As an adult, I don’t have much trouble adjusting my sleep schedule when I need to wake up early. I just go to bed earlier the night before.

Teenagers, however, don’t seem to work that way. Adolescent sleep patterns are biologically different, making it difficult for them to compensate for early wake-up times. As a result, one of the most effective policies for improving student outcomes in middle and high school is delaying school start times. A recent NBER study provides the latest evidence. The authors examine a California law requiring middle schools to start no earlier than 8:00 a.m. and high schools no earlier than 8:30 a.m. Most schools were affected. After the policy was implemented, total sleep duration increased by an average of about 40 minutes, and the share of students sleeping at least eight hours per night increased by 13 percent.

The effects on academic achievement were substantial. Math and English test scores increased by 0.08 to 0.10 standard deviations—roughly the difference between having a highly effective teacher rather than an average one. These gains are larger than what we would expect from any feasible class-size reduction in middle or high schools.

The study also examined mental health outcomes. While those estimates are less precise, the results suggest improvements in mental health, particularly for boys.

This new NBER study is not an outlier. It adds to a large body of well-identified research reaching the same conclusion: when schools start later, teenagers get more sleep and perform better.

The policy implications are straightforward, though implementation is not always easy. One concern is that parents cannot always shift their work schedules, especially when younger children need supervision before school. But for families facing this challenge, before-school programs can help fill the gap.

Another concern is transportation. Many districts stagger start times so buses can serve multiple schools, meaning some students must start early. Yet this is ultimately a scheduling problem. Districts could shift the entire school day later, allowing students to start and finish later while still leaving plenty of time for after-school activities and family dinners.

The evidence is clear that teenagers benefit greatly from delaying school start times. Missouri school districts should carefully weigh the trade-offs and consider practical adjustments to give our kids more time to sleep.

The post Teenagers Need More Time to Sleep appeared first on Show-Me Institute.

In a series of sketches for Saturday Night Live, Billy Crystal played a fictionalized version of actor and director Fernando Lamas as host of the talk show “Fernando’s Hideaway.” Crystal’s character would often say that it is better to look good than to feel good.

This was on my mind as I reviewed recent evaluations of St. Louis’s guaranteed basic income pilot by Washington University’s Center for Social Development. The review’s claims will sound familiar to anyone who has followed these pilot programs around the country. Participants reported feeling more financially secure. They were better able to pay bills and cover everyday expenses like rent, utilities, and groceries.

In many ways, the findings are exactly what one would expect. St. Louis distributed $500 per month for 18 months to several hundred households using federal pandemic relief funds. If someone suddenly receives an additional $500 each month, it should not surprise anyone that paying bills becomes easier in the short run.

The St. Louis program is also not unique. Over the past several years, cities across the country have launched similar guaranteed income pilot programs. Their evaluations tend to report the same kinds of outcomes: reduced financial stress, improved food security, and higher levels of self-reported well-being.

But as economists Hilary Hoynes and Jesse Rothstein of the University of California, Berkeley note in a review of the universal basic income literature, the new wave of guaranteed-income pilots is “not well suited” to answer the most important questions about the policy. (My colleague David Stokes wrote about this same study in 2024.) The pilot program evaluations tend to measure short-run responses that economists have already examined for decades in earlier experiments.

These evaluations often measure something quite narrow—how recipients say they feel about their financial situation. But feeling good about one’s finances is not the same thing as actually being better off.

More comprehensive research on guaranteed income programs paints a more complicated picture. A recent randomized study published by the National Bureau of Economic Research examined the effects of unconditional cash transfers using a large experimental design. In that study, 1,000 individuals were randomly selected to receive $1,000 per month for three years, while a control group received only a nominal payment.

The researchers tracked employment, income, and time use using administrative data and detailed surveys. Their findings suggest that while the payments increased consumption and temporarily improved subjective well-being, participants also worked fewer hours and saw declines in income earned from work. The transfers reduced labor-force participation and led participants to shift some of their time away from paid work and toward leisure.

In other words, the transfers made recipients feel more financially secure—but they also changed work behavior in ways that reduced earned income.

This should not come as a surprise. Economists have been studying guaranteed income–style policies for decades. Earlier negative income tax experiments and other research on income transfers have consistently found that unconditional income tends to reduce work effort modestly. Those effects may be small, but they are real and have important implications for the long-term economic impact of such policies.

None of this is to say that guaranteed income programs provide no benefit to recipients, or that the research from Washington University is flawed. Reducing financial stress and helping families weather unexpected expenses is not nothing. But policymakers should be careful not to confuse the short-term financial relief detailed in the St. Louis pilot program evaluation with long-term economic improvement.

