Blargh Blog

Thursday, November 10, 2005

The Dependency Hypothesis

People respond to incentives. That is the insight that many libertarian-types have taken and run with, seemingly analyzing everything in terms of economic rationality and the logic of the market. (This leads to eminently mockable turns of phrase, such as "Assuming choices to engage in risky sex are made rationally".)

It may be revealing, then, to look at the cases where these libertarian-types embrace some other view of human behavior. One view that shows up time and again (see recent posts by Becker, Posner, Whitman, and Wilkinson) is the generalized dependency hypothesis. This is the hypothesis that people who receive benefits from government programs like Medicaid and welfare develop generalized deficits in areas like initiative, energy, willpower, and independent decision-making, and that these generalized deficits make them less effective at dealing with situations where independent, willful action would be beneficial, such as preparing for Katrina.

It is important to clarify what this hypothesis is
not saying. There's a different hypothesis about dependency that is right up the free market alley. That is the view that government programs create incentives that induce people to depend on them, rather than using them as a temporary safety net. Unreformed welfare, for instance, gave people enough money to live without working, and it increased the effective tax rate that people going from welfare to work would face (including the removed welfare benefits), so the hypothesis that people develop a dependency on welfare could be based only on the claim that people respond to incentives.

A second kind of dependence is slightly more general, dealing with a domain of life rather than a particular government program. Some government retirement savings programs, to take an example, don't require the individual to make any decisions or to become informed about how to invest. This can lead to dependency in the domain of financial investment, in that people who have been relying on the government program will not be prepared to make their own informed decisions about investments in other programs. This type of dependency requires an account of human psychology that is only slightly more complex than "people respond to incentives", to wit, "people learn from experience."

The generalized dependency hypothesis is far more ambitious empirical claim than either of these more limited claims. It is supposed to be able to account for people's decisions of all kinds (or people's inability to make independent decisions of all kinds). It applies even to rare or novel situations, like fleeing from an approaching hurricane. In order to have such generality, this hypothesis requires a much more complex view of human psychology, one with such general capacities as "initiative" or "energy", to use Becker's terms, or "will power", to use Whitman's. It is also less clear how government programs would reliably produce such dependency.

What is my view on these three kinds of dependency, dependence on a program, dependency in a domain, and generalized dependency? I am not really sure. That's why I've asked Becker and Wilkinson if they could point me to any empirical studies of generalized dependency, or any thoughtful, empirically-informed books on the subject. And that's why I'm making the same request to you, my loyal reader / transient visitor / confused googler. Are there people who have rigorously studied this generalized kind of dependency, investigating the mechanisms at work, its causes and effects, when it occurred and when it did not? Have they written anything good? I would like to read more, no matter what the ideology of the author (as long as it is someone thoughtful, not an ideologue).

I am a blogger, so I do, of course, have some views on the topic. I think that there is a lot more variability than dependency hypothesizers allow. The three kinds of dependency seem so different that it is probably unhelpful to refer to them all with the same word (that is why I focused my request on generalized dependency). The role of the government in breeding a "culture of dependency" probably varies a lot across the three kinds of dependency and across different government programs.

Dependence on particular government programs is probably relatively common, though some overstate its prevalence in cases like welfare, and it is not always such a terrible thing (perhaps "reliance" would be a more neutral term than "dependence"). It is also not limited to government programs. People come to rely on all sorts of arrangements that were intended to be temporary. Good program design can help avoid this problem, but it is often a difficulty that must be dealt with.

Dependency in a domain really should not be called "dependency" at all, I think. Often, being unable to make independent decisions in a domain is a perfectly reasonable, fine position to be in. There is just too much to learn, in too many different domains, to be able to make independent decisions everywhere. Many government regulations are designed to reduce this information burden and to give people a guide to, say, which doctors they can trust to be competent. In many cases, the government takes the role of informing people to facilitate better decisions, as by mandating nutrition information labels on food and making them include comparisons to government-devised Recommended Daily Allowances. The kind of process that Whitman warns against, where one government policy weakens their decision-making ability on another subject and makes further government regulation seem appropriate, can occur with this kind of "dependency", but that does not mean that the government should stay out of the way. For one thing, we can be careful about this kind of government expansion, and promote more government programs that keep people informed and involved. Also, this kind of expansion is not necessarily bad, as long as it doesn't stretch out too far. Finally, the benefits of the program can easily outweigh this effect when it is negative. Making beneficial programs like 401(k)'s opt-out instead of opt-in could make people less inclined to become informed about them, but the reason that this change is attractive is that many people remain uninformed about them under the current system and thus fail to take advantage of programs that would be beneficial to them.

