An important study of credential inflation, based on work done at Oxford University, can be found in Van de Werfhorst and Anderson, “Social Background, Credential Inflation and Education Strategies,” Acta Sociologica Dec 2005 Vol. 48(4): 321-340. 

 

Abstract: The primary goal of this article is to examine the impact of credential inflation on educational attainment in twentieth-century United States. To do so, we create a measure of ‘intergenerational credential inflation’ (intergeneration inflation factor) and include it in regression models predicting educational transitions. Using the General Social Surveys of 1972–2000, we find that people are generally less likely to invest in schooling if its value is relatively low. … This finding supports relative risk aversion theory, which assumes that the main goal of [students] is to avoid downward social class mobility. Perhaps most important, we find that credential inflation is particularly influential on transition probabilities if parents had made the same transition. This pattern is consistent with the information differential thesis that [students] are more informed about the value of education if their parents acquired it.

 

Noteworthy is the author’s construction of an Intergenerational Inflation Factor (IIF) to gauge the responsiveness of student outcomes (i.e., student retention) to varying degrees of background credential inflation, seen here as a “macro-level condition” effecting student educational attainment. The results illuminate the dynamics of credential inflation and its impacts. The results also tend to confirm the downward social mobility defense theory first proposed by Boudon (1974), with noted exceptions.

 

This theory argues that the decision to end formal education is based largely on a desire to avoid downward social class mobility. In fact, this desire is posited as the ‘primary goal’ of individuals when determining educational strategies. Simply put, children typically desire to achieve at least enough education to gain access to the social class of their parents.

Relative risk aversion sheds light on why, relative to working-class children, children of more advanced social classes are more ambitious and achieve higher levels of education. At a relatively early point in their educational career, most working-class children have already met the goal of avoiding downward mobility. Middle-class children generally need to acquire much higher levels of education to achieve their parents’ social class...

All else being equal, children should need only as much education as their parents to enter the same social class as their parents. If the values of education credentials are not constant over time, however, this simple relationship will not hold. If certain education credentials increase in value from one generation to the next, children will typically need less education than their parents did. Conversely, if the value of an education decreases, children are likely to need more education than their parents to achieve the same social class.

A significant body of research indicates that education credentials have devalued during the twentieth century. This devaluation was largely caused by ‘over-schooling’, i.e. a vast expansion in educational attainment that was not equaled by an upgrading of the labor market... (Van de Werfhorst and Anderson, page 322)

 

In order to investigate the influence of credential inflation on educational decisions, Van de Werfhorst and Anderson develop a measure they call the Intergenerational Inflation Factor (IIF) to estimate the value of education, which is then incorporated into educational attainment or transition models. 

Figure 2 displays the intergenerational inflation factor of the four educational transitions. The reference line on the graph at IIF=1 represents where the value of the respondents’ education is equal to what it was in the previous generation. For the most part, educational qualifications have gradually devalued from one generation to the next (IIF <1) but there are some exceptions. For example, high school education increased in value from the 1930s birth cohorts until the early 1950s birth cohorts (IIF >1), reaching a high for the mid-1940s cohorts. Having at least some college for the 1940s cohorts was also worth slightly more than it was for the previous generation (329).

 

Note as well the bifurcating upward trend of Transition 4 (Some postgraduate) for the 1957-63 and 1964-70 birth cohorts that increases the value of these credentials for those that have them. This confirms the trend (“something is happening at the top” for postgraduates) reported by Wessel (WSJ Oct 2006 - Click to link here.).

 

Next, the researchers investigate educational attainment mechanisms. As already mentioned, parental educational attainment plays a crucial role in student outcomes, and the possible reasons for this widely observed effect are discussed.

 

Each of the Transitions or levels of student attainment relative to parental attainment are shown against the background of credential inflation (remember, IIF<1 represents the LOSS of educational value), where solid lines represent those students whose parents successfully completed the transition indicated, and the broken lines are for those students whose parents did not make the transition. The vertical scales (probability levels) vary, and the horizontal scale is IIF.

For Transition 1 (High School), there is a positive correlation between the relative value of the high school diploma, and the proportion of those attaining it. This monotonic increase can be seen for both those students with a parent that is a high school graduate, and those students without any parent graduating high school. But for those students with a parent that is a high school graduate, the proportion is slightly higher than for those without.

 

Transition 2 tells a similar story, with the effect of credential inflation even more pronounced (IIF<1). The greater the extent of the credential inflation, the wider the difference in educational attainment between those students with and without parental attainment. This differential narrows as educational credentials grow in value, but widens with the loss of value.  

Transition 3

The parental attainment effect is more pronounced as IIF increases; but it also dramatically loses salience as credentials deflate in value. Here, credential inflation appears to mediate the influence of parental attainment, significantly undermining its positive influence on educational attainment (334). This is important for policy makers to recognize, as they seek to ramp up access to postsecondary education, but without managing the effects of credential inflation. As can be seen in Fig. 2, Transition 2 (Some college) and Transition 3 (College) have significantly lost value relative to the preceding cohorts since the 1950s. For this reason it is important that data from more recent cohorts be added to this model.

Especially troubling is the apparent lack of response, one way or the other, by non-parental attainers. This finding severely limits policy options, because here, even with a dramatic increase in the value of education, this has only minimal effect.

 

But this also explains the noted trend in merit aid that goes to those already succeeding socio-economically – that is, students from the middle and upper-middle class. If we assume a correspondence between social class and parental attainment, there is a “bigger bang for the buck” when you distribute financial aid to these classes. But by failing to take credential inflation into account, we are really on the slippery slope of diminishing returns (IIL less than .75), but behaving as if IIL=1.5!     

 

Transition 4

For the completion of some postgraduate work, the parent attainment effect breaks down for those students with parents who have themselves completed some graduate work, and even reverses slightly, when credentials increase in value. This sudden drop in attainment for those students with parental attainment, as IIF increases, is counterintuitive, and may show that they “are more likely to consider the relative pay-off for a graduate degree compared to a bachelor’s degree when the value of education has increased” (334). Indeed, as IIF decreases, the relative competitive value of the advanced degree is dramatically magnified. This explains “Why It Takes a Doctorate” (Wessel, WSJ OCt 29, 2006).

 

This study, to conclude, provides ample evidence of the effects of credential inflation on educational outcomes, as well as gives evidence regarding the intractability of social stratification in the educational context. The authors use these results to discuss the “information differential” model to explain continuing inequalities in educational attainment.

 

But, for those of us living in the South, the authors list southern regionalism as a separate causal factor that is statistically significant for overall education attainment:

 

“[P]eople from the southern states,” observe the authors, “are disadvantaged independently of the composition of parental characteristics” at statistically significant levels (331).

"The Monster that Ate My College Degree"