The Pervasive Effect of Priors: Part Four
A New York Times front page last week prominently featured a story, U.S. Opens Spigot After Farmers Claim Discrimination, that shows many people in a very bad light indeed. A small, focused program intended to compensate a small number of people, true victims of discrimination in farm lending, has mushroomed for various reasons into a huge money pit, “compensating” those who may very well not have suffered discrimination.
Even those who generally think well of government would, I think, be hard pressed not to be distressed by this story. Government responded to political pressures to include more and more people, and require less and less documentation, resulting in a multi-billion dollar giveaway. I want to focus here on views of those taking “advantage” of the compensation scheme to seek compensation when they were not injured.
Different people have different views as to how people respond to incentives in general and monetary incentives in particular. Some think anyone would ‘do anything for a buck’ – including have children, get/not get married, get more healthcare, or file specious discrimination claims. Some people might think some subset of people (‘greedy’? ‘rational’? more on that later) would do anything for a buck. Some people might think that incentives matter ‘at the margin’ but that someone could not be persuaded to do something very much ‘against his nature.’
There’s also a role for self-deception here: a person who is motivated by a monetary incentive may not want to admit this, and therefore might convince herself that she was doing the incentivized act because it was right/what she really wanted to do, not because of the incentive. Which view a person has depends in part on how she sees herself: what does she see herself as being willing to do for money? It may also depend on her broader view as to whether ‘being willing to do many things for money’ is a bad thing or a good (“rational”) thing.
With respect to what motivates somebody else, a person may think ‘this person is like me—one of ‘us.’ ‘If she is doing x, her motivation is probably what mine would be.’ Obviously, people are not monolithic, and equally obviously, there will be enormous differences in the monetary opportunities people have and how they experience and react to them. There are many things nobody would do no matter how much money was being offered.
Some of the people making specious claims to compensation must know their claims are specious. How do they understand (or justify) what they are doing? Some possibilities might be: ‘Everyone games the system when they can’? Many people get lots (and lots more than they deserve) from the system- I get lots less than I deserve from the system, so it’s fine for me to game the system now? Or simply ‘it is legitimate to try to get whatever money the system makes available.’ Or????
Maybe when all one’s friends and relatives are doing something, a person might just do it almost automatically, without having any sort of rationalization? Recall the LIRR disability scam, in which a huge proportion of people working on the LIRR and nearing retirement age were able to get falsely certified as disabled so that they could simultaneously get retirement and disability payments from the Long Island Railroad. The scam’s price tag has been estimated at $1 billion.
How might the NY Times story affect one’s worldview? Somebody who thinks government generally does a good job, and that people seeking compensation generally really have been wronged, may be actively appalled. He may wonder whether his priors need to be adjusted; however, he will, I suspect, probably not conclude that they need to be jettisoned.
But for many people, the story will accord with their priors to the contrary. They may see it as making the contrary prior untenable – ‘how can anyone think it’s not often like this???’. And so our different worldviews remain different—something that continues to surprise us.