Lucas Davis

For this post, I interviewed Professor Lucas Davis about his paper, “The Effect of Driving Restrictions on Air Quality in Mexico City.” 

Professor Davis is an Associate Professor at the Haas School of Business at the University of California, Berkeley. He is also the Jeffrey A. Jacobs Distinguished Professor in Business and Technology there, as well as the Faculty Director of the Energy Institute at the Haas School of Business, and a Research Associate at the National Bureau of Economic Research. He specializes in the economics of energy and the environment. 

In 1989, the government of Mexico City enacted a policy to control air pollution. The policy, called Hoy No Circula (HNC for short) is still in place today. The government was very concerned about the extremely high levels of air pollution, and they thought that placing a restriction on driving would be a good way to reduce it. The policy bans most drivers from driving their vehicle one weekday per week. For each vehicle, the last digit of the license plate determines which day the vehicle cannot be driven.

In Professor Davis’ own words, “I lived in Mexico City in the 90s, and I coped with this program on a routine basis. I found it to be a huge hassle. . . I always assumed that if there was so much pain being inflicted by this policy, then there must be must be some evidence of its effectiveness.” He carries out a very thorough search for such evidence, but he just cannot find any.

First, he looks at the daily pattern of pollution after the policy is enacted. Carbon monoxide, for example, which vehicles emit, follows a typical rush-hour pattern. It peaks at 9 am and at 6 pm. He wants to be thorough, so he also examines several other pollutants, including nitrogen dioxide, ozone and sulfur dioxide. None decreases after the policy. He also finds that drivers seem to have simply switched to using their cars more on weekends. 

When I asked Professor Davis what the unintended consequences of this policy were he said, “The problem with telling people that they can’t drive their car once a week is that it means they are going to look for substitutes on that day; and anecdotally, long before I wrote this paper, I was hearing that people went out and bought more cars.”  He goes on to say, “Now if, for example, I have a third car, I can loan it to my teenager the other days of the week, and increase my family’s total driving.” 

Professor Davis looks for solid evidence of these anecdotes he was hearing. He finds it. First, he finds that gasoline sales did not decrease after the policy. He also finds evidence that both the number of registered vehicles and sales of vehicles increased after HNC. And, think about it, what kinds of cars do you think people would go out and buy? He discovers that people bought mostly used vehicles, not new ones. So, most of the extra vehicles on the road were high emissions vehicles. Of course, this ended up contributing to air pollution and gasoline consumption! 

How else did people react to this policy? He has some evidence that they took taxis more; and the taxis in Mexico city at the time the policy was implemented consisted of mostly relatively old, high-emissions vehicles, also making air pollution worse instead of better. 

But wouldn’t people take public transportation? It was a stated goal of the program. It’s a very good system (subways and buses), but he finds no evidence that people switched to it. In fact, Professor Davis’ evidence is that ridership decreased slightly. He thinks that this might be because the people who drive to work are from the middle and upper classes and hence value time highly. They therefore took taxis and bought additional cars instead, as we just discussed.

Professor Davis struggles to identify any real winners from this policy. He thinks that everyone, except maybe the taxi drivers, has suffered in Mexico City, because of this policy. It’s been a huge inconvenience, and it just hasn’t worked.  

But, it turns out, several countries have this kinds of policy in their big cities, and more are planning to implement it, including Delhi and Paris. Several large cities in South America also still use it. So I asked Professor Davis what types of policies he thinks should replace this policy. One suggestion he had was better emissions testing. He said that emissions testing is sometimes too lax, and sometimes even fraudulent. With tighter standards, we can keep offending vehicles off of the roads. 

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

Jennifer Doleac and Benjamin Hansen

For this post, I interviewed Professors Jennifer Doleac and Benjamin Hansen about their paper, “Does ‘Ban the Box’ Help or Hurt Low-Skilled Workers? Statistical Discrimination and Employment Outcomes When Criminal Histories are Hidden.” 

