James Paton writes for the University of York’s The Yorker on why cuts to higher education may be justified as too many people are going to university:
In the economics of education, there are two main theories of what a degree is for.
The first is the human capital argument: people need to be educated in order to gain the required skills to work in a particular sector. Second is the education signaling argument: a degree signals to the labour market that the graduate is of a higher calibre than those who don’t have a degree.
A distinction must be made between Liberal Arts degrees and Science degrees. Liberal Arts degrees come under the education signaling argument. It does not matter if I am (to become) a PPE graduate, I can go into journalism, banking, consultancy and many other areas; I won’t use the stuff from my degree, it just shows that I am an able individual through my ability to complete a degree. I may gain some human capital and skills through thinking more in depth, writing papers and researching topics, but I do not learn practical skills. On the other hand, mathematics, chemistry, engineering and physics (there are many others too) do have a signalling effect but they are more suited to their respective employments (one could say they are very academically vocational), and thus fall in line with the human capital argument…
Full article here.