Caplan says that Schooling is Mostly Signaling—Econlib If I told him “since education in US is just about signaling, an American should move to a place where their degree + alma mater would be regarded as more valuable—e.g., a developing country, or a poorly educated area, etc.”, d’you think he’d agree?
I do not think Bryan would agree with that. Studying in the United States (US) means a higher chance of being employed relative to studying in a random country, but the US has higher salaries, which plays against leaving.
Don’t you think a similar objection would apply to Caplan’s “proof” that people don’t move to poorer neighborhoods because something something externalities?
(Moreover, I just realized thata “realists say that people only care about relative wealth” is a remarkable strawman, and it’s refutation does not entail that people barely care about relative income—and this is the first time I see an Economics professor mixing claims about wealth and income in the same argument)
Yes, I think a similar objection applies. However, I would still expect more people to move to neighbourhoods with a lower mean income if people cared a lot about their income relative to their neighbours. I believe people’s behaviour is better explained by people caring much more about their income than their income relative to their neighbours.
Or: people care about relative income because: a) it entails more wealth (as capital gains accumulate faster than returns on work) which entails more power, like the possibility of funding intellectuals to say that inequality doesn’t matter; and b) it signals status, or it is used to buy status-goods, such as buying a nice house in a rich neighborhood without fearing your neighbors wanting to sack it (since they might care about relative income, even if you don’t)
Btw I just realized I can totally bite this bullet: I have lived in 4 cities in the last decade, and I prefer to live in the cheap one not only because of the low cost of living (like many online workers have been doing), but also because I never feel poor in relation to others...Which results in mixed feelings, though, as I don’t want to feel much wealthier than the surroundings—it makes me wonder of I should be paying more for services and taxes etc.
Caplan says that Schooling is Mostly Signaling—Econlib
If I told him “since education in US is just about signaling, an American should move to a place where their degree + alma mater would be regarded as more valuable—e.g., a developing country, or a poorly educated area, etc.”, d’you think he’d agree?
Hi Ramiro,
I do not think Bryan would agree with that. Studying in the United States (US) means a higher chance of being employed relative to studying in a random country, but the US has higher salaries, which plays against leaving.
Don’t you think a similar objection would apply to Caplan’s “proof” that people don’t move to poorer neighborhoods because something something externalities?
(Moreover, I just realized thata “realists say that people only care about relative wealth” is a remarkable strawman, and it’s refutation does not entail that people barely care about relative income—and this is the first time I see an Economics professor mixing claims about wealth and income in the same argument)
Yes, I think a similar objection applies. However, I would still expect more people to move to neighbourhoods with a lower mean income if people cared a lot about their income relative to their neighbours. I believe people’s behaviour is better explained by people caring much more about their income than their income relative to their neighbours.
Or: people care about relative income because: a) it entails more wealth (as capital gains accumulate faster than returns on work) which entails more power, like the possibility of funding intellectuals to say that inequality doesn’t matter; and b) it signals status, or it is used to buy status-goods, such as buying a nice house in a rich neighborhood without fearing your neighbors wanting to sack it (since they might care about relative income, even if you don’t)
Btw I just realized I can totally bite this bullet: I have lived in 4 cities in the last decade, and I prefer to live in the cheap one not only because of the low cost of living (like many online workers have been doing), but also because I never feel poor in relation to others...Which results in mixed feelings, though, as I don’t want to feel much wealthier than the surroundings—it makes me wonder of I should be paying more for services and taxes etc.