Tyler Cowen in Marginal Revolution offered this link to the reassessment of school choice programs. The article points out that a number of people who advocated school choice have reversed their position on the value of school choice and the article tries to figure out why.
I remember first being introduced to school choice through Milton Friedman. A quote from his article hypothesizes why school choice programs may not work as well as others: "if they send their children to private nonsubsidized schools they are required to pay twice for education--once in the form of general taxes and once directly". This is also mentioned in the National Affairs article: " the compromise that allowed the voucher-program legislation to pass required that D.C. public schools receive additional funding, even as they would no longer bear the expense of educating the voucher students. The initial sum was an extra $13 million a year; this figure was eventually boosted to $40 million per year".
I was never completely happy with Friedman's proposal since I don't think it embodies the idea of voluntary exchange. In particular, school choice lets parents pick the school they want their child to go to, but it does not allow the school staff to pick the children they want to go to their school. A similar situation would exist if workers could pick where they wanted to work, but employers were not allowed to choose who would work for them. Of course Friedman had to deal with political reality, that is, what might be an acceptable reform. And I believe this is the bigger problem. We are not very good, and by we I mean economists - politicians - or anyone else, at predicting the consequence of partial market reform, and yet we live in a world where any policy change must be a partial reform.
So what can we conclude. Like Friedman and many others we have to live with principles, like individual freedom, and support reforms that move us in that direction. While we can't be sure of the consequences of a partial reform, we can be confident that with human ingenuity we will get it right over time. Of course this raises an important question: What about members of society who agreed to live by this principle and were harmed by our attempts at reform, don't we also have a duty to see these harms corrected?
I recently had a chance to blog in http://truthonthemarket.com/free-to-choose-symposium/ a blog symposium on law and behavioral economics. It was interesting to read the different views of the value of behavioral economics to a professional field like the law. I blogged on the theme of computational mechansims as a unifying theme for different experimental nethods.
For a while now I'v been looking at the use of virtual worlds for teaching and research. I have an island called terraeconomicus in Second Life since 2006, and I have recently rented server space on ReactionGrid where we run an OpenSim server and a Unity3D server. My goal is to use this blog to start documenting my experience with virtual worlds as a tool for economists. As a start I recommend a blog by Wagner Au called New World Notes and a blog by John “Pathfinder” Lester called Be Cunning and Full of Tricks.
Ezra Klein posted an article in the Washington Post which states that immigration is good for economic growth. Most economists I know would agree. He also shows some graphs, unfortunately poorly explained-- for example tell me what this graph means since budget is usually understood to be planned expenditures, that Americans are made better off from immigration. I would like to believe his argument, but I find it less compelling, because a lot of Americans seem to be concerned. Furthermore politicians are responding. Arizona is a recent case in point. So why do we see so much concern? One possible answer is because people are in fact being made worse off. Klein suggests an alternative possibility which goes like this. People tend to think in terms of trade-offs. If an immigrant gets a job, then an American must be losing a job. But, Klein argues, that this is not true. So instead, Americans are concerned because they fear being made worse off, even though they are not being made worse off.
Fear is a powerful motivator, and it is clear that at least some anti-immigration groups use fear as one of their main rhetorical devices, but I am not convinced by Klein's argument. For the argument to work it must be that Americans fear the unknown consequences of immigration. But, we have always had immigration. How long can it be an unknown? An alternative answer is that immigration raises competition in the labor force, and it is this increased competition that makes people worse off. This requires some explanation since, as an economist, I was trained that competition makes people better off. What I was taught was that competition causes the best ideas, products, technologies, and human skills to be discovered. and as long as competition is regulated by market prices, social norms, and rule of law, and there is enough diversity so that everyone can 'win' on some competitive front, then we are all made better off. So how can I claim competition makes us worse off?
Here is my hypothesis. I think we all enjoy some competition, but we differ in how much. For most of us we reach a point, call it our success point, where we are satisfied with the return we are getting from our competitive effort and increasing our effort is not worth the cost. Most Americans are near their success points. Immigrants are not. Note, the untold story in the Klein article is that after a generation, or two, immigrants are no longer immigrants, and therefore must be in the part of Klein's data where the immigrant advantage is gone -- note by my hypothesis it is because over time immigrants are now much closer to their success points. So people are made worse off, not by immigration per se, but because any change can drive them away from their success points. If I am right then Americans would not be so concerned if they knew they faced a consistent immigration policy that was in steady state with respect to their individual success points.
I am a professor, trained as an economist, who uses experiments to study the world. I plan to use this site to discuss experiments and related topics by myself and others. I invite anyone with an interest to participate. I will moderate comments to prevent spam.