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Archives for Incentives (page 1 / 1)

The Unintended Consequences of Bike Lanes

The Unintended Consequences of Bike Lanes →

It won’t surprise you to learn that these lanes, like many technocratic schemes, come with unintended consequences. When it snows — and it does, from time to time, always catching the city completely by surprise — the plows can’t remove the snow from the streets because the plows can’t fit in the bike lanes. So the plows dump all the snow into the bike lanes themselves. This causes a problem for the two or three people who actually ride bicycles in the bike lanes. It also causes problems for motorists because the city, employing its micromanagerial genius, often uses the portion of the bike lanes near intersections as left-turn lanes for cars. Safety first.

Another consequence — unintended? — is that already congested streets lose an entire lane. I remember once it took me nearly thirty minutes to travel five blocks down L Street, NW. The road was down to one lane, effectively.

And today’s observation: Delivery trucks can’t fit in the bike lanes. So they load and unload not at the curb, but in the street. Safety first. Bottlenecks form. Commuters lose productive time at work or time home with their children. Welfare decreases because rage, or at least irritation, increases.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." — F.A. Hayek, The Fatal Conceit

This entry was tagged. Incentives

Why Women Really Demanded Diamond Rings

Why Women Really Demanded Diamond Rings →

David Friedman shares an interesting tidbit.

…In the early 20th century, a common pattern was for engaged couples to have sex with the understanding that if the woman got pregnant they would get married; evidence from several late 19th century European cities suggests that about a third of brides were pregnant. One problem was the risk of that the man, having gotten the sex, would dump his fiancee instead of marrying her. One solution to that, in U.S. law, was the tort action for breach of promise to marry. In a society where marriage was the main career open to women and the fact that a woman was known not to be a virgin substantially reduced her marriage prospects, seduction could impose substantial costs and result in a substantial damage payment.

Starting in 1935 in Indiana, U.S. states started altering their laws to abolish the action for breach of promise. Women responded, by Brinig's account, by requiring a down payment from their fiancees in the form of an expensive ring—which forfeited if the fiancee terminated the engagement. Think of it as a performance bond.

A new practice: The doctor will see you today

A new practice: The doctor will see you today →

Here's something interesting from my files.

Medical personnel are fond of saying that you can't practice medicine like a business. They often believe that their work is unique and can't be easily optimized by industrial engineers. But there is some room for improvement. Take scheduling. What if you did today's work today? Worry about next week, next week. Don't try to schedule it today.

A few doctors have started applying that principle in their offices and have found that their patients spend less time in their waiting rooms and spend less time waiting for an available appointment. And the doctors spend less time being overbooked and overworked. The concept is called "open access scheduling" and allows doctors to leave most of their time unbooked.

[P]atients start calling at 9 a.m. and are assigned 15-minute time slots on a first-call, first-serve basis. Those who want a traditional scheduled appointment can try for the two to three hours a day he reserves for advanced bookings, usually for annual physicals or patients who need regular follow-ups. A few extra slots are left open for walk-ins or emergencies.

This is the type of innovation and experimentation that you'd see more of, if patients paid for their care directly, giving them the freedom to shop around and consult different doctors. That kind of open ended market would also give providers more freedom to experiment with how they practice healthcare, rather than being tied to the rules of large HMOs and large group practices.

Consider the Milwaukee Evidence in Debate on Voucher Expansion

Consider the Milwaukee Evidence in Debate on Voucher Expansion →

Wisconsin's School Choice Demonstration Project (SCDP) recently finished a 5-year study of the effectiveness of Milwaukee's voucher program.

After five years, the SCDP team found:

Statistically significant gains for voucher users in reading compared to matched Milwaukee Public School (MPS) pupils (with the important caveat that the introduction of program wide WKCE testing in the final year of the evaluation could be responsible for some of the gains);

  • Statistically similar impacts on math test scores for matched MPS and MPCP users;
  • A modest positive impact on public school tests scores as more private schools participated in the MPCP;
  • Statewide taxpayer savings, though not in Milwaukee;
  • Higher graduation rates for voucher users compared to MPS;
  • Higher rates of four-year college enrollment for voucher users;
  • Evidence that closed schools in both MPS and the MPCP were the lower performers;
  • High levels of parental satisfaction;
  • No impact on housing prices or racial integration;
  • High rates of school switching;
  • Wide variation in achievement levels between schools.

