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President Trump today issued a revised version of his infamous executive order to temporarily ban the issuance of new green cards and visas for nationals from Iran, Syria, Yemen, Libya, Somalia, and Sudan. The new order dropped Iraq, which eviscerated Trump’s argument that the list of banned countries is based on an existing list in U.S. law. The order also cuts the number of refugee admissions by about 37 percent compared to the post-1975 average number of annual refugees admitted—from 79,329 per year to just 50,000. However, there were 110,000 refugees scheduled to be admitted in 2017 so the actual decrease in refugees this year is a whopping 55 percent under this executive order. The Trump administration thinks this new order addresses many of the legal challenges made against the first version.

Introduction

When the first version of this order was signed at the end of January, Cato’s research showed that the actual domestic terrorism risk from nationals of those six countries was minor and that the order stands on shaky legal ground. For this iteration of the executive order, I intend to show that the permanent decrease in refugees costs native-born Americans more than we’d save from fewer terrorism deaths. This cost-benefit analysis does not look at the cost of temporarily reducing green cards and other visas.

Results

If Trump’s refugee reduction eliminated all deaths from refugee terrorists then it will cost native-born Americans about $159.4 million per life saved, which is about 10.6 times as great as the $15,000,000 per statistical life estimates if the average number of refugee admissions had stayed at 79,329 going forward (Figure 1). In other words, such a policy would reduce your annual chance of dying a terrorist attack committed by a refugee on U.S. soil from one in 3.64 billion per year to zero at a cost of $159.4 million per life saved. 

However, President Trump’s executive order is not decreasing refugee flows by 37 percent in 2017. The Obama administration slotted 110,000 refugee admissions for 2017, so this year’s reduction is actually 55 percent. If I assume that the new 110,000 annual admission figures would have been the new normal in the absence of Trump’s executive order, the economic costs increase to $326 million per life saved for a 100 percent reduction in your chance of dying in a refugee terrorist attack on U.S. soil. The economic costs incurred are about 21.7 times as great as the cost for a single death by refugee terrorist in this scenario (Figure 1). 

Figure 1

 

Average Number of Refugees Would Have Continued

Obama’s Boosted Number of Refugees Would Have Continued

New Chance of Being Killed in Refugee Terror Attack on U.S. Soil

100% Reduction in Refugee Terrorism

$159,356,197

$326,004,018

Zero

To break even, Trump’s decrease in the refugee program would have to save one life per year if the average number of 79,329 refugee admissions had continued or about two lives per year if President Obama’s boosted refugee numbers are considered the new baseline. Regardless, there would have to be an unrealistically large and sustained increase in deaths committed by refugee terrorists in attacks on U.S. soil to justify this reduction in numbers.

Methods

The above cost-benefit analysis is similar to that which Greg Ip at The Wall Street Journal published but with some minor changes.

I estimate the economic benefits of refugees to American natives. This figure is known as the immigration surplus which ignores all of the economic benefits to the immigrants themselves and instead focuses entirely on the economic benefit to native-born Americans. George Borjas estimates the immigration surplus at 0.24 percent of America’s $17.194 trillion GDP. Over 43 million immigrants are currently living in the United States. From 1975 to the end of 2015, about 3.3 million entered as refugees. I assume that 1/3 of those refugees are deceased. From this, I am able to make a rough estimate of the annual immigration surplus per refugee that I further decrease by 50 percent because refugees tend to be poor (although this doesn’t matter as much for the immigration surplus). The result is that each refugee increases the wages of native-born Americans by $476.61. I then multiply that lost immigration surplus per year by the number of fewer refugees admitted. I then take the chance of dying annually in a refugee terrorist attack and divide it by the current U.S. population to estimate how frequently a death would occur if the chance remains constant which estimates a death by a refugee terrorist once ever 11.4 years. Multiplying the wage loss by the number of refugees who have been locked out by the number of years it would have taken for another refugee-terrorist death yields the $159.4 million cost per life saved. 

Yearly economic benefit for Americans from all immigrants is $41,265,600,000 according to lowest estimates from Borjas ($17.194 trillion times 0.24 percent). Multiply that by .0503 (percent that’s refugee) to get $2,077,246,422. Divide that by the stock of immigrants currently alive who entered as refugees (2,179,170) to get $953.24 wage benefit to all Americans per year, per refugee. I then assume that they only add half that amount because they are poor so the result is $476.61 immigration surplus per refugee per year.

