The Consumer Financial Protection Bureau Should Protect Fair Negotiations (not the poor)
Recently, President Obama appointed Richard Cordray to be the head of the new Consumer Financial Protection Bureau, created in the wake of the financial crisis to protect consumers. What exactly does it mean to 'protect consumers'?
To some, the goal of the agency is to protect the poor, by regulating companies that provide "payday loans" to poor consumers, often charging extremely high interest rates. I recently listened to an old episode of This American Life, entitled The Giant Pool of Money, which detailed the struggles of some who were given loans that they couldn't pay and the resulting human cost. As a liberal, I am prone to be sympathetic to whatever we can do to improve the lives of the lease fortunate among us.
However, the thing that angered me most in the episode was the story of a veteran who qualified for a Veteran's Home Administration loan, but was instead given a loan for which the mortgage broker received a higher commission, and now pays a 10% interest rate. This veteran has a job and continues to pay his mortgage, but clearly was taken advantage of by someone who likely presented themselves as working on his behalf, but instead wanted a better commission. According to the episode, the commission for this purchase was $18,000 and mortgage brokers at the time were earning $75-100 thousand dollars per month (for a job with little societal benefit).
There will always be a way for people to take advantage of others, whether due to the desperation/need of others or due to their lack of understanding. However, not all immoral ways of making a living are necessarily illegal. Republicans have been consistent in their criticism of the Dodd-Frank law which created the Consumer Financial Protection Bureau. Mitt Romney has promised to repeal it. There is something to be said for the idea that sometimes protecting the poor can cause inefficiencies in the economy and there is no doubt that the liberal impulse to help the poor, and extend them credit, was one of a number of contributing factors to the financial crisis, in that incentives were created to loan money to those who could not afford it. However, I think both liberals and conservatives would agree that when financial negotiations take place, steps should at least be taken to ensure that everyone understands the process.
Below is some data that is suggestive, though not definitive, that liberals and conservatives (as well as moderates and libertarians) might agree more about ensuring a fair process, as opposed to making sure that the poor are protected from predatory lenders. While liberals might feel that protecting the poor is a more immediate concern, the most consensus exists (higher wrongness scores for conservatives/libertarians) for ensuring that everyone completely understands the process when a negotiation occurs.
In the wake of his controversial nomination, Cordray himself positioned the agency as ensuring a fair process, rather than a fair outcome.
The battle between liberal and conservative ideas can be seen as the battle between the balance between ensuring a prosperous society and ensuring a society that cares for the least fortunate in it. Both goals are served by fair, open negotiations where all parties understand what is agreed to, and where people earn a living through activities that add societal value. Whether it is via Dodd-Frank, the Consumer Financial Protection Bureau, or some other means devised by Republicans, I'm hopeful that a consensus can occur around protecting consumers from those who might take advantage of their relative lack of information.
- Ravi Iyer
The Experiential Economy
I recently wrote/created (though the graphic design is not mine) the below infographic for Good Magazine in an issue dedicated to societal trends. The idea here is that the material economy (which produces physical goods like cars and electronics) is being replaced by the experiential economy (which produces experiences like food and vacations). The psychological data is based on a paper we recently had accepted by the Journal of Positive Psychology (along with Ryan Howell and Paulina Pchelin at San Francisco State University) and my dissertation research, all of which focused on the longer term characteristics of people who tend to buy experiences (e.g. dinner at a restaurant) rather than material goods (e.g. clothing).
The take home message is that, convergent with lab research using experimental manipulations, people who report having a preference for experiential purchasing report being happier relative to people who report having a preference for material goods.
The reasons for this have been detailed by other researchers who report that people adapt to experiences less quickly, meaning that good experiences last longer. As well, people who buy experiences are less apt to compare their purchases to others, with the inevitable disappointment that exists when someone out there gets a better deal. For example, I recently bought a Prius and still find myself visiting priuschat.com to see if I got the best deal, an exercise which has no utility whatsoever. On the other hand, my recent hike to Machu Picchu remains an unequivocally positive memory.