There are also broader societal concerns that pilot evaluations like this one cannot address. One of the Show-Me Institute’s objectives is to build a state where “all Missourians are free from dependence on government.” Large unconditional cash-transfer programs, such as the program tested in St. Louis, could expand long-term dependency on government support and weaken incentives for work and self-sufficiency. That risk remains a significant policy concern.

Feeling better about your finances is not the same thing as improving the underlying economics—regardless of what Billy Crystal might advise.

Local leaders must be careful not to confuse the two, lest we commit to an expensive program that does more harm than good.

The post Economically, Feeling Better Isn’t the Same as Being Better appeared first on Show-Me Institute.

When Congress created Opportunity Zones in 2017, the goal was simple: use tax incentives to steer private investment into distressed communities. Investors could defer or eliminate capital-gains taxes if they reinvested those gains in designated census tracts.

The hope was that these incentives would spur development and expand opportunity in struggling neighborhoods. But new research suggests the program may suffer from the same problems as Tax-Increment Financing (TIF).

In a recent paper from the National Bureau of Economics, “Understanding the Employment Effects of Opportunity Zones,” the authors examine employment outcomes through 2023. They find that jobs located within Opportunity Zones did increase modestly. But most of those gains appear to come from nearby communities rather than representing new economic activity. Sound familiar?

The authors estimate that job growth inside Opportunity Zones is largely offset by job losses in adjacent low-income tracts. Their overall conclusion is that the program mainly results in a “spatial reallocation of jobs and households” rather than broad economic gains.

The distribution of those jobs also matters. Most of the new positions in Opportunity Zones are filled by workers who live outside the zones—often in more affluent neighborhoods. Meanwhile, the economic circumstances of existing residents show little improvement. Employment among residents rises slightly, but median earnings and poverty rates do not change significantly.

These results should sound familiar to longtime readers of the Show-Me Institute. I’ve argued that programs like TIF often fail to generate new economic growth. Instead, they tend to shift development across neighborhoods or municipalities. Projects still get built, but just in a different place.

The evidence on Opportunity Zones suggests something similar may be happening at the federal level.

Investment incentives can influence where development occurs. But that does not necessarily mean they create new economic opportunities for the people policymakers mean to help.

TIF is TIF is TIF, even at the federal level.

The post Are Opportunity Zones Just Federal-Level TIF? appeared first on Show-Me Institute.

The piece featured a quote from the mayor bemoaning the passage of Amendment 4 in Missouri, which required the city to up its spending on the police from 20% to 25%. The author begins with a quote from the mayor:

“The current system doesn’t work. We need more accountability, not less . . . We need more innovations in policing, not less.” Lucas explained that he doesn’t believe an increase in funding for the KCPD will be useful in countering rising violent crime.

This is interesting because in his latest budget, Mayor Lucas was eager for the Kansas City Police Department to significantly increase salaries for existing officers as well as new hires. Why would he want that if he didn’t think it would be useful?

The Pitch, perhaps to back up the mayor’s reaction to Amendment 4, offers the following:

A body of evidence shows that increasing police funding has no major impact on reducing local crime rates. One of the tropes used during the campaign for Amendment 4 was the need to fund the KCPD while skewing the increase in homicide rates in Kansas City to present the Lucas administration and the Kansas City Council as far-left partisans who care not for the safety of their constituents.

The first link (“body”) is to a page of Human Rights Watch. It doesn’t expressly conclude that police funding doesn’t reduce crime. Instead, it provides a two-stage yet still heavily qualified claim:

Studies show that investing in health care, housing, universal basic income, child care, universal pre-K, and public safety programs outside the criminal legal system infrastructure would reduce poverty and inequality, and research suggests, is likely to improve community safety. [emphasis added]

All of that may be true. But plenty—in fact most—people living in poverty and suffering inequality do not commit crime. Policing is about getting criminals off the street and deterring crime. And we know that the most common victims of crime are exactly those same poor people.

The second two links (“evidence shows” and “Increasing police funding has no major impact”) are about a single study of the 20 largest cities in Canada. Those may be compelling. But I suspect the dynamics of crime and policing between the United States and our neighbor to the north are sufficiently different to be unhelpful for Kansas City.

The last link (“reducing local crime rates”) has nothing to do with the relationship between crime and police funding. The article merely makes the argument that many places accused of defunding the police have actually increased police funding.

