Monday 20 August 2012

Coercion everywhere: welfare edition

It's hard to draw the line between coercion and choice. Some people see coercion in normal market transactions between consenting adults where relative wealth differences are large - prostitution markets are often banned as somehow coercive; most countries would ban me from selling you one of my kidneys for fear that the money offered had coerced me. I don't see any of those as being coercive; others do.

Mike Munger defines exchanges as being Euvoluntary if they satisfy a few requirements, the last of which likely motivates bans on organ sales, prostitution and price gouging. I'm going to highlight the two that deal with coercion:
(4) neither party is coerced, in the sense of being forced to exchange by threat, and (5) neither party is coerced in the alternative sense of being harmed by failing to exchange.
Munger doesn't argue for bans on voluntary transactions that fail to meet the more stringent conditions for Euvoluntary exchanges; indeed, he says they remain just and useful. I'd argue transactions failing requirement (4) ought to be banned because we have pretty strong expectations that one party is left worse off by the transaction, but that those failing requirement (5) should generally be allowed.

National announced changes around welfare policy a few months ago.* One proposed change would provide free contraception for young women receiving benefits and for the teenaged children of families on benefits. Most people, at least by wholly unreliable web-polls on news-sites, think this an excellent idea. With over 12,000 votes cast, 85% say it's great. I also think it's a pretty good idea.

Some of the Kiwi Twitteratti worry whether there's a slippery slope towards stronger forms of encouragement for long term contraception use for women on benefits. They could be right. But, would that kind of requirement be coercive?

Receipt of various benefits already comes with a laundry list of conditions. If you're getting the accommodation supplement, you have to report family income. That gives some people incentive either to hide that they're living with their partner or, worse, to have one partner leave. Here's one list of the requirements around disclosing to Work and Income whether you're "in a relationship for income assistance purposes". Is it coercive that, if you care about being truthful, you may be forced (in the (5) sense) to avoid entering into a relationship? Whatever the costs of coercion in those cases, they seem outweighed by the ability better to target benefits to those most in need.

I have a hard time seeing how adding contraception as condition of receipt of benefit is different in kind from the other forms of coercion that already surround receipt of welfare payments. People still choose whether to accept the bundle of restrictions and payments. The exchange fails to be Euvoluntary as (5) is definitely violated. But (5) is pretty likely to be violated if any conditions are attached to welfare receipt.

Lew Stoddart thought I was engaging in moral gymnastics in hating state coercion except when it comes to welfare. But most interactions with the State involve coercion (4): threat of force. On my anarchist days, I hate all of these and would side with Peter Cresswell on getting the state out of welfare. But on other days, I take the tradeoff: some coercion in exchange for some public goods, albeit in a total bundle that's rather larger than I'd like. All of the potential rights violations can be put into the utilitarian calculus and weighed against the benefits that come either directly from the coercion or indirectly through what the coercion enables. We already do that when we weigh the costs of pointy relationship questions asked of beneficiaries against the benefits of greater targeting.

What are the tradeoffs for contraception mandates? There's a coercion (5) cost imposed on people on benefits. There's the cost imposed on children who fail to be born but would have valued their lives. Some of this will just be a transfer: when people come off benefits, they may wind up having other children who will only exist because some other child wasn't born previously. So we'd need to take the net decrease as a cost. On the benefit side, there's less type (4) coercion of those whose taxes would otherwise go to supporting children born to families on welfare. There will be some children of higher income families who get to come into existence if their parents keep more of their income. And there will be some relatively small number of children who fail to come into existence who, behind the veil, would prefer staying behind the veil.

I don't know which way things would fall on a full accounting. But ruling it out as eugenics misses that there are already pretty strong eugenic effects built into policy. Ex ante welfare policy subsidised childbearing by those who might otherwise chosen smaller families. Proposed changes to welfare policy imposing work requirements more quickly after the birth of additional children to those on benefits also have expected effects on fertility. So does free contraception for those on benefits.

I'd also disagree with Lew on one other point. While I agree with him that there is strong bipartisan consensus and majority agreement with taxpayer provision of support to the poor, that agreement is part of an implicit social contract. If you're down on your luck and trying your best, or if you're disabled and incapable of working, there seems pretty strong support for relief. But does that same level of broad consensus exist for supporting those deciding, while on benefit, either to have more children or to fail to take measures to avoid having additional children? I'd love to see some polling data on it.

Meanwhile, Kearney and Levine survey the evidence on teen childbearing in the United States. They find it pretty hard to find significant predictors of panel variation (why some states decline more quickly than others). Most targeted policies didn't have any effect. But two policies - expanded family planning assistance to poor women through Medicaid and reduced welfare benefits - did seem to matter and accounted for about twelve percent of the drop in teen childbearing. They frame this as being a fairly small effect, but it's still the only policy combination they found that had any effect. And, it's also the policy combination that National's looking at running: tighter work requirements for those with young children and enhanced access to contraception.

