A college degree is just a piece of paper to me. I worked hard and spent a lot of money on mine. But, it’s not what got me a job.

I find the above quote, from Rachel Esterline, horrifying.

The conclusion that a college degree does not get you a job begs the question of what, precisely, a college degree does get you. There are rosy platitudes about “learning,” or “experiencing life” (really, just living out from under the ready hand of one’s parents for the first time). There are also depressing prognostications claiming that the purpose of college is to indebt Americans so that they are forced to enter the business world to pay off their debt. Indentured servants.

But let’s ignore that for now.

In order to be a marketable job candidate once you graduate, I believe you need to spend hours outside of the classroom to develop your real-world skills

College does not prepare you to get a job; well, then, what does? The author lists a number of things; it reduces to internships (experience), networking, attitude, and skills.

You don’t necessarily need a degree to get a job. You need skills.

Yes, skills. What are skills? “How to use Twitter” or “How to create a PivotTable in Excel?” Or are skills more along the lines of “How to write persuasively,” or “How to think clearly?”

It’s certainly difficult to say, and depends to no little extent on the job you’re pursuing. If you’re trying to get a job as a programmer, experience programming helps – but so does a solid knowledge of theoretical computer science, which you learn in college. And I imagine it’s quite necessary to have an Engineering degree to get a job as an Engineer.

A degree can act as a certification that you have certain skills. You can’t graduate from an Engineering program without a certain minimum baseline of both skills and knowledge.

But let’s step back and look at college a bit more. Broadly speaking, there are two types of college education: the liberal arts, and vocational studies. Vocational studies include Engineering and Welding, but I’d also through pre-professional programs like Social Work, Art, Theatre, and Business in there.

Liberal arts programs attempt to expose students to a broad array of concepts, methodologies, and techniques to build clear thinking and writing skills. This is necessarily ambiguous, and the results are rather difficult to quantify. As such, its benefits are questionable (and are frequently questioned).

Vocational programs attempt to distill the essential knowledge of a field, and provide that to a student. A Business major entering the workforce will know quite a bit more about how business works than someone lacking that education; he/she will understand marketing, finance, operations, business law, strategy, etc. Certainly, their knowledge will be broad (no one’s going to hire a new grad to spearpoint the development of a business strategy) but it will be a good overview of the field of business. That is, they’re unlikely to be tripped up by not understanding a major area of business – such as possible legal impediments when introducing a new product, or exporting a product overseas.

Naturally, we can expect liberal arts students to have difficulty quantifying what they learned, and how that’s beneficial to business (though you’d hope that the nature of the education would give them a clue of where to begin). However, it’s more troubling of students in vocational and pre-professional programs, where one would expect to feel confident in their understanding, and their ability to contribute to the bottom line.

There’s a possible explanation. College is taught by academics, who are trying to make more academics. To the extent that academia is separate from the concerns of business, people taught by academics won’t understand business concerns. For instance, if Professors in the Business department are interested in understanding how business works, they may neglect teaching the skills to be successful in favor of the understanding of what makes something successful. So a student could be quite good at evaluating whether or not something is going to work, but quite bad at making it work in the first place.

College could teach general theory without teaching applicable skills. The idea, of course, is that the skills necessary both change frequently, and there’s a huge selection of skills that people employ. Attempting to cover them all has a very poor return on investment. However, the theory of how something works gives students the ability to acquire the skills faster than they would otherwise be able to. A college degree may not certify that you have the skills required – but it could certify that you’re eminently capable of learning the skills in short order.

It would thus make sense that new graduates, upon entering the workforce, feel that nothing they learned is directly applicable to what they’re doing. It’s probably quite galling to spend four years of your life studying something, and then come out the other end faced with the task of learning a bunch more; vocational students especially, who may expect their education to deal with their jobs.

Does College Get You a Job?

The problem, of course, is that the author does not credit college with getting her a job – at all. This is obviously false on one level (the unemployment rate for college graduates is less then half that of the overall unemployment rate), but that’s not sufficient to dismiss her claims.

The author could mean a few things. First, she could be claiming that college does not improve your chances of getting a job – rather, that the “real-world” skills you build during the time you’re coincidentally at college get you a job. It’s not sufficient to point to either the unemployment rate of college graduates to dismiss this; it’s possible that people who are more skilled (or more likely to acquire skills) go to college, and that college adds nothing.

Second, she could be claiming that skills improve your chances of getting a job. This is non-controversial: the more skills you have, the more ways people can use you, the more companies can consider hiring you, the more likely you are to be hired. It’s a simple numbers game. And, in a competitive economy, having additional skills can put you ahead of your classmates.

Third, she could be claiming that a college degree is necessary but not sufficient to get a job. That is: companies will not hire you without a college degree, or without a college degree and skills. You need both a degree and skills to get a job (while this possibility is rather undermined by her claim that “you don’t necessarily need a degree to get a job,” different jobs may have different standards; so no one will hire you without skills, some will hire you with skills, and more will hire you with a degree and skills). This option seems to impose a considerably amount of structure on the labor market – more, perhaps, than is warranted. Relaxing the structure reduces this option to a variation of the second, where both skills and degrees factor into your desirability (and/or flexibility) in the labor market.

Still, the first option is, in many ways, the most disturbing. The claim that what you learn in the classroom is unrelated to getting hired means that the benefit of attending college is learning the other skills: the “real-world” ones outside the classroom. Such an option begs the question of why attend college in the first place; there are surely cheaper ways to obtain those same “real-world” skills with paying tuition, which can be as high as $30k/year. Given how much time students spend attending and studying for classes, it’d probably be a lot faster as well.