Instead, consider the conclusion of a 2018 study conducted by Princeton University, titled, “More COPS, Less Crime.” The author examined the impact that federal COPS funding (Community Oriented Policing Services) had on crime and concluded, without qualification, “one officer-year was added for every $95,000 spent by the federal government and that the social benefit associated with the ensuing crime reduction [was] on the order of $350,000.”

Another paper published by the National Bureau of Economic Research in 2020 concludes, without qualification, “Each additional police officer abates approximately 0.1 homicides.”

Issues surrounding crime and law enforcement are not easily settled. They are made even more complicated by partisan politics. I suspect Mayor Lucas knows better than what he claimed, and The Pitch should be a little more thorough with its facts and research.

The post The Pitch’s Half-hearted Crime Research appeared first on Show-Me Institute.

Titled “Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?” it surveys the existing research on the effects of the minimum wage.

What does it find? According to the authors:

Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.

Labor economics isn’t my field of expertise, but from an outsider’s perspective, raising the minimum wage doesn’t look good!

The post New Summary of Minimum Wage Research Shows Negative Effects appeared first on Show-Me Institute.

The Institute paper, written by myself and Elias Tsapelas, looked at political campaign giving in Kansas City and found that:

The number of donations made to the campaigns of public officials who have decision-making power for TIF awards appears to increase in the election cycle in which developers apply for a TIF and then fall off in the election cycles afterward.

Companies might describe political giving as a sign of good corporate citizenship, and that may be true. But the fact that the contributions drop after a tax-increment financing (TIF) plan is awarded suggests something more akin to a quid pro quo.

A new study by Cailin Slattery at Columbia and Owen Zidar at Princeton/NBER also links economic development incentives to political campaign activity. They find:

The interaction between an incumbent governor and an election year is highly correlated with increases in incentive spending, suggesting a strong role for political determinants of incentive provision. In the raw data, per capita incentive spending increases by more than 20% in half of the cases in which it is an election year and the Governor is up for re-election versus one-fifth of the cases otherwise.

This study also finds, as do many other serious studies of economic development incentives, a “lack of clear spillovers and equity benefits.”

If a particular public policy shows no substantial benefit to taxpayers, and yet seems to rise and fall based on relationships to political contributions and campaigning, it is reasonable to conclude that there are darker motives at play than the public good. Isn’t it about time Missouri and its various municipalities rein in these incentives in the name of good and efficient government?

The post TIF for Tat Two appeared first on Show-Me Institute.

• 41.4 percent of businesses reported that they were temporarily closed because of COVID-19. A far smaller number—1.8 percent—reported that they were permanently closed because of the pandemic. By contrast, only 1.3 percent reported that they were temporarily closed for other reasons. 55.4 percent reported that they were still operational.
• Approximately one-fourth of firms have cash on hand totaling less than one month’s worth of expenses. About one-half of firms have enough cash on hand to cover between one and two months of expenses.
• More than 64 percent reported that it is very or extremely likely that they would be open on December 31, 2020—which is used as a measure of the probability of being open. A growing literature has found entrepreneurs to be overoptimistic about their prospects

It is completely appropriate for policymakers in Missouri and across the country to debate the efficacy and appropriateness of aid to small businesses. As with aid to municipalities, we do not want to reward bad decision-making with public funds. But as Glaeser and his co-authors point out, the impact of the virus and the public response is great and already with us.

While I am often skeptical of government intervention in the economy, it is difficult to argue that there is no role for government here. After all, even the most ardent Objectivists over at The Atlas Society understand that there we are in unprecedented times. For anyone who wants to consider exactly how unprecedented, this NBER paper is a good start.

The post Some Estimates on the Impact of Covid-19 on Small Business appeared first on Show-Me Institute.

First, it’s worth recalling that in 2018 the National Bureau of Economic Research (NBER) demonstrated how tax rates affect innovation. Looking at state-level taxation dating back to the early twentieth century, the NBER concluded, “A one percentage point higher tax rate at the individual level decreases the likelihood of having a patent in the next 3 years by 0.63 percentage points.” Specifically, they found that, “higher personal and corporate income taxes negatively affect the quantity, quality, and location of inventive activity at the macro and micro levels.” This should not surprise anyone; resources that might be put toward innovation can’t be used for that purpose if they are spent paying taxes.

The new study from Arizona State University, titled “Doing Business: North America“ looked at 115 cities in the United States, Canada, and Mexico and rated them in six different categories. Those were “starting a business,” “employing workers,” “getting electricity,” “registering property,” “paying taxes,” and “resolving insolvency.” (All U.S. cities tied for first place regarding insolvency.)

