Child Care Quality and Regulation

I have been reading and writing a lot about childcare throughout the last year. Something I never thought I would do, but turns out to be quite interesting actually. It is also something I can talk to people about, which I was never able to do with the other things I have been working on. So I thought I would write up the few basic insights I’ve gained in researching this topic.

1. The quality of interactions between a child and its caregiver matters more than the frequency. What follows from this insight is that neither group size nor the ratio of children per staff matter all that much, but teacher training is essential. The cool thing is that the literature in early childhood psychology is in basic agreement with the economics literature regarding this insight.
2. When it comes to teacher training, the most important variable seems to be whether the caregiver has taken a college level class in early childhood education in the last year. This is something that friends of ours have confirmed anecdotally: they have three daughters and they have been hiring female students enrolled in USU’s Family Life Studies program, which combines various fields within the family, human development, and consumer science disciplines, as nannies. Our friends have reported that whenever their nannies have recently taken classes in early childhood development, their kids got to do many activities that are more engaging and would learn new things quickly. In fact, when asked how the nannies came up with the activities they would say things like “We learned this in class a few weeks ago and I thought I’d try it out.”
3. Things that negatively affect childcare outcomes are low teacher pay and high teacher turnover. Both of those variables are highly correlated as you might expect, since poorly paid childcare staff tend to be less committed to their jobs than better-paid staff.
4. European child care facilities tend to have better educated staff that receive higher pay than American day care center staff, largely because limits for child/staff ratios and group-size limits are not as low in Europe (this is not true for all European countries or all American states, but the consensus seems to be that on average child/staff ratios are higher in Europe).
5. One other problem with US childcare regulation is that small family day care homes, i.e. mothers taking care of a few other children in addition to their own in their own residence, are regulated in many states, which makes it difficult for such small family day care homes to operate. In order to operate legally, they have to undergo a number of health and safety inspections (not in all states but in a large number of states). Often, the cost of compliance is too high to warrant legal operation. This type of regulation severely constraints entry into the market for child care provision and as every econ 101 student knows, lower supply results in higher prices.
6. Another effect of this regulation is that because parents are relatively price sensitive, increasing regulatory cost often result in lower staff wages rather than being passed on to parents. As explained above, lower staff wages are one of the main culprits of creating a high quality care environment.

Overall, the lesson that I draw from this is that deregulation of staff-child ratios and groups size limits, as well as the removal of most health and safety standards for small family day care homes would result in better quality childcare outcomes in the US as well as lower prices. Currently health and safety are elevated as standards while childcare quality is largely neglected. Returning some of the decision making rights over how safe a care environment has to be to parents would lower barriers to entry into the child care sector, lower the cost of care, and probably also result in higher wages for child care staff (even though that may seem counterintuitive). I know not all parents may be well informed, but I do think that all parents have enough interested in their child’s health and safety that they would not drop them off at a day care construction site that does not follow any safety standards. Another thing I know for sure is that with snow on the ground 8 months out of the year, day care centers and homes in Utah do not have to have an outdoor play area to provide good care, even though that is one of the things they are required to have.

Deficits, Cognitive Bias, and Thinking Critically about Thinking

In a great book, Democracy in Deficit: The Fiscal Legacy of Lord Keynes, James Buchanan (1986 Nobel prize winner) and his student Richard Wagner (one of my professors) argued that spending is very closely related to reelection and that taxing works against reelection. The argument that we could spend when we were in bad economic times and save when we returned to prosperity (Keynes's countercyclical argument) gave rise to one of the enduring problems with the modern state -- fiscal opportunism. They called the balanced budget idea of government, "that old-time fiscal religion," and argued that only a balanced budget amendment could help save congress from the incentive to shy away from taxes and always increase spending.

California passed measures that has made it in effect a public referendum on every tax cut and every spending increase. This has led to California becoming completely bankrupt with no good way to get out of the fiscal mess. Voters easily vote for more programs and for tax cuts in the same ballot. In fact, people are watching California from China and arguing that democratic reforms could destroy the economy. There is a new assumption is that economic growth and democracy might work against one another.

The very essence of the argument of the republican idea of government was that representatives would have to be held to account for their stewardship of the resources that they are entrusted. I think one way to solve this issue of mis-allocation of resources is to trust them with fewer resources. I have little faith in the idea that we just need to elect better stewards.

