Lessons from Exchange

Hannah Orban, Fulbright Future Scholar, Funded by The Kinghorn Foundation | The University of Sydney/University of Michigan

Unintended Consequences: Lessons from Fulbright and Policy

With any risk worth taking, you can never be totally sure of the outcome. You can run the numbers, weigh up your options and research the best way to do it, and yet, there’s always an element of chance that means the result is uncertain.

My experience as a Fulbright scholar taught me that sometimes when you take a risk, the outcome can be much better than you ever expected. Through my graduate studies of public policy, I also learned that with any risky venture, there’s also a chance the outcome could be much worse than you hoped.

Public policy is all about outcomes. As policymakers, we investigate problems, interrogate the evidence base, and try to design policies that progress the public good, but sometimes, good intentions turn into dreadful unintended consequences.

One such case occurred in US disability policy during President Clinton’s sweeping welfare reforms. This case study is important to me for three reasons: firstly, it helps to answer one of the questions of my Fulbright project, which asked how models of disability in legislation and policy impact the socioeconomic outcomes of people with disability; secondly, it exemplifies how economics, a field I came to love during my Fulbright program, can help us evaluate and design policy that achieve positive outcomes; and thirdly, it is a reminder that while outcomes are always uncertain when we take risks, sometimes the outcomes are better than we expected, and this has been true of my Fulbright experience.

Lessons from Welfare Reform, Economics and Disability Policy

In 1996, President Clinton introduced the Personal Responsibility and Work Opportunity Reconciliation Act, more commonly known as ‘welfare reform.’ There was bipartisan agreement at the time that cash welfare was dysfunctional, and it had to change. The problem, the President said, was that people desperately want the chance to work. They want to be independent, not dependent; they want a pay cheque, not a welfare cheque.

Based on this reasoning, you would be forgiven for thinking that welfare was just free money in exchange for not working. If the choice is between working and getting paid, or not working and getting tax-funded welfare, then it seems obvious that President Clinton should be reforming welfare.

In pursuit of this outcome, the President took a risk. He introduced a policy changing the rules of the Supplemental Security Income (SSI) program, a means-tested, cash transfer program that supports people with disabilities who cannot work. Children with disability from very poor families can also receive SSI, and it can be a vital source of income that helps with necessities like staving off eviction and hunger, paying for much-needed treatments or subsidizing time off work for parent-carers.

The President introduced a policy that required children receiving SSI to be reviewed at age-18 to see if they were still eligible for the program as adults. The critical question here is who does and does not deserve SSI assistance? Although it is fair and reasonable to check eligibility for government programs, the implementation of this policy yielded troubling outcomes.

Professor Manasi Deshpande, an economist at the University of Chicago, and Dr Michael Mueller-Smith, an economist at the University of Michigan, recently ran the numbers on the long-term outcomes of age-18 reviews. The authors found that young disabled people removed from SSI at 18 not long after 1996 are ‘twice as likely to be charged with an illicit income-generating offense than they are to maintain steady employment at $15,000 per year in the labor market.’ Rather than pushing people off welfare so they would earn a pay cheque, instead, this policy pushed many young disabled people off what was likely to be the only source of legitimate income available to them.

Moreover, Deshpande and Mueller-Smith find that the early loss of SSI benefits permanently increased criminal activity through the adult lives of former SSI recipients. On average, the annual likelihood of incarceration for this cohort increases by 60 percent over the two decades post-removal. Their data suggests that the uptick in criminal charges is motivated by income generation, indicating that they struggled to source income from work.

The unintended consequences of this policy couldn’t be farther from what policymakers intended. Policymakers wanted the age-18 reviews to push young people with disability off welfare and into the paid workforce. Policymakers wanted to save money by reducing welfare expenditure; instead, the costs of incarceration, administration, police, and the courts, as well as the costs to victims, likely outweighed any savings for the public purse.

The fear that receiving SSI benefits would disincentivize people from being employed has persistently influenced the design of disability welfare policy – yet, we should have been twice as fearful that taking SSI benefits away would lead young people with disabilities to prison.

Underpinning a policy of aged-18 reviews is a theory called the ‘economic model of disability.’ Disability studies, the field that examines what disability is, what are its consequences, and how we perceive it, has described several models of disability over the last half century. The economic model defines disability by its ‘disabling effects’ on someone’s ability to get a job. It focusses on a person’s ‘deficits’ and blames the individual’s impairment as the reason why they can’t find work. So for policy, the economic model says that its critical we figure out who can work, and who cannot.