While St. Louis ranked 31st overall out of the 115 cities in Canada, the United States, and Mexico (no other Missouri cities were included in the study; Chicago scored 45th overall), the areas where it scored less impressively—starting a business and employing workers—feature significantly in attracting entrepreneurs and innovation.

St. Louis scored 60th on “starting a business” (46th among U.S. cities). This ranking resulted from a “study of laws, regulations, and publicly available information on business entry,” along with consideration of the time and cost of complying with applicable regulations.

Regarding “employing workers,” St. Louis ranked 47th both for the whole sample and among the 66 U.S. cities examined. This ranking was more involved and is described on page 177 of the report, but it reflects the cost of wages and wage regulations such as probationary periods, overtime requirements, and sick leave.

Policymakers can debate the value of local and state mandates and regulations associated with starting a maintaining a business, but all should acknowledge that each one imposes a cost on the employer. Forty-six other U.S. cities have formulated less costly ways to meet their public policy objectives when it comes to employing workers. And St. Louis was outranked by cities in in all three countries examined when it came to ease of starting a business!

All this suggests that when working toward the important goal of taking advantage of St. Louis’ “innovation districts” in the agri-tech, biomedical and technology fields, city government could do a lot more to help entrepreneurs take advantage of what the city may already offer.

The post St. Louis Ranked in the Middle in Ease-of-Doing-Business Study appeared first on Show-Me Institute.

Now we learn that high tax rates affect more than development. According to a new study from the National Bureau of Economic Research, tax rates affect innovation. The researchers used data stretching back to the early 20th century and looked mostly at state-level taxation. The large amount of data used by the researchers led to some impressive findings (page 33):

A one percentage point higher tax rate at the individual level decreases the likelihood of having a patent in the next 3 years by 0.63 percentage points. Similarly, the likelihood of having high quality patents with more than 10 citations decreases by 0.6 percentage points for every percentage point increase in the personal tax rate.

The report even anticipated some of the usual complaints about innovation in Kansas City that are tied to our development-incentive “border war” with Kansas:

We find that taxes matter for innovation: higher personal and corporate income taxes negatively affect the quantity, quality, and location of inventive activity at the macro and micro levels. At the macro level, cross-state spillovers or business-stealing from one state to another are important, but do not account for all of the effect.

Municipal leaders have invested a lot of taxpayer money and frothy eloquence in innovation and technology. Yet when it comes to actual public policy, such as with ridesharing, they have reverted to regulatory bad habits in both St. Louis and Kansas City.  They certainly aren’t supporting innovation in their tax policies.

If political leaders in Missouri want to spur innovation, they need to enact policies that stay out of innovators’ way—and burden investors less.

The post Higher Taxes = Less Innovation appeared first on Show-Me Institute.

The WDAF story goes on to point out:

The city has “banned the box” since 2013 and said it’s been a big success. Employers can still do background checks, which could prevent someone from getting hired. But getting rid of the check box can help eliminate the stigma [that would] prevent qualified candidates from getting hired just because of their criminal history.

That is certainly a noble goal. But research from respected universities and public policy organizations casts doubt on the effort’s effectiveness. According to The Atlantic magazine,

. . . banning the box may actually be hurting some of the exact groups of people it was designed to help, according to a few new studies. In a recent paper from the National Bureau of Economic Research, Jennifer L. Doleac of the University of Virginia’s Frank Batten School of Leadership and Public Policy and Benjamin Hansen of the University of Oregon looked at how the implementation of ban-the-box policies affected the probability of employment for young, low-skilled, black and Hispanic men. They found that ban-the-box policies decreased the probability of being employed by 5.1 percent for young, low-skilled black men, and 2.9 percent for young, low-skilled Hispanic men.

The left-leaning Brookings Institution found the same, detailing what happens when the felony conviction disclosure is removed:

Employers are forced to use other information that is even less perfect to guess who has a criminal record. The likelihood of having a criminal record varies substantially with demographic characteristics like race and gender. Specifically, black and Hispanic men are more likely than others to have been convicted of a crime: the most recent data suggest that a black man born in 2001 has a 32% chance of serving time in prison at some point during his lifetime, compared with 17% for Hispanic men and just 6% for white men. Employers will guess that black and Hispanic men are more likely to have been in prison, and therefore less likely to be job-ready.

