Over at Econlog, Bill Dickens is trying to convince Bryan Caplan that signaling does not explain the majority of the value of higher education. Two of his reasons why education is productive is that is has a value as a consumption good, and as consumption capital:

2. Education is a consumption good. This should be self explanatory. At the margin school may be work, but infra-marginally at least some (if not most) people actually enjoy the reading, the lectures, the homework, etc.

3. Education is not just investment in work capital, its also an investment in consumption capital and social capital. I feel much more  at home in the world due to the fact I understand certain cultural references… The  shared culture produced by the education experience expands our common  language with a lot of meaning, and that produces huge network  externalities. Knowing history does help me do my job, but it is much  more important that it allows me to make analogies that will be  understood by acquaintances.

As an explanation for why people value college, this has some appeal. As an explanation for why college has a social value, I think it’s a pretty weak defense. Grant for a moment that it is entirely factually correct, is there any reason why this should be subsidized?

For the first thing this is a terribly regressive subsidy, primarily benefitting people with above average ability and wealth. Second, if the goal is to increase “social capital” for consumption purposes this is probably the least efficient way to do it. The money would be better spent subsidizing high-minded TV shows that make audiences more literate and cultures, or providing grants for creating and broadcasting informative documentaries or books that are catered towards people who normally wouldn’t watch them or read them. You would almost certainly generate more consumption capital and welfare by providing free subscriptions to the New Yorker ($40) for 175 households than a year in college ($7,020) for one person, and it would cost the exact same.

I’m not defending the signaling theory, Bill Dickens’ theory, or any other theory of education as a matter of fact. But proponents of more education investment should not look to Dickens’ criticisms of the signaling theory education, because even if he is right education is still way oversubsidized.