Monday, November 28, 2016

Randall Reback

The first expert I interviewed was Randall Reback, Associate Professor of Economics, and my colleague at Barnard College, Columbia University. His specialty is the Economics of Education; and he is particularly interested in K-12 education policy in the US, with a focus on policies that affect teachers, and how they are evaluated. He also studies policies that determine the types of non-academic services that students receive in schools, like health services. He is also interested in school choice policies, and what determines how much money schools get to spend.

I wanted to know more about Professor Reback's paper “Mobility, Housing Markets, and Schools: Estimating the Effects of Interdistrict Choice Programs.” In this paper, Professor Reback and his co-authors, Eric J. Brunner and Sung-Woo Cho,  study a policy called “Interdistrict Choice.” These are public school choice programs, also called open enrollment programs. These programs are in place in many US states. Families can live in one school district and apply to send their child or children to school in another, nearby district. Until recently, with the rise of charter schools, this was the most heavily used form of school choice in the US. The rules vary by state, but the idea is to give families freedom of choice, in order to provide a better match for each child in terms of schooling needs. In some states, the goal is also to increase diversity within a school district, by guaranteeing a certain number of spaces for children from outside the district.

I wondered how often families actually take advantage of these programs. The data show that about 5% of students transfer out of district on average, with a high of 10%, and a low of 1%. So, these policies seem to be effective. But he argues that the districts are allowed to limit the number of slots available for transfer students; and states could put pressure on districts to expand the programs, and take more transfer students.

Which families take advantage of the policy? The children who transfer, he says, have parents who are more well-off than their neighbors, but not as well-off as the parents of the children in the district to which they are transferring.

The unintended consequences of this policy are fascinating. The researchers found them by comparing the 12 states where the districts are required to participate in the program to other districts, often nearby, where the transfer policies are not adopted. Professor Reback explains them from an economist’s perspective: this policy is intended to affect the market for schooling, but it also turns out to have consequences on the market for housing. In particular, in districts where there are desirable nearby transfer opportunities house prices rise. Families are willing to pay more for a house in a district where they have the chance to try to transfer to a nearby school district. The data in the paper suggests that if a state were to adopt a statewide inter-district choice program, house prices would increase by more than 5 percent for homes in areas with the most desirable outside transfer opportunities. Also, population density increases in these districts. More families are choosing to live in these communities. And, residential composition changes: these districts become slightly wealthier. Again, these are all compared to districts that are similar, but happen to be located in places that didn’t have this transfer policy.  

So, according to Professor Reback:

“even if the choice policy leads to segregation across schools, it helps integrate across communities. Households that might not have chosen to live in a community in the past, because they would have chosen to live in a more affluent community, now they can live in a community with more income diversity, and attempt to send their kids to other public school districts. The policy has an integrating effect in terms of residential diversity, even if it might have a segregating effect in terms of which kids are attending school with which other children.”

Perhaps you are not surprised that there is a link between the market for schooling and market for housing. You probably know that, traditionally, much of the value of a home comes from the value of the public schooling in the district that the home is located in. Researchers have linked voting behavior on school choice programs -- not just this one but also private school voucher programs and charter school programs -- to the housing market. Even if voters aren’t going to use a programs themselves, if they live in a district where such a program is on the slate, they might not support it for fear of losing some of the value of their homes. And the evidence is that house prices do fall, though only slightly, in the school districts with these policies. Houses retain most of their value, however, because the only way students are guaranteed to attend these schools is to live in these districts; so these houses are still the most attractive.  

One interesting thing about these unintended consequences is the distinction between unintended consequences and unanticipated consequences.  In this case, the consequences on the housing market, and on the redistribution of the population, are not unanticipated. The policy makers, school districts, and the homeowners all seem to understand that there will be effects on the housing market. In fact, it’s one reason why the districts might limit the number of slots available to students from outside the district --  to limit the effect on house prices.

So, in this case, the unintended consequences are limited, because of the limited number of slots available in each district. This is a good thing. But, it is my goal in this blog to learn from these experts how we might re-design policies in the future. So, I asked Professor Reback about the potential for policy reform. He told me that the public school district is the “provider of last resort,” and that each year choice programs, like interdistrict public school choice policies and charter schools, create a greater degree of uncertainty in the number of students the public school district will have to serve. This makes it harder for them to set their budgets. His suggestion is that the cutoff date for participating in all choice programs be early, well before September, and be coordinated across programs. This makes a lot of sense.

