Joe Biden Doesn’t Think on the Margin

RYAN BOURNE, CATO INSTITUTE

In his address to the joint session of Congress, Joe Biden claimed:

“When this nation made 12 years of public education universal in the last century, it made us the best‐​educated and best‐​prepared nation in the world. But the world is catching up. They are not waiting. 12 years is no longer enough today to compete in the 21st Century. That’s why the American Families Plan guarantees four additional years of public education for every person in America – starting as early as we can.”

Let’s leave aside whether the President’s reading of the historical returns to public education is correct (a lot of evidence highly doubts it). Let us also park the idea that national economies “compete.”

Even if Biden was correct on these claims, using past evidence of the effects of expanding years of public education as justification for further expansions would be misguided.

That the first interstate highway system may have produced significant increases in economic activity does not mean that building another interstate highway system would be a cost‐​effective use of public funds. Which is only to say that good economics happens on the margin: what matters is the weighing up of the marginal costs and marginal benefits of each additional year of publicly provided education, not the average costs and benefits from the past.

We all understand this in our private lives. Half an hour of exercise per day may bring benefits to us that exceed the costs of that which we miss as a result. Maybe an additional half‐​hour still has net benefits again. But at some point, the marginal costs—the economic costs of an additional unit of time working out—clearly exceed the benefits.

The realistic alternative to someone spending an extra two years in government‐​financed college is, for many, a couple of years spent acquiring on‐​the‐​job skills or going to college privately. The opportunity cost of kids spending time in subsidized universal preschool is, for many kids, spending two years with their parents or a family member, or in a daycare setting.

To make a more convincing case for this additional public spending, then, Biden would have to explain why the marginal benefits of the extra public education exceeded the additional costs. Little of the evidence presented in the accompanying “Factsheet” to the American Families Plan convincingly attempts that.

In fact, when pushing for universal preschool education provision or significant childcare subsidies, the administration tends to use past evidence from targeted programs at very disadvantaged kids (for whom it is more plausible a government program might provide something the child otherwise wouldn’t receive) as supporting the case for universal provision.

That, again, shows a failure to think on the margin: that a program might bring benefits exceeding costs for some disadvantaged kids doesn’t mean extending it to all will bring similar net benefits.–

The idea of “thinking on the margin” is explored in much more detail in the context of the pandemic in my recent book Economics In One Virus.


Ryan Bourne occupies the R. Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute. He has written on a number of economic issues, including: fiscal policy, inequality, minimum wages and rent control. Before joining Cato, Bourne was Head of Public Policy at the Institute of Economic Affairs and Head of Economic Research at the Centre for Policy Studies (both in the UK). Bourne has extensive broadcast and print media experience, and has appeared on BBC News, CNN and Sky News, whilst having articles published in (among others) the Wall Street Journal EuropeThe Times (London) and the UK Daily Telegraph. Bourne holds a BA and an MPhil in economics from the University of Cambridge, United Kingdom.


Used with permission. Cato Institute / CC BY-NC-SA 4.0


LEAVE A REPLY

Please enter your comment!
Please enter your name here