Search This Blog

Monday, December 10, 2012

Three Laws of Social Programs

At AEI, Charles Murray follows up on Nicholas Krisof's welfare article by explaining three laws of social programs:
1. The Law of Imperfect Selection. Any objective rule that defines eligibility for a social transfer program will irrationally exclude some persons.
This law accounts for the reason that programs like Food Stamps and the Supplemental Security Income program constantly expand. Whenever the people who administer the programs run into a case of a genuinely needy person who has been excluded under a current rule, they tend to redefine the rule or otherwise alter the program’s administration to be more inclusive, which in turn brings more people who don’t need the social transfer under its umbrella.
2. The Law of Unintended Rewards. Any social transfer increases the net value of being in the condition that prompted the transfer.
Kristof referenced the increased net value of being illiterate because of the “intellectual disability” payment of $698 per month that leads parents to withdraw their children from literacy classes. But the same thing is true of every payment of any kind that requires people to demonstrate that they have a problem before they qualify for the payment. It is not a defect in program design. It is inescapable whenever you give rewards for having a problem.
3. The Law of Net Harm. The less likely it is that the unwanted behavior will change voluntarily, the more likely it is that a program to induce change will cause net harm.
This is not as obvious as the first two laws, but just as inexorable. My favorite chapter of Losing Ground is a thought experiment about a government program that uses financial rewards to reduce smoking. If the rewards are small, nothing will change. If they are large enough to induce a significant number of people to quit smoking, the program will inevitably lead to more people who take up smoking in the first place and the net number of inveterate smokers.