Categories:
Behavioral Economics
Regulation and Subsidies
“Behavioral Economics and Perverse Effects of the Welfare State,” my 2007 Kyklos paper with Scott Beaulier, has been getting belated attention lately thanks to Karl Smith. Check out comments from Mike Konczal (Rortybomb), M.S. (the Economist), and James Kwak (Baseline Scenario).
Your thoughts?
If my immigration webinar on Wednesday goes well, maybe I’ll make this my next topic. After all, it’s the heart of the third section of the fourth book I plan to write…
Update: Beaulier replies.
READER COMMENTS
Josh
Feb 8 2011 at 9:04am
James Kwak misfired. Blaming poor financial decision skills on lack of education, parenting, or peer inspiration, is beside the point. It is not required that the poor be congenitally worse at decision making for the question of whether cash is an optimal form of welfare to be relevant.
It’s easily imaginable that in some cases the decision-making of some group is so bad that even centralized life-planning by a government bureacracy results in better outcomes for them.
It’s interesting that James Kwak’s more liberal commenters failed to seize on this happy (for socialists) thought, but rather have focused on defending the poor from the insinuation that their own decisions could have anything whatever to do with their poverty. (Said with a minimum of snark; I don’t think rational people would argue that poor decision-making is the sole cause of poverty, but I don’t think they’d deny it plays a role, either).
You underachived, Bryan – let’s produce the graph which demonstrates at what level of decision-skills a population is better served by totalitarianism!
Jeremy H.
Feb 8 2011 at 12:09pm
Kwak and his readers are missing another perhaps serendipitous (from their perspective) take on the paper: an in-kind welfare state is preferable to a cash welfare state.
I think this is probably wrong. But it seems to hold if they take behavioral conclusions seriously. So much for making lemonade and seeing silver linings!
Jeremy H.
Feb 8 2011 at 12:17pm
In other words, the policy implication of the paper could be to weaken the case for vouchers. A real world test of this (as opposed to laboratory behavioral experiments), would be to see if educational vouchers improve outcomes for the poor.
Comments are closed.