Losing Ground American Social Policy, 19501980 Charles Murray

1
Losing GroundAmerican Social
Policy,1950-1980Charles Murray

• By Andrew Western, Alex Scanlon,
• Shaunda Brown

2
Overview

• Negative Income Tax Experiment (NIT) failed as a
  better alternative to existing welfare
• Failed Incentives I
• Irrational short-term gain decisions with
  differing wealth levels
• Economic incentives regarding work, marriage, and
  income
• Failed Incentives II
• Crime and Education

3
Thesis

• American social policy during 1960-80 was
  designed to help people, yet directly contributed
  to negative social incentives regarding
  employment, marriage, crime, and education.
• These were unintended consequences to the reforms
  made in legislation regarding welfare and the
  education systems.

4
Negative Income Tax Experiment

• In the 1960s, technology allowed economists to
  model and test social welfare theories on levels
  previously not possible.
• NIT was a real-life experiment from 1968-1978
  which provided payments to persons whose income
  falls below a certain floor.
• The purpose of NIT was to provide people with a
  livable income without reducing work effort,
  reducing marriages, and increasing the rate of
  divorces.

5
NIT parameters

• 8,700 people at a cost of millions of dollars
• Goal was to fill the welfare systems functions
  with fewer unwanted side-effects
• Experimental group with an income floor set and
  control group with no such provisions at each
  site
• Data collected for ten years

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Results of NIT

• Reduced work effort on a substantial level
• 9 for husbands, 20 for wives
• Decline for men was due not to decrease in work
  hours, but an exit from the labor force
  altogether
• Marginal income from wives disappeared in
  lower-income families
• Young males at a critical stage decreased their
  work week by up to 43
• No extra school
• Not a temporary effect response was stronger
  over time

7
Welfare Family Effects

• SIME/DIME sites showed data relating to divorce
  rates
• 36 higher for whites receiving NIT payments,
• 42 for African Americans
• In New Jersey site, 66 higher for African
  Americans and 84 for Spanish-speaking
• Only explanation between the two groups was the
  NIT
• Control group had welfare as well, so results
  were due to additional work disincentives
• Participants knew payments were for only three
  years

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Incentives to Fail I

• Rational decisions differ between poor and
  non-poor
• Poor had few resources to reach accurate
  conclusions
• Thought on a shorter time-line
• Poor long-term thought

9
State in 1960

• Welfare system did not encourage support for
  married women or those with live-in partners
• AFDC provided 23/week to unmarried women with
  children
• no men allowed in house
• prevents supplementation to income (jobloss of
  payments)
• This environment did not discourage marriage and
  mandated employment in order to live together

10
State in 1970

• AFDC limitations changed due to new regulations
• For woman with child
• 50/week, 11 in food stamps, rent subsidies,
  Medicaid, money can be supplemented (additional
  job can supply extra 30 plus one-third of
  additional income)
• Male income does not count toward female
  eligibility toward benefits
• No penalty for living together
• Effect is that it is more beneficial for a male
  to be unemployed and be living together unmarried
  than to be working a low-income job
• More disposable income for unmarried and
  unemployed couples

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Effects of Welfare

• 1960 encouraged traditional working-class ways
• 1970 changes in incentives encouraged
  unemployment and those dependent on welfare
  welfare types
• Now others are induced to cut back on work,
  including non-recipients
• Public opinion and social norms changed so that
  welfare was viewed not as a privilege, but as a
  right

12
Incentives to Fail II

• Changes in welfare, risks attached to crime, and
  educational environment reinforced one another
• Together, they radically altered the incentive
  structure

13
Crime

• During the 1960s, the risk of being caught and
  the risk of going to prison if caught is
  dramatically reduced
• 1966 in Cook County Illinois, 1,200 juveniles
  were committed to reform school
• 1976 only 400 youths were committeda reduction
  of two-thirds at a time when arrests were soaring

14
Education

• Children observed were at average or
  below-average abilities with parents who ignored
  their progress or lack thereof
• For students who had no discipline at home,
  sanctions were required to control students
  behavior
• In 1960s, this meant holding a student back,
  disciplinary measures, suspension, or expulsion.
• By 1970s, use of these sanctions had sharply
  declined

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Lowered Sanctions

• Incidents of student disorders skyrocketed
• Permission of such behavior was acceptable
• Problem was due to change in intellectual
  environment in favor of more open, less
  disciplined treatment of the learning process
• Gault vs. Arizona 1967 meant due process was
  required for suspension and circumstances for
  suspension were restricted
• Teachers and administrators were vulnerable to
  lawsuits
• Rebellious students could make life considerably
  more miserable for the teacher than the teacher
  could for the students

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Conclusion

• Have a nice day!