Generalized dependency is the one that I feel like I know the least about. There are some related areas of study in psychology, like learned helplessness and the effects of expectations, which suggests that there might be some empirically viable content to the concept of generalized dependency. However, in most cases people who promote the generalized dependency hypothesis use "folk" concepts and do not seem to have much contact with relevant social science research. Whitman is an exception, but the conclusions that he draws from Roy Baumeister's research on the "self-control muscle" go far beyond the existing research. Whatever the psychological process, it is not clear that the government has enough of an influence on people's lives to create widespread, generalized dependency (except for people who are incarcerated). Possibly some government programs increase this kind of dependency (perhaps indirectly), but it is also possible that some decrease it, and that many have no effect on it. Which government programs are most likely to create this kind of dependency or to alleviate it, and how? What else, other than the government, influences the generalized dependency of a culture, and how?

These are the important questions that I have the most trouble answering, which is why I'd like to go read something that explores them. I'd prefer to read a book or a published study, since I expect that blog discussion would be relatively cursory and not tied very closely to empirical work (and anyone capable of better in a blog comment would most likely be able to recommend a study or book that was even better).

So hit me with recommendations if you can.


At November 12, 2005 12:06 AM, Blogger Genius said...

I suggest all policies create dependence. Any rational person will make decisions considering the environment and any policy that is of any value will change some of the environment. In general such a policy wil achieve some of its aim and some effort will be wasted by free riders or whatever. rather like in physics how some energy is transfered and some is always lost as heat.

Presumably there are some domains which we care about this more than others (a value judgement all the same).

The difference between 401k being opt in and out is presumably a set of people who are uninformed (or just really lazy). So if we take their money and make some decision regarding it we create quite a significant amount of dependency regarding a section of their money and the benefits of 401k (e.g. their retirement) so you are making a decision that they would otherwise have had to have made themselves (even if a sub set would have chosen to do nothing) and this decision has echos throughout all sorts of aspects of their lives.

Further, I would suggest there IS such a thing as generalized dependency in as far as there are certain behaviors that a "dependant" person exhibits (whatever they are dependant on) and there are other habits that a non dependant person will exhibit - the less time one spends exhibiting the former the worse one will be at achieving ones aims via those behaviors.
It would seem the only contentious part of that related to how generalisable examples of dependency are (I suggest they are fairly generalisable).

Now the magnitude of this effect by government I think is small as a percentage of what it could be theoretically. I.e. if I imagine total dependence in the form of an ultimate North Korea scenario it is clearly different from where you or I live but that does not mean that a policy that encourages dependence (or lack of thought) in regard to certain general behaviors might not be bad and more costly than the benefits. It is the marginal cost that matters here.

> But it is also possible that some decrease it, and that many have no effect on it.

I am pretty far from being a libiterian so I think that many policies on balance are worthy despite any rise in dependance - BUT it is a cost one should consider. And the above doesnt absolve anyone since if you were opposing a law and cant see its consequences that is a problem in itself.

> Which government programs are most likely to create this kind of dependency or to alleviate it, and how?

I don’t think this can be stated without a lot of opinion since it requires some sort of value judgment regarding what is dependency (in its negative form) and a measure for it
and also some sort of measure for action to compare it with (ie obviously the 401k law makes a bigger change than a law against teasing bears) and is VERY dependant on the environment.

> What else, other than the government, influences the generalized dependency of a culture, and how?

This probably needs more clarification - although one could start with normal things like - education/intelligence, population density, cultural history, collectivism, and more directly - aspects of the incentive structure and how they generally affect habits.

I emphasise habits because this is largely a market inefficiency we are talking about here so it is habits ruling rational decisionmaking.


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