Signaling, and Why Apple Needs to Change a Certain Emoji
This is the second part of a series on different economic concepts and how they apply to our present day.
In a broad sense, signals are used to send information about one party to another that is otherwise unobservable. Ideally, like with education, these signals are difficult to obtain or mimic.
Think back to a month or two ago, what was the first thing you thought when you saw someone wearing a mask in public? Is that opinion any different than your opinion when you see someone wearing a mask in public now? Besides masks, I want to cover some examples of signals across public health, education, fashion, and a little bit of exercise.
Masks, Masks Everywhere
The tech-strategy podcast series Exponent released an episode Good is Better Than Perfect arguing why we should all be wearing a mask in public. This was not within the past couple of days, this was three weeks ago. They offered two arguments as to why everyone should be wearing a mask. First, wearing a mask protects others. There have been contrarians who refute this, but they are only conflating absence of evidence with evidence of absence.
Second, and more related to signaling, we need to defeat the stigma that people wearing a mask in public may be sick. Let’s say that people continue to believe that those wearing masks are likely to be sick. If that were the case then we probably will not see a large percentage of people wearing masks in public. This movement needs to be made from the bottom-up because even the iPhone emoji implies someone wearing a mask is sick. Take a closer look at the picture above. The same emoji on WhatsApp doesn’t show a sick person wearing a mask. That is because WhatsApp does not have the same stigma towards masks.
The True Meaning of Education
Shifting from one current example to another, let’s take a look at our education system. Economist and author Bryan Caplan is doing great work in this field. Caplan discussed his most recent book two years ago in another captivating episode of EconTalk. His ideas are appropriate to revisit now with many graduations being cancelled or rescheduled due to our current situation. So, let’s take a moment to appreciate that graduating is a signal.
When students graduate from college, what does that say about them? Caplan’s writes “The labor market doesn’t pay you for the useless subjects you master; it pays you for the preexisting traits you signal by mastering them.” However, in theory, education should be raising students’ skill levels and better preparing them for the real world. Is that really the case though? A few weeks ago schools began shifting from in-person to online learning. To my dismay, there has been a spike in scrutiny over online cheating. To me, all this does is support the claim that a college degree is merely signaling without providing much additional benefit. If students cared about learning then there should be less reason to worry about online cheating. Imagine you faced a hypothetical choice between (1) attending all lectures and learning all the material at school XYZ but you are not allowed to receive a diploma or (2) not learning any material but you receive a diploma from school XYZ. There should be one right answer, but unfortunately that is not the case.
Let’s tweak the college example. What if everyone went to, and graduated from, college? If everyone were to graduate from college, then the signal of having a diploma would be significantly less meaningful. The purpose of a degree is to signal that you are a high-ability type worker, because obtaining a degree is too costly in time and effort for a lower-type ability worker to achieve. Caplan writes, “If everyone had a college degree, the result would be not great jobs for all, but runaway credential inflation. Trying to spread success with education spreads education but not success.”
If education were to benefit students in ways besides signaling then, by everyone obtaining a college degree, we would collectively be a more productive workforce. That would not be the case. Instead, we would be faced with two unappealing alternatives. The first is the same signal becoming more expensive due to credential inflation. The second is a reliance on other characteristics that are thought to be representative of some quality (like what happened with “ban the box” and job applications).
Everything Else
EconTalk (seriously, the best podcast series) has an entire episode just on Signaling. There are plenty of examples where signaling is analyzed in a personal setting as opposed to a professional one. Caring for someone sick is a signal of allegiance. We learn a lot about people who care for us when we are sick. You can’t mimic that signal, and it is difficult to do without care and effort. How about a familiar holiday that people may now view differently? Valentine’s Day. This is one instance where a signal is better determined by common judgment rather than private judgment. Whereas private judgment consists of how much someone likes the chocolates, flowers, etc., common judgment goes by the amount of money spent. No matter how much someone might like Reese’s Peanut Butter Cups, common judgment says to go a little more all-out on Valentine’s Day.
Instead of gifts, let’s be more introspective. The same podcast episode includes a discussion on why we are drawn to doing things we are good at (in order to show off). Here’s another one we may not think about much, who we choose to associate with is a signal. Think back to the purpose of signaling. We know signals serve to convey otherwise unobservable information that is difficult to mimic. These examples fit the criteria.
Moving forward, the signals we value will change. So where are we headed? If we were to brainstorm which signals will become more valuable in the future, we need look no further than health. Soon, health will be one of the most distinctive signals. In a world where billionaires are dressing more casual than ever, where people are using scams to attend prestigious universities, and where there are $2000 IKEA shopping bags, health and physique become more distinguishing.
That’s right, I almost forgot, we said we would cover an exercise example. So, how do you know if someone does CrossFit? Don’t worry. If someone does CrossFit, they’ll tell you.