Peak credentialism

How much is a degree from a prestigious university worth? The answer is a bit difficult to answer because there are many cofounding factors: people from the connected class  (folks that ‘know people’) tend to attend the most prestigious universities, and they also tend to do well professionally. It is likely that highly connected people do well no matter what.

Sorting it out is difficult, but we should remember that the objective of an employer is often to hire the most qualified person. The credentials are only an approximation. In jobs where it is easy to identify the highly productive individuals, you would expect that credentials would have less value.

In After credentials (2008), Paul Graham wrote:

Credentials are a step beyond bribery and influence. But they’re not the final step. There’s an even better way to block the transmission of power between generations: to encourage the trend toward an economy made of more, smaller units. Then you can measure what credentials merely predict.

The era of credentials began to end when the power of large organizations peaked in the late twentieth century. Now we seem to be entering a new era based on measurement. The reason the new model has advanced so rapidly is that it works so much better. It shows no sign of slowing.

The New York Times told us in 2017 about how tech jobs rely on measuring skills rather than degrees. They wrote:

In the last two years, nearly a third of IBM’s new hires there and in a few other locations have not had four-year college degrees. IBM has jointly developed curriculums with the local community college, as well as one-year and two-year courses aligned with the company’s hiring needs.

My oldest son will be attending college next fall, studying in computer science. We reviewed job ads together. It was interesting that few job ads in technology made much of a case for education. Unsurprisingly, the more senior the position, the less likely the job was to require specific education.

In the United Kingdom, the most prestigious universities are part of the Russell Group. Klein (2021) finds that graduating from these universities is not especially advantageous for most students, except maybe for those from low backgrounds:

The findings show no discernible differences in occupational prestige between graduates from Russell Group universities and other universities once conditioning on covariates. When considering career trajectories, graduates from Russell Group universities had no advantages at immediate labor market entry but gained somewhat higher occupational prestige levels than students from other universities in the first two years since their first significant job. This advantage remained stable until their sixth year in the labor market. After six years in the labor market, however, graduates from other universities had a steeper career progression and caught up with their peers from Russell Group universities.

Looking a Germany, Lang and Schwabe (2021) find that attending ‘excellent’ universities is not as helpful as one might think:

Applying a difference-in-differences approach in combination with a simulation study, we do not identify a statistically significant excellence premium in the wages for graduates of ‘universities of excellence’.

Thus there is evidence that Graham was correct in 2008: we are moving beyond credentials. In effect, you probably need to worry less today about which college you tend, or even whether you should attend college. Keep in mind that after you have had a few real jobs, few people will care about your degrees. After all, 8% of CEOs have never even completed college.

Daniel Lemire, "Peak credentialism," in Daniel Lemire's blog, June 1, 2023.

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Daniel Lemire

A computer science professor at the University of Quebec (TELUQ).

7 thoughts on “Peak credentialism”

  1. I think this is highly dependent on viewing this from a tech industry perspective.

    1. I think it’s viewed from any industry where you can measure viability of a candidate through other means. Any job where you can tangibly demonstrate your ability to get the job done or that you have specific desirable skillsets, coupled with other desirable characteristics like enthusias, passion, willingness to learn, is what will get you the job.

      Some generic examples across any industry would be sales numbers, reducing customer complaints, manufacturing numbers vs industry average, reducing staff churn, a higher percentage of jobs completed to a high standard with happy customer testimonials compared to the industry average, etc.

  2. Even though this is tech-specific, I think every industry should reconsider whether a modern college degree (which could mean almost anything) is really a requirement for employment. At worst, a college degree represents 4 more years of high school at a crippling cost to the student. At best, it’s a real education with value add to the employer. I’m afraid most degrees fall into the former category.

  3. I don’t agree with this assessment. A college degree is a space where skills can be developed and flexed without the career-defining consequences of total failure. Most college degrees make graduates better at thinking because those graduates grow their skills with other growing graduates. Most importantly that growth happens more collaboratively than competitively. Much like an academy for football or a school for cooking, it is the people that you train with that make you grow faster. College is where you are most likely to find the best people to train with.

    I do think some segments of people benefit from not getting feedback and not training with others in a structured environment. But I claim that most do need feedback and training in a structured environment. By most I mean like 99.99%.

    Now as to whether the price of college is extortionary … well you’ve got a friend in me.

    1. Most college degrees make graduates better at thinking because those graduates grow their skills with other growing graduates.

      If that is true, then you don’t need the college degree, you just need college attendance. Few people attend prestigious universities and just decide to never go get the degree. If you offer a choice to students… you get the classes and exams, but not the degree… or you get the degree, but you don’t get any of the courses… which one do you think that students will pick? It is the degree they are after, not primarily the training.

      In practice, it is very difficult to make someone a better thinker. There is not much evidence that college do that out of colleges.

      Most importantly that growth happens more collaboratively than competitively. Much like an academy for football or a school for cooking, it is the people that you train with that make you grow faster. College is where you are most likely to find the best people to train with.

      That’s true: college can help expand your network. However, there are many other ways to do that especially if you are from a well-off family.

      I do think some segments of people benefit from not getting feedback and not training with others in a structured environment. But I claim that most do need feedback and training in a structured environment. By most I mean like 99.99%.

      Most jobs offer a structured environment where you can get feedback and training.

  4. Here in Germany people still adhere strongly to so called “Scheingläubigkeit” (its an intended pun, can be translated as “faith in degrees”, but also as “shiny delusion”) – it is still almost impossible to get into higher positions without having graduated university.

    That being said, it somewhat changed recently for high demand job segments, esp. in mid-level like programming jobs – companies started to be less picky about degrees and to look more for real (measurable) expertise, as there are simply not enough graduates to recruit. Still, not having a certain degree will most likely cut into the salary you can negotiate, as you are seen as “suspicious” for lacking the proper background or fundamentals.

    On the other hand the educational standards at German universities are fairly equal throughout the country, at least for fundamentals and more general “scientific thinking”. Thus the name of the university will not have a big impact on your CV (unless for niche qualifications by a certain working group). Other things like international experience, will often be valued much higher.

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