Think about this example: In a business, no one cares how many times you failed before you succeeded. In politics, no one admits fault or past mistakes for fear that it will be used against them. This incentive means that dishonesty creeps into the system, little learning takes place and information is sharply limited. The only profit and loss signal is reelection (which is infrequent and clumsy, because it is not broken down to specific issues). Politicians go on TV regularly and refuse to comment on the substance of the issues for fear it will affect their ability to negotiate and vote trade later. It says something about our public discourse in this country that John Kerry's worst mistake was to change his mind in light of new evidence. George Bush's major selling point was that he was above changing his mind. This virtue would ensure a businessman failure, but a politician ought to have this to succeed.

On the other side of the debate are people who want the government to have more power. Obama goes to sleep every night thinking that no one could do a more honest and better job than he is doing. Strictly speaking, he might be right - given that anyone is making decisions for the 300 million people in this country. What these people seem to want is for politicians to make decisions for them. These individuals prefer the myth that there are guards on a wall ensuring that we won't have to tackle the difficult issues. After-all, they are elected to decided for us. This view assumes that only Obama has access to the information about the banks, about the war, about the economy. More trust is needed in his secret files that make it clear which decisions to make. People who have run a business of any size understand the importance of managers seeming to have a clear plan. However, asserting confidence doesn't save the manager when errors are discovered. The plan has to adapt. I am not sure that politics contains the necessary incentives for this to occur no matter who is wearing the hat.

At the end of the day, I have become convinced with the evidence arguing that the majority of how we view the world politically is derived neurologically (Jon Haidt, U Virginia). We can do brain scans and determine the more active centers of people's brains. To break it down to the most important dichotomy, we can look at the left-right political space in this country. Those with a greater portion of activity in the higher-order cognitive thinking areas tend to believe that we can reason our way out of every problem. They don't see natural connections between family members or small group affiliations, they see larger pictures, ethnic groups, political groups, and nations. They then "know" in some sense that greater data collection and more central control will help eliminate "errors" that others are making. Those that have less of this frontal lobe bias, when shown a picture made of dots, see the individual dots and have to have the picture pointed out to them to see it. They are more likely to be religious or traditional in other ways. They see the world made up of very strong social ties. These individuals are the ones that donate to charity, preferring help to come from knows how the one receiving the aid will use it to make themselves better off. Groups are smaller in this perspective and individuals are very meaningful pieces of the whole. These brain types fear outsiders and tend to see reasoning about issues as propaganda meant to ensure compliance rather than agreement.

Of course the frontal lobe types dismiss the others as less evolved. Actually, more research is being done to see if frontal lobe injury makes one more conservative. The implication here is that those that are conservative are brain damaged in some way. Actually, I don't know that this implication holds logically. Any good economist knows that there is a division of labor. The frontal lobe functions are necessary to making well-rounded decisions, but not enough to guarantee that well-rounded decisions are made. Too much focus on high-cognitive reasoning is like Spock from Star Trek. I think that there are good reasons that local knowledge and knowledge of meaningful social connections are important. What we tend to think, at least in academia, is that frontal-lobe activity takes the place of all of the other things that are important to being a well-rounded individual. We have spent so much time defending our nerdy habits that we don't realize the limitations of being nerdy. No one that I know of is doing good research on the impacts of this hypothesis on the political economy. I think it shows that the founders of this nation knew something about people when they wrote the constitution that we have forgotten over time. The reason we need competition between the federal and state levels is to help us balance between high-ideals and the way those ideals come into practice. I just hope that we can account for the goodwill of both sides amid a very frustrating political conversation and economic environment.

Guilt by Association fallacies and Academic Ethics

1) Universities accept private money for buildings, professorships, and other uses.

2) Little of this comes without normative implications and either explicit or implicit quid quo pro.

3) This has been the case for centuries, and in fact is the oldest model of academic funding (think Phillip of Macedonia).

I have recently been made aware of the political interest in universities that receive private funding. Considering that university professor's emails are public documents, we have plenty of evidence about what discussions were taking place about accepting money from private donors.

Does anything actually contribute to a substantial claim of ethical violation? No.