In short, ban-the-box policies are likely hurting minorities.  Hiring discrimination is a thorny problem, but not all such problems have easy or obvious solutions. If your proposed solution is hurting the people it is intended to help, it’s probably time to think about a new approach.

The post Does Banning the Box Work? appeared first on Show-Me Institute.

A study released this month from the National Bureau of Economic Research examines food inequality with an eye toward quantifying the impact of grocery store location. The paper concludes:

We find that equalizing supply would close the gap in healthy eating between low- and high-income households by less than ten percent. After separating out supply variation, the descriptive correlations in our final section show that education and nutrition knowledge predict healthy grocery demand and explain non-negligible shares of the relationship between income and healthy grocery demand. For a policymaker who wants to help low-income families to eat more healthfully, the analyses in this paper suggest that improving health education—if possible through effective interventions—might be more effective than efforts to improve local supply.

There are several nonprofit organizations in Kansas City working to address the issues of nutrition in the urban core, including Rollin’ Grocer and Kanbe’s Markets. If there is a market for healthy food, these efficient, private efforts are much more likely to succeed than a single, multi-million-dollar box store.

City leaders may get to point to a new, revived grocery store and shopping center as a result of their political largesse. But a subsidized grocery store won’t create much new interest in eating healthy—it is more likely to merely draw traffic away from other businesses that contribute to the local tax base.  It will also consume public funds that would otherwise go to support infrastructure and, ironically, education. If food deserts are real, they are psychological, not geographical. A taxpayer-funded Sun Fresh won’t do much but get in the way.

The post More Research on Food Deserts appeared first on Show-Me Institute.

GDP Growth during the Expansions of the Post-WWII Period

Source: CRS calculations based on data from the Bureau of Economic Analysis (BEA).

Note: Economic expansions as identified by the National Bureau of Economic Research.

This result is not just bad—it is catastrophic. The average American should not be wondering if his income is a bit above or below 2007 levels. Just by historical averages, the average American should be 20% better off than in 2007. And this slow growth is settling in as a permanent new-abnormal.

I believe the root cause of abysmal growth is the huge tax increases imposed by President Obama and Congress since 2008. The most harmful were the increase in the capital gains tax from 15 to 20 percent, the increase in top bracket income from 35 to 39.6 percent, and the new tax of 3.8 percent on investment income in the Affordable Care Act (ACA). The massive increase in regulatory burden through the ACA and Dodd-Frank bills are also crushing, but unfortunately are harder to measure.

The three tax increases mentioned above (plus higher state and local taxes) directly lower expected returns on all investments. Our government grabs the fruits of investment and then is puzzled when businesses do not invest. This causes billions of dollars of investment projects to come off the table.

Weak investment is the signature feature and cause of the abysmal "recovery" under President Obama. The aggregate of all investments in the United States is Net Private Domestic Investment (NPDI), computed by the Bureau of Economic Analysis. Relative to GDP, NPDI averaged 7% per year from1960 to 2008. The average was 7 to 8 percent from 1960 to 1990, and 6.5 percent in the Clinton and George W. Bush years. However, for the Obama years NPDI was an astoundingly low 2% of GDP!

In every year of Obama’s presidency but 2015, NPDI was worse than in any year from 1960 to his inauguration. This isn't bad luck. If nothing changed in the economy, the likelihood of having a period as bad as Obama’s just by chance would be 1 in 1000.

The numbers for GDP and NPDI are interesting, but they’re still just lifeless statistics. The human toll is terrible, taking the form of millions of Americans who can’t find jobs or can’t make ends meet in the jobs they do have.

Dismal investment levels are the predictable result of taxing investment and income at high rates. This terrible economic performance will continue until income and investment taxes are slashed. The government can still raise needed revenue with a broad-base approach, eliminating all the special deductions and credits and allowing very low rates.

On the other hand, maintaining the current high rates will entrench lackluster investment and stagnant incomes and trap far too many Americans in a bleak economic future.

The post The Dismal Recovery appeared first on Show-Me Institute.

My friends Adam Peshek, Matt Ladner,  Jason Bedrick, Lindsey Burke, and Jonathan Butcher have written what I think are fair explanations of the findings.  Based on survey research and buttressed by the enrollment patterns of schools participating in the program, it appears that the requirements that the program placed on schools kept good schools from participating.  This drove students into lower-quality schools and, not surprisingly, worse outcomes.  Yet another reason to remember that program design matters.

