Kid Nation

While many highbrow types eschew television, and would perhaps be mortified by the concept of reality television, I think it's shortsighted to ignore the reflection of society that the medium inevitably presents.

The most recent example that has potential to yield some very interesting anecdotes about society is Kid Nation. The concept is to dump 40 kids (all under 16) into an abandoned frontier town, with resources for 40 days, and a modicum of structure to see what kind of mayhem or progress ensues. The beauty of children is the more base responses to situations that economists are happy to see.

In fact, this setup is a perfect real life metaphor for what economists attempt to do in general: Abstract from the complexity of the real world to try to learn something about the interactions between some of the most important moving and stationary parts.

What triggered my thoughts regarding Kid Nation was how the distribution of wealth would play out and how this model would present an excellent way to describe taxation in a more concrete context. Since the residents will be paid different wages depending on the job they do, it will be interesting to see what, if any, redistribution will take place. The difference between the highest rung of this model economy and the lowest is significant ($1.00 in wages vs. $.10).

Of more interest to me is how (and if) public goods will be provided and paid for. Will security be needed? What about a system of justice? Perhaps education? Even the arts? If this group of children agreed that these were necessities for a thriving culture, how best to provide them? The topics to watch are endless for an economist so I'll have to keep tuning in to see if any of these come up.

One idea that could stem from this model is how to put government services and the shared sacrifice in a more labor oriented framework: We continually talk about marginal rates and the burden of taxation, and that's fine. However, if you boil it down to the number of hours that each of us needs to contribute to enjoy security, law and order, etc, some interesting conversations may ensue. If you can't directly offer up those hours, how should you compensate the others who can? Certainly, society may want the most productive to keep producing privately instead of offering up their labor for public goods or security. But there has to be a tradeoff. I'd like that to be the starting point for a discussion about taxation instead of the moron George Bush and his ilk's mantra about how it's your money, blah, blah, blah.

Higher education

Perhaps fitting that the first post since I began my PhD program is regarding higher education. I sat in on a workshop presentation by a PhD student from U-Chicago this afternoon. The presenter seemed fairly comfortable with his research and handled a few tough questions from the mostly friendly audience. The model tied together tuition increases at private colleges to increases in wealth across the colleges themselves. Essentially, the model argues colleges are taking their wealth bequests and spending the money on improving quality, thereby allowing them to increase tuition since their product is more valuable.

My problems with the model were somewhat simplistic, at least in my way of thinking. First off, I have to believe that there are serious barriers to entry in the private college market. The prestige and name recognition necessary to compete at this level must be high. We have schools founded by Rockefellers and Vanderbilts from past centuries, but none by Gates or Buffett. So if we have a supply side issue alongside a demographic boom in the late 80's and a stock market boom in the 80's and 90's, is it possible that these phenomena fully explain the coincident rise in tuition and college wealth?

The other point I questioned was the impact of taking public universities out of the equation. I understand that the budget constraints are much different, but the fact that tuition is rising at public institutions (net tuition) is a question that must be taken into account. If private schools feel they are differentiated vs. public schools, then any decrease in government support that causes tuition to rise may compel, or allow private schools to increase tuition.

Both questions could be links to areas of further research, particularly the supply question. That seems to be a common thread these days -- grown up industry, even academia doesn't really want competition.

In any case, these seminars are motivation for a grad student taking core theory courses.