Aesthetic Integration


Renewed interest in an old model 

Last week we linked to the widely publicized news popup: yes that SENATOR KIRSTEN GILLIBRAND would be pushing legislation to reintroduce government-run commercial banking through the United States Postal Service.

Link popup: yes to the announcement, and link popup: yes to Gillibrand’s Twitter thread on the plan.

In a 2014 article for the HARVARD LAW REVIEW, law professor and postal banking advocate MEHRSA BARADARAN describes the context that makes postal banking an appealing solution: 

“Credit unions, S&Ls, and Morris Banks were alternatives to mainstream banks, but they were all supported and subsidized by the federal government through targeted regulation and deposit insurance protection.

Banking forms homogenized in the 1970s and 1980s, leaving little room for variation in institutional or regulatory design. Eventually, each of these institutions drifted from their initial mission of serving the poor and began to look more like commercial banks, even competing with them for ever-shrinking profit margins.

The result now is essentially two forms of banks: regulated mainstream banks that seek maximum profit for their shareholders by serving the needs of the wealthy and middle class, and unregulated fringe banks that seek maximum profits for their shareholders by serving the banking and credit needs of the poor. What is missing from the American banking landscape for the first time in almost a century is a government-sponsored bank whose main purpose is to meet the needs of the poor.”

Link popup: yes to the full article. 

  • Baradaran has written widely on this issue. Another 2014 article, in Slate, gives a broad overview of the history of the US Postal Savings Service, which was operational from 1911 to 1966. Link popup: yes. A brief post at the Harvard University Press blog discusses her work in the context of Gillibrand’s announcement, and features of a video of her discussing banking disparity in the US. Link popup: yes. See also Baradaran’s book How The Other Half Banks popup: yes, which surveys the American retail banking landscape and advocates for a government option. 
  • From the past week, Matthew Klein looks at the pros and cons of Gillibrand’s plan in Barron’s (link popup: yes), and an article in The Week raises some lightweight but worthy counterarguments on postal banking (l popup: yesink popup: yes). (Similar sentiments are more succinctly captured in a few tweets from Matt Yglesias. Link popup: yes.)
  • Central to the postal banking discussion has been a 2014 white paper produced by the USPS Inspector General which proposes the various financial services and delivery methods that could compose a postal banking system. Link popup: yes
  • For context, an interactive mapping tool of data collected by the Federal Deposit Insurance Corporation in 2015 gives detail on the extent of the problem: 7% of American households are unbanked, and nearly 20% are underbanked. Link popup: yes. And, from the Urban Institute, details on the data for the New York City area. Link popup: yes.
  • A Pew Research Trust presentation maps the geographic distribution of post offices alongside un- and underbanked regions, providing strong evidence for the infrastructural capacity of the postal service to address service gaps: 10% of census tracts have no bank branches within 5 miles, and of those tracts, 76% have a Post Office closer than the nearest bank. Link popup: yes.


Can public benefits programs keep people out of prison?

A new paper by CODY TUTTLE of the UNIVERSITY OF MARYLAND, forthcoming from the American Economic Journal: Economic Policy, looks at how access to Food Stamps affects recidivism rates. 

“It may not come as a surprise that half of releasees are back in prison within five years of their release and three-quarters are re-arrested within five years. Recidivism in America may be at least partly the consequence of barriers to reentry.

In this paper, I focus on one of those barriers, the SNAP ban, and ask how it affects recidivism outcomes, defining recidivism as a return to prison after release. It is particularly critical that we understand the effect of the SNAP ban because it is currently in effect in 30 states, and because survey evidence suggests SNAP is an important resource for offenders post-release. Approximately 70% of the former inmates in the Boston Reentry Study report receiving SNAP benefits even just two months after release. 

To study the effect of the SNAP ban on recidivism, I use a federal policy change (as it was implemented in Florida) that imposed a lifetime ban from SNAP receipt on offenders who committed drug trafficking on or after August 23, 1996.

I find the SNAP ban has increased the probability of recidivism among drug traffickers.”

Full paper here popup: yes.

  • Tuttle’s findings dovetail with research we shared earlier this year on the effects of minimum wage laws and the Earned Income Tax Credit on recidivism rates: “We find that the average minimum wage increase of 8% reduces the probability that men and women return to prison within 1 year by 2.8%… The availability of state EITCs also reduces recidivism, but only for women. Given that state EITCs are predominantly available to custodial parents of minor children, this asymmetry is not surprising.” Link popup: yes
  • Jennifer Doleac, a researcher whose work we’ve linked to in the past, has written a series of edifying Twitter threads summarizing a lit review on evidence from recidivism interventions for the William T. Grant Foundation popup: yes and The Lab popup: yes @ DC popup: yes. The topics compiled span mental health and employment interventions. Link popup: yes to the master thread of threads. 
  • An especially interesting thread features research on “wrap-around” programs that encompass a variety of reentry assistance interventions, attempting to close service gaps in other more targeted programs. Doleac writes: “These studies suggest that we should be very cautious about continuing to implement wrap-around programs without rigorous evaluation. Perhaps programs that try to address many needs at once wind up doing a mediocre job on all fronts, thus having little impact. This is also a caution for nonprofits that start w[ith] one focus and add on bells and whistles as they realize how multi-faceted the challenge is. I’ve seen this happen in real time, & it always comes from a good place. But trying to do everything makes it tough to do any of it well.” Link popup: yes.  