Let me add two points:

First, we should be Bayesians.  To borrow from the branch of statistics, when trying to understand a phenomenon we should make assumptions about how it works, test them, update our assumptions based on the results of our tests, test them, update again, and so on, in a slow march toward the truth.  Study after study has supported the belief that private school choice programs benefit the students who participate (across a number of indicators). This study should decrease our confidence, but—especially given the issues that Peshek and others raise with the fundamental design of the program—it should not decrease it a great deal. That said, there is clearly a lot going on here, and we need to keep digging and updating what we know.

Second, and more importantly, if you live by the sword, you die by the sword. For years now, advocates (present company included) have used state math and reading test scores as the primary means to argue that school choice “works.”  In addition to probably not capturing everything that we want out of schools, we should also take into account that it appears that more and more families are opting into private schooling  to get away from schools that they think are obsessed with standardized testing . We should not be surprised when we look at standardized test scores from private schools and see that these students are scoring lower.  In fact, we should probably expect it.  But, if we’re going to support our arguments for choice with test scores (using them to show either shortcomings in public schools or the benefits of choice), we have hitched our wagon to them and can’t be surprised if people attack vouchers when poor test score results come out. Similarly, advocates (present company included) have treated voucher programs as interchangeable when talking about their effects, even though they differ in meaningful ways. If we’ve talked about their benefits without taking program design into account, we can’t be surprised if people attack their shortcomings without doing it either.

I hope this study causes a course correction in the school choice community on several fronts (understanding the costs of regulation, how we think about test scores, the fact that all voucher programs are not created equal). It should be a wakeup call, not a death knell.  

The post New Study Shows Negative Effect for Vouchers. We’ve Got Some Explaining To Do. appeared first on Show-Me Institute.

Based on Steinhoff and Yoakum’s comments, I’d like to make three points:

Point #1: Pensions Take From Some to Reward Others

The generous teacher retirement benefits for those who stay in the system for their full career are made possible by the contributions of those who leave the system early. According to Yoakum, “The retirement system is designed to provide a career employee in Missouri schools with roughly the same standard of living they had.” The key phrase there is “career employee.” Workers who leave early face a severe financial penalty.

As McShane pointed out in the article (and as I’ve noted before on the Show-Me Institute blog), benefits from the teacher pension system do not exceed a teacher’s contributions until they have worked for 28 years. 28 years! As a report from the Urban Institute noted, 62% of Missouri teachers do not stay for that long. The majority of teachers are not benefiting from the pension system, but are instead subsidizing the benefits of others.

Point #2: Retirement Benefits are an Ineffective Way to Recruit Teachers

Yoakum contends that the pension system is helping recruit teachers to Missouri. This is a poplar refrain among pension supporters. At first glance, the argument makes sense—better benefits attract more people. The problem is that people, especially young people, typically don’t pay much attention to their retirement benefits. This is illustrated by the quote from Steinhoff, “It is the best kept secret even within the profession because, for most teachers, it doesn’t come on their radar until they’re teaching for about 25 years.” I fail to see how a well-kept secret helps recruit teachers.

As a National Bureau of Economic Research report notes, employees value current pay much more than they value deferred compensation into a pension system.  Thus, a better way to recruit and retain teachers might be to pay them more now, rather than promise them more later.

Point #3: Pensions Pull Some to Stay, Push Others Out

OK, maybe pensions aren’t the best way to recruit new workers, but they do help keep teachers in the system, right? As Yoakum said, “From the employer standpoint, it does provide golden handcuffs to a certain extent. When a teacher has accumulated a certain years of service, it’s very hard for them to leave. This helps our school districts retain those very good teachers.”

This “Golden Handcuffs” phenomenon is discussed by economists Robert Costrell and Michael Podgursky in an Education Next article with the same name (see their excellent illustration above). The yellow line is the value of Missouri’s teacher pension system, while the black line represents a smooth-accruing cash balance plan. This shows how teachers who leave early are worse off under the current system. As a result, Costrell and Podgursky agree with Yoakum that the back-loaded nature of PSRS pulls teachers to stay until full retirement—but at a cost. First, there is no indication that the “pull” is felt only by the “very good teachers” to whom Yoakum alluded. Indeed, there may be some teachers who are burnt out and want to retire, but feel compelled to stick it out until they reach full retirement. How is that good for kids? And after a teacher reaches their peak pension value, the system punishes them and pushes them out. Thus, beyond a point, the system acts as a disincentive for veteran teachers to stay.

We cannot accept the merits of defined-benefit pension systems simply because they provide a terrific benefit to a fraction of our teachers. Rather, we should consider whether the system is designed to provide fair retirement support for every teacher in Missouri. Clearly it is not. 

