Missouri lawmakers, via Senate Bill 784 and House Bill 1812, have proposed to reform the Access Missouri program. Currently, the program awards need-based grants to Missouri students. Students attending private colleges may receive up to $4,600 of aid, and students attending public schools may receive up to $2,150. Under the reform bills, these amounts would be equalized to $2,850 for all students. The bills perplex me; is the brand of reform they endorse really necessary?

Proponents of reform have made three, general arguments, all of them dubious:

First, they assert that reform would make the distribution of public aid more equitable. It’s atrocious that private school students may receive more than $2,000 in additional funding than their public school counterparts. This is tantamount to pandering to special interests. This argument is very puzzling; do its exponents not remember that the award amounts were carefully derived from two years of collaboration among private and public representatives and financial aid experts in order to meet “just” and “equitable” standards? Do they not understand that public aid is already lavished upon public school students and that the Access Missouri grants constitute the only form of public aid available for low-income students attending private colleges? Would not equalization of AM grants then be tantamount to pandering to public college students at the expense of their deserving private school counterparts? Are taxpaying Missouri citizens choosing to attend private colleges less deserving of the taxpayer dime than those attending public colleges?

Second, they argue that private school students should not receive a higher subsidy because they chose a more expensive education. It is an inefficient use of government funds to confer grants to students who are simply “paying too much” for education that they could receive at a public institution at a much lower cost. Here, too, problems abound. First, this claim once again ignores the state appropriations already going toward public institutions and the students who matriculate there. Second, the claim assumes that private and public schools have homogeneous curricula that can easily be compared. The reality is more complicated. Private colleges offer unique course and degree possibilities, with unique levels of quality and market value relative to public schools. In that light, the value of education at a private college is private and subjective. Even if we were to assume that private and public colleges are perfect substitutes, it is unclear why Missouri should, other things being equal, choose to subsidize one group of students at the expense of another group.

Third, proponents suggest that reform would open access to more students. Some legislators have argued that equalizing the award amounts would result in an increase in the total matriculation of Missouri students. Given a dearth of quality data on the impact of Access Missouri, this claim is utterly unsubstantiated; without appropriate data, I find it very difficult to accept prima facie. To begin, the reform package reduces the maximum amount of private aid by $1,750 and increases the maximum amount of public aid by $750. All else equal, it is reasonable to assume that students would be less motivated to attend private colleges, but not significantly more motivated to attend public universities. Of course, all else would not be equal, and the sum effect of reform is difficult to project. What can be said is that the claim that access would increase as a result of the reform is premature.

The Post-Dispatch doesn’t seem to like the reform package, and instead suggests that schools compete for funds. As per this view, students would receive aid relative to the “effectiveness” of the institution they attend. It is an interesting idea, primarily because it would involve the development of outcome measures that higher education currently lacks.

I have a better idea, one on which I have previously written: Support students through higher education vouchers, and then use Access Missouri for the rest.

Can guilt really be a good thing when it comes to the choices we make, and can ethical — namely, “green” — behavior be a bad thing? George Monbiot recently wrote a post on Guardian News about green buying habits and their lingering effects on the moral psyche of the public. He mentioned a recent study released by the University of Toronto, “Do Green Products Make Us Better People?”

The study provides evidence that consumer choices — in this case, choosing green versus conventional products — affect not only price and other economic factors, but they affect social and moral attitudes as well. The authors, Nina Mazar and Chen-Bo Zhong, argue that buying green products, to which people attach a high social and moral value, actually produces a licensing effect: Those who behave in a nominally ethical and pro-social way in one instance will be less likely to regulate their subsequent behaviors. Buying green products establishes moral credentials, and this can lead to less ethical behavior in other areas — essentially, instilling in some people’s minds the idea that they can act more selfishly than before they performed the instance of ethical behavior.

The authors performed three experiments, one of which demonstrates the licensing effect in action: Participants who purchased green products were shown to lie, cheat, and steal more often. The psychological term “licensing effect” is, in my mind, analogous to the economic concept of “moral hazard,” which characterizes a situation in which an economic actor behaves differently when he is partially insulated from a risk than he would if he were fully exposed to it. When a person purchases car insurance, he may feel that he has purchased a “license” to drive more dangerously than before, to some degree, because of the compensatory reassurance that insurance provides. The psychological licensing effect may produce an impact on the public that is similar to that of economic moral hazard.