From 2000 through the end of 2015, 6,329 immigrants and non-immigrants were ineligible for visas because of terrorist activities or association with terrorist organizations (Figure 1). A full 99.5 percent of the denials were for terrorist activities. Keeping terrorists, criminals, and other national security threats out of the United States is one of the federal government’s important immigration responsibilities but many of the people denied a visa shouldn’t have been. An overly broad definition of providing “material support” to terrorists results in bans that make little sense and do nothing to defend Americans from terrorist attacks.

For example, a young man who was living with his uncle in Colombia was attacked by paramilitaries who then forced the young man to march for several days.  Along the way, paramilitaries shot and killed many of those in the man’s group. Often times he was forced to watch the executions and, at times, to dig the graves of the dead. Sometimes the man was told that it was his own grave he was being forced to dig. The government denied his attempt to settle in the United States because his forced digging of graves provided “material support” in the form of “services” to a terrorist organization. 

Another example is of a Liberian woman who was abducted, raped repeatedly, and held hostage by LURD rebels after they invaded her house and killed her father. During this time they forced her to cook, clean, and do laundry. She eventually escaped and is now in a refugee camp but her attempted resettlement in the United States was put on hold because the tasks she had done for the rebels, such as doing laundry, provided “material support” in the form of “services” to a terrorist organization. 

Those who are denied a visa for this reason can get an exemption based on their individual circumstances, whether the material benefit was knowingly or intentionally given to terrorists, for certain medical reasons, and on a group-by-group basis for those who aided foreign groups supported by the U.S. government. A full 55 percent of those who are originally denied a visa on terrorism grounds are eventually overcome for this reason. The high waiver rate shows just how unnecessary and arbitrary many of these visa denials are in order to prevent domestic terrorist attacks. 

Figure 1

Visas Denied for Terrorism and Those Overcome by Waivers

Denied All      

212(a)(3)(B) Terrorist Activities

212(a)(3)(F) Terrorist Organizations

2000

101

0

2001

84

0

2002

49

25

2003

100

2

2004

77

0

2005

112

2

2006

120

0

2007

256

1

2008

418

0

2009

470

0

2010

621

0

2011

690

0

2012

890

0

2013

619

1

2014

707

2

2015

982

0

All

6296

33

      Overcome All    

212(a)(3)(B) Terrorist Activities

212(a)(3)(F) Terrorist Organizations

2000

31

0

2001

0

0

2002

0

0

2003

15

0

2004

26

0

2005

37

1

2006

39

1

2007

138

0

2008

266

0

2009

343

0

2010

387

0

2011

483

0

2012

470

0

2013

352

0

2014

457

0

2015

426

0

All

3470

2

Source: State Department, Report of the Visa Office, Statistical Table XX https://travel.state.gov/content/visas/en/law-and-policy/statistics/annual-reports.html

Since at least the days of ancient Athens—which Demosthenes tells us had a five-year statute of limitations for nearly all cases—governments have limited the time period within which punishment or compensation may be sought. Statutes of limitations exist to protect defendants from vindictive or arbitrary lawsuits and prosecutions brought long after their memories have faded and records that might have been used to rebut a claim lost. They ensure that we need not spend our lives constantly anxious about the possibility of the distant past coming back to haunt us over half-forgotten slights.

These are the basic animating purposes behind 28 U.S.C. § 2462, which imposes on the federal government a five-year limitations period for any “action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,” and the Supreme Court’s unanimous 2013 opinion in Gabelli v. SEC (in which Cato also filed a brief) finding no valid justification for the Securities and Exchange Commission to pursue enforcement actions seeking civil penalties more than five years after the relevant conduct had occurred.

Unfortunately, the SEC didn’t learn its lesson and has consistently attempted to circumvent and subvert Gabelli by arguing that the relief it seeks in its years-overdue enforcement actions—monetary disgorgement, injunctions requiring defendants to obey the law, and declaratory judgments that laws were violated—is actually “equitable” and not a form of civil penalty covered under § 2462. Disgorgement—requiring a defendant to return their ill-gotten gains—has indeed traditionally been a way to remedy unjust enrichment rather than a punishment, but the SEC’s use of it has been anything but equitable.

The agency has brought disgorgement actions not to make the victims of wrongdoing whole, aid in public securities-law enforcement, or encourage private compliance, but to punish unsuspecting defendants for decades-old conduct, destroy their reputations and careers, and score massive financial judgements that go straight to the vaults of the U.S. Treasury rather than the pockets of any victims. When one actually looks at what the SEC is doing in context, it becomes clear that this “equitable” relief is functionally a “civil fine, penalty, or forfeiture, pecuniary or otherwise,” subject to § 2462’s five-year limitations period.