Let’s assume this is true. Can we reconcile this depiction of college with my above musings? Well, one option is to shift the playing field, by claiming that a college education shows dividends later on in life. Perhaps, after you’ve had a few jobs, your education allows you to make fewer mistakes or somesuch. It’s not unreasonable to suppose that an entry-level position requires less than four years of training you received at college; they may be requiring something else altogether.

However, that’s dissatisfying. It simply shifts the value of college to later in life – and if that was true, we would expect to see more people attending college after they’ve worked for a few years. Instead, most people in college come directly from high school.

I prefer to believe that there is some additional value in college that the author is not considering. The question is how to define it, and where we can expect it to manifest. Unfortunately, that’s not something I’m well-equipped to answer…

Game Theory begs to be applied to the scenario described in a Knowledge@Wharton article “A Seasonal Sale Shift.”

The fourth paragraph opens like this:

With retailers pushing sales earlier and earlier and consumers waiting later and later to buy, Baker Retailing Initiative managing director Erin Armendinger compares the situation to the children’s game of chicken.

Chicken is, as we all know, a special application of the classic Prisoner’s Dilemma game – where the mutually agreeable situation is unstable, because both sides benefit from departing from it (as long as the other does not).

Not to mention the massive coordination failure between competing retailers: if a competitor starts offering markdowns, you have to as well or you’re screwed. Oh, the Betrand model, how easily you screw over retailers.

It’s a situation that begs for a game-theoretic analysis, but the article doesn’t even mention the phrase.

Also, they misuse the term “value proposition.” They’re conflating the idea of “value” (dropped wholesale by the profession of economics because it was too hard to pin down). The value proposition encapsulates the experience the customer has due to your product – rather similar to the famous Drucker quote “the world wants holes, not drill bits.” Price is always an aspect – especially in retail – but it’s not really related to the value proposition as such.

Now, retailers actually are changing their value proposition. From the article:

For example, apparel retailers have been changing their supply chains and inventory as part of what’s known as a "wear now" strategy. While in the past, suggests Armendinger, retailers rolled out merchandise for a new season on a particular day — changing to displays of sweaters and corduroy pants in the height of summer’s heat — many are now offering a balance of clothing so people shopping in August can still find shorts and short-sleeved shirts.

Funny how that works.

Knowledge@Wharton recently featured an article explaining why ranking employees relative to their peers can backfire.

The astonishing thing is how rapidly people have forgotten two millennia of leadership.

The “astonishing” finding in the article – that  is, astonishing to people who have managed to avoid 40 years of work in employee motivation by psychologists – is that (i) giving employees feedback comparing them to their peers can cause resentment, and (ii) financial rewards do not always correlate with higher attainment.

To look at the the issue another way: why was this astonishing? What’s necessary to believe such that people believed that doing those two things would actually improve employee productivity?

Simple: that people (employees) are highly rational actors knowingly engaged in competition with their peers for a finite amount of resources (compensation) who attempt to optimize their personal income with no regard to others.

That doesn’t sound terribly human – or terribly friendly, for that matter – so why did people act as if it were true?

Such is the influence of economics, the magical discipline which is two parts mathematical rigor and one part magical thinking (which directs the other two parts).

For purely practical reasons, early economists constructed models explanations of the economy that assumed that actors were perfectly rational. It was sort of a mind game: What would the perfect economy look like? To what extent is our current economy perfect?

It was a practical attempt because data simply wasn’t available to run empirical studies on something like the macroeconomy, or even large markets. The computational power simply wasn’t available to create sophisticated models using that could account for non-rational behavior.

Why? Because economists needed – that is, they weren’t capable of developing anything else – a model that was deterministic. An individual, placed in the same situation, would make the same decisions (assuming their situation has not changed). A non-deterministic model is both far more difficult to create, requires far more computation, and is also considerably less useful.

The second reasons is simpler – economists weren’t trying to predict what an individual would do, they were trying to predict what all individuals would do. That is, they assumed that the average of all actions in a market would be rational. And they found a reasonable amount of evidence supporting that, where they expected to (in markets that had other assumptions of competition).

This explanation is vastly oversimplified and ignores both some thinkers and some developments.

In any event, like all academia, a popular idea remains a popular idea – until the tides of reality can o’ercome it. The rationalism of individuals was repeatedly challenged (frequently by economists), but economists could successfully point out that they were talking to the average of all actions, so as long as the average turned out to be roughly rational, they were OK. Since economists never drifted down to individuals, everything worked out dandy.

The problem came when people – and I’m looking at business – who did deal with individuals attempted to apply the lessons of economics to running their business. After all, economics began as a normative science to figure out what to do – so applying those normative guidelines should lead to greater efficiency.

Except that the average of all actions is not the same as the average action. It’s the same as the myth of the perfectly normal man – he doesn’t exist. It’s a statistical accident, really, that arises when you take a distribution and reduce it to a single number.

Rationalism for individuals had all the advantages for business (HR and all) that it had for economists: it allows for a (mostly) deterministic system. Given a scenario, the rational person will make the rational choice. No more fuzzy-duddy special exceptions for snowflake-special individuals: just cold, hard, unfeeling, highly efficient rules.

And thus died the two-millennia history of leadership rooted in the idea of inspiration; or making people fight for a cause greater than themselves, producing something that stretched beyond their own narrow lives.

The death of the dream to change the world – replaced, as it were, by a mission statement to align interests. Oh, and a vision statement so you know where you’re going, allowing you to plan how best to get there.

On a completely unrelated note, the study the Knowledge@Wharton article references is completely inapplicable to the real world. It is, however, backed by a mountain of empirical and theoretical psychology.