We may not be able to alter our psychology, but structural incentives can be changed. Monbiot’s Guardian piece mentions that we are living in a consumer democracy, and in such a system some people hold more “votes” than others. Those who possess disproportionately more votes are less inclined to change a system that has served them well, which ultimately means that those seeking change must look to a different mechanism, such as the political process.

These insights into human nature, and their potential implications, should be kept in mind as public policy is developed. Missouri has joined the ranks of many other states by instituting green legislation, such as a 2008 bill pertaining to green cleaning in schools, which the governor signed into law only after altering the legislation so that it would suggest guidelines and recommendations rather than mandate requirements for green cleaning. The licensing effect ties into this as well: A suggestion to behave responsibly may be more likely to result in moral credentials that justify irresponsible behavior elsewhere than if that behavior were mandated. This is not to suggest that policymakers should always use mandates, but the potential unintended consequences are worth thinking about.

There’s been a lot of talk lately about health care, especially at the suddenly very popular town hall–style meetings, which have seen both violence and passionate debate. As both David Stokes and I have argued, we are better off remaining civil. And, because health care is so important to us here at the Show-Me Institute, I thought I’d weigh in with some thoughts on health care reform.

If it were the case that a government solution, in the form of any act of Congress or national board of medical care, could provide service better than an actual competitive system, I would support it wholeheartedly, and would advocate it strongly. It’s worth pointing out, though, that what we have now is not a free market — it’s not even close.

Because of economic reality, no act of government would produce something better than a competitive system would, so long as the good or service in question is excludable (and medicine certainly is). This is because the price system operates in a way that produces an optimum allocation of resources, given limited availability of goods and information.

Health care in this country is broken because government intervention prevents competition from fixing it. Alleviation of licensing, regulation, and other burdens would encourage entrepreneurs to innovate cheaper forms of care. This is true not only of the providers of health care services, but also of health insurance provision. Right now, we are lucky we aren’t all getting the kind of “care” they get in McAllen, Texas. That’s a place where doctors are really exploiting the market power they are granted by the AMA monopoly and the current level of federally funded medicine (Medicare and Medicaid). I definitely recommend this New Yorker article — which we’ve linked to before — even though I disagree with the author’s conclusions about how to proceed, policy-wise.

And, for the record, medicine is not the best way to improve health. Sound counter-intuitive? Well, check this out:

our main problem in health policy is a huge overemphasis on medicine. The U.S. spends one sixth of national income on medicine, more than on all manufacturing. But health policy experts know that we see at best only weak aggregate relations between health and medicine, in contrast to apparently strong aggregate relations between health and many other factors, such as exercise, diet, sleep, smoking, pollution, climate, and social status. Cutting half of medical spending would seem to cost little in health, and yet would free up vast resources for other health and utility gains. To their shame, health experts have not said this loudly and clearly enough.

I added the emphasis for the “other factors,” because it’s important to realize which factors may make more of a difference than increasing medical treatment, which, unfortunately, is getting all the attention in the current debate.

The above quote is from a fantastic article by Robin Hanson. I HIGHLY recommend it to anyone concerned with making this country healthier.

Or, if you just want the latest coverage of Missouri’s town hall meetings from the Show-Me Institute’s roving reporter Audrey Spalding, check out her article on Policy Pulse.

James McWilliams, author of Just Food, discusses in a recent issue of Forbes magazine how the practice of buying local does not necessarily support the aim of reducing environmental impact.

McWiliams begins by citing a 2006 academic study in New Zealand that determined Londoners could reduce their environmental impact by purchasing lamb imported from New Zealand rather than lamb produced in England, because factors other than transportation often play a far larger role in environmental impact.

Mcwilliams continues by discussing how economies of scale in production can positively distribute environmental costs:

To choose a locally grown apple over an apple trucked in from across the country might seem easy. But this decision ignores economies of scale. To take an extreme example, a shipper sending a truck with 2,000 apples over 2,000 miles would consume the same amount of fuel per apple as a local farmer who takes a pickup 50 miles to sell 50 apples at his stall at the green market. The critical measure here is not food miles but apples per gallon.