I'd like to thank the editor at Good Magazine for asking me to frame things in terms of the direction of the economy as that led me to this Forbes Magazine article, which has data on how Americans spend their discretionary income. Spending generally has gone down due to the recession, but from the perspective of experiential vs. material purchasing, it's clear that experiential purchases (e.g. dining out) are becoming a greater percentage of discretionary spending compared to material purchases (e.g. jewelry). Anecdotally, I've noticed startups that seem to be trying to capitalize on the preference for experiences and my credit card won't just reward me with stuff, but with experiences.
Perhaps if economists want to consider ways to jump start the American economy, they should consider the trend toward experiences, which are intrinsically difficult to outsource. The world doesn't need increasingly more stuff, but there is an experiential deficit out there. Just think of all the elderly who lack humane care, the homeless for whom personal attention is needed, or the way that Zappos has thrived by making customer service a positive experience. In economic terms, if experiences really do create more value for consumers, then the economy should necessarily shift in that direction and I'm hopeful that thinking of "the experiential economy" explicitly will be generative for business leaders, policy makers, economists, and perhaps most importantly, for consumers.
- Ravi Iyer
The Moral Foundations of ThinkProgress, Alternet, Daily Kos, & the NY Times
Over the past couple years, Jon Haidt has had press articles from various liberal leaning press organizations, including these articles from ThinkProgress, Alternet, Daily Kos, and the New York Times.
One of the great things about doing internet research is that web servers automatically collect information that makes it very easy to do cross-sample validation. This information can also be used to compare the people who visited us from these articles. Which group is the most liberal and how do they compare on their moral foundations scores?
First, I thought do a simple comparison of these groups.
There are fewer people from the Daily Kos to be able to be sure about conclusions (hence the larger error bars), but it looks like (unsurprisingly) all of these groups are liberal, compared to people who find us via search engines, who tend to be only slightly liberal. Their moral foundations scores show a similarly more liberal pattern with higher Harm/Fairness scores and lower Ingroup/Authority/Purity scores. Daily Kos readers are the most liberal followed by ThinkProgress & Alternet and then NY Times readers and finally people who found yourmorals.org via a search engine.
To me, the most interesting results are where groups appear to be equally liberal (ThinkProgress & Alternet), but have differences. ThinkProgress visitors appear esepcially low on Purity scores, while Alternet visitors appear significantly higher on Harm/Fairness scores.
An even stronger test of the kinds people who use these websites is to control for how liberal (slight, moderate, or extreme) individuals at these sites report themselves to be and examine individuals within each group of liberals. Those results are below.
This is the graph for people who said they were "very liberal".
These are the results for people who said they were "liberal".
These are the results for people who said they were "slightly liberal". Interestingly, there weren't enough slight liberals in the Daily Kos sample to include them in this graph.
The pattern seems fairly robust in that ThinkProgress visitors care less about Purity. Perhaps they are less religious? Alternet visitors seem to care more about Harm/Fairness. Perhaps they are more empathically motivated and ThinkProgress visitors are more rationally oriented. I don’t know enough about the liberal blogosphere to theorize well about why these differences exist, but I’m hopeful that by sharing these differences, others will be able to enlighten me. At the very least, I hope readers of these sites will find it interesting.
Would you be interested in seeing how your group compares to others on the moral foundations questionnaire? Or visitors to your website? You may have noticed a small "create a group" link on our explore page of yourmorals.org which lets you create a custom URL, whereby each visitor's graphs will not only let them compare their individual scores to other liberals/conservatives, but also to members of their group, and to compare their group scores to the average liberal/conservative. Once you create those URLs, you can put them into blog posts, articles, or emails targeting your group. We are still beta testing the feature, but would welcome anyone who wants to try it out and who perhaps has feedback on how we can improve it.
- Ravi Iyer
Liberals vs. Conservatives:innocent until proven guilty?
If you are uncertain if a criminal is innocent or guilty, is it better to err on the side of innocence or guilt? Given that proof is continuous, not categorical, how much bias toward innocent until proven guilty should one have? A friend of a friend recently asked is this question to a group of psychologists:
do you know if there is any evidence that conservatives would be more upset (defined loosely) by a guilty person getting away with a crime than by an innocent person being convicted of a crime? and would it be the opposite for liberals?
None of us could come up with a ready answer of a published study to this effect (feel free to let me know of one and I'll add it here), so I thought it would be useful to share a quick analysis of a few YourMorals.org questions that help answer this question.
