you’d make even if everyone else chose differently. So unless you think that a Harvard ’24 diploma will have an asterisk on your resume forevermore, the case for a gap year needs to be rooted in more than the rejection of pretense.

Loosening The College Grip

Having shown my hand on how I think the university sorting function will maintain perceived value, I would like to hear which forces are conspiring to upend that. If the university is not the atomic unit for compressing a person’s pre-drinking age life into a single string, what will serve that function?

Thinking aloud a bit, diplomas need to be viewed from the employers’ point of view. A diploma reduces your cost to being hired. You paid part of the cost in your tuition. The employer pays part of the cost through higher wages. The university collects a finder’s fee. The university is outsourced HR but since the university is “working” for every hiring company, the employer requires the student to bear some of the cost.

For those rooting for the “death of universities”, they must believe the “finder’s fee” is too high. I’m very receptive to that possibility, but I have questions.

  • So what model emerges to solve matchmaking even if we feel the university’s educating function is settled?
  • Is it a matter of unbundling the signaling effect from education by making the student’s abilities as measurable as their blood pressure?
  • Is Google or Facebook with their intimate knowledge of your behavior better suited to sort you (and if so at what age)?
  • Is your search history more predictive of whatever employers care about than your transcript?
  • Is distance learning going to create more fingerprints that big data forensics can use to identify potential?

Perhaps the risk is not that your resume will have an asterisk, but that you don’t need a resume at all. When you have enough compute why settle for a summary?

The answer to such a question is the breadcrumbs to humanity’s oldest questions. Have fun with that.

Some recent news on the unbundling of signal and education that probably isn’t getting enough attention:

To be blunt, university degrees are only as valuable as the weight applied by company hiring managers, and Google has just signaled that a $300 certificate has parity with a diploma. If you can earn $93k after taking a $300 course, then what’s the future of higher education? (Link)

Higher ed in the next 20 years will be largely influenced by large employers’ hiring practices. We are seeing experiments like Lambda and this effort by Google. I’m funding a 529 for my boys but there’s an outside chance by the time it’s their turn there will be de-risked alts to the 4-year college.

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