We’ve argued on this website before that locavore policies constitute a new form of protectionism. This is true, but likely not a very compelling line of reasoning for locavores.

In this case, the economically efficient and environmentally efficient solutions do not have to be polarly aligned. Locavores should understand how their actions may fail to uphold the values they are rooted in, because of logistics and unintended consequences that haven’t been thoroughly considered. It’s even more important to view with a skeptical eye any legislation, government purchases, or changes in trade policy based on the reasoning that local consumption equates to environmentally friendly consumption.

The National Animal Identification System (NAIS), bureaucratic brainchild of the U.S. Department of Agriculture, mandates identity registration for livestock to allow for centralized tracking and oversight in the event of disease outbreak. The policy may be well-intentioned, but its stated goals don’t justify the incursion into private life, erosion of liberty and livelihoods, and the increase in prices that it would undoubtedly foster. The program calls for livestock owners to furnish federal databases with personal information: their name, home address, telephone number, and the GPS coordinates of their home. Further, if these owners wished to transport the animals outside of their birth farm for any reason (even on a trail ride or to a fair), the animals would need to be biochipped and registered to a federal identification number. It’s no wonder this policy has been the target of recent protests in Jefferson City.

Given that compliance costs for this program are relatively high, smaller farms will close down, farmers will lose their livelihoods, and larger farms will pass on their costs to consumers in the form of higher prices. All for what? Farmers and livestock research organizations argue that the spread of disease is not even initiated at the level of the farms, but rather at meat processing plants, so this policy is misguided not only in implementation, but also in its conception.

Metro, as previously announced, made cuts to its service yesterday. Bus service will be reduced by 44 percent, MetroLink by 32 percent, and the call-a-ride service by 15 percent. Also, the call-a-ride service will no longer provide transportation to those who reside west and south of I-270. Metro predicts that job access in Saint Louis County will fall from 98 percent to 71 percent.

This could cause the unemployment within Saint Louis County to increase in the medium run, especially when added to the 600 employees that Metro itself plans to terminate. In testimony before the Metro Board of Commissioners, Show-Me Institute policy analyst David Stokes contributed possible alternative solutions to cutting services while still making the budget. He found that one potential solution to avoid making the cuts would be to “increase the cost of individual tickets more than the cost of monthly passes. That way, regular riders who depend on mass transit would not be priced out of the system, and would still be able to purchase affordable monthly passes.”

In short, it seems there is an alternative revenue source method, and — as Stokes suggests — Metro could have avoided the service cuts and minimize the costs of restructuring. Overall efficiency should be at the heart of the debate.

A recent article by Jo Mannies in the St. Louis Beacon (link via John O’Combest) reports:

The executive board of the Missouri Police Chiefs Association says it has officially endorsed red-light cameras “as part of a comprehensive traffic safety enforcement toolbox that should remain available to reduce deaths and injuries on our roads.”

This stance runs counter to that of the St. Louis Police Officers Association, which came out earlier this month against the cameras.

I would really like to see why the state’s police chiefs believe red-light cameras are actually a safety tool, despite the contrary conclusions of several studies. Either way, it is a very interesting split among the people enforcing the tickets. We’ll be sure to keep you updated on any and all movement that we see on this issue.

Something fun for a Monday morning …

My buddy Mike Sweeney, over at STL Hops, is having a “Best Missouri Craft Beer Challenge.” It’s a bracketed tournament that is set up like much like the March Madness tournament, in which you vote for one beer over another and whichever one has the most votes moves on to the next round.  Currently, they are on Round 3, so get over there and vote.

My personal pick to go all the way is the O’Fallon 5-Day IPA. The site attracts a large proportion of hopheads (fans of the ingredient that bitters the beer — not dope smokers), so that bodes well for O’Fallon. Plus, I always favor the underdog, and since they are a 52 seed out of 64, you can’t get much more underdog than that.

As long as a pumpkin beer doesn’t win, I will consider it a valid tournament. Enjoy.