The below question was asked on a 7 point scale, meaning that liberals (and libertarians) generally agree that it is better to let 10 people go free than to convict one innocent person, while conservatives are somewhat torn given a 10-1 scenario.
Another way to ask this question is to ask how wrong it would feel for a criminal to go unpunished. Again, we see a similar result where liberals and libertarians are less punishment oriented, while conservatives feel it would be more wrong. This is perhaps a gut-level intuitive rationale for the above graph.
Everyone agrees that we should punish the guilty (indeed, everyone is above the midpoint on the above scale) and free the innocent. The issue is that we operate in an uncertain world and some kinds of errors bother some people more than other errors.
I believe a similar asymmetry drives the differences between Tea Party and Occupy Wall Street. Most people will admit that there are lazy people who take advantage of government generosity (e.g. the prototypical welfare queen) and that there are poor people who work hard and encounter a disaster that is out of their control and deserve help (e.g. the guy who works 2 jobs that don't provide health care, and gets a chronic disease). The question is which case bothers you most.
Similarly, there are cases of wealthy people who clearly deserve their wealth and who create wealth for others (e.g. Steve Jobs) and there are cases of wealthy people who game the system and create negative wealth for others (e.g. the aggressive mortgage bankers of the sub-prime crisis). Is it worse to unfairly tax Steve Jobs or unfairly let the bankers keep their windfall of ill-gotten rewards? There is no right answer to this. I would submit that in such uncertain circumstances, we all let our intuitions lead our moral thinking, and hence we see the strong divisions we see in society. Personally, I think it's a good thing (that the conversation is had, though not that it gets so personal and uncivil), as society needs a healthy balance between punishing the guilty and protecting the innocent.
- Ravi Iyer
Does social psychology try too hard to be perceived as a “science”?
I recently read this article in the American Psychological Society's magazine, the Observer, and it reminded me of this article by Paul Rozin, detailing how social psychology's desire to be perceived as more scientific has led it to restrict the range of methods deemed acceptable (an over reliance on confirmatory rather than exploratory methods). As someone who came to psychological science later in life, in order to understand the world, rather than obtaining a psychology degree in order to earn a living, I have to admit some discomfort with the way psychologists attempt to use the word science. Psychology definitely uses the scientific method and most psychologists I know are very well trained in that respect. Yet, through no fault of psychologists themselves, I believe there are very real differences between the subject matter that psychologists study (human beings) and the subject matter of other disciplines, such that the word "science" is sometimes a misfit. Three obvious misfits are:
- Human beings have some degree of free will which confounds reproducible results. Some will dispute this, and maybe humans are more constrained than we might think, but that is a far cry from believing that human behavior is fully determined. In contrast, a computer is actually incapable of producing a random number that is not fully predictable, though it can measure an ostensibly random event outside of itself and report that as a random number. If psychology or neuroscience ever produces a machine that can predict which number a person will pick from 1-100 with 100% accuracy in the same way that you can predict a machine's decisions (if you know the inputs), I will retract this paragraph, but I doubt that will ever happen. As long as you allow for some degree of free will of the subject matter, the scientific paradigm of reproducibility breaks down. Imagine if the gas in our car could decide not to combust or the electricity in our refrigerator could decide not to flow in the direction intended. How reliable would our cars and appliances then be? Physicists should be quite thankful that atoms are not so willful.
- We care about individual human beings, not the "average" human being. When we do studies on electricity and figure out a method to conduct electricity with 10% less loss of energy, without any side effects, we have undoubtedly made a worthy discovery. It doesn't matter if the same intervention causes some energy that would otherwise be captured to be wasted, as long as the net effect is positive. Energy is fungible. In contrast, human beings are not. If we conceive of some intervention that makes 10% of people more happy, undoubtedly it will make x% of people less happy. All psychology studies are full of people who react in the opposite direction to the published results. For example, people generally conform to social norms...but we all know that there are people who do the complete opposite and rebel. This can be mitigated by measuring individual differences, but the problem is that human beings are both the consumers and the subjects of our research. People care about what makes them themselves happier, not the "average" person. Since psychologists cannot say with certainty what will happen to any individual person, the consumer of psychological knowledge has to filter anything said to them through the filter of their own individuality, in order to derive utility. While our results may often be reproducible on groups (despite free will), they never encompass 100% of people and so there will always be some degree of subjectivity to a result. For this reason, a memoir where a person can be more certain of the applicability of a phenomenon, due to the deep description of a situation, really can lead to more useful insight than a study that describes what scientifically happens to an "average" person, from the perspective of a knowledge consumer.
