Helping people in the short term may lead them to make decisions that harm them in the long run. No, this isn’t some cranky diatribe against the welfare state or an argument for tough love. It’s more a plea for activists and politicians to look beyond the intended impact of do-good laws and to seriously consider trade-offs and potential unintended consequences.

The challenge is to be guided by a moral compass but to resist the pull of moral indignation. Moral indignation tends to make us think in generalities, impairing our ability to think clearly about what might actually happen if the law went our way.

Take the push to raise the minimum wage to the level of a “living wage”. The idea is that a full-time wage should be enough to support one’s basic needs. Leaving aside issues of feasibility and labor market ripple effects, I’ll focus on how too-high minimum wage laws could reduce college graduation rates – thereby undermining the long term earning potential of millions. This makes intuitive sense: for some young people, if you can make a decent wage without college, why go to all the trouble of powering through what feels like endless coursework? And when you’re young, a “living wage” is a good enough wage, especially if you don’t have children.

But my argument isn’t based on intuition – it’s based on research. A few years ago, Toby J Park (now an assistant professor at Florida State University) tracked the progress of 38,000 community college students in Texas. One of the things he looked at was how wages affected academic success. He found that getting a raise made it more likely a student would take a break from school (“stopping out”) and less likely she would complete a college degree. This effect was highly significant. According to Park:

“While a percent increase in wages has a roughly 4 percent effect on the odds of stopping out, we see a whopping 13 percent decrease in the odds of graduation.”

The problem was that getting raises exacerbated the natural tendency of young adults to discount future benefits in favor of present gratification. Specifically, the present – in the form of wages – became more gratifying, reducing the appeal of sacrificing for the future. Students who got raises were more likely to increase their work hours, which made going to school even more onerous than it already was. I would imagine this effect was more pronounced for students who struggled academically – in other words, those who had the most to gain from staying in college.

No one’s saying poverty’s good for college students. This isn’t an either/or situation, e.g., either you’re for the living wage or you think people being poor is ok. That way of thinking is typical of minds gripped by moral indignation: narrowly focused and categorical, unable to grasp the bigger picture, responsible for a lot of bad ideas on how to make the world a better place. Bad ideas like the living wage.

Reference:

Park, T.J. (2012). The Role of the Community College in Texas: The Impact of Academic Intensity, Transfer, and Working on Student Success. Unpublished doctoral dissertation, Vanderbilt University.

Paul Fain Third Try Isn't the Charm https://www.insidehighered.com/news/2013/11/15/students-are-unlikely-graduate-if-they-stop-out-more-once-study-findsAccessed 12/3/16.