An article by the Heartland Institute focuses on the adverse affects of the stimulus bill’s weighty legal lingo.  The author claims that lawyers will have their hands full trying to find out ways for their clients to get a slice of the massive government check.  Although the increased job security for laywers that this forest of verbiage enables was probably unintended, this may well catalyze a trend in which everyone scrambles for a piece of somebody else’s pie. And we’ll all end up paying for it later.

Earlier this month, the Center for American Progress released a study suggesting that credit card companies utilize text messaging in order to administer early warnings to customers who are at risk of incurring penalty fees. From the perspective of the credit card holder, this information could be very helpful in reducing the occurrence of penalty charges.

I disagree with the Center for American Progress, however, regarding their suggestion that this should be written into law. However helpful such a practice might seem from a consumer standpoint, it’s difficult to gauge the costs involved in implementation and therefore determine whether, overall, it would actually be a value-added service in practice. The decision should probably be left to market forces.

The Columbia Daily Tribune reported early last month that Education Week’s annual “Quality Counts” report on public education found that Missouri’s performance has a particularly low ranking. In fact, the study found that “Only 10 other states and the District of Columbia scored as low or lower than Missouri; and Nebraska is the only bordering state to earn a lower grade.”

The State registered C’s and D’s on important matters, such as children’s chances of success, transitions and alignment from early childhood to post-secondary education, and teaching. In addition, according to the study, Missouri is not offering incentives to highly qualified teachers, and has among the lowest teacher salaries. This should be a wake up call for improvement. So many solutions could be proposed to improve the quality of education we are giving to our children — our future. Many of these solutions can be found in the Show-Me Institute’s studies and articles about education policy.

Whether you like red light cameras or hate them (although if you’re visiting this site, I’ll guess the latter), no one can argue the fact that they do not discriminate. Whether you’re driving a Pinto, a Hummer, or a Ford Ranger, red light cameras will catch you if you are running those yellows. In that aspect, they were fair — until now. According to this St. Louis Post-Dispatch article,* many policymakers who pushed for these cameras in the first place are failing to pay their fines when they are photographed breaking the law.

I don’t know how I’m expected to follow this law when even the lawmakers don’t. Apparently, civil liberties are something to worry about only when your own are threatened.

*If you squint hard enough at the top right corner of the photo in the article, you can kind of see my apartment.

The Show-Me Institute’s very own David Stokes was interviewed by David Nicklaus of the St. Louis Post-Dispatch for an article discussing the topic of licensing in the state of Missouri. While Missouri has been ranked to have the least amount of licensing restrictions, Stokes was still able to show how regulation can affect the economy by focusing on the massage therapy industry, which is a licensed profession in Missouri but not in Kansas.

His latest case study compared the prices of the metropolitan Kansas City market on both sides of the state line, and compared Springfield to Wichita. Unsurprisingly, the data show that Missourians pay a higher cost for massage services, a situation likely caused by market regulation. Stokes is quoted in the article as saying:

“This is a system designed to limit competition for the people who have the current licenses,” Stokes asserts. “That’s the only reason. Everything else is a smoke screen.”

I agree with David Stokes 100 percent. It baffles me how people try to argue for occupational licensing by saying that it is a form of consumer protection. Although his study demonstrates some of the ancillary benefits that licensing can provide, such as reduced search costs when trying to find a competent practitioner, government officials aren’t in a position to determine whether those benefits are worth the higher market costs that reduced competition brings. Ultimately, the primary thing being protected is the income of a particular set of licensed professionals.

I could easily prolong this post, but interns at the Show-Me Institute don’t get that long of a break. So excuse me while I go to Kansas to get a massage — it’s been a loooong day!

By way of John Combest, I saw an article in the Southeast Missourian that would tickle Nick Naylor pink. Ten years ago, Big Tobacco settled a lawsuit with the states agreeing to pay $294 billion over 25 years to fund health care and smoking-cessation programs. Unfortunately, there were no strings attached to the way the 46 states spent these settlement funds. According to the article, less than 4 percent of the money was used for the programs they were intended for. This is far from the first time government has misused funds. It’s the same old bologna, just a different flavor.