Archives: 05/2017

The Problems with Centrally Planning School Choice

Even strong proponents of private school choice programs often disagree on who ought to have access. Many people that view private school choice as a means for social justice argue that programs should be targeted to the least-advantaged members of society. Alternatively, I have claimed that a universally accessible program could benefit the least-advantaged in society more than anyone because of amplified market entry. Other education scholars argue that program access should be determined based on the empirical evidence on student test scores. While we gain important information from scientific experiments, we should not make program access decisions based on them.

Experiments Can Only Tell Us about Groups

As a social scientist performing quantitative analyses on school choice programs across the United States, I have realized one thing that is particularly frustrating. Even the strongest quantitative scientific experiments do not tell us much about the individual children that we are studying. Since our statistical results rely on the law of large numbers, there is no way around this issue. We must group the people we are studying together in order to calculate a statistically significant treatment effect.

Sure, we can perform subgroup analyses to determine if there are heterogeneous effects for different types of individuals. Nevertheless, these subgroup analyses suffer from the same systemic flaw; they rely on grouping people to calculate average effects. While subgroup analyses give us important information about groups of people, they are often erroneously used by decision-makers to determine which specific children in society ought to have access to school choice programs. A large positive result for advantaged members of society and an insignificant result for the disadvantaged may lead one to solely support access for the advantaged.

The problem with this decision is that it assumes all members within the subgroup will respond to the treatment in the same way. This is far from true. An average overall result of “zero” for disadvantaged children likely means that the program worked for some of them and did not work for others. Why prevent disadvantaged students from accessing a program simply because they looked like those that did not benefit previously?

Should Taxpayers Back the ‘Organic’ Label?

Why are consumers willing to pay almost double for food labeled organic?  The average consumer probably believes that the “USDA Organic” label issued by the U.S. Department of Agriculture implies the food comes from small local farms that use production techniques that are environmentally friendly and result in food that is better for human health.  The Washington Post published an article recently about an organic farm that does not seem to be consistent with such perceptions.  The High Plains dairy complex in Colorado, the main facility of Aurora Organic Dairy, has over 15,000 cows. In the organic dairy industry 87 percent of farms have less than 100 cows, but farms with 100 or more cows produce almost half of organic dairy products.

The Post article argues that these large dairy operations may be violating the USDA’s regulations for organic milk. Though Aurora officials maintain that they meet all the requirements for the USDA Organic label, the article contends that satellite images, visual inspections by Post reporters, and tests of milk from High Plains all indicate that the company may not be complying with the natural grazing standards of the organic regulations.

But the Post article misses the important point that even if Aurora were in technical compliance with the grazing regulation, the label does not convey any information about health and environmental benefits. As then-secretary of agriculture Dan Glickman stated at the release of the final standards for organic foods in 2002:

Let me be clear about one thing: the organic label is a marketing tool. It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.

Misconceptions of the Efficiency Wage Hypothesis

In an otherwise largely fair write-up of the disagreements and controversies surrounding the economics of minimum wage laws, a blog I was cited in yesterday made a common error in discussing the so-called “efficiency wage hypothesis.” Here’s the extract (my emphasis):

But if employers have monopsony power (they have enough market power to influence the wage rate in their industry) then the impact of a minimum wage is to raise employment (up to a point). Furthermore, the efficiency wage theory suggests that a minimum wage could help raise employment by increasing productivity and lowering turnover.

This last sentence is a misreading of economic theory.

Many do claim that higher minimum wages can lead firms and workers to improve productivity in ways that avoid job losses, whether that be through more worker effort, less staff turnover or whatever. And there’s no doubt that in some cases, firms and workers adjust in this way.

But the efficiency wage theory itself is actually a market failure theory of unemployment. It does not suggest that raising the minimum wage could increase employment. It suggests that in certain sectors where the costs of replacing labor are high, firms pay above market wages out of fear that lowering them would reduce their workers’ productivity substantially. The consequence is that the specific sectoral labor market does not clear, resulting in at best excess supply of workers in that sector (who subsequently have to find employment in other sectors at lower wages) or at worst more unemployment in the economy as a whole.

Religious-Liberty Executive Order Is Small Beer, But Good Beer

The executive order that President Trump signed today doesn’t go as far as some hoped and others feared, mainly putting a thumb on the scales for future regulatory and enforcement actions. Its three main parts are as follows:

  1. Declares protecting religious freedom to be executive-branch policy, underlining an intent “vigorously enforce” the law’s “robust protections for religious freedom.”
  2. Instructs the Treasury Department effectively not to enforce the Johnson Amendment – which prohibits nonprofit organizations from endorsing or opposing political candidates – against religious organizations.
  3. Directs the Secretaries of Treasury, Labor, and Health & Human Services to issue new regulations that “address conscience-based objections” to Obamacare’s preventive-care mandate.

