Half Changed World

The NY Times reported this week on a study that looked at the effects of New York City's requirement that chain restaurants post the calorie counts of each item on the menu.  The researchers looked at fast food restaurants in high poverty neighborhoods, and compared purchases in New York and Newark.  They found that the average purchase in New York was of more calories after the law was in effect than before, while there was no change in Newark.

The article offers a few hypotheses for why this might be the case.  One possibility is that shoppers were more interested in a good value than in nutrition.  I can testify that, at least for my husband, when we went to Nathans over the summer, the posted calorie counts encouraged him to buy a large drink rather than a small, because he could see that it was  more than twice as much beverage for only a dollar more.

I would also suggest, from behavioral economics, that there is probably an anchoring effect from some of the really absurd things on the menu.  About 1/3 of those who noticed the calorie signs said that they affected their purchases.  Well, people do feel like they took nutrition into account when they pass up the 1,000 calorie triple megaburger with cheese and get the double burger instead.

Some of the people quoted in the article suggests that the calorie postings will have more effect over time.  I'd be highly surprised if that were true.  My guess is that over time, people will pay less and less attention to the signage.

I also think that the law has less impact because it only applies to chain restaurants.  I don't think anyone is surprised to learn that Big Macs are bad for you.  I think people would be more surprised by how many calories are in things that sound like they might be healthy.  My sense is that most restaurants cook with far more butter and oil than almost anyone uses at home these days.

This morning, we were woken at 8.15 am by the phone ringing.  It was an automated message from T's credit card company, reminding him that he had a payment due, and offering him the opportunity to make the payment by phone.  Since they charge for the phone payments, he declined, but he did turn the computer on right away to make a payment before it was overdue.

He clicked onto our bank's site, only to discovered that it had been closed yesterday by the Office of Thrift Supervision, just like in the This American Life episode about what happens when the FDIC takes over a bank.  He was still able to make the electronic payment, but it definitely made us pay attention.  Last fall, when lots of banks were failing, I did wonder about the security of this bank — which was essentially entirely online, with just one actual branch — but after double checking that it was covered by the FDIC, I chose not to worry about it.  I'm sort of surprised that it failed now — isn't the banking crisis supposed to be over?

Our account is now part of Stearns Bank, whose website indicates that they've taken over no less than four failed banks.  I'll wait and see what terms they offer us — what I most liked about ebank was that I could use any ATM, and they would reimburse us for the fees charged by the bank. Otherwise, I'm not sure what bank I'll move to.  Probably Schwab, since we already have a brokerage account with them.

Can someone please tell me why the Washington Post thought that this story ("Squeaking by on $300,000") deserved to be on the front page of Sunday's paper?  It's not a terrible story, not like the Times' claim that pot bellies are hip, but I don't think it qualifies as serious news by any standard.

It's clear that almost everyone the reporter talked to was totally unwilling to be quoted for the record.  That probably showed good judgment — it's hard to imagine any possible upside to being featured in this story.  It made me wonder what Steins was hoping to get out of it, since she struck me from the article as being more or less sane and having some sense of perspective.  She has to have known that she's going to get trashed by a significant share of the people who read the article.

Moreover, it's not at all clear to me that Steins is really all that affected by the recession.   Ok, so her bonus is less.  But if she's pulling $50,000 a year out of savings to make her budget balance, it sounds like she'd still have a hole of $30,000 to $40,000 even with her usual bonus.  Her real problem is that she and her ex-husband bought a house that she just can't afford on her own, even with very generous alimony/child support.   And she bought him out in 2006, close to the peak of the market.  If the real estate market was better, maybe she'd downsize and get out of the hole. But it also sounds like she doesn't want to move her kids out of their school.

Fundamentally, I thought this article mostly illustrated the logic to the 60 percent solution.  If your fixed expense are such a high fraction of your income, you can squeeze the little things to death — not buying a fancy cell phone for your kid, going longer between hair colorings — and it doesn't fundamentally change the big picture.  Unless Steins has enough savings to keep pulling out $50k a year for the next decade, she needs to bite the bullet and go after the big things — the house, the nanny, the second car.