While a careful application of § 2462 is itself sufficient to resolve this case, it is also important to note the serious reasons that actions like those taken by the SEC are in deep opposition to good public policy. Allowing the SEC—an administrative juggernaut more than capable of bringing meritorious claims in a timely manner—to pursue antiquated claims distracts the agency from its stated priorities of pursuing current malfeasance. It also misleads Congress and the public into believing that modern markets are rife with misconduct, in addition to casting a never-ending shadow of potential liability over anyone involved in financial markets.

This is why Cato has filed an amicus brief in support of Charles Kokesh, a man now entangled in the SEC’s stale web, to urge the Court to put an end to the SEC’s gamesmanship and categorically hold that the agency may not institute an enforcement action seeking disgorgement or injunctive/declaratory relief more than five years after the underlying conduct occurred.

The Supreme Court will hear argument in Kokesh v. SEC on April 18, with a decision expected by the end of June.

This week, the United Nations’ special rapporteur for housing presented a new report in Geneva. In it, she condemns the evils of “deregulation of housing markets,” “capital investment in housing,” “excess global capital,” and even takes neo-liberalism to task twice over its “requirement that private actors ‘do no harm’” and “do not violate the rights of others.” Who knew that respecting individual rights was controversial? 

Included in the report are superstitious allusions to banks, investors, and money. Throughout, the U.N.’s special rapporteur trains her angst on markets, and concludes that markets are “undermining the realization of housing as a human right.”

However, in spite of burdensome regulation, worldwide markets are becoming better at providing housing to the poor. For evidence, just look at the data: the percentage of the urban population that is living in slums (houses with inadequate space, sanitation, water, durability, or security) has fallen consistently over the past twenty-five years. 

In some regions, the number has declined even more rapidly. In South America, the percentage of the urban population living in slum housing fell a whopping 37.7 percentage points over the twenty-five year period. 

 

Meanwhile, the house price index, or price of housing relative to average disposable income per person declined by 25% worldwide since 1970.

The special rapporteur paints a dismal picture of housing in the United States, which is puzzling given a plethora of U.N. member states with genuinely dire conditions that go unmentioned, like Zimbabwe, Cuba, and Venezuela. Still, conditions are even improving in the United States. Housing has become less crowded and more comfortable: as household size has fallen, the median and average SF per home has consistently grown.

Aside from these omissions, the U.N. special report lacks a conceptual understanding of economics and finance. There are many glaring examples:

  1. Luxury apartment buildings are not the enemy of low-cost housing. Thanks to filtering, the addition of luxury apartments to a city means that lower-income households have additional, improved-quality housing when luxury options are built. 
  2. Housing is not an investment, and as long as bureaucrats continue to talk about it this way over-consumption will occur. As John Allison explains, “We live in a house, and therefore we consume the house. Houses are not used to produce other goods.” As we saw during the financial crisis, policies that encourage over-consumption of housing harm the poor.
  3. The implied belief that investors somehow conspire to build luxury condominiums worldwide highlights a gross misunderstanding of the way financial markets operate. Investors don’t decide what type of housing to build, private developers do based on local market signals. For that matter, developers don’t even really decide what to build, often local government’s zoning regulations decide for them.
  4. The reason that real estate is typically purchased by Limited Liability Corporations (LLCs) is not due to a conspiracy to anonymously purchase housing and “alienate” people from their communities. LLCs are used because tax codes and other government regulation encourage their use.
  5. Mortgages in the context described don’t become “speculative investments” due to changes in market conditions; they could not meet the standard for a speculative investment. Speculative investments are typically understood as a class of investments that are short-term in nature and based on asset pricing dislocation.
  6. Bondholders can’t own rental properties (unless they become equity holders through bankruptcy proceedings). Bondholders own debt, not equity.

In light of this confusion, the special rapporteur recommends “a full range of taxation, regulatory and planning measures in order to … prevent speculation and excessive accumulation of wealth.” It seems likely that if the U.N. had an understanding of the vast regulatory web that strangles the production of housing in the developed world, she might have come to a different conclusion.

Recently, some people have wondered aloud at the worldwide crisis of faith in elite international governing bodies. When the U.N. produces a report replete with economic and financial incompetence, an omission of counterarguments and counter facts, and brimming with ideological bias, it simply isn’t difficult to understand.

