Wednesday, February 13, 2008

What is an unintended consequence?

There was some ruckus over the Freakanomics article in the NYT on the unintended consequences of the American Disabilities Act.

1. Andrew Gelman believes that all consequences are actually intended but he ponders this entry by Dubner and Levitt. What is considered an unintended consequence?
2. In the comments section of Andrew's post: To take the one example in their article that I know something about: The paper they cite on the ADA and the disemployment effect is one of the very earliest papers on the subject, and there has been a lot of subsequent refinement. For example, there is a case to be made that the disemployment effect was actually due to more people with disabilities choosing to get further education, rather than enter the job market immediately, because the ADA increased educational opportunity for people with disabilities. See, e.g., Christine Jolls, Identifying the Effects of the Americans with Disabilities Act Using State-Law Variation: Preliminary Evidence on Educational Participation Effects, American Economic Review, 94:447-53 (2004). But whether the Jolls paper is exactly right or not, there is certainly no consensus (to say the least) that employers stopped hiring disabled people after the ADA because of onerous requirements created by the ADA. (Indeed, there is not even consensus that the ADA did in fact create onerous requirements, at least for the vast majority of employers.)
3. Further commment on Michael Dorf: An interesting story, but is it true? Well, for one thing, it's not clear that Dubner and Levitt understand the argument they're reporting: Fear of back-end lawsuits by dismissed members of a protected class is a frequent argument made against non-discrimination mandates in general, but the particular worry with respect to the ADA has typically been that its requirement of "reasonable accommodations" for disabled workers would impose higher costs on employers for workers they don't fire. The reasonable accommodation requirement of the ADA distinguishes it from Title VII, the general federal anti-discrimination in employment statute. By failing to confine their argument to the disability context, Dubner and Levitt (perhaps unwittingly) suggest that all anti-discrimination law is perverse.
4. The NYT article was based on research by Acemoglu and Angrist which does not make such a strong claim - in fact I thought the abstract was tantalizingly close to claiming causation but does not actually say that so they've covered themselves.

Finally, the most important question asked by Andrew - what can be considered an unintended consequence? A comment on Marginal Revolution highlighted by Andrew: The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences.

I don't necessarily disagree with this but I think there might be more to it than that. For instance, a water company adds a new additive (replacing chlorine with chlorine ammonia or chloramine) to its water purification process in order to comply with EPA regulations. This new additive causes old lead pipes to bleach lead into the water coming out of the taps of homes in Washington, DC. Is this really an unintended consequence? I would not consider it so -- rigorous analysis of the affects of the chloramine on all kinds of pipes would have led regulators to this effect. Sloppy regulation perhaps but not an unintended consequence. Likewise, with the other examples cited in the NYT article.

What about when I replace my incandescent light bulbs with fluorescent ones and this lead me to use the fluorescent ones even more -- for instance, they are not as hot so in the summer I would tend to turn on the lights more. Is this an unintended consequence?

No comments: