Reading Assignment #6- "The Most Unusual Day" and "An Academic Episode"

"The Most Unusual Day"

A.


Overall, I found the article to be extremely interesting. We have been learning in class about the "Law of Unintended Consquences" and this article can absolutely be applied to the law because of the fact that there were consequences the government wasn't necessarily expecting: that people would alter their births to get the bonus, which in turn, increased the amount of people delaying their births and made the hospital very crowded in July. I found it very interesting how a policy can indeed have inverse effects, and this article was proof in the pudding.

I also found it interesting how Gans pointed out how usually, governments try to avoid giving citizens an incentive for fraud on medical decisions. The government in Australia, in Gans words, did this to save $100 million. It is interesting because clearly the Australian government weighed the costs/benefits of its policy, and in the end, came to the conclusion that the benefit in ultimately promoting medical fraud outweighed the cost they would endure.


B.


1. What was the ultimate goal of the Australian government to pass this policy? What, besides saving money, did they think they would get out of the policy?
2. This is more of a question that would require research, but I am interested to know the answer nonetheless: Did this policy cause any babies to pass away from parents trying to prevent a birth to take place later than expected?
3. Why is it that people value money so much, they are willing to risk the health of their baby to gain extra money? Why is having a healthy baby not an incentive enough to give birth?


C.


Josh Gan's article starts off discussing how there are several unusual days in the world. According to Gans, however, none is more unusual than July 1, 2004- the day the Australian government began paying $3,000 for every baby born.

The Australian government was doing this to save money, but their reasoning was to offset the costs that mothers incur when having a new/not being able to work because of maternity leave.

This policy passed by the Australian government is called "The Maternity Payment" or the "Baby Bonus" and it was set to rise to a $5,000 bonus by July 2008.

Gans, who was expecting his third baby, talked to his wife about having his baby in July to get the bonus. The author believe that he was not the only one thinking this way- he was expecting that ultimately no births would occur on June 30 because people would want to get extra bonus.

The data about child births since that policy was passed is now officially out. The results show that over 1,000 births across the country were shifted as a result of the new policy. He knows that this was the case because "normal" delivery statistics remained unaffected, but all the inducement and cesarian statistics went up. Also, June was a low month for births while July was unusually high. In fact, 25% of all births were shifted by more than 2 weeks.

A result of all of this? When Gans went in to have his baby born, the hospital was completely overwhelmed. This shows an unintended consequence- perhaps the Austrialian government didn't expect people to create fraud. Next time, Gans pointed out, he hoped that the hospitals would be better prepared/staffed.

The end lesson Gans pointed out was that the Australian government shouldn't introduce policies this was so as not to create such an incentive for people to produce fraud- and alter birth dates.
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"An Academic Episode"

A.


I found Stigler's article to be quite interesting in one particular way: how he tried to show the results/effects of unintended consequences. In class earlier today and last week, we talked a lot about the effects of unintended consequences. This article perfectly illustrates them.

Throughout the article, Seguira continues to make new policies that he thinks will fix the problems that are going on in his university. While the policies do indeed fix the problems in one regard, other problems are born from these new policies. This is the perfect description of unintended consequences, because Seguira did not in any way expect these issues to arise when he enacted his new policies.


Thus, I found the clever way that Stigler was able to weave the concept of unintended consequences into a story the most interesting part of the article.

B.


1. Why is it that Seguira did not comprehend that by continuing to make new policies, more issues were caused? Why did he feel the need to change something that already ran somewhat smoothly?
2. How much do unintended consequences play into policy maker's decisions to enact a policy? Do policy makers even try to consider what unintended consequences might come about from enacting a certain policy?
3. In the end, did Seguira honestly think everything was better than it was before he enacted his policy? What does the end result of all of his policies say about trying to change the landscape of the labor force?


C.


George Stigler starts off his article mentioning how he believes we run our universities backward and then progresses into a story about a president (Seguira) of a university in South America.

In June of each year, any member of the faculty (including graduate students) could challenge the person who had the position immediately above him to a competitive examination. Impartial judges would judge the competition and whomever won would get the higher position/salary.

This new policy at the school led to many unintended consequences, something we have been learning about in class a lot.

Some results of the new policy included:

1. Libraries had an unprecedented rush- the older professors who had higher positions started working harder and studying more.
2. People began to hoard their knowledge, worrying that sharing any knowledge could lead to someone getting an upper hand in the competition
1. A result of this was that the graduate students started to receive less sufficient education

Seguira was understandably concerned about the lack of teaching that was taking place after his new policy was put into effect, so he began granting 5 points per teacher whose students won a challenge. The points would go towards a teacher's point total in the competition, and Seguira believed all of this would promote teachers to teach again. But then this led to a paradox in one instance:

• One professor was challenged by seven of his grad students, they all did better than him on the exam, but his 35 points he received helped him win the victory.

The ensuing fall, less grad students enrolled because all who could afford to do so went to study in the US. People then realized that the grad students were doing this to study the examinations in another country. This proved to be a smart idea for the grad students: Of the 61 students who spent the year in the US, 46 won their challenge the following spring.

To prevent this from happening again, Seguira presented more policies which led to unintended consequences:

1. The exam would be given by professors chosen at random from the US, England, France, Sweden and German. Now, if a grad student went out of the country to study, 4 times out of 5 he'd guess the wrong country.

In the 3rd year, it became apparent that research almost stopped completely because all the professors were putting their time towards preparing for the challenge. Thus, Seguira made a new policy, giving the professors more of an incentive to publish work: 2 points for every article and 7 points for each book published. 

1. More unintended consequences: research did revive a bit, but the research was not nearly as good since the professors were rushed to get it completed before the following year's challenge.

This all probably would have continued on forever but Seguira received a new presidential position at a very good South American university. He accepted, but before he left, he made one final amendment: A man could receive a permanent number of points the department chairman deemed fit when an offer was received from another university.

This allowed Seguira to move up to a higher position.