Finally, I asked Professor Reback about his other related work. In work with Robert Bifulco, he looks at how students attending charter schools affects traditional school districts. They studied two school districts. When a new charter school opens, the public school district needs to decide how much to downsize, in terms of eliminating staff. The authors work under the assumption that the school districts can easily downsize roughly 1/3 of what they need to eliminate quickly; another 1/3 will take one to three years, like eliminating a principal; and the last 1/3 is the longer term downsizing like eliminating a superintendent. They find that it’s the medium term downsizing that is the hardest for the districts. And if the charter school fails and closes, the traditional school has to absorb the students back in. Professor Reback and his co-author have several policy recommendations to make these sorts of transitions smoother: as mentioned before, setting a common early deadline for choice programs will help here as well. Another is the shared use of space. School districts now often sell their space to charter schools. Instead, they could rent it, and so with schools sharing resources both can be more productive. I think this is a brilliant idea.

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.

Welcome to my blog!

Welcome to my blog! If you already know me, or you just read my profile, you know that I'm an economist. What initially drew me to economics was the mathematical modeling: I fell in love with economics when I discovered that I could approximate humans’ and governments’ behavior with equations and graphs. For example, it is standard in economics to write down a model where humans buy the products, in the amounts, that make them the happiest. So, economists make up equations to measure people’s happiness, based on the amount of the product that they buy. If you took calculus in high school or college, maybe you remember how to use it (or at least that you can use it) to find where an equation is maximized. And, voila, you’re using mathematical modeling to understand economic decision making. 

So, math is powerful. But, with experience, as I've matured as a social scientist, I've come to appreciate the important roles that the other social sciences play in our understanding of economic models. I'm not the only one. Economics as a field has also matured in this way. In particular, the Great Recession caused me, and many of my colleagues, to “think outside the box,” and to realize that mathematical modeling isn’t necessarily the best way, or the only way, to analyze every situation.

I am now fascinated by all the social sciences. I've been studying psychology, social psychology, and sociology and how the insights in these fields can help me to understand the "behind the scenes" behavior in the models I work with. For example, I model people as having self-fulfilling expectations. If they all expect a recession, they play it safe, don’t spend as much, and their expectation is fulfilled. Vice versa if they all expect a boom. But the models can't explain how this self-fulfilling prophecy occurs. Why do people all start to behave similarly when they are in a group situation? It's herd behavior, group psychology. Insights from these other social sciences are needed. My working paper, "Sunspots in Social Networks: Experimental Evidence,” with Pietro Battiston, is incorporating such insights.

The point is that my studies of these other, fascinating social sciences have led me to my obsession with unintended consequences. Unintended consequences are everywhere. They result because human behavior is unpredictable. When individuals, groups, or governments take action with a goal in mind, that goal is almost never the only result of the action. When the other, usually unforeseen, outcomes are significant enough to be of note, they earn this distinction.  In his seminal paper, "The Unanticipated Consequences of Purposive Social Action," Robert K. Merton wrote: 

"we may have sufficient knowledge of the limits of the range of possible consequences, and  even adequate knowledge for ascertaining the statistical . . . probabilities of the various possible sets of consequences, but it is impossible to predict with certainty the results in any particular case . . . We have here the paradox that whereas past experience is the sole guide to our expectations on the assumption that certain past, present and future acts are sufficiently alike . . . these experiences are in fact different."

In my search of the literatures, both academic and popular press, I’ve found that the most prominent examples are negative, or undesirable, unintended consequences of government policies. But unintended consequences, both positive and negative, can result from the actions of private individuals and groups as well. In this blog, my goal will be to delve deeply into some of the examples I’ve found the most compelling. I’ll interview the authors who wrote about these examples, then summarize each interview for you, including information about other related research that the author is working on. 

I’m looking forward to taking this journey with you. I expect each posting will bring us all, as professional and amateur social scientists, closer to an understanding of the complexities of human behavior; and to thinking about how to better anticipate, and hence prepare for, any consequences of our future actions. I hope that you will take the lessons you learn here and apply them in your daily life. The consequence might be a drastic change in the way you live your life. Maybe not, I don’t know, I can’t predict. Let’s see what happens. . .

Thanks for reading!