Governments are keen on higher eclucation,seeing it as a means to boost social mobility and economic growth.Almost all subsidise tuition-in America,to the tune of$200bn a year.But they tend to overestimate the benefits and ignore the costs of expanding university education.Often,public money just feeds the arms race for qualifications.As more young people seek degrees,the returns both to them and to governments are lower.Employers demand degrees for jobs that never required them in the past and have not become more demanding since.Spending on universities is usually justified by the"graduate premium"-the increase in earnings that graduates enjoy over non-graduates.These individual gains,the thinking goes,add up to an economic boost for society as a whole.But the graduate premium is a flawed unit of reckoning.Part of the usefulness of a degree is that it gives a graduate jobseeker an advantage at the expense of non-graduates.It is also a signal to employers of general qualities that someone already has in order to get into a university.Some professions require qualifications.But a degree is not always the best measure of the skills and knowledge needed for a job.With degrees so common,recruiters are using them as a crude way to screen applicants.Non-graduates are thus increasingly locked out of decent work.In any case,the premium counts only the winners and not the losers.Across the rich world,a third of university entrants never graduate.It is the weakest students who are drawn in as higher education expands ancl who are most likely LO drop out.They pay fees and sacrifice earnings to study,but see little boost iii thcir future incomes.When dropouts are includecl,the expected financial return to starting a degree for the weakest studcnts dwindles to almost nothing.Governments need to offer the young a wider range of options after school.They should start by rethinking their own hiring practices.Most insist on degrees for public-sector jobs that used to be done by non-graduates.Instead they should seek other ways for non-graduates to prove they have the right skills and to get more on-the-job training.School-Ieavers should be given a wider variety o:[ways to gain vocational skills and to demonstrate their employability in the private sector.lf school qualifications were made more rigorous,recruiters would be more likely to trust them as signals of ability.and less insistent on degrees."Micro-credentials"-short,work-focused courses approved by big employers in fast-growing fields,such as IT-show promise.Such measures would be more efficient at developing the skills that boost productivity and should save public money.To promote social mobility,governments should direct funds to early-school education and to helping students who would benefit from university but cannot afford it.Young people,both rich and poor,are ill-served by the academic arms race,in which each must study longer because that is what all the rest are doing.It is time to disarm. Which is the most efficient way to improve the society?