In two earlier posts on this blog, I described how President Trump said he had required the use of American steel in the Keystone XL and Dakota Access pipelines, while the reality seemed to be only an interagency consultation that would “develop a plan” on the issue and had some important qualifiers (only “to the maximum extent possible and to the extent permitted by law”).  Now Politico is reporting that any such requirement will not apply to Keystone:

The Keystone XL Pipeline will not be subject to President Donald Trump’s executive order requiring infrastructure projects to be built with American steel, a White House spokeswoman said today.

Trump signed the order calling for the Commerce Department to develop a plan for U.S. steel to be used in “all new pipelines, as well as retrofitted, repaired or expanded pipelines” inside the U.S. projects “to the maximum extent possible.”

By the White House’s judgment, that description would not include Keystone XL, which developer TransCanada first proposed in 2008.

“The Keystone XL Pipeline is currently in the process of being constructed, so it does not count as a new, retrofitted, repaired or expanded pipeline,” the White House spokeswoman said.

Assuming this report holds up (I’d like to hear it from additional White House sources), it is a small victory for free trade.  There is still a great deal of uncertainty on the direction of U.S. trade policy right now, but at least for the moment I have a bit of hope.  Cooler heads seem to have prevailed on this one issue.  Perhaps they will have similar success on other issues.

Raj Chetty, the head of Stanford’s “Equality of Opportunity” project, recently released a paper called “The Fading American Dream” co-authored with another economist, a sociologist, and three grad students. It claims that “rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s.” [Though the study ends with 2014, when most of those “born in the 1980s” were not yet 30.]

The title alone was sure to attract media excitement, particularly because the new study thanks New York Times columnist David Leonhardt “for posing the question that led to this research.” 

Leonhardt, in turn, gushed that Chetty’s research “is among the most eye-opening economics work in recent years.”  He explained that he asked Chetty to “create an index of the American dream” which “shows the percentage of children who earn more money… than their parent earned at the same age.”  The result, he concludes, is “very alarming. It’s a portrait of an economy that disappoints a huge number of people who have heard that they live in a country where life gets better, only to experience something quite different.”

“Another Chetty-bomb just exploded in the mobility debate,” declared a Brookings Institution memo: “Only half of Americans born in 1980 are economically better off than their parents. This compares to 90 percent of those born in 1940.”

At Vox.com,  Jim Tankersley proclaimed “The  American Dream [is] collapsing for young adults.”

“Sons born in 1984 are only 41 percent likely to earn more than their fathers, compared to 95 percent of sons born in 1940,” wrote USA Today reporter Nathan Bomey.  “If the American dream is defined as earning more money than your parents,” said Bomey, “today’s young adults are just as likely to have a nightmare as they are to achieve the dream.”

The Chetty study proved to be a politically irresistible story, since it appears to confirm a popular nostalgia for the good old days and belief that it has become more and more difficult to get ahead. But that is not what the study really shows.  What it really shows is:

First: Incomes were extremely low in 1940, so it was quite easy to do better 30 years later.

Second: Doing better than your parents is not defined by your income at age 30, but by income and wealth accumulated over a lifetime (including retirement).

Third: A rising percentage of young people remain in grad school at age 30, so their current income is lower than that of their parents at that age but their future income is likely to be much higher.

Consider those three points in more detail.

Regarding the First point, it should be no surprise that children born during the Great Depression or World War II did better than their parents. Of course they did. We don’t need an intricate statistical study to make such an obvious point.

I was born on a Texas Army base in 1942 where my father was a lieutenant earning $167 a month. That was not a difficult target for me to exceed in 1972.  

Comparing incomes of children and their parents at age 30 over many decades tells us more about the very low incomes of poorly-educated and poorly-employed parents in the early decades than it does about the incomes of their children more recently.  

Only 38.1% of Americans age 25–29 had a high school diploma or higher in 1940, compared with 75.4% in 1970. Only 25.7% of American age 18–24 were enrolled in college in 1970, compared with 40.5% in 2015.

To return to the “absolute mobility” of children born in the 1940s would require another 1930-38 Great Depression, another World War, and a massive loss of college degrees. 

Turning to the Second point, “Fading American Dream” depends entirely on an indefensible caricature of that dream—namely, as earning more than your parents did at a very young age (30).

The study claims “One of the defining features of the ‘American Dream’ is the ideal that children have a higher standard of living than their parents.”  But that means over a lifetime (importantly including retirement)—not just at age 30. Labor incomes of peak at age 50 for most college grads, and in the mid-50s for those with advanced degrees. Investment incomes commonly peak in retirement.