- Human beings are highly evolved social animals that can intuit complex things about other human beings. The observer article highlights the findings of this probability sample survey where it was found that people believe that psychology is a science, but also that everyday life provides training in psychology (see below chart). In both the original study and the APS article, these statements were presented as somewhat contradictory pieces of evidence, but I don't think this is necessarily true. I believe both are true. People intuitively know a lot about how people work. Their perceptions may be biased by experience, but then again psychologists are biased by sampling in the same way. I firmly believe that anyone who believes that you can't learn something profound about the human condition from a good book hasn't read a good book (or is blinded by their own biases). I cannot see how psychologists can be truly useful to the world as long as we believe that our methods are the only ones that speak to questions about human psychology and ignore outside wisdom, much of which is more advanced than what we study.
Personally, I agree with the survey respondents in the above study. Psychology is a science and psychologists are among the best scientists in the world, if only because we have to deal with a subject that is willful, variable, cares about itself, and where the bar is so much higher for producing marginal knowledge above that of the average person. Psychologists should be applauded for that. Yet, I believe that trying to tell people that our image as a discipline rests upon the belief that what we do is very similar to what physicists and chemists do will always fail because the above three reasons are self-evident to most consumers of psychology.
Psychology is what it is. Trying to sell it as more may lead psychologists be less trusted, as we seem more out for our own gain than for doing something useful. It may also lead psychologists to adopt unhelpful procedures, designed to prove our scientific-hood, as opposed to being of use to others, and/or to ignore those methodologies seen as less "scientific" (e.g. qualitative studies or narratives), in order to be associated with methodologies seen as more scientific (e.g. neuroscience, as in the article), even when we could learn something from both. There is truth in any view of the world, and the best truths are arrived at from a variety of angles, in the same way that the use of many measurement techniques reduce overall error. According to the above graph, under 50% of people (in 1986) believed that psychology has an impact on their daily lives. I absolutely believe that psychologists should continue to use the scientific method as best we can. However, I also believe that psychologists may actually make more of a real impact if we realize the inherent limitations of our subject matter and stop worrying so much about whether we are grouped with the physicists or the sociologists.
- Ravi Iyer
Equity trumps Equality in arguments about taxation
It is more effective to advocate for progressive taxation using arguments about equity or deservingness rather than arguments about how unequal American society has become.
I have written about this before, using different data, but with renewed attention being paid to rising inequality, leading liberals to continue to push for rising taxes for the rich, I feel like it bears repeating, this time with different data. While most Americans might prefer a more equal distribution of wealth, when positing such a distribution without considering who worked harder or contributed more, I doubt any study could show that any large group of people actually care about sharing some good equally more than adhering to the principle of deservingness. People care more that people get what they deserve than if everything is shared equally. Indeed if anybody knows of such a study, showing the oppositve, please share it with me.
Below is a graph of questions asking "how wrong" certain violations of fairness principles are. For example, a violation of procedural justice concerns situations like a trial being decided with misleading information or a law being made without the input of affected parties (alpha = .77). A violation of "lack of punishment" would concern a person going unpunished for a crime (alpha = .78). A violation of equity/deservingness concerns a person contributing to society and not being rewarded or a bonus being awarded without considering the relative contributions of employees (alpha = .76). A violation of equality concerns some employees being paid a lot while others are paid very little or a child inheriting a lot of money while another inherits nothing (alpha = .89).
To me, the interesting thing is not that liberals care more about equality than conservatives,or that liberals care less about punishing wrongdoers. Both facts make sense but are almost self-evident if one pays attention to politics and current events. Rather, the most interesting thing about this data (and any other data where I've pitted equality/deservingness against equality), is that everyone, including liberals, believes that equity/deservingness is a more important principle than equality.