The post Missouri Pensions Reward Some, Punish Others appeared first on Show-Me Institute.

Indeed, those risks are now playing out in Ohio.

Most of the Ohioans who entered Medicaid under the expansion are working-age adults without children or disabilities. Before Obamacare, Medicaid was restricted to children, the elderly, the disabled, pregnant women, and impoverished families.

Pitching Obamacare expansion to the Ohio General Assembly in 2013, the Kasich administration estimated 447,000 would enroll by fiscal year 2020. Actual enrollment exceeded 620,000 by the time fiscal year 2015 ended in June.

Kasich implemented Obamacare expansion after vetoing a legislative ban on the policy, despite publication of a National Bureau of Economic Research study finding Tennessee’s employment increased when the state removed working-age adults from Medicaid.

Money spent on these able-bodied beneficiaries is money that cannot be spent on unequivocally vulnerable populations. And perversely, as Ohio has expanded its Medicaid program to those not in poverty, it appears the state is also planning cuts to services for some of Ohio's neediest, including the disabled. 

Missouri's neediest beneficiaries deserve better than that, and Missouri taxpayers should be able to rest assured not only that their tax dollars are going toward help for those who need it the most, but that failed government policies—particularly those we are seeing fail in real time across the country—aren't brought home to the Show-Me State. We should reform Medicaid for Missouri's neediest. We should not expand it under Obamacare.

The post Ohio’s Medicaid Explosion Under Obamacare Is a Warning for Missouri appeared first on Show-Me Institute.

Unfortunately, Missouri’s certificate of need (CON) program may be erecting barriers to the market functioning efficiently when matching care providers and care consumers. A recent working paper by the National Bureau of Economic Research examined how hospital entry deregulation in Pennsylvania affected the market for cardiac revascularization. Because Pennsylvania eliminated its CON program in 1996, economists were able to compare clinical outcomes before and after the program’s repeal — the ideal conditions by which to conduct an experiment. The researchers found that “free-entry improves the match between underlying medical risk and treatment intensity” and “improved access to care.”

Another study conducted in the same state, on the same topic, found that the post-deregulatory market did a better job at matching the appropriate procedure to the appropriate risk level. After deregulation, better doctors also saw an influx in demand for their services.

Removing the CON program in Pennsylvania empowered patients to attain better care from better doctors. Certainly, a market uninhibited by cumbersome regulations does a better job at matching the right patient to the right procedure, performed by a better doctor, than a nine-member regulatory board. Missouri could follow Pennsylvania’s lead in doing away with the micromanagement and creating a system conducive to competition and innovation.

The post Show Me Better (Part 2): Certificate Of Need And Access To Care appeared first on Show-Me Institute.

Local governments should provide services that government is best suited to provide and that the private sector cannot serve as effectively. This includes streets, police, fire protection, and neighborhood parks. The list does not include hospitals. The private sector, including both non-profit and for-profit hospitals, has long provided fantastic health services to our country. Indeed, to many Americans, the idea of a government hospital probably feels like a relic.

As with many privatization efforts, the fears of turning a beloved public asset over to the profit-mongering private sector are vastly overstated. The Kaiser Foundation found in a 1999 study of public hospital ownership changes that, “In most instances, access to care for low-income patients has been preserved after conversion and teaching programs have not been cut.”

A 2001 study for the National Bureau of Economic Research concluded: “In many respects, the empirical evidence from hospital conversions is reassuring. … On the whole, hospitals’ missions appear to be preserved post-conversion.” The studies note that the government should carefully negotiate the contracts and monitor the operations after the sale to ensure compliance with public goals and protect the public interest. Missouri law already requires the state attorney general to review any hospital sales, as it did when Sweet Springs, Mo., sold its hospital to a for-profit company in 2009. No more state regulation is needed, especially changes that outright prevent sales to for-profit companies.

Private hospitals, both non-profit and for-profit, are a cornerstone of our health care system. They treat the uninsured and poor as part of their mission, and they do it well. The idea that only a government hospital can take care of society’s needy is as ill-founded as the idea that government should make clothes and grow food for the poor because the private sector is not capable of doing those things, either.

There is nothing wrong with North Kansas City making money off the sale of the hospital if that is what it chooses to do. That money would not disappear in a sinkhole — it would be invested back in the city or returned to city taxpayers via lower tax rates. In particular, if a for-profit hospital took over operation, the tax base of the city would be greatly enhanced. The money from the sale or new taxes could allow the city to do many things, including investing in a lower-cost health care clinic if it chose. Clinics are a far more responsible long-term strategy for local governments than large hospitals. Such a change would not be new to Missouri. Saint Louis County now operates three clinics after closing its public hospital more than two decades ago.

