The Economics of Personal Responsibility and Human Development

 Congratulations to Nick Kristof of the New York Times.  I am really impressed with this discussion between him and Carol in Berkeley.   My mother’s name is Carol and she has been to Berkeley and I’m wondering if my mom wrote the following response;

Here is the NY Times Source and my remarks appear below.  

By all means, let’s talk about “personal responsibility”’ — Nicholas Kristof

Carol in Berkeley, Calif., on “Who Killed the Knapp Family?” (Jan. 9):

So long as poverty is seen as an individual or cultural failing (e.g. the culture of poverty which was linked to race, even though the evidence was nonexistent) we will not treat this with the seriousness it deserves. Yes, every individual has responsibility for their lives. But pulling oneself up by one’s bootstraps, after we take away not only your boots but your capacity to buy or make boots is unfair and is also emblematic of how poverty is understood. We need to understand that collectively this costs us all — both morally and financially. The solution is collective. It is jobs that pay a living wage, it is opportunities for upward mobility for oneself and one’s children, it is training for these jobs and it is a real safety net. Will some people still be poor? Will they self destruct? Of course. But the numbers will be far smaller. And we will be far richer as a society.

Nick: This observation by Carol struck me as exactly right. One of America’s mistakes over the last half century was to go too far down the track of extolling “personal responsibility” and haranguing people to lift themselves up by their bootstraps. When an infant in three counties in the United States has a shorter life expectancy than an infant in Bangladesh, that’s not because the American newborn is making “bad choices”; it’s because we as a country are. So by all means, let’s talk about “personal responsibility” — it’s real — but also about our collective responsibility to help America’s children and give them a fighting chance to succeed.

MEK:

This is a very important discussion.  Note that it is vague about what are the steps to implement this new “American Dream” social contract.   

How would Gary Becker respond to this important discussion?  I think he would trace out the information challenge.  Children do not select their parents.  When a child is born, will the parent invest efficiently in the child or will under-investment take place? If under-investment takes place, why does this occur?  Did the parent face financing constraints? What role can the state play to augment efficient investments in the child so that she has a higher probability of achieving her full potential?  Why Children Fail?

My starting point here would begin with investing in Jim Heckman’s policy proposal on early childhood development and helping parents to shape the course of their children’s life.

If more children receive early life interventions, and if these children live close to each other, then spatial neighborhood positive externalities occur. See this new John List and Yves Zenou co-authored paper.  

These early life intervention programs are expensive and would be very expensive if all disadvantaged children participate in them.  I have co-authored an under-appreciated paper on the local public finance issues that arise for such interventions.  Read my paper, I think that we make a key point (but few agree!).

Matthew E. Kahn & Kyle Barron, 2015. “The Political Economy of State and Local Investment in Pre-K Programs,” NBER Working Papers 21208, National Bureau of Economic Research, Inc.

Abstract

My co-authored JHU Press book further explores these themes of how to help the urban poor who often live in poor cities to achieve their full potential.  I do not believe that the answer here is a higher minimum wage or strict rent control laws.   While Econ 101′s perfect competition models are not in fashion right now, the lessons those models teach us lurk and will manifest themselves in the medium term in terms of unintended consequences if well meaning policy makers seek to help the poor through price controls.

An alternative path forward is to address the investment co-ordination failure that emerges for the urban poor who live in poor places.  Read Chapter 1 of our new book.