What economists mean by ‘signaling’
Acton Institute Powerblog

What economists mean by ‘signaling’

Note: This is post #68 in a weekly video series on basic microeconomics.

Economists often make such claims as “a college diploma is an example of signaling.” What exactly do they mean by ‘signaling’?

A signal is an action that reveals information, explains Tyler Cowen. In this video by Marginal Revolution University, Cowen looks at higher education, and shows how a a large fraction of the value you receive from your degree comes on the day you earn your diploma.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Click here to see other videos in the Introduction to Economics series.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).