So what are the practical lessons from the SCDP for other communities considering vouchers? Don’t expect the introduction of a voucher program to sizably increase test scores across the board for voucher users, or students in public schools. It’s safe to expect no negative impact on test scores, but any gains will likely be substantively small. So if the primary consideration in a community is raising test scores, a voucher program like Milwaukee’s may not be wise.

However, if you are a community struggling with high school graduation rates, particularly for low-income pupils (like Madison and Green Bay), a Milwaukee style voucher program could be a viable strategy to raise attainment.

I think this evidence justifies expanding the voucher program state wide. I'd love to see that happen.

Top grads want to teach. Why don't they get hired?

Top grads want to teach. Why don't they get hired? →

Here's another indication that unions are hurting education.

The awkward fact is that teaching in America has become a quasi blue-collar profession mostly shunned by top college graduates. The countries with the best education systems recruit from top graduates. What about our top graduates? A good barometer is Teach for America (TFA), which in 2011 drew nearly 48,000 applicants for 5,200 teaching positions. Those applicants included 12% of the seniors at Ivy League schools.

Here's the question that never gets asked: What happens to the 43,000 top graduates who wanted to teach but didn't get an offer from TFA? Nearly all seek other careers.

For the best and brightest college graduates in this country, jobs offered by regular school districts lack prestige. Their accountability-free practices give the best teachers no way to stand out. These young TFA applicants rose to the top of their high schools classes and won admittance to the top tier colleges. They want a shot at shining on the job as well.

Rising Health Care Costs are No Mystery

Rising Health Care Costs are No Mystery →

One issue that does not get enough attention is the prosaic act of shopping.   I spend my own money, and I care about price.  I spend someone else's money, I don't give a rip.  Josh Cothran did a visualization of who is spending health care money.  Just look at the 1960 and 2012 charts, and pay particular attention to the orange "out-of-pocket" number.  Another way to rewrite these charts is to say consumers care about prices for spending in the orange band only.

Also, healthcare providers only care about your happiness to the extent that you're paying them. If you're not paying out of pocket, they don't care whether or not you're happy with your healthcare.

The problem of government incentives

White House Seeks CEOs' Help - WSJ.com:

Mr. Gould said the group would talk about inspiring top performance from government employees. Then he explained that this inspiration would have to be done without much in the way of financial bonuses, threats of firing or promotions that leapfrogged the normal civil-service rules.

What's left, exactly? Inspiring speeches? I don't see that doing much to inspire a career bureaucrat in a secure job to suddenly do something new and disruptive.

This entry was tagged. Government Incentives

The Problem with American Healthcare

Why does healthcare in America seem so broken? There's actually a very simply reason: the people receiving the care are not the people paying for the care. As always, he who pays the piper calls the tune. Russ Roberts breaks it down:

So why doesn't a hospital work better? The answer I think, is that the level of specialization in medicine has emerged from a process that has very few incentives to make sure that the level of specialization is as productive as it should be. There are very few informational feedback loops. Very little accountability. Sure, if a surgeon leaves a scalpel in your chest cavity and sews you back up, the surgeon bears a cost. And as a result, it doesn't happen very often. But the kind of errors that Arnold worries about, the kind of errors that I've worried about with my Dad in the hospital (and the kind I've seen made) are the ones that have little or no consequence to anyone other than the patient.

These errors are built into the system. When a drug leads to unexpected side effects because the right questions weren't asked, when an opportunity for a safer treatment is missed, when an aggressive treatment for one illness weakens the immune system and leads to other problems, who can you blame? Who bears a cost other than the patient?

You can blame the hospital of course, whatever that means, but the costs to the human beings who work in the hospital are small. There are no feedback loops within the hospital to reward generalists who look for the costs of specializations. And the reason there are not is because the patient is not the customer. The patient is not paying the bill. The financial incentives that do exist are coming from Medicare and Medicaid and the insurance companies. The normal feedback loops that protect the customer from error and greed and simple stupidity are missing. In a way, it's amazing it works as well as it does. It works as well as it does presumably because most doctors and nurses do care about the lives in their hands. But it's imperfect and could be much better.

( Via Cafe Hayek.)