Weekend Economists Waiting for Godot March 7-9, 2014

[Demeter]

17. The Hammock Fallacy PAUL KRUGMAN

http://www.nytimes.com/2014/03/07/opinion/krugman-the-hammock-fallacy.html

... it helps to recall something Mr. Ryan said two years ago: “We don’t want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” There are actually two assertions here. First, antipoverty programs breed complacency; that is, they discourage work. Second, complacency — the failure of the poor to work as much as they should — is what perpetuates poverty.

The budget committee report is almost entirely concerned with the first assertion. It notes that there has been a large decline in labor force participation, and it claims that antipoverty programs, which reduce the incentive to work, are a major reason for this decline. Then come 200 pages of text and 683 footnotes, designed to create the impression that the scholarly research literature supports the report’s claims.

But it doesn’t. In some cases, Mr. Ryan and colleagues outright misstate what the research says, drawing outraged protests from a number of prominent scholars about the misrepresentation of their work. More often, however, the report engages in argument by innuendo. It makes an assertion about the bad effects of a program, then mentions a number of studies of that program, and thereby leaves the impression that those studies support its assertion, even though they don’t.

What does scholarly research on antipoverty programs actually say? We have quite good evidence on the effects of food stamps and Medicaid, which draw most of Mr. Ryan’s ire — and which his budgets propose slashing drastically. Food stamps, it seems, do lead to a reduction in work and working hours, but the effect is modest. Medicaid has little, if any, effect on work effort...