With Congress about to pass restrictions on some of the ways that credit card companies make life miserable for unwary users, the credit card companies are claiming that they're going to have to raise fees, curtail reward programs, and eliminate grace periods on those who pay off their cards every month.

This is obviously BS.  If the credit card companies were losing money on people who pay off their cards every month, they wouldn't be giving them credit.  They're making money now, even with the grace period and reward programs, because they charge merchants a cut every time someone uses their credit card.  And if they could make more money by eliminating the reward programs, etc., they would have done so already.  If they start charging fees, they'll just drive their customers away.

The NYTimes has an interesting discussion on the subject going, with lots of people saying that if credit card companies started charging annual fees, and/or eliminating the grace period, they'd just stop using credit cards.  I'm in this category — I use my credit card for convenience, and could switch to a debit card without too much hassle.  I'd need to keep more of my money in the checking account to ensure against overdrawing, but could presumably find an interest-bearing checking account to use.

That said, there will be losers (other than the credit card industry) as a result of this bill. There will be fewer card offers with low teaser rates, and the people who successfully juggled different accounts to always keep the interest low will be worse off.

The credit card industry may also try to squeeze more out of merchant fees.  I'm not quite clear on how the system of merchant fees isn't a violation of anti-trust law, but they've got a pretty good monopoly going on.  And merchants are afraid they'll lose huge chunks of their customer base, or that customers will spend less, if they don't take plastic.  I noticed last summer when gas prices were really high that some stations were offering discounts for cash — I hadn't seen that in a while.  (Visa and Mastercard don't allow stores to charge a transaction fee for using them, but they do allow discounts for cash.)  I'd assume that if they increase the fees enough, more stores will start offering discounts for cash.

Could you live without your credit card?  And how much of a discount for cash would it take to get you to switch over?

Last Friday, David Brooks had an op-ed in the New York Times with the headline The Harlem Miracle, discussing an evaluation of the schools run by the Harlem Children's Zone. While lots of people have been excited by the concept of the HCZ — it's the basis for the "Promise Neighborhoods" idea that Obama talked about in the campaign and included in his budget — there hasn't been any hard data about effectiveness until now.  Here's the underlying study* which really is quite exciting.

The main findings of the study are:

• For the middle school students, there were really enormous gains in math scores, although they took several years to kick in.  The gains in language arts scores were much more modest.  These findings are based on comparisons between those randomly selected for admission and those who applied but were randomly denied, so they're about as strong as you get.
• The elementary school impacts were stronger on language arts, somewhat smaller on math, but still impressive.  Because few students who applied for the elementary schools were denied admission, these findings are based on a different statistical approach (instrumental variables), which is somewhat less reliable.
• The authors did not find any significant effects on test scores for graduates of either Baby College or Harlem GEMS (the preschool program run by the HCZ).  They also note that the middle school impacts were as strong for kids who lived outside of the Zone as for those who were in it, suggesting that the full community package was not essential to the model.

So, what does this mean?  To start with, it refutes the claims of some that there's nothing you can do to help these kids do better in school and society. (The strong version of this claim is that IQ is genetic and can't be affected by anything you do, the weaker version is the claim that by the time the kids are in middle school it's too late.)

Brooks uses this finding to argue for "an emerging model for low-income students" where "schools create a disciplined,
orderly and demanding counterculture to inculcate middle-class values."  The thing to notice here is that Brooks is lumping HCZ and KIPP together.  Both models certainly share some features, including extended school days and years, and very high expectations.

However, if you read Whatever it Takes, one of the main themes is that Geoffrey Canada  (who runs HCZ) was constantly fighting his board, who thought they should just bring KIPP in to run these schools.  Canada felt that KIPP was too focused on rescuing a few students — and encouragin these students to define themselves in opposition to the neighborhood culture — whereas he wanted to change the neighborhood culture.  He also fought against explicitly teaching behaviors like making eye contact, arguing that no middle class school does that.  So, I don't know whether Canada gave in on these points, or if Brooks is distorting HCZ to fit his agenda.

