Thursday, August 2, 2007

Incentives have Consequences


Last week’s post led to some good feedback from all of you. I’ve included a couple quotes I thought were worth mentioning.

Alex G. – I disagree with your plan. And you hit the nail in the head yourself. "I usually don't like the government telling me what to do with my money".

Yes, and I did make the comments two weeks ago about sticking to principles. Good point.

Mark S. – The majority of people are middle class working people who do have insurance, but rely on that check to make one yearly big purchase or down payment. I think that since you are making the majority of people fill out extra paperwork it would not go over well.

The great thing about getting feedback is that I can expand my understanding of where other people are coming from and adjusting my political strategies to meet those realities. No matter how good a plan is on paper, it has to capture the imagination of the public to make it through the legislature and become law. For me, filling out the extra form to get the money or directing my tax return into an HSA didn’t seem like a bother, but Mark obviously didn’t like it. I still like my idea in general, but I’ll have to think about some alternatives.

-On to this week’s post

In 1963, Dr. Stanley Milgram of Yale University devised a psychological experiment to test our level of obedience to authority in order to shed light on how thousands of people took part in the Holocaust. His test instructed a volunteer test person to ask a number of questions to a man hidden behind a screen. If the man gave the wrong answer, they were to flip a series of switches that started at 45 volts and increased to 450.

The man behind the screen was an actor. The actor made sure to let each person know that he had a heart condition before the questions started. As the volts increased, he would pound on the wall and make other noises. A recording played protests and screams to simulate that the man was in agony from the shocks. A “scientist” in a white lab coat would prod any person hesitant to continue by assuring them that this was very important research.

What kind of monster would keep flipping the switches? Out of the 40 people in the original study, every single person flipped the switches up to 300 volts. This level is lethal and was past the point where the actor went silent. All of them expressed some concern for the well-being of the man. In the end, however, 26 of 40 flipped all of the switches including the 450 volts three different times at the end. We have all wondered how we would behave in certain situations and like to believe that we would not succumb to peer-pressure and incentives that encourage us to go against our morals. This experiment revealed that doing so is not as easy as it seems.

When I talk to people face to face about the idea that our poverty programs have caused the awful mess our poor people live in today they don't like to believe that the incentives created by the programs can shape behavior that much. They believe that in any given population group a certain number of people are born reckless or unintelligent. Others believe that their upbringing has destined them for crime and immorality. I refuse to believe that the bell curve of human existence is unchangeable. Every human being is capable of greatness. A greatness defined by strong moral character, loving and peaceful relationships, and a lifetime of adventures and personal growth.

The Milgram Study shows that given the right conditions, bad incentives can make normal people to do horrible things. It is not a stretch to believe that bad incentives in our poverty system have led to the rampant problems today. Those at the bottom of the spectrum, plagued by criminal and immoral behavior, were not destined by fate to be there, our system has done it to them. Our poverty programs have been a horrible mistake.

Confusion also exists that correlates poverty programs with charity, when they do not normally have the same effects. Charitable organizations trying their best to lift people out of poverty, addiction, mental illness, or homelessness, can be very effective. The difference between charity and government programs is that when we help a friend in need, there is an expectation that they will do the right thing to prevent that situation from happening again. If they do not, we usually stop giving help in the same manner.

A government program doesn't work the same as charity. A dispassionate bureaucrat merely looks through documents to see if one qualifies and then hands out a check. Their job is to process paperwork efficiently, not to make moral judgments on the applicant. A charity can quickly react to changing events because they are typically small and have fewer rules. The government can’t change something without massive research projects and congressional hearings to figure out whether there is a problem and then a bill has to crawl its way through Congress. The government is simply too big to administer poverty programs effectively.

Unfortunately, too many in poverty today are ill prepared to take care of themselves and their children, so sweeping these programs away overnight would cause a lot of short-term chaos. This is why I proposed building a bridge to link those hurt by the horrible mistakes of the past to a better future. A future where they have the strength to rise up to the greatness God intended for them.

I think we’ve made a good start. Next week: Education.

As always, tell me what you think. Feedback has been slowly increasing and if it increases a little more I will probably switch to a blog format soon.

Milgram Study

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