Please put the "The post appeared first on Econlib" at the beginning instead of the end of the post. It would also be better to add "on [date]" to the end of it. Thanks for considering.
It seems that this is a big deal, but it isn't. There are many examples of this phenomenon. Example: when one contracts with a builder to build residential housing, when is the builder paid? When he finishes. I cannot think of a case where the builder is paid each day he work on the house (not the employees of the builder who are wage earners, but the builder himself). He is usually either paid when the house is completed. How much is 2/3 of a house worth? Not that much. The same is true with work in process inventory in a manufacturing plant. How much would a retail car customer pay for 64% of a car, with no transmission? They don't. There isn't a retail market for WIP. How many of us would pay for and who would sell 40% of one of Dr. Caplan's books? They don't. (I have all of them).
The question that the educational establishment is trying to answer is fair: when is someone done with something as ethereal as education, skills or competencies? Like every product or service ever devised, retail buyers have to know how to differentiate between WIP and a finished good or service.
What your argument misses is that do in fact buy WIP goods. Car kits are a thing, as are individual parts of cars. On the used market often people can break down a complete car or motorcycle and sell the parts individually for a good bit more than they could the machine as a whole.
Likewise, tracking the value of work in progress absolutely matters in a plant, and the value change at each step has to measure actual changes in value inputted to the product. You can't just say "This product has all the parts assembled and complete and is worth 100$, but once I put a 1 cent sticker on it it now costs 500$." There will be audits aplenty from unhappy people if you try that. By the time people get their diploma or bachelor's degree they have already completed all the class work, so the sheepskin effect suggests that the course work is not the valuable part. Otherwise people would just take classes and get grades, then tell potential employers about that, much like they do for professional certifications.
But doesn't this just show how ridiculous it is to measure "education" by inputs (ie., the years of education) rather than some measure of "outputs."
Wouldn't you expect that someone who spends 12 years in school and STILL doesn't earn a diploma to be, to put it mildly, a pretty substandard person who is treated this one in the labor market?
Please put the "The post appeared first on Econlib" at the beginning instead of the end of the post. It would also be better to add "on [date]" to the end of it. Thanks for considering.
It seems that this is a big deal, but it isn't. There are many examples of this phenomenon. Example: when one contracts with a builder to build residential housing, when is the builder paid? When he finishes. I cannot think of a case where the builder is paid each day he work on the house (not the employees of the builder who are wage earners, but the builder himself). He is usually either paid when the house is completed. How much is 2/3 of a house worth? Not that much. The same is true with work in process inventory in a manufacturing plant. How much would a retail car customer pay for 64% of a car, with no transmission? They don't. There isn't a retail market for WIP. How many of us would pay for and who would sell 40% of one of Dr. Caplan's books? They don't. (I have all of them).
The question that the educational establishment is trying to answer is fair: when is someone done with something as ethereal as education, skills or competencies? Like every product or service ever devised, retail buyers have to know how to differentiate between WIP and a finished good or service.
What your argument misses is that do in fact buy WIP goods. Car kits are a thing, as are individual parts of cars. On the used market often people can break down a complete car or motorcycle and sell the parts individually for a good bit more than they could the machine as a whole.
Likewise, tracking the value of work in progress absolutely matters in a plant, and the value change at each step has to measure actual changes in value inputted to the product. You can't just say "This product has all the parts assembled and complete and is worth 100$, but once I put a 1 cent sticker on it it now costs 500$." There will be audits aplenty from unhappy people if you try that. By the time people get their diploma or bachelor's degree they have already completed all the class work, so the sheepskin effect suggests that the course work is not the valuable part. Otherwise people would just take classes and get grades, then tell potential employers about that, much like they do for professional certifications.
They are in the education market after all.
Thanks, I'm going to share this with my class as optional reading!
What's "the CPS"?
But doesn't this just show how ridiculous it is to measure "education" by inputs (ie., the years of education) rather than some measure of "outputs."
Wouldn't you expect that someone who spends 12 years in school and STILL doesn't earn a diploma to be, to put it mildly, a pretty substandard person who is treated this one in the labor market?