There are certainly caveats to this data, in that it's a limited sample and the conclusions are somewhat reliant on the questions I choose to ask. However, this is but one of many datasets we have collected which tell the same story...that equity concerns trump equality concerns. Moreover, I think this idea is quite "post-dictable" meaning that most people who really think about it, realize that they themselves, no matter how liberal they are, care more about equity/deservingness than they care about making things more equal. This article from the Atlantic blog sums it up nicely:
I think very few (completely misguided) people resent “wealth” per se. I don’t remember anyone ever begrudging Bill Gates’ wealth, either. When people resent wealth, more often than not the resentment is directed at how the wealth is accrued rather than at who has accrued it. In certain instances, the how and the who become one and the resentment oozes toward the individual. I’m thinking of the Paris Hilton’s of the world in this instance. Here’s somebody who has done nothing of substance whatsoever; her wealth was accrued by virtue of genetic lottery. But those instances where people resent a particular person for their wealth are, I think, rather rare.
So how can liberals argue for progressive taxation as a matter of equity rather than equality? One problem for liberals is that research on system justification suggests that conservatives are more likely to believe that wealthy investors are more like Bill Gates than Paris Hilton. I don't have data on this (though I hope to collect it), but one example that worked for me recently is to frame progressive taxation policies in terms of rewarding work, as opposed to investment. Conservatives value hard work and I might even go as far as to say, anecdotally, that the conservatives I know work harder than the liberals I know (see this book which is tangentially related). Yet, we live in a country where someone who works hard for a living pays taxes at a higher rate (the income tax rate) compared to someone who happens to buy the right stock or the right real estate property at the right time, and sells it later for a gain (taxed at the capital gains rate). Or someone who inherits millions, and lives off their investments, a la Paris Hilton. Hard work is penalized relative to profiting by owning things. Is that fair?
- Ravi Iyer
Hypermoral Debt Ceiling Quotes
In an attempt to popularize psychological theories such as idealistic evil and the dark side of moral conviction, I sometimes use the term hypermoral to describe why ostensibly good people (e.g. non-psychopaths), can be led to do terrible things for ostensibly moral reasons. Research suggests that much of the violence that exists in the world can be attributed to an excess of morality, not to a deficit.
Violence can occur in many forms. War and terrorism may be more obvious forms of violence that are readily characterized as idealistic, but the current willingness by many to risk the fate of the world's economy in order to achieve some moral end could be thought of as a form of hypermoralism as well. Since such an event has never happened before, it may be uncertain what would happen if the US debt ceiling negotiations do not produce a result, but anybody who has convinced themselves that they know that that raising the debt ceiling will not create a catastrophe is clearly engaging in speculation (and likely moral confabulation) beyond their experience (since no such actual knowledge of this hypothetical event exists) and contrary to the vast majority of experts/economists of all political persuasions. Psychology studies, especially experiments, often show what can happen, in some controlled setting where variables are more easily isolated. But sometimes it's useful to look to evidence from the real world to see what does happen. I would argue that the below quotes show hypermoralism in action, in that individuals are willing to cause damage to innocent others (via the American economy) in order to achieve some moral end.