But presumably, other people do have a good idea of what exactly is going on the HCZ schools.  Is this model then broadly replicable?  That depends on a bunch of questions:

• Are there enough good teachers out there who are willling to work in low-income neighborhoods, with the kind of hours required, and under intense pressure to achieve good test scores?  (HCZ had extremely high turnover of teachers.)  And are we, as a society, willing to pay enough to recruit teachers to do this?
• Are the kids willing to work as hard they have to to succeed in this model?  To give up afternoons and summers and weekends, and to work harder in school than they ever have before?
• How much of this success is dependent on Canada himself?  His personal charisma is clearly part of what made both teachers and students willing to work so hard.  And his personal story makes him a very convincing messenger for the idea that if you work hard you can succeed, even coming from poverty in Harlem.  No one is going to give up their weekends and summers unless they're convinced that it will make a difference.

* It drives me crazy that the Times never includes links to underlying sources.  But it cracked me up that Judith Warner's blog last week included a linked definition for "muffin top."

Others on this column:

• Laura at 11d.
• GothamSchools
• Thoughts on Education Policy

Today's New York Times had an article on unemployed financial-industry men who are spending more time with their kids.  It's all too typical of the Times' coverage of parenting, in that the reporter seems to have noticed a pattern among her neighbors and decided that it was a trend.  Far more interesting than the article is that pretty much every comment posted on the article said:

• It's called being a father.
• Why is this worth invisible when done by women but newsworthy when done by men?

And seriously, it's time to retire the "Mr. Mom" references.  It's just lazy copyediting.

I ran across this LA Times article today, about (formerly) middle-class workers who have lost their jobs and are shocked to discover that their families don't qualify for most public benefit programs.  In many cases it's because with unemployment benefits, their incomes are still too high to qualify for food stamps or cash assistance; in other cases, they would qualify based on income, but have too much assets — especially cars — to qualify.

I don't know whether this makes those rejected for benefits more or less supportive of these programs.  I can imagine some people thinking "gee, if I can't live on this, how can people live on far less?" and supporting expansion and other people thinking "well, if these programs won't help me when I really need it, what good are they?" and supporting cuts.

Since the Recovery Act passed, I've been spending a lot of my time at work writing about the temporary assistance (TANF) provisions and trying to convince states to use that money to expand benefits for the neediest families.  It's been a tough sell.  Even though any increases would be 80 percent federally funded, state budgets are so tight that in many cases, they're saying they can't find the 20 percent.  And states are nervous about expanding programs with money that is designed to be temporary, because it's always hard politically to cut services back later.  I'm frustrated, but I get it — I know how hard it is to sell any expansion of "welfare."

That said, I'm really shocked by how hard it is in some states, including Virginia, to get the unemployment insurance expansions passed.  For those who believe that welfare is bad, but contributory social insurance, like social security, is good, UI should fall on the "good" side of that divide — it's based on wages and subject to a history of employment. The fact that it's still under fire makes me somewhat more skeptical about the claims that making programs universal will protect them from being attacked as "welfare."

That's pretty much the meaning of the House of Delegates vote last week to reject the changes needed for Virginia to receive an additional $125 million of the unemployment insurance modernization funds from the Recovery Act.  (Virginia already has an alternative base period in place, so we automatically get the first $62 million.)  They claim it's because the expansion of benefits would cause taxes on business to go up in the long run.  What they don't tell you is that the Recovery Act provides enough funding to cover the costs of this expansion for 18 years!

Specifically, the two provisions that they shot down last week would have expanded eligibility to people who are only seeking part-time work (because after all, if you only work part-time, your family must not really need the income, right?) and provided extended benefits to people who are training for a new job (because what the 21st century economy really needs is lots of unskilled labor). 

Here's a video of Tim Kaine's reaction and here's a petition to express your outrage. 

