Friday, 4 February 2011

The law of unintended consequences, again

This new NBER working paper by Julie Berry Cullen, Mark C. Long and Randall Reback looks at Jockeying for Position: Strategic High School Choice Under Texas' Top Ten Percent Plan and give a nice example of the law of unintended consequences. The abstract reads:
Beginning in 1998, all students in the state of Texas who graduated in the top ten percent of their high school classes were guaranteed admission to any in-state public higher education institution, including the flagships. While the goal of this policy is to improve college access for disadvantaged and minority students, the use of a school-specific standard to determine eligibility could have unintended consequences. Students may increase their chances of being in the top ten percent by choosing a high school with lower-achieving peers. Our analysis of students’ school transitions between 8th and 10th grade three years before and after the policy change reveals that this incentive influences enrollment choices in the anticipated direction. Among the subset of students with both motive and opportunity for strategic high school choice, as many as 25 percent enroll in a different high school to improve the chances of being in the top ten percent. Strategic students tend to choose the neighborhood high school in lieu of more competitive magnet schools and, regardless of own race, typically displace minority students from the top ten percent pool. The net effect of strategic behavior is to slightly decrease minority students’ representation in the pool. (emphasis added)
Good intentions are not enough, you have to think through the likely effects of your policy. Changing incentives changes behaviour, often with unintended consequences.

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