Some view the risk to the economy as a means toward promoting the protestant work ethic and self-reliance:
"It is not a bad thing for a society to have a cultural and moral bias in favor of productive work and to sanction the easy acceptance of charity and welfare payment when these are not necessary and when one can provide for oneself." - Robert Sirico in the National Review
"The welfare state seems to be corrupting some of our core moral principles....This moral corruption is eminently on display in the increasingly common, and increasingly loud, protests over cuts in state budgets, and we will soon see it in the looming fight over whether to raise the federal debt ceiling...To be specific: The welfare state encourages people to ignore, to violate--even to pretend does not exist--the moral principle that it is wrong to live at other people's expense." - James Otteson of Forbes.com
Some view the risk to the economy as a lesser evil, compared to the risk of leaving debt to our children:
"It is immoral to bind our children to as leeching and destructive a force as debt. It is immoral to rob our children’s future and make them beholden to China. No society is worthy that treats its children so shabbily." - John Boehner, Republican Speaker of the House
On the left, some would risk the economy because they feel that it is morally unfair that the rich are not asked to pay more:
"The Republicans have been absolutely determined to make certain that the rich and large corporations not contribute one penny for deficit reduction, and that all of the sacrifice comes from the middle class and working families ....I cannot support legislation like the Reid proposal which balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country. That is not only grotesquely immoral, it is bad economic policy." - Vermont Senator Bernie Sanders
Some view any talk of compromise as disloyalty to one's partisan team:
Mitch McConnell is right now talking about making a historic capitulation...Consider sending McConnell a weasel as testament to his treachery. - Erick Erickson of RedState.com
Budgets are moral documents, and so it is unsurprising that politicians have strong moral feelings about them. Reasonable people will disagree about what is or is not a moral way to run society, and that is exactly why we shouldn't give politicians the ability to do immoral things, like holding the economy hostage, to get their way. Reasonable people may do unreasonable things, when confronted with a strong moral issue, and politicians are inherently moralistic individuals who constantly deal with moral questions. We shouldn't give them tools like the debt ceiling, that allow them to threaten to hurt others in service of some ostensibly larger moral end.
- Ravi Iyer
Libya as a moral war (except for libertarians)
Many people believe that war and violence are inherently immoral, and some psychologists have begun to explore the idea that celebrating heroism is an antidote to the problem of evil. In contrast, other psychologists have highlighted the dark side of moral conviction (Skitka & Mullen, 2002) and the notion of idealistic evil (Baumeister, 1997) to explain how moral motivations might actually lead to increased violence. I sometimes call this being hypermoral, not because I have any great further insight, but simply because I think it has a better chance of catching on as a pop culture meme.
President Obama started military action against Libya, following his belief in the concept of a “just war”, suggesting that Libya might be a useful example of morally motivated violence. This was somewhat informed by the fact that I personally support intervention in Libya on moral grounds, meaning that I see no gain for the US or myself, but rather would like to help those who are attempting to gain their freedom. Unfortunately, that requires violence. While I may see this as 'good', others likely see this as evil, and I do see the unfortunate parallel with violent actions anywhere, in that I could see a suicide bomber having a very similar thought process, even as they kill many innocent people in an act that I would term evil. The point of this research is to divorce normative judgments about which kinds of violence are good or evil from the more general psychological process, and simply to show that at least in this case, violence is often morally motivated, rather than being indicative of a person who is amoral.
As such, I conducted an experiment where participants were randomly assigned to answer questions about Libyan military intervention in terms of what is morally right or what is in the national interest. For example, one question read "Considering what is (morally right/in the US national interest), I support the recent American intervention in Libya."
Results are shown in the graph below, broken down by ideological group, and indicated that many individuals are indeed more supportive of intervention when framed in terms of what is morally right. Liberals (p<.05) exhibited significantly greater support for Libyan intervention, framed in moral terms. Conservatives exhibited a marginally significant effect (p=.06), though the magnitude of the difference is greater, so I likely just need to survey more conservative participants, who are a minority in this sample. Consistent with our research on libertarian morality, whereby libertarians are not moved by the typical moral concerns of liberals and conservatives, libertarians were unaffected by moral framing. Interestingly, moderates were also unmoved by moral framing.
This is one specific case and one specific study on a very specific sample, so there are certainly limitations in the conclusions one can make, as with most any social science research. However, this does suggest that for many people, the case of Libya is a concrete example of morally motivated violence. I'm hopeful that thinking about violence and war as morally motivated, divorced from whether you think the ends are good or evil, will be a useful paradigm for reducing violence and conflict more generally. Perhaps violence will actually be reduced if people become less moral and instead more tolerant of other people's views and actions.
- Ravi Iyer
Oregon’s Medicaid Experiment vs. Motivated Reasoning
Recently, an unprecedented study was done in Oregon where (due to budgetary, not research reasons) a lottery was held to randomly decide which applicants for Medicaid would actually receive the opportunity to receive Medicaid. There has never been an opportunity to randomly assign people to have access to a program like Medicaid, and so this represents a unique opportunity to learn something about the effects of Medicaid, especially considering the large sample size. The results were recently published and while there are multiple news reports about the article, none had the depth (or graphs) to satisfy me, hence this post as an excuse to dig deeper.
There is a psychological point to be made here too, about partisan motivated reasoning. The results of the study are intuitive to most people who are not so ideological. Of course increased access to health care leads to greater psychological and physical well-being for the insured as well as greater cost to society. I have to admit that as a liberal, I'm tempted by arguments that the benefits of preventative medicine and reduced use of expensive emergency rooms means that increased health care for the poor will be essentially cost neutral. While Obama touts improving health care access as a deficit reducing measure and liberal pundits minimize costs, the reality is likely that insuring everyone will cost significant money. At the same time, arguments that state that medicaid doesn't improve poor people's health or that minimize the effect, seem psychologically motivated as well. Indeed, the fairest summary of the results of the study would be this fairly obvious sounding ABC News headline which reads, "Medicaid makes poor healthier and states poorer". To add something to the numerous articles out there, I made the following graphs to summarize results:
People who received medicaid (in red) felt happier ("very happy" or "pretty happy" as opposed to "not too happy"), healthier, and less depressed (using this measure) than the control group (in blue).
People who received medicaid (in red) used more preventative services than control group (in blue) (yearly results for just women).
People who received medicaid (in red) used more medical services overall than control group (in blue), costing taxpayers more money, without any decrease in ER visits (yearly numbers, extrapolated from 6 month numbers in article - costs used per event in article, based on previous studies, are in parentheses).
Partisans will surely see it through partisan eyes, as one man's enormous gain in outcomes is another man's modest increase. The National Review had a fairly detailed critique, but I can't help but feel that statements like "supporters must show not only that expanding coverage improves health but also that it does so at a lower cost to taxpayers than alternative policies" ring hollow unless advocates are forcefully pushing for those policies on the grounds of improving the health of the poor. It has the same feel as liberal arguments that taxing the wealthy will actually stimulate the economy. Both groups don't like to make tradeoffs, even obvious ones, but the reality is that expanding health coverage will both cost money and improve health.
Is it an unaffordable amount of money or a trivial amount? The other neat thing about the study is that it actually translated health usage into actual dollars spent per year. The control group still spent money on health care, which was presumably taken care of through existing services, charities, or emergency rooms. The marginal cost of insuring the poor could be seen to be the difference between the experimental and control groups or the total cost of the experimental group. Under medicaid, the government would pay all those costs, but there may be savings on what government is already spending on emergency room visits to public hospitals and other like societal costs. In comparison, I found these links for the yearly cost of educating a child or incarcerating a prisoner in Oregon.
Yearly Cost
Of course, the above graph is perhaps misleading as there are far more school children than prisoners, so perhaps multiplying the total cost of care by the 213,000 medicaid eligible uninsured individuals or by the almost 650,000 total uninsured (numbers from statehealthfacts.org), and comparing it to the overall Oregon budget might put the cost of expanding coverage dramatically in context. Below are yearly Oregon state budget items compared to extrapolated medicaid costs. Note that the cost of insuring all uninsured is likely lower due to many uninsured being young working adults. However, there is likely overhead and administrative costs to the program that are not taken into account as well, so perhaps this balances out.
Oregon Yearly Budget Items in Comparison to Potential Expanded Health Care Cost
I learned something from this exercise. My liberal intuition was that expanding coverage to all the uninsured would not be that large a cost for a state. In reality, it looks like expanding Medicaid in Oregon would be roughly equivalent to the entire budget of the Oregon University system or at least the community college system, depending on whether you count the entire cost of medicaid health care or just the marginal cost of increased usage. Either way, it is a significant cost. At the same time, providing health coverage to all the uninsured is not fiscally impossible. It costs a fraction of the overall state budget and would cost a fraction of the Oregon health and human services budget. Behind all the reactions to such studies is the attempt by both liberals and conservatives use motivated reasoning to avoid a hard choice between a costly government program and failing to provide health care for our nation's poor. There is a cost, in terms of money or well-being, to either position.
