Patrick Emerson of the Oregon Economics Blog has been thinking about how to handle the huge backlog of maintenance projects for Portland’s public schools. Which projects should Portland Public Schools (PPS) tackle now? Which ones should PPS tackle later? Drawing on the ideas of behavioral economists Matt Rabin and Ted O’Donoghue, Emerson makes the following suggestion.
As an economist, intertemporal problems are routine. You have to weigh the present value of the costs and benefits when taking a decision about fixing something today versus letting it go a while longer. This would seem a fairly easy problem for an institution like PPS (though it is in no way an answer to the overriding problem of resource constraints). But the reality is that parents have a time horizon that is much shorter than the school district itself. If a parent knows their child will be in a school for only 5 years, the present discounted value of deferred maintenance cost is much smaller than for PPS itself which is thinking of school buildings lasting for 50 more years. This is true in many aspects of government business – it is often hard to get the public to be far-sighted (especially true when you talk about very long time horizons and add some uncertainty like in global warming).
It seems like an appropriate response would be to put some welfare weights on the current concerns of parents and the concerns of future parents and be explicit/transparent about it. Simply deferring maintenance and hoping for better times in the future seems like a fool’s errand. It is likely to never happen and often you end up having to pay a much higher price when systems fail like the heating system at Cleveland. Once we decide how to weight the concerns of the current generation and future generations, we can then start to allocate resources systematically. Why is this a good idea? Because it is often very hard to resist fulfilling urges today – people tend to place undue weight on current needs and desires. Ex post, however, they often regret not having exercised more self-control…In the parlance of (Nudge), my welfare weights idea would be introducing ‘architecture’ to the choices made by the PPS. This architecture acts as a commitment device and will ensure that we are not shortchanging future kids for the sake of the current ones. Instead what we have is a bunch of discretionary decisions that add uncertainty and inefficiency into the system which serves no one well.