Michael Spence

So I think that says something, and if you, uh, again, like I like to sort of see if there's any underlying theory.

There's a guy called Michael Spence, he wrote about this thing called signaling theory, uh, in 1973, way before AI.

And he basically showed that the more a human is shown to make some kind of sacrifice in their relationship or, or communication, the more believable it is.

If you cook Valentine's dinner for your partner in a microwave-

During his distinguished career, Hall has been an active proponent of a flat tax and served as an advisor to President-elect Ronald Reagan, the Justice Department, the Treasury Department, and the Federal Reserve Board.

Hall's receipt of the 2026 Nobel Prize extends a distinguished tradition of economic scholarship at the Hoover Institution, including past prize winners Milton Friedman, Friedrich Hayek, Gary Becker, Douglas North, George Stiegler, Thomas Sargent and Michael Spence.

A great Nobel.

Senior Fellow John H. Cochran celebrates the recipients of the 2026 Nobel Prize in Economics, writing, this is a great prize honoring two superb and highly influential economists.

So college isn't what it used to be.

But Michael Spence, you know, got his Nobel Prize for the signaling value of higher education.

Right.

My wife went to Harvard.

You need learning with a multimodal delivery.

An online classroom should be pedagogically equivalent to an on-site classroom, should be equal to an on-campus classroom, should be equal to an on-job classroom.

And the fifth one would be learning with signaling value, which is not social signaling value, which is what Michael Spence got his Nobel Prize for, but employability signaling value.

And that apprenticeships give you that, right, in some sense.

So the change came from within rather than from the top down.

Now the futurist lens here, Michael Spence, an economist in 1973, he published a paper on what he called job market signaling.

He later won the Nobel Prize on this.

I think I talked about this a few weeks ago as well.

Now the value of signals are changing rapidly, and he's thinking carefully about what comes next.

Mike Spence is a Nobel laureate in economics and former dean at both Harvard and Stanford.

His work on information asymmetry and growth is so foundational to how economists think about markets and development.

Here's our talk.

Welcome to The Economics of Work.

I'm honored to welcome Mike Spence, Nobel laureate and former dean at both Harvard and Stanford, and just a really clear thinker and writer on so many important topics.

Mike, welcome to the show.

Well, it's wonderful to be with you.

Okay, I have to stop you there because we need to look at what exactly is being signaled.

The theory you're referencing, signaling theory, goes all the way back to Michael Spence in the 1970s.

Yes, it does.

The whole point of the signal in Spence's model wasn't just about proving you knew a specific software program.

Instead of appealing to common values, he matched tariffs with targeted ones of his own and turned trade diversification into an actual strategy, not just wishful thinking.

Zooming out, Nobel economist Michael Spence has argued that today's global growth depends on supply-side resilience, not on dreams of frictionless, ever deeper integration.

We're in what he calls an age of permanent crisis, pandemics, wars, climate shocks, trade disruptions, and now an America willing to use tariffs against its allies.

The winners in this world are the countries that diversify their trade and invest in the strengths that make them harder to push around.