First, let me tell you about the authors. Professor Hansen is a visiting research scholar at Crime Lab New York, here in New York City, while he is on sabbatical from his position as an Associate Professor at the University of Oregon. He is also a research associate at the National Bureau of Economic Research and  research fellow at IZA, the Institute for the Study of Labor Economics. He specializes in the Economics of risky behaviors. This includes substance abuse, drunk driving and alcohol use and abuse. He also studies the use of drugs that were illegal and are becoming legal, like the timely case of marijuana; and the economics of criminality.  Professor Doleac is an Assistant Professor of Public Policy and Economics at the University of Virginia, and a Nonresident Fellow in Economic Studies at the Brookings Institution. She’s also an Affiliate at the University of Chicago Crime Lab. She studies crime and discrimination; and she’s finding that these two areas of interest have become overlapping, as you will see in the example we study below. In her work on crime she often looks at how new technologies can affect public safety.

In this paper, the authors discuss a policy called “Ban the Box,” or BTB for short. The goal of BTB is to help people with criminal records find a job. It has this name because typically, especially for low wage jobs, there is a box that potential employers ask applicants to check, when they fill out a job application, if they have a criminal record. Often potential employers are reluctant to hire anyone who checks this box. So, the idea of BTB is to hide this information at the beginning of the process, and instead reveal it at the end, right before an offer might be made. This will give the applicant a chance to put his or her best foot forward, a chance to establish a good rapport with the employer, increasing the chance to be hired, despite the criminal record.

Why is this important? It’s important because there is evidence of high recidivism rates among the prison population. That is, too many people end up committing another crime, and back in jail. And securing employment is an essential way to build a stable life, preventing this recidivism.

The authors are able to assess the effects of BTB because it took effect in different cities at different times. Unfortunately, they don’t have data on individual workers and whether each has a criminal record. So, here’s what they do. They focus on a portion of the population they think will be most affected by this policy: young males without a college degree (low skilled workers). They compare the share of this population that is working where the policy was adopted later to the share that is working where it was adopted earlier. What they find is that, in particular, minorities (blacks and Hispanics) in this group experience a reduction in employment after the policy is in place.

What’s going on here? This policy completely backfires! When BTB is implemented, according to Professor Doleac, “the policy itself doesn’t do anything to change employers’ feelings about hiring someone with a criminal record. If employers don’t want to hire someone with a criminal record, then when they can’t see who has a record, they might try to guess who has a record. Because interactions in the criminal justice system in this country are so highly correlated with race, we might expect that employers would discriminate against young, low skilled black and Hispanic men.”  The reduction in employment was about 5% for young black men and about 3% for young Hispanic men. These are pretty big numbers.  

In social-science-speak this unintended consequence is the result of statistical discrimination on the parts of the employers. This happens when members of a particular group are discriminated against because information is missing about them. So, the observer is forced to use only the information available. The easily available information, race in this case, is used in place of, as a substitute for, the missing information. The very policy that was meant to help those with a criminal record turns out to hurt them, and it hurts others who don’t even have a criminal record!

It certainly seems that withholding information from employers isn’t the right policy in this case. Professors Doleac and Hansen would recommend instead giving employers more information. Instead of a BTB policy, they would recommend a policy in which a criminal history is revealed along with what it means. For example, employers need to understand the different crimes, and whether they might be related to job performance. Previous work has shown that when employers are allowed to gather more information on minorities, it helps the minority job seekers in their quest to find work.  This makes a lot of sense. One paper found that potential employers banned from conducting credit checks on job applicants used race as a proxy for credit score, and employment for blacks fell by at least 7%. 

I asked the authors about their related work. Professor Hansen has another paper on the effects of a criminal history on employment. He examines what happens if blood alcohol content (BAC) threshold cutoffs are removed. With a BAC cutoff of 0.080, someone who gets stopped and measures 0.081 gets a DUI, but someone with 0.079 just gets reckless driving. He is interested in how much of a difference this criminal history makes when each person searches for a job.

Professor Doleac is interested in how to improve prisoner re-entry. She is currently studying a new program that uses technology to help inmates develop a transition plan for when they are released from jail or prison, then provides additional information and reminders (or “nudges” in behavioral economics lingo) to help them stay on track after they get out. The program addresses a number of areas that can be challenging for this group – including finding a place to live, enrolling in school, getting a job, accessing health care and substance abuse treatment, and finding reliable child care.

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

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.