All of these are salutary, but none are earth-shattering. The IRS, which ultimately answers to Treasury Secretary Steve Mnuchin, already has vast discretion in enforcing the Johnson Amendment. HHS also has broad authority over how and against whom to apply the preventive-care mandate, but its freedom of action has already been restricted in several ways by the Supreme Court’s rulings in Burwell v. Hobby Lobby and Zubik v. Burwell (a.k.a. the Little Sisters of the Poor case) – and Secretary Tom Price were already expected to accommodate the religious nonprofits in a way the Obama administration refused to.

So all this move really does is signal the direction of executive policy preferences, which at the margin will lead agencies to implement federal statutes in a way that’s more solicitous of the freedom of religion, expression, and conscience. That’s a good thing, and a welcome change from the Obama years, but it’s not a radical (or any) change in the law. 

Members of Congress Announce New State-Based Visa Bills at Cato Event

At a Cato Institute Capitol Hill Briefing today, Senate Homeland Security Committee Chairman Ron Johnson (R-WI) and Congressman Ken Buck (R-CO) announced their intention to introduce new immigration legislation that would allow states to sponsor workers, entrepreneurs, and investors. Sen. Johnson introduced his version this afternoon. In 2014, Cato wrote a policy analysis about this idea. My colleague Alex Nowrasteh and I have published blog posts and op-eds about it, and Cato’s Handbook for Policymakers urged Congress to implement such a policy.

State-sponsored visas would build much-needed flexibility and adaptability into the federal immigration system. We are pleased that members of Congress are finally taking up this innovative and important idea.

The federal government’s monopoly over legal immigration fails to address the diversity of economic needs among the states. A more decentralized visa program could head off local problems before they build into a national crisis, building flexibility into the system that exists in every other area of the market. Giving states greater control would also increase political support for immigration programs and allow Congress to reform the system without needing to agree on every issue.

Can Virginia Require a Church To Permit Breast-Feeding in the Pews?

In 2015, following the lead of many other states, Virginia passed a “law that says women have a right to breast-feed anywhere they have a legal right to be,” as the Washington Post reports. The law provides “no exemption for religious institutions,” as well as no quarter, it would seem, for owners’ ordinary rights to set terms and conditions when they invite visits from the general public. Now a mother and her attorney say Summit Church in Springfield, in the D.C. suburbs, had no right to ask her to use a private room after she began feeding her baby without a cover during a sermon.

Should Annie Peguero, of Dumfries, Va., press a claim in court, she might have to contend with Virginia’s version of the Religious Freedom Restoration Act, which provides in relevant part (h/t Ann Althouse): “No government entity shall substantially burden a person’s free exercise of religion even if the burden results from a rule of general applicability unless it demonstrates that application of the burden to the person is (i) essential to further a compelling governmental interest and (ii) the least restrictive means of furthering that compelling governmental interest.” But since not all states have a version of RFRA—and particularly since, if the Post’s readers are typical, a large sector of polite opinion is taking Ms. Peguero’s side and appears to see nothing wrong with applying such laws to churches in Summit’s position—it seems likely that this will not the last such claim. 

Personally, I’m fine with public breast-feeding no longer being classed as an automatically shocking thing. But why is government dictation of how a church may arrange its worship services no longer classed as an automatically shocking thing?

[cross-posted and adapted from Overlawyered]

Want to Regulate Schools? Use Parents

Results of last week’s DC voucher study, showing some significant negative effects on standardized math tests, has school choice opponents in overdrive writing voucher obituaries. But at least some commentators, like the New York Times’ David Leonhardt, concede that choice works, but only if it is shackled to regulations they like. That choice works if carefully managed is perhaps an inevitable concession with the broad notion of school choice clearly in ascendance. However, the idea that regulated choice produces better outcomes flies in the face of basic economic theory and choice research.

Negative Impacts of Regulation

State requirements often come in the form of standardized test scores or restrictions on the types of teachers that may be employed. These regulations force schools to focus narrowly on state tests, which do not appear to matter in the long-run, and limit the supply of teachers, lowering educational quality while increasing costs.

As I illustrate below, programs with less restrictive voucher laws lead to more impressive experimental evaluations of student math achievement, perhaps because the costs of regulation ward off high quality private institutions: