Empowering people beats big government solutions
Old thread, but Roland Fryer has now won the John Bates Clark medal, the second highest honor after the Nobel prize for Economists, given to the best Economist under 40, in large part for his work on how culture pressures to not work hard in schools reduce the achievement of African Americans over time.
"WHEN Roland Fryer was a teenager, he hung out with a bad crowd. Surrounded by drug dealers and getting into fights, he used to sell counterfeit handbags to make a bit of extra cash. Asked by a friend where he would be at 30, he replied that he would probably be dead. In fact, at that age, in 2008, he became the youngest African-American to win tenure as an economics professor at Harvard. On April 24th the American Economic Association (AEA) announced that he had won this year’s John Bates Clark medal—the profession’s second-highest honour after the Nobel prize. He is its first black winner.
The Clark medal—awarded to the most promising American economist under 40—was given for Mr Fryer’s work on improving “our understanding of the sources, magnitude, and persistence of US racial inequality”. His research has sought to explain why black children do so much worse in life than their white peers—and why relatively few have, like him, overcome their rough backgrounds.
One explanation, long dismissed as an urban myth, was that black pupils do not study hard because those who do are accused by their peers of “acting white”—and ostracised. Mr Fryer found a novel way to test this notion. He measured how popular pupils were by asking them to name their friends. To guard against fibbing, he counted a friendship as real only if both children named each other. He found that the myth was true. Black high-school students with good grades had fewer friends than those with mediocre ones. For whites, the reverse was true.One of his early studies asked why black kids do worse than whites at school. He found that, after controlling for such things as income, there was no gap in kindergarten. But over time, black pupils lost ground in virtually every subject. By the middle of third grade (at around nine), they were 20% less likely than whites to be able to perform tasks such as multiplication.
How, then, to persuade slackers to study harder? Mr Fryer suggested offering small cash rewards to children who meet certain goals, such as memorising their times tables. This was surprisingly effective. One of his experiments in Houston’s elementary schools showed that, for every 10% increase in incentive payments, pupils worked 8.7% harder. (By comparison, a similar increase in wages spurs adult males to work only 3.2% harder.)"
http://www.economist.com/news/united-states/21650164-hotshot-economist-lessons-baltimore-and-other-trouble-spots-hood
http://www.economist.com/node/17420321?story_id=17420321
Cutting out the middle men
The most efficient way to spend money on the homeless might be to give it to them
WHEN the workers in the City of London head home each evening, a hidden legion of homeless people shuffles out of the shadows to reclaim their territory. The Square Mile has more rough sleepers than any other London borough except Westminster: 338 were identified by Broadway, a charity, over the past year, most of whom had spent more than a year on the streets. Policymakers have long struggled to find ways to shift such people, some of whom take deluded pride in their chaotic circumstances, resist offers to come in from the cold and suffer from severe drug, drink or mental-health problems (sometimes all three).
Broadway tried a brave and novel approach: giving each homeless person hundreds of pounds to be spent as they wished. According to a new report on the project by the Joseph Rowntree Foundation, a think-tank, it workeda success that might offer broader lessons for public-service reform and efficiency.
The charity targeted the longest-term rough sleepers in the City, who had been on the streets for between four and 45 years (no mean achievement when average life expectancy for the long-term homeless is 42). Instead of the usual offers of hostel places, they were simply asked what they needed to change their lives.
One asked for a new pair of trainers and a television; another for a caravan on a travellers site in Suffolk, which was duly bought for him. Of the 13 people who engaged with the scheme, 11 have moved off the streets. The outlay averaged £794 ($1,277) per person (on top of the projects staff costs). None wanted their money spent on drink, drugs or bets. Several said they co-operated because they were offered control over their lives rather than being bullied into hostels. Howard Sinclair of Broadway explains: We just said, Its your life and up to you to do what you want with it, but we are here to help if you want.
This was only a small-scale pilot projectthough its results have been echoed by others elsewhere in Britainbut it underlines the importance of risk-taking in the provision of public services. In this case, although finance directors (and many voters) might balk at buying the homeless caravans, the savings should outweigh the costs. Some estimates suggest the state spends £26,000 annually on each homeless person in health, police and prison bills.
The scheme also reinforces the view that handing control to the users of public services, even in unlikely circumstances, can yield better results. It is perhaps the most radical application yet of personalised budgets, increasingly used in Britain for the disabled and chronically ill. That is itself in keeping with an emerging international trend to use conditional cash transfers to solve intractable social problems.
Roland Fryer, a Harvard economist, has invested more than $6m to test the proposition that paying pupils can improve poor schools. The most successful method was the simplest, in which children in Dallas were rewarded for reading books. Similar schemes are proliferating in the developing world. In Malawi, the World Bank recently gave a trial to the idea of paying adolescent girls to stay in school. That worked, too. Researchers also found that rates of HIV infection were much lower among girls paid to stay in classrooms: one more lesson in the power of responsibility and self-control.