Here’s a thought experiment for you. Would you rather have a Princeton education, or do without the education but get the Princeton diploma?
Economist Bryan Caplan posed this question a couple of years ago in his provocative book, The Case Against Education. It’s a tougher question to answer than you might think. As Caplan put it, if you’re stranded on a deserted island, a diploma from a survival training course isn’t as valuable as the actual survival training. But in the labor market you wouldn’t see it the same way.
For job seekers, the diploma is probably more valuable than the education. Economists call this the “sheepskin effect.” (Traditionally, diplomas were printed on sheepskin.) To get hired by a big company, you need to get into the pipeline of people getting an interview, and it’s difficult to even get an interview if you don’t have a diploma from the right school.
Screening the applicant pool to find graduates from the best schools doesn’t guarantee you’ll get the best workers, but it’s a useful shortcut for employers. It saves time and minimizes the chances you’ll get truly unqualified applicants. And, not to be discounted, it gives the HR people an excuse if a hire doesn’t work out. “Hey, he came from MIT. I assumed he could do the work!”