The Graph from Advisor Perspectives shows cumulative changes in real median income by age groups from 1967 to 2015. Median income rose much more at ages 45–64 than it did at ages 25–34, and the growth of median income has been fastest by far for those over age 65 (thanks in large part to rapid growth of tax-favored savings plans for retirement).

To judge yourself a failure at age 30 because your income had not yet passed your father’s income at the same age would be a psychological problem, not an economic problem.

Finally, switching to the Third point, a large and growing share of college grads now remain in graduate school past age 30, so (unlike their parents) they have little or no earned income. That would have been quite unusual at age 30 in 1940-80. The “average graduate student today is 33 years old. Students in doctoral programs are a bit older.”  Grad students have low current incomes at age 30, but high lifetime incomes.

An Urban Institute report finds “The share of adults ages 25 and older who have completed graduate degrees rose from eight percent in 1995 to 10 percent in 2005, and to 12 percent in 2015, growing from 34 percent to 37 percent of individuals with bachelor’s degrees.”

Most men born around 1940 went to work right after high school, assuming (often wrongly) they waited to finish high school.  By age 30 most men my age had many years of valuable work experience, known as “human capital” or on-the-job-training. Most of us married in our twenties and were in two-earner families with children by age 30.

Chetty and company compare incomes of children at age 30 with the ages of their parents when sampled sometime between the ages of 25 and 35.  Most parents of those turning 30 in the study’s last year (2014) were born during the Reagan years of 1983-89 when economic growth averaged 4.4% a year. To compare incomes between President Reagan’s boom years and President Obama’s prolonged slump reflects the poor economy of 2008–2014, not poor “mobility.”  Those born in 1984 turned 30 in 2014, when median household income was $53,718 in 2015 dollars—6.5% below 2007 and nearly the same as $53,367 in 1989 (when tax rates were much lower).  

The finding of a 2014 study by Chetty and Emmanuel Saez that “measures of intergenerational mobility have remained extremely stable for the 1971–1993 birth cohorts” is still credible and relevant.  Mr. Chetty’s latest 30-year parent-child comparisons involving those born from 1940 to 1984, by contrast, are not credible and not relevant.

In an effort to justify its massive global warming regulations, the Obama Administration had to estimate how much global warming would cost, and therefore how much money their plans would “save.” This is called the “social cost of carbon” (SCC). Calculating the SCC requires knowledge of how much it will warm as well as the net effects of that warming. Needless to say, the more it warms, the more it costs, justifying the greatest regulations. 

Obviously this is a gargantuan task requiring expertise a large number of agencies and cabinet departments. Consequently, the Administration cobbled a large “Interagency Working Group” (IWG) that ran three combination climate and economic models. A reliable cost estimate requires a confident understanding of both future climate and economic conditions. The Obama Administration decided it could calculate this to the year 2300, a complete fantasy when it comes to the way the world produces and consumes energy. It’s an easy demonstration that we have a hard enough time getting the next 15 years right, let alone the next 300.

Consider the case of domestic natural gas. In 2001, everyone knew that we were running out. A person who opined that we actually would soon be able to exploit hundreds of years’ worth, simply by smashing rocks underlying vast areas of the country, would have been laughed out of polite company. But the previous Administration thought it could tell us the energy technology of 2300. As a thought experiment, could anyone in 1717 foresee cars (maybe), nuclear fission (nope), or the internet (never)? 

On the climate side alone, there’s obviously some range of expected warming, often expressed as the probabilities surrounding some “equilibrium climate sensitivity” (ECS), or the mean amount of warming ultimately predicted for a doubling of atmospheric carbon dioxide. In the UN’s last (2013) climate compendium, their 100+ computer runs calculated an average of 3.2°C (5.8°F). A rough rule of thumb would be that this is also an estimate of the total temperature change predicted from the late 20th century to the year 2100.

That forecast is simply not working out. Since 1979, when global temperature-sensing satellites became operational, both satellite and weather balloon data show that the lower atmosphere is warming at about half the rate that was predicted. And in the area that is supposed to show the most integrated warming, in the tropics from about 15,000 to 45,000 feet, there’s two to three times less warming being observed than would be “forecast” by the UN’s models if they are run backwards from today. At the top of the active weather zone there, the forecast warming is a stunning seven times more than has been observed.

Since around the time that the last UN report was being written, a spate of scientific papers has been published showing that the ECS is quite a bit lower than the UN’s number, by 40-60 percent, depending upon the study.