I just saw this article about whether the stronger European safety net means that they don't need separate stimulus packages.  I don't really know how much spending is needed to turn their economies around, but would note that less than half of the American Recovery and Reinvestment Act could even vaguely be described as safety net spending (and only that much if you include all of the individual tax credits in that category).

But, I think the broader point, that the European programs are far more countercyclical the US programs (meaning that they automatically grow during hard times) is really important.  There are a couple of reasons for this.  The obvious explanation is that their social programs are far more generous than ours in general.  But I think it's equally important — although not as obvious — that several of our major programs — especially Unemployment Insurance, TANF, and Medicaid — are administered at the state level.   By constitution, most states aren't allowed to run budget deficits, so they're forced to cut services or raise taxes just when people need help the most.

The Federal government often chips in to help states when times are bad, but that requires specific legislative action, which often creates political complications.  There's a program — the Extended Benefits program — that is supposed to provide extra unemployment insurance to workers in high unemployment states, but the mechanics of it are so messed up that in practice, Congress always comes in and passes a separate program.  And that often happens well after we're in a recession — the one good thing about this one is that it got people to pay attention relatively early.  Obama's budget includes language about fixing the Extended Benefit triggers, which made this policy wonk happy.

The Times article that I linked to above mostly focuses on a German program called “Kurzarbeit,” or short-work, which allows firms to cut workers hours instead of laying people off, and the government makes up a portion of the reduced wages.  There's actually a U.S. version of that in some states, called work sharing, although almost no one has heard of it.  It's a good idea.

I can't find the link now, but last week I heard a story on NPR about a PTA that was buying paper for the teachers to use in the classroom, with money they had been saving for new playground equipment.  The reporter was shocked that this was necessary, but I went to public schools in New York City in the 1970s, and I definitely remember the school running out of paper (for the mimeos!) by late in the term.

Laura at 11d linked to this article about a Long Island school district where parents raised over half a million dollars to preserve school sports and other extracurriculars after the school system's budget was turned down.  Laura wonders if this undermines school equity.  I'm less worried about that situation, where the largess seems to have been spread across the whole district, than the situation you sometimes see where parents raise hundreds of thousands of dollars for specific schools, sometimes hiring extra teachers.  They're willing to do it, because it's still cheaper than private school.

Our school PTA's total annual budget is about $25,000, with the largest fundraisers being sale of Sally Foster giftwrap, a silent auction, and a craft fair.  When the economy gets better, I want to look into putting the big items for the auction online and marketing them outside the school community — we get some really nice donations, but there's just not enough people in the school who can afford them for them to go for more than the minimum bid.  But we sweat the small stuff too.  We had an election day bakesale, and we collect General Mills box tops.

What do we pay for?  The two biggest expenses are teacher workshops and training, and buses to let each class go on two field trips a year.  We buy some computer equipment for the school (smart boards) and books for the school library.  We bring in visiting authors, and give all the teachers small stipends to cover some of the things they buy for the classroom, which otherwise come out of their pockets.  It's not a ton of money, but it makes life measurably better for the school.

Oh yeah, and we also pay for cheese sandwiches for kids who don't have lunch money.  Unlike in some places, this hasn't been a big deal.  My guess is that it's because slightly more than half of the school qualifies for free or reduced price lunch, so the kids who wind up getting cheese sandwiches aren't particularly poor.  They're either kids whose families are having sudden hard times and haven't gotten the paperwork in, or they're kids who just forgot to bring in lunch money.  We do send a note to the parents, asking them to reimburse the PTA and giving them info on how to apply for school lunches. 

(By contrast, with hindsight, I'm horrified at the memory of the oh-so-progressive elementary school I attended, where only the kids who ate "hot lunch" sat in the cafeteria, and everyone else ate in the auditorium.  The hot lunch was notoriously awful, and I'm sure that everyone who ate it was getting the free lunch.  Sigh.)

What does your PTA pay for?  And do you think it's appropriate?