More recently, National's been suggesting drug testing for those on welfare, though the latest versions of it are rather weaker than the trial balloons first floated. The best argument in favour of this kind of policy comes from the Beaulier-Caplan take on the behavioural economics literature [see here and here]. While some American evidence suggests few there tested come up as being on drugs and so the policy isn't worthwhile, we'd really need better evidence to draw that conclusion if the existence of the policy reduces drug use; low rates of positive tests can be viewed as a success of the policy rather than a failure. It may here be worth waiting a few years to see what happens as different US states adopt mandatory drug testing. I'd be betting against that the policy winds up being found to be desirable, but why not free-ride on the Americans' experimentation with this one?

* I'd initially had this post queued up for 5/9/2012 when I'd meant to have it queued for 9/5/2012. Oops. Updated and now posted.


  1. I don't favour drug testing of beneficiaries for a couple of reasons:
    1) I don't support the prohibition model in the first place, and would much rather see a regulated legal, or at least decriminalised, market for drugs. Then those who are unable to enjoy their intoxicant of choice in a responsible manner can be dealt with through either the health or justice systems as appropriate.
    2) I doubt the money saved in denying benefits to the unemployed, sick etc. who test positive would offset the cost of testing the remainder.

    Regarding offering contraception to beneficiaries, there is a huge difference between making them available and mandating that beneficiaries take/use them. I'd support the former, but the latter seems a tad too coercive for my taste.

  2. Even were drugs legal, you can imagine calls for banning use among those on benefits. It doesn't bother me that some beneficiaries use drugs, but I can imagine defensible reasons why some taxpayer/voters might oppose drug use among beneficiaries.

  3. It has been suggested in the media that beneficiaries subject to drug testing will simply substitute to harder drugs that stay in the body for less time so are harder to detect. Cannabis is detectable for weeks after use while Methamphetamine (or P) is only detectable for three to five days.

    I'm not convinced that many recreational users of a mild sedative like cannabis would switch to a much more expensive and notorious stimulant like P. However they might well switch to cigarettes and alcohol, both of which are widely available, legal sedatives. Presumably welfare drug testing wouldn't penalise people for these perfectly legal activities.

    The relative merits of different drugs (legal and illegal) are the subject of much debate. I think we can agree however that drug testing of welfare recipients is unlikely to make teetotalers out of the current drug users*.

    *There doesn't seem to be any empirical evidence about whether welfare recipients use drugs. The current policy is simply being driven by politicians going "Oh those filthy dole-bludgers, we should stop paying them to use drugs." It's this complete lack of evidence that makes this policy so objectionable, in my opinion.

  4. ---(5) neither party is coerced in the alternative sense of being harmed by failing to exchange.

    Isn't that the equivalent of saying neither party is coerced in the alternative sense of being helped by the exchange? Am I missing something?

  5. No, it means rather that if you're dying of thirst in the desert, someone selling you high priced water may have some fairly high price setting power because your outside option is bad.(Yes, I agree price controls here would have perverse consequence)

  6. Interesting point Jack, it makes sense that beneficiaries would switch to alcohol/tobacco, with the accompanying health risks, rather than lose a percentage of their benefit. Call me cynical but I'm pretty sure this policy isn't about getting people off drugs, its about pandering to the moral majority and appearing "tough on crime".
    I too find the suggested policy objectionable for much the same reason. The term beneficiary-bashing is over-used but I think in this case it applies simply because of the underlying assumption that folk on the dole are sitting at home smoking pot all day rather than looking for work. This may apply to a small minority, but there just aren't enough jobs to go around, and taking money off a beneficiary isn't going to make him/her more qualified or eligible for the few positions available.

  7. *** One proposed change would provide free contraception for young women receiving benefits and for the teenaged children of families on benefits. Most people, at least by wholly unreliable web-polls on news-sites, think this an excellent idea. With over 12,000 votes cast, 85% say it's great. I also think it's a pretty good idea.***

    I architect of the welfare state in the UK, Sir William Beveridge, would agree. As would economist John Maynard Keynes. Both supported birth control be used by those who were unable to work - socialists in the UK like George Bernhard Shaw generally felt this was necessary for a socialist system to be sustainable.

    In practical terms it seems likely that the current system will simply create a growing underclass. Unfortunately, low future time orientation, low cognitive ability, bad values tend to be transmitted on either via genes and/or environment to the next generation. Basically the reverse of the process that economist Greg Clark described in 'A Farewell to Alm's which expanded the middle class and adapted the population for the modern economy. With low skill labour being slowly replaced by out-sourcing and improved technology there is only going to be a greater pool of people who are welfare dependent.

    A possible curveball will be technology to screen for behavioural traits. An Oxford Professor caused a stir recently by suggesting there would be a moral duty to use such technology for the benefit of individuals and society generally. Most of the respondents to the Telegraph poll were against the idea - although I wonder whether they would use it if it was available?

  8. I am utterly torn on whether I would wish to use genetic enhancement in utero. It makes the kids less me-like!

    Some of the debates among the progressives in the 20s were pretty nasty on the birth control side. And, the Flynn Effect has been seeming to counter the generalized "idiocracy" argument. But it does seem odd that policy seems designed to have the kinds of effects you're highlighting.

  9. Heh, that's true :)

    The Flynn Effect is interesting and probably has someway still to go in developing countries (as more get access to schooling, better nutrition etc). Although, somewhat surprisingly, Flynn himself suggested that NZ might be on a downward trend given current fertility rates.