However, that truth seems to easy to dismiss in the age were scandal and the whiff of guilt is enough to start political movements.

It makes me very sad that academia stoops so low as to be susceptible to innuendo.

Being both a large oil refiner and a fan of free-markets is ipso facto proof of ethical corruption. I struggle even to care about logic that is so flawed, but yet it fully depresses me.

Standing Still

It is appropriate to acknowledge a long gap in posting.

What is it about standing still that creates a fear of starting out again?

Momentum is the life blood of academics. In thinking about the gap in blogging all I can offer to explain it is the existence of final exams. This has somehow created enough reason to ignore the blog. I know I was more productive when I was blogging each day, but was that because I was less exhausted or does the causality run in some other way? For example, discharging a thought or two as the day began allowed me to refocus on the tasks at hand while preserving my notes about what I woke up thinking about.

Well, I will see if I can get out of this torpor now that the semester is over...

Academia: A Handshake Culture?

Gone are the days where the choice of the correct tweed jacket was all you needed to signal membership in the fraternity of academic teaching, speaking, and publishing. However, it seems that for every student who overestimates the depth of insight and limitless pool of expertise that their professors have, there is at least one student whose contempt is palatable.

Perhaps this is best described by misunderstanding the portion of the job that is spent outside of the classroom. It is hardly surprising that when academics present the same paper at conferences year after year without making any progress the average student sees a very low bar. However, this should not really be the case in the modern university since people willing to take the job are numerous and the typical person able to qualify for tenure craves the attention that a new publication affords them. So where does this idea of intellectual laziness come from?

Perhaps the non-tenure track lecturers are responsible? The contempt for the system might be very real among these instructors who value teaching without research (if such a thing actually exists). Perhaps students simply haven't understood the complex reward mechanism associated with tenure. Perhaps the student's immaturity makes them look at the world as who you know and not what you know.

I certainly can relate to the idea that professors are parroting warmed over insights from a instructor's manual. The incentives are such that the less time you spend on prep the more time you have for research. So even very competent researchers would have an incentive to use the teaching materials available from the publisher. An interaction between this lack of prep and lack of pedagogical instruction for the research faculty can breed the type of contempt I see among students.

But this still leaves the idea that all research grants, publications, research appointments, and other gigs on campus come from some club which is anything but transparent. As a economist and big fan of the market mechanism for revealing information, this is perhaps a fault of a system that is protected from competitive forces. However, the longer I spend in academia, the more convinced I am that there is a meaningful division of labor. Some people do very detailed work and are bad at promoting (much less explaining) the significance to the wider public. Some are very good at expressing themselves, but find the underlying research element challenging. Some are highly mathematical, good at expressing themselves, but can't publish. Still more are very adept at understanding the politics of the university and add value as administrators. Others are very effective managers over research projects and create synergies from otherwise frustrated researchers.

All of these categories are needed, but each comes with a weakness. As a student it might be easy to look at this collection of weaknesses (taking attention away from the classroom) rather than at the collection of strengths. I wish the advantages of these different personalities were more clearly defended, perhaps in something like a price mechanism. Good teachers should be compensated according to the the value they create among the tuition paying students. This might be the biggest source of the critique for students. Good researchers should be rewarded in proportion to their ability to publish. People who are able to act as good managers and increase the productivity of their research team should also be compensated. There is no one model, nor should we ever pretend that there is.

For everyone who relies on a firm handshake to get things done in academia, there need to be several others that are nose-down researchers who can rely on these people to do their job consistently and without penalty. To be an academic with no sense of politics, we need some people to manage effectively. There also need to be good teachers who can communicate effectively. Rather than denying the division of labor, let us embrace it.

Internet Retribalization and Politics

In a TED-talk I watched a couple of weeks ago, Seth Godin argues that the internet has retribalized society by allowing people at the fringes with similar interests to find each other. Basically, the Zappos family blog has brought together shoe lovers, if you like coffee you will follow the Coffee Sage, and if you are an Austrian economist, you will read Coordination Problem. By finding others with similar interests in this way, people who used to be at the fringe of society have moved to the center of their specific social network.