North Kansas City officials deserve credit for launching a careful effort to investigate the best options for the city. They are not doing this as part of a fire sale. If city leaders determine that a sale of the hospital to a private company is best for the city and its residents, they should be allowed to do so without new state regulations blocking the way. Limiting the city’s options, which recent bills filed in the state legislature would do, has no real benefit. If residents and voters do not like North Kansas City officials’ ultimate decisions, they have numerous ways to send that message.

Privatizing the hospital will benefit North Kansas City. Health care services under private operation would continue just as they have for decades under public ownership. North Kansas City should not be expected to hold back against a nationwide trend toward converting public hospitals because of erroneous fears of private operation.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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According to the News-Leader, there are numerous opponents of grading schools, including superintendents, school district personnel, and the Missouri PTA president. In fact, the PTA president states that A–F grading “doesn’t address any problems at all. It’s just another way of identifying the problems that we know are there.”

The fact is, A–F grading does help address problems. The first problem it addresses is transparency. Currently, it is very difficult to see how an individual school is performing in comparison to other schools or a benchmark level of performance. A letter grade will solve this problem in a way that is easy for the average parent to understand.

Assigning letter grades to schools also encourages those schools to improve. The A–F grading system in Florida has been evaluated a number of times and the results show that the stigma of receiving an “F” grade encourages schools to change practices and to improve. Rouse, Hannaway, Goldhaber, and Figlio wrote in a National Bureau of Economic Research paper:

In sum, we find that schools receiving an “F” grade are more likely to focus on low performing students, lengthen the amount of time devoted to instruction, adopt different ways to organize the day and learning environment of the students and teachers, increase resources available to teachers, and decrease principal control, as was expected given the increased oversight built into the A+ Plan.

Assigning A–F grades is not just a way to single out or label low-performing schools. It is a way to motivate schools to improve instructional practice and to strive for excellence.

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In his article “Supply-Side Soccer,” economist Kevin A. Hassett describes the findings of a new study published by the National Bureau of Economic Research, “Taxation and International Migration of Superstars: Evidence from the European Football Market.” The report, by economists Henrik Kleven, Camille Landais, and Emmanuel Saez, studied the top soccer clubs in 14 European countries from 1980 to the present, exploring how changes in tax rates affected players changing teams, and to what extent player mobility affected club performance.

To break the results down simply, countries such as Spain, which lowered income taxes for the highest tax brackets, ended up attracting the best players. This, in turn, led to higher performance in the European soccer leagues. In order to compete with the lower-taxing countries’ offers, high-tax-bracket countries would have to offer much larger salaries for the players to obtain equal standards of living.

At the end of his article, Hassett points out that this same principle stays true for business climates between political jurisdictions. This is a point that Missouri should take under advisement, for businesses often follow the same trends between states.

As seen in the Show-Me Institute case study examining the differences in tax policy between Tennessee and Missouri, while Missouri instituted and then raised an income tax, our southeastern neighbor remained income-tax free. The study found that this difference in policy is positively correlated with Tennessee, historically our economic lesser, rising above us in terms of population and economic prosperity.

Attracting new business is a crucial part of ensuring future economic prosperity, and revitalizing the economy. Instead of offering giant multi-million-dollar tax credits to developers or specific businesses in efforts that rarely if ever deliver on their hoped-for success, why not cut taxes across the board to create a climate conducive to all businesses?

The post Gooooooaaaaaaaallllll!!!!! Supply-Side Economics, 1; Missouri, Nil appeared first on Show-Me Institute.

Miron’s area of expertise is the economics of libertarianism, with particular emphasis on the economics of illegal drugs. He has served on the faculty at the University of Michigan and as a visiting professor at the Sloan School of Management, M.I.T. and the Department of Economics, Harvard University. From 1992-1998, he was chairman of the Department of Economics at Boston University. He is the author of Drug War Crimes: The Consequences of Prohibition and The Economics of Seasonal Cycles, in addition to numerous op-eds and journal articles. He has been the recipient of an Olin Fellowship from the National Bureau of Economic Research, an Earhart Foundation Fellowship, and a Sloan Foundation Faculty Research Fellowship. Miron received a B.A., magna cum laude, from Swarthmore College in 1979 and a Ph.D. in economics from M.I.T. in 1984.

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