It seems like there’s quite a conspiracy of nature when it comes to observed versus predicted warming, with various measures all telling us that we’re seeing about half as much warming as we are supposed to in the bulk atmosphere. Further, the Obama Administration assumed a distribution of possible warming that was way to hot at the extreme end, 7. 1°C or 12.9°F, a number that Science magazine recently said was “implausibly high” in a different model.

On the economic side, how much something will cost by the year 2300 requires some estimate of economic growth between now and then. It’s called the discount rate, and there are actually guidelines for how to do this put out in 2003 by the Office of Management and Budget. The higher the discount rate, the less that warming costs that far out into the future. OMB says that “you should provide estimates of net benefits using both 3 percent and 7 percent.”

The latter figure drove the cost of warming down too far for the Obama Administration’s liking, and the cost actually went below zero assuming 7 percent and an ECS not far from what may be the most realistic value. That means it could be a net benefit, something Denmark’s Richard Tol has been saying for decades, as long as it doesn’t warm too much. The Administration wouldn’t go near that, so, in contravention of the OMB guidance, they simply did not use the 7 percent rate, as Kevin Dayaratna of the Heritage Foundation notes.  

For more information on the social cost of carbon, take a look at my testimony from earlier this week before the House subcommittees on the environment and on oversight. A lot came to light in the hearing, which will go a long way towards an EPA justification to cease and desist on its onerous Clean Power Plan and other Obama Administration climate regulations. 

With a presidential administration that is disliked for myriad reasons openly pushing school choice, what had been kind of a cold war over choice for years has exploded into a hot one. And the tip of the anti-choice spear seems to be the New York Times. Last week it ran a piece by New America education director Kevin Carey suggesting that choice has been “dismal,” and doubled down on that yesterday with an attack on choice as an academic “failure.”

Is it a failure? First, the vast majority of random-assignment studies of private school voucher programs—the “gold-standard” research method that even controls for unobserved factors like parental motivation—have found choice producing equivalent or superior academic results, usually for a fraction of what is spent on public schools. Pointing at three, as we shall see, very limited studies, does not substantially change that track record.

Let’s look at the studies Carey highlighted: one on Louisiana’s voucher program, one on Ohio, and one on Indiana. Make that two studies: Carey cited Indiana findings without providing a link to, or title of, the research, and he did not identify the researchers. The Times did the same in their editorial. Why? Because the Indiana research has not been published. What Carey perhaps drew on was a piece by Mark Dynarski at the Brookings Institution. And what was that based on? Apparently, a 2015 academic conference presentation by R. Joseph Waddington and Mark Berends, who at the time were in the midst of analyzing Indiana’s program and who have not yet published their findings.

Next there is Ohio’s voucher program. The good news is that the research has been published, indeed by the choice-favoring Thomas B. Fordham Institute. And it does indicate that what the researchers were able to study revealed a negative effect on standardized tests. But Carey omitted two important aspects of the study. One, it found that choice had a modestly positive effect on public schools, spurring them to improve. Perhaps more important, because the research design was something called “regression discontinuity” it was limited in what it was able to reliably determine. Basically, that design looks at performance clustered around some eligibility cut-off—in this case, public schools that just made or missed the performance level below which students became eligible for vouchers—so the analysis could not tell us about a whole lot of kids. Wrote the researchers: “We can only identify with relative confidence the estimated effects…for those students who had been attending the highest-performing EdChoice-eligible public schools and not those who would have been attending lower-performing public schools.”

That is a big limit.

Finally, we come to the Louisiana study, which was random-assignment. Frankly, its negative findings are not new information. The report came out over a year ago, and we at Cato have written and talked about it extensively. And there are huge caveats to the findings, including that the program’s heavy regulations—e.g., participating schools must give state tests to voucher recipients and become part of a state accountability system—likely encouraged many of the better private schools to stay out. There are also competing private choice programs in the Pelican State. In addition, the rules requiring participating private schools to administer state tests are new, and there is a good chance that participating institutions were still transitioning. Indeed, as Carey noted, the study showed private school outcomes improving from the first year to the second. That could well indicate that the schools are adjusting to the change. And as in Ohio, there was evidence that the program spurred some improvements in public schools.

Choice advocates should not cheer about the latest research, but in totality, the evidence does not come close to showing choice a “failure.” Indeed, the evidence is still very favorable to choice. And the primary value of choice is not necessarily reflected in test scores: it is freeing families and educators to choose for themselves what education is best.

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