In a recent Atlantic article, George Mason University economist Bryan Caplan declares that college is, mostly, a waste of time. Caplan's claim is sure to appeal to those who feel that their own higher education was wasted, or who dislike colleges because of liberal campus politics. But his arguments against college are deeply flawed, and the country would be well-advised to take them with a shot of skepticism.

Caplan asserts that much of the value of a college education comes not from skills and knowledge, but from something economists call signaling. Suppose employers want to hire smart, hard-working, conscientious employees, but they can't tell which employees fit the bill. They might demand that any employee complete some arduous series of tasks simply to prove that they have the requisite traits. People who aren't smart, hard-working and conscientious enough won't bother to go through with the trial, allowing employers to separate the good workers from the bad. Caplan believes that college is mostly this kind of task — an ordeal that young people go through just to demonstrate their worth.

But Caplan misapplies the theory of signaling. First of all, he says that it represents "wasted resources." In signaling models, the resources that people spend proving themselves aren't wasted — they're an economically efficient way of overcoming the natural problem of asymmetric information. Basic economic reasoning suggests that if there were an easier, cheaper way to tell which employees would be good, at least some companies would have discovered it by now. Yet degree requirements remain ubiquitous. So if Caplan is right, the signaling benefit of college is still a positive and necessary economic force.