    Modeling prosocial motivation and incentives

TIMOTHY BESLEY of the LONDON SCHOOL OF ECONOMICS and MAITREESH GHATAK of the CANADIAN INSTITUTE FOR ADVANCED RESEARCH review literature on prosocial behavior and propose new incentive models: 

“There is a need… to shift the focus away from government versus market provision and instead look at the wider incentives that providers face to generate insights into how public goods and services should be provided. Studying this requires a better understanding of the frictions that prevent an efficient allocation of goods and services with significant social returns. This review builds a framework to develop the main ideas in an emerging literature that studies incentives in organizations with three core features: (a) the good or service being produced has a significant social component that is not captured by its market value; (b) outcomes and inputs are difficult to measure; and (c) some of those whose effort is needed are motivated agents, i.e., agents who care about the output that they produce.”

The conclusion makes the excellent suggestion of bringing other disciplines to bear on these questions:

“There is the potential to unify the more standard approach to the economics of incentives with more sociologically and psychologically informed approaches.”

Full paper here popup: yes.

  • Recent work on the formation of prosocial groups, from Ernst Fehr at the University of Zurich and Tony Williams: “Migration opportunities and normative consensus building are key to the quick emergence of an efficient culture of universal cooperation because the more prosocial subjects populate the two efficient institutions first, elect prosocial judges (if institutionally possible), and immediately establish a social norm of high cooperation. This norm appears to guide subjects’ cooperation and punishment choices, including the virtually complete removal of antisocial punishment when judges make the sanctioning decision.” Link popup: yes.


  • Chris Hughes on sharing the profits from data: “We should not only expect that these companies better protect our data – we should also ensure that everyone creating it shares in the economic value it generates. One person’s data is worth little, but the collection of lots of people’s data is what fuels the insights that companies use to make more money or networks, like Facebook, that marketers are so attracted to. Data isn’t the ‘new oil’, as some have claimed: it isn’t a non-renewable natural resource that comes from a piece of earth that a lucky property owner controls. We have all pitched in to create a new commonwealth of information about ourselves that is bigger than any single participant, and we should all benefit from it.” Link popup: yes.
  • The Bureau of Labor Statistics and Census Bureau are working together to fill a data gap on productivity: “Dispersion in productivity across businesses may provide information about the nature of competition and frictions within sectors and about the sources of rising wage inequality across businesses. There are currently no official statistics that provide this level of detail.” Link popup: yes.  ht Will
  • The Wall Street Journal on how some towns are paying young people to move to them: “Relocate to Hamilton and the city promises 5,000 dollars to help pay student loans. Pack up for Grant County, Ind., and claim 5,000 dollars toward buying a home. Settle in North Platte, Neb., and the chamber of commerce will hold a ceremony in your honor to present an even bigger check.” Link popup: yes.
  • Hiba Hafiz in the New York Times reveals a surprising fact: the National Labor Relations Board cannot hire economists. “Congress cut the division’s funding, effectively ending its work, and in 1947 it barred the board from hiring experts in economic analysis.”  Link popup: yes.
  • David Dayen on funding a job guarantee: “The one critique that cannot really be put on the federal job guarantee is that it costs too much. Or at least, you cannot say this without ignoring the mountain of taxpayer money we already employ for that intended purpose.” Link popup: yes.
  • Frances Coppola summarizes new work on government debt: “A new working paper from the IMF popup: yes casts serious doubt on the entire basis for the austerity mantra. Far from default being inevitable if debt rises too high, it may never happen at all. For advanced economies in good standing, the government’s debt capacity appears to be infinite.” Link popup: yes.
  • Government and AI, Part 1: Statements and video from the recent congressional hearing on Artificial Intelligence and Public Policy. (The emphasis is more on economic and labor impact than on the ethics of algorithmic decision-making.) Link popup: yes.
  • Government and AI, Part 2: A 183-page report from the UK House of Lords’ Select Committee on Artificial Intelligence. From coverage in TechCrunch popup: yes: “The report popup: yes also calls for the government to take urgent steps to help foster ‘the creation of authoritative tools and systems for auditing and testing training datasets to ensure they are representative of diverse populations, and to ensure that when used to train AI systems they are unlikely to lead to prejudicial decisions’ — recommending a publicly funded challenge to incentivize the development of technologies that can audit and interrogate AIs.” Link to the full report popup: yes. ht Sara
  • Jeffrey Sachs at the Niskanen Center dispels—in detail and with new data sets—much of the hysteria around the campus free speech ‘crisis’. Link popup: yes
  • On the (substantial) welfare effects of Colombia’s rapid-transit bus system, with greater modeled effects of transit expansion in tandem with a value capture scheme. Link popup: yes
  • On pension reform in China: “Both our theoretical and empirical results confirm that pension privatization is adversely associated with local public spending on education in China. Private pension subsidies, moreover, magnify this effect. Our study supports the theoretical assertion and selective empirical findings of a negative intergenerational effect of pension privatization.” Link popup: yes.
  • “In contrast to the prediction of basic theory, income tax increases in OECD countries have led people to spend less time working and more time on leisure activities, with little change in hours of household work.” Link popup: yes.
  • After Chetty, Jesse Rothstein examines the impact of children’s educational outcomes on mobility: “I find little evidence that the quality of schools is a key mechanism driving variation in intergenerational mobility… this points to job networks and the structure of local labor and marriage markets, rather than the education system, as likely factors influencing intergenerational economic mobility.” Link popup: yes. ht ankit 
  • A great post on the oddities of the helium market by Timothy Taylor at Conversable Economist. Link popup: yes.

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