Compare this to the culturally dominant social model of disability, which says that although people have impairments, it is society that disables them through physical, social, legislative and economic barriers. In the social model, society is the problem, while in the economic model, disability is the problem.

As an aside, it is worth noting that although it is called the economic model of disability, it does not describe how the field of economics views disability. As the Professors Deshpande and Mueller-Smith show in their research, economics tends to produce far more nuanced views of disability in society than merely looking at a person’s capacity for work.

The economic and social models coexist in our society and institutions, and yet they have vastly different implications for policy solutions. Consider the problem of high rates of unemployment for workers with disability – an issue in both the United States and Australia. If we adhere to the social model of disability, then the problem is with society. Policies we could choose to solve this problem include tax incentives to encourage employers to overcome their discriminatory attitudes and hire disabled workers; or we might create subsidies for reasonable workplace accommodations to make jobs more accessible (and less disabling) for workers with disability. However, if we adhere to the economic model of disability, our policy solutions change dramatically. With the economic model, the first thing we would want to do is work out who can and can’t work, which requires assessing an individual’s impairments and diagnoses to see if they could get work. Notice that this does not involve asking the workplace to adjust so that it’s more inclusive – it just asks whether the individual can work.

In the context of SSI, the economic model of disability looked only at whether or not a person’s impairment stopped them from working. If their disability prevented them from working, then they were eligible to receive SSI. However, if there were even the faintest possibility that someone could get a job, the SSA deemed them ineligible for SSI at their age-18 review.

This narrow model considers the person’s disability as the problem, and fails to account for the social, macroeconomic, systemic and physical barriers that prevent young disabled people from finding work. This model of disability is grossly asymmetrical, and its dreadful miscalculation in the implementation of age-18 reviews has created decades of costs, hazards and hardship for society and people with disabilities.

Through my Fulbright program, I realised that good policy begins with really understanding the problem. Too often, people with disability are stigmatised as incapable of contributing to society, or as cons who are trying to swindle the welfare system. Yet, the age-18 review policy might have worked better if policymakers had interrogated the labour market and education system to see if young people with disability actually have the opportunities and resources to gain and keep employment.

Rather than assuming people with disability are the problem, we must understand all of the barriers people face, like discrimination, segregation and inaccessibility. Only then can we avoid devastating unintended consequences, and instead, achieve outcomes that are even better than we expected.

Lessons from Fulbright in Unexpected Joy

Not all uncertain outcomes end in sorrow. Sometimes, taking a risk can pay off in totally unexpected and wonderful ways.

My time as a Fulbrighter has brought countless, unexpected joys. The American people continued to surprise me with their warmth, earnestness, work ethic and hospitality. My program of study was more challenging and rewarding than I expected, and transformed the way I think about and work on public policy. And living in a climate where winter days regularly reach -15 degrees Celsius was surprisingly fun and beautiful.

Perhaps the most unexpectedly joyful outcome of my Fulbright program was studying economics.

Economists and economics get a bad rap. One Professor I met joked that people become economists because they lack the charisma to be accountants. Worse still, economics is sometimes associated with sterile and unsophisticated understandings of the world, such as the economic model of disability.

While the ‘economic’ model of disability is narrow, the field of economics is vast and practical. Deshpande and Mueller-Smith’s research shows just how insightful economics can be for analysing and improving policy outcomes, including disability policy. My work with Professor Wolfers writing lectures in economics was some of the most challenging, engaging, intellectually stretching and joyful work that I’ve had to chance to do. Through teaching economics, I deepened my understanding and love for it. Working with Professor Wolfers, a Fulbrighter, Australian and renowned economist, was something I never expected I would do during my Fulbright program. And yet, with my tuition expenses covered by my generous scholarship, I was free to work on this exciting project and make lifelong connections with Professor Wolfers and his co-author and partner, Professor Stevenson.

Moving to the US to take on two years of graduate study is both a rare privilege and risk. Although I hoped for a good outcome, the unintended consequences of my Fulbright program have been far more exciting, challenging and exhilarating than I ever expected. Thank you, Fulbright!