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A New Model?

Robert Haveman

In their provocative article, Bowles and Gintis presume that the US welfare state is in trouble, and offer both an explanation and a remedy. Their explanation, an alternative to that of "egalitarians" who find that their altruism message falls on deaf ears, rests on a view of political dynamics in a heterogeneous population of individuals who are in varying degrees "selfish, reciprocal, altruistic, and spiteful," and is cast in a new model of human behavior--Homo reciprocans as opposed to Homo economicus.

In their view, public support for the welfare state has withered not because altruism has died and self-interest has become dominant, but because this diverse population places weight on two characteristics of public sector programs, both of which must exist if political support is to be maintained. First, the public program must direct its benefits to those who most need them: assistance must meet the "basic needs" of "deserving" people. Second, there must be "cooperation" between the donors and recipients reflecting common adherence to social norms or, better yet, joint action to secure these objectives. When these characteristics do not exist, the diverse donor population not only withdraws support, but may even incur costs as it "punishes" those who violate these norms. In this "homo reciprocans" framework, the level of support provided (and punishment imposed) depends upon the "social distance" between donor and recipient. Bowles and Gintis present support for their view from a variety of sources ranging from anthropology to historical accounts of collective struggles to laboratory experiments designed in a game--theoretic context to evidence from public opinion polls.

Given this perspective, it follows directly that any waning of public support for welfare state programs is due to the perception of donors that the beneficiaries of public programs (e.g., welfare) behave counter to accepted social norms. While I find this framework convincing as an explanation of some welfare-state policy developments, I am unconvinced about its generality as a model for understanding the evolution of welfare-state policy more generally.

First, I fail to understand why the insights offered by the authors require the substitution of a new model of basic human objectives--Homo reciprocans--for the standard Homo economicus. The authors' story about the decline of the welfare state can be derived just as well from that old self-interested maximizer whose utility is positively related to the economic well-being of others (or negatively related to being taken advantage of by others). We simply need weights on these arguments that are inversely related to the social distance between donor and recipient. In sum, while the Homo reciprocans model can indeed help us to understand some types of human behavior, it is an unnecessary contrivance for Bowles and Gintis's purposes.

Second, Bowles and Gintis propose that the US welfare state is eroding, "in trouble." But is it? From 1980 to 1993, a period covering the entire Reagan era, per capita public social welfare expenditures (public assistance, social insurance, health, education, housing, and veterans) grew from $3,600 per person (in 1993 dollars) to $5,200 per person. (Only veterans benefits decreased over this period.) As a percent of Gross Domestic Product, these expenditures increased from 18.6 to 21.1 over the period, and as a percent of total government spending they increased from 57 to 67. Moreover, if one looks only at those means-tested programs whose benefits are targeted at working-age families with children headed by an able-bodied person, benefits have grown from $50 billion (in 1995 dollars) in 1975 to over $100 billion in 1995; from 1.2 percent of GDP to 1.4 percent. Moreover, there is little evidence that this larger volume of expenditures is less targeted on those at the bottom of the distribution. Indeed, in several states that have responded to the 1996 welfare reform legislation (e.g., Wisconsin), aggregate expenditures on poor families have increased, despite drastically reduced numbers of recipients. This doesn't sound like a welfare state in decay.

Yet something is clearly happening to the welfare state: its basic objectives have been increasingly challenged in public discussions. Perhaps this is what the authors read as its decline. For decades, the basic objective of social policy has been to ensure that citizens have sufficient income to meet a socially-accepted minimum level of living. Social Security programs did this by publically insuring people against life events associated with economic hardship. And, welfare programs provided cash and in-kind support to those (in certain "categories") whose incomes in fact fell short of this minimum standard. The nation's official poverty measure also reflects this objective.

Recently, however, a growing number of critics have emphasized the norm of individual responsibility and independence (as opposed to reliance on government programs), and this discussion has had inevitable implications for the welfare state. The 1996 welfare reform legislation--which eliminated entitlement to means-tested cash benefits, imposed time limits, and carried the message that people had to learn to get by on their own through market work--is one example of enforced self-reliance. Proposals for the privatization of Social Security (implying that people had to save prudently for their nonworking years, manage wisely these savings, and then rely on these private accumulations for support when elderly), medical savings accounts as a replacement for Medicare benefits, the shift from defined benefit to defined contribution pension policies, and the emphasis on loans rather than grants to cover higher education costs are other manifestations of this emphasis on self-reliance.

If these changes in the welfare state are the phenomena to be explained, does the Homo reciprocans view provide us with much insight? In some cases, it seems to me, the answer is yes. The 1996 welfare reforms, for example, would seem to clearly fit this framework. AFDC was the program that everybody loved to hate; it was seen as inducing inefficient behaviors, generating long-term dependency, and fostering the creation of a dysfunctional social class that is at the core of many of the nation's problems. While this assessment of the program may have reflected stereotypes and prejudice, the fact is that many Americans believed that welfare recipients are in this state because they have made irresponsible choices--to bear children out-of-wedlock, drop out of high school, abuse drugs and sell them, and refuse minimum wage jobs when they are available. Nonpoor Americans did not like the notion of providing cash support to those who did not cooperate in attaining common objectives, who did not play by the rules, and who in fact acted contrary to these rules. And this dislike was intensified when the program actually contained incentives promoting these behaviors. Punishment for these behaviors became a part of the legislative solution.

But does this model help us to understand other proposed welfare state reforms? Here, one must stretch in order to shoehorn the suggested policies into the Homo reciprocans framework. Does the actual behavior of the elderly--Social Security and Medicare recipients--suggest a violation of cooperation in attaining commonly held goals? Are college students failing to promote social norms that the remainder of society values? In these cases, the authors' framework fails to provide us with much insight; punishment of old people and students for violating long-standing and fundamental communal norms does not seem to be the issue.

Rather, the concern seems to be a more narrow one related to the "self-reliance" objective. In these cases, the behavior of the recipient is not the problem. Rather, the structures of the programs themselves are questioned. These welfare state programs are seen to contain incentives for dependence on government, and hence less self-reliance. Understanding the basis for this redefinition of the welfare state, then, requires us to understand why this "self-reliance" fetish has become chic, why self-reliance is perceived to have declined, and why the state is held responsible for this perceived decline. These welfare state reform proposals seem to have more to do with the ascendance of the self-reliance norm than with any change in the cooperative behavior of recipients. While I have no model that explains this shift in attitudes, neither do I gain much insight into the cause of this development from the Homo reciprocans framework of Bowles and Gintis.

Originally published in the December 1998/January 1999 issue of Boston Review

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