- Ravi Iyer
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Last 30 Posts:
- January 25, 2012
Why doesn’t Ron Paul use the word ‘America’ much? - January 7, 2012
The Consumer Financial Protection Bureau Should Protect Fair Negotiations (not the poor) - December 11, 2011
The Experiential Economy - November 2, 2011
The Moral Foundations of ThinkProgress, Alternet, Daily Kos, & the NY Times - October 15, 2011
Liberals vs. Conservatives:innocent until proven guilty? - September 11, 2011
Does social psychology try too hard to be perceived as a “science”? - August 31, 2011
Equity trumps Equality in arguments about taxation - July 31, 2011
Hypermoral Debt Ceiling Quotes - July 17, 2011
Libya as a moral war (except for libertarians) - July 10, 2011
Oregon’s Medicaid Experiment vs. Motivated Reasoning - June 18, 2011
Relative vs. Absolute Good Choices for Liberals, Conservatives, and Libertarians - May 23, 2011
Personality profiles of readers vs. non-readers and saving your local bookstore. - May 9, 2011
When Ingroup Love does not equal Outgroup Hate - May 2, 2011
Osama Bin Laden’s Death is a chance to escape Zero-Sum thinking - April 23, 2011
Liberals place more value on being funny than conservatives and libertarians. - April 21, 2011
Jon Kyl’s Moral Confabulation is something we all do. - March 30, 2011
Why should the US lead in Libya? Liberal-Conservative Value Differences. - March 24, 2011
Perceptions of Scarcity & Responsibility inform Budget Negotiations - February 27, 2011
Psychological Correlates of Feelings Toward Labor Unions among Liberals - February 22, 2011
Reagan was a Union Member – Visiting his Library as an exercise in Civil Politics - February 15, 2011
Psychology is generally Continuous, not Categorical - February 11, 2011
Are liberals more neurotic than conservatives? - February 10, 2011
Can liberal academics study conservative ideology? - January 17, 2011
Rush Limbaugh says Civility is the New Censorship - January 11, 2011
You can’t put out a Fire with Gasoline – A Reaction to reactions to the Giffords Shooting - December 29, 2010
Tony Washington’s NFL Story: How wrong is brother-sister incest? - December 18, 2010
Tony Hsieh, liberals, and libertarians prefer buying experiences to materialism – A Review of Delivering Happiness - December 7, 2010
The Case for Honesty as a Moral Foundation - December 2, 2010
The Definition of Moral Hazard and A Review of The Big Short - November 23, 2010
Does conflict avoidance underlie disproportionate liberal support of civility?
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Civil Politics Posts
- Tom Edsall's Guide to What Each Side Gets Right January 23, 2012 Jonathan Haidt
- Keystone Pipeline's Unlikely Allies January 21, 2012 Bill Bishop
- Center Aisle Caucus brings bipartisan civility to congress October 26, 2011 Ravi Iyer
- 6 Structural Ideas to turn Partisans into Americans from The Atlantic August 5, 2011 Ravi Iyer
- 95% of Americans want civility in politics & 87% believe it's possible to get there July 21, 2011 Ravi Iyer
Why doesn’t Ron Paul use the word ‘America’ much?
A colleague of mine forwarded me this article in the New York Times, which compared the presidential candidates' usages of various terms. Some words require more context, but what struck him (and me, after I saw it) in this graph is the fact that Ron Paul doesn't use the words America or American very much, even as he talks a lot about war (usually in negative terms), the constitution, and liberty.
A simple possible convergent explanation comes from this graph of questions concerning how much how much a person identifies (e.g. feel's close to, has things in common with, uses the word "we") with people in their community, in their country, and around the world. Ron Paul and libertarians like him, may think of themselves as individuals, moreseo than the typical liberal or conservative, and less as members of a community, a country, or the world.
From a psychological perspective, this is a further illustration of the idea that moral reasoning is intimately inter-twined with social functioning in that people tend to have a moral profile that correlates well with the types of social functioning they desire.
I would argue that a healthy society needs all types of social concerns. Cohesive working units such as armies, companies, and to a lesser extent countries, are necessary for efficiently performing tasks and competing with/defending against other groups. At the same time, it would seem callous to be an extraordinarily efficient society that doesn't care about the plight of others who are not in our group. Finally, any society needs people who are less constrained by group concerns who can push society forward. We should be thankful for the diverse ideological perspectives in our country and rather than seeing politics as war, we could see it as an exercise in finding balance between worthy concerns.
- Ravi Iyer