Should the disabled pay their own way?

A blind couple are outraged that they got charged extra at a hotel when their dogs allegedly moutled all over the place and required extra cleaning work to be done. There appears to be some dispute over exactly what happened, and the manager of the hotel is clearly a PR disaster area, but is it fair that the couple should have been charged extra if it cost the hotel more to accommodate them?

Well, ordinarily, it makes sense to charge more when the cost of providing a service increases; however, it seems unfair to penalise those who are already disadvantaged through no fault of their own. Yet requiring hotels to house them and imposing the cost on the hotel owners also seems unfair: why should the hotel owners pay the entire cost of accommodating a few individuals’ disabilities? Since most people would like to see services provided for disabled people, yet few people are willing to individually pay for them, the obvious solution is to spread the cost over everyone. Read more

Teacher Crisis: Scraping the bottom of the barrel

Interesting piece on stuff today about the teacher crisis currently happening in primary schools. Apparently it has gotten so bad that they are considering hiring teachers who don’t have adequate English language skills. A survey of 79 schools showed that three quarters of the shortlisted candidates were ranked as either poor or very poor. I didn’t realise that it was this bad.

Hiring primary school teachers who can’t speak adequate English is outrageous. It’s very common at university to have economics and finance lecturers who can’t communicate properly in English (attracting the best staff is a problem in the tertiary sector too given that we don’t have discipline specific salaries to reflect the high paying jobs economics and finance phds can get, see a great paper by Professor Glenn Boyle on the evidence) and I must say it’s a terrible learning environment. The subtleties of the English language often mean that by wording a question slightly differently it has a completely different meaning. Expecting a third year university student to decipher the actual question is one thing, our brains are fully developed by then. But when you have kids at primary school whose brains are still developing not being able to understand their teacher is another.
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Student Loans: The good the bad and the Ugly

National announced yesterday that it is going to keep interest free student loans. As someone with a student loan I love the scheme and the free money it gives me. When I put my economist hat I think that it is terrible policy since it provides terrible incentives to for students to borrow. I personally didn’t have a student loan until they became interest free at which point I borrowed as much money as I possibly could.

Not only are National not avoiding electoral suicide by alienating students, they have also said they will provide a 10% bonus on early payments of more than $500 to help combat the fact that students have no incentive to pay back their loan while they are still in New Zealand (0% nominal rate=negative real rate due to inflation, i.e. your debt shrinks over time, isn’t that cool?).

Now this sounds nice on the face of it, but David Farrar has put on economist hat and worked out that while this improved incentives for repayment, it exasperates the perverse incentives regarding borrowing. DPF notes that an optimal strategy for a student would be to borrow as much as you could and then pay it off at the end of the year giving you a nice 10% return for your effort. However the problem is actually worse than that. Read more

Interest free student loans and compulsory schooling: Is there a better way?

Recently the two main political parties in New Zealand have announced schemes that aim to, in some ways, help up-skill 16 and 17 years olds. At the same time, National has come out stating that it will leave student loans interest free, but provide a reward for repayments (leading to much debate).

Although these may seem like separate issues, when I look at the economy the issues of youth employment/skills, education, and unemployment/employment are intensely linked. As a result any policy that the parties take up on one of these issues must take into account how it influences these other sections of society.

In this post my aim is to put forward my current belief of what an ideal policy would look like for these three sectors – that’s right, I said policy not policies. Personally I think that all three are so closely linked that we have to use the same or very similar instruments in order to provide the right sort of outcome. Now, this analysis will be unashamedly normative, I’m going to be packing it with value judgments. I will try to make these judgments clear so you can either i) attack me on them, ii) work out where my objective logic may have gone wrong, separate of the value judgments.

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