As I was listening to Godin talk, I started thinking about the implications of this retribalization on politics. My first instinct is to think that a larger number of better-organized small groups make for even more rent seeking and redistribution a la Olson (1965), Tullock (1967), and Stigler (1971). On second thought, however, it does not seem like such interest-sharing groups are really involved in political activism or even designed for this purpose. So far, they seem to exist only for informational and socializing purposes. This might be an artifact of their recent emergence. Maybe they just haven’t figured out yet that they can profitably lobby government for redistribution in their favor. It would after all take an act of political entrepreneurship to make that leap from being organized as a social network to finding a politically profitable niche (See my paper with Randy Simmons and Ryan Yonk on Bootleggers, Baptists, and Political Entrepreneurs in the Winter 2011 Issue of the Independent Review). If such groups were to start spreading into the political arena, what would be different about the type of lobbying they might do as compared to the traditional K-Street-type lobbying we have mostly observed so far, and what would be the implications of their different lobbying activities?

First, and most obviously, internet-based groups would most likely make greater use of informational campaigns than existing groups. Rather than contributing to campaigns by giving money, they might use their existing social network to spread information about a candidate or a specific issue. The trend towards internet-based retribalization, which Godin describes, seems to come with an amount of information sharing across group boundaries that is much greater than what is common for non-internet based groups. Everyone is familiar with the importance of social media in many of the recent revolutions in the Arab world. Similarly, you-tube stars have made it into the world of advertising and at least one homeless person has found a job. Such a shift towards more informational campaigns would also be in line with the most recent Supreme Court decision on the issue of campaign finance legislation (Citizens United v. FEC), which effectively removed restrictions on electioneering communications.

A related second point of comparison to existing lobbying groups would be the ability of the new internet-based groups to operate on a higher level of public opinion rather than through direct congressional influence (pre-constitutional rather than constitutional or post-constitutional, see my working paper with Adam Martin on Two Tiered Political Entrepreneurship). Rather than going through the established channels of forming a PAC for representation in Washington DC, internet-based groups could conceivably influence policy making by organizing internet-based protest. While popular opinion might only be a weak constraint on congressional decision making, it does seem to be a proximate cause of policy.

Third, such groups could most likely organize previously unseen fundraising campaigns. Just remember Ron Paul’s 2007 Money Bomb, which generated $4.2 million in one day, making it the largest one-day fundraiser ever at the time. The significance of this point might be limited for fringe issues, for which support remains low. However, if a small group is well connected, it can conceivably overcome the disadvantage of a small member base.

These three potential changes to traditional influence suggest that if more internet-based groups should indeed become politically active, they would make public discourse more competitive (because they would be able to generate greater amounts of funding), less congress-centric and instead driven more by public opinion (because they would affect public opinion to change legislation), and more information based rather than influence based (because their campaigns would be informational campaigns rather than influence or money campaigns). Overall, such a trend towards more competition, more information, and more active public opinion sounds like something that could actually make the world a better place.

Leontieff function as it applies to Professorship

The above function suggests that you are only evaluated by the measure in which you do the least well. For economists this is simple, it is a perfect compliment arrangement. It is an extreme case. But when you are preparing to appear in a formal setting, you don't want to know how many shoes you have to chose from to wear with your tux, you want to know if you have one right shoe and a left shoe that matches. Having 5 right shoes does not solve the problem.

The opposite case is a perfect substitute. In professorship many people assume you can either teach well and then not do research or research well and not really excel at teaching. This is not the case. I should point out that teaching well is hard to measure, so we proxy with teaching evaluations.

To some extent the idea of perfect compliments can only occur if the supply of people with moderate ratings on both margins is high. As labor is scarce, quality is sacrificed. However, there seem to be many people that would like the job. It is easy to see that someone needs to be a good researcher in order to be effective in the classroom. Who wants to hear a lecture from someone that is still teaching something they were forced to learn in grad school, good teachers update (good researchers update).

Why might it be the case that you need to be a good teacher to be a good researcher? What about the division of labor? Communicating clearly is very helpful in research. Too often people get rewarded for tweaking a tiny aspect of a model or having the only access to a data set. Just like judging students based on one GRE test, judging an article based on access to data or a particular methodological tool fails a robustness check. I can't exactly explain why a good researcher has to be a good teacher, but it seems to make sense to me. Maybe enjoying the classroom means that a good researcher will stay productive over a long period? I am open to thoughts on this.