The Economics of Giving Stuff Away

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As is typical, Kevin Williamson is worth reading on the practical economics of government policy:

We are a very, very rich country. We can afford all sorts of things: food for the hungry, health care for the indigent, education for children, and hearing aids for families that for whatever reason cannot manage to scrape together $1,000 a year to invest in the well-being of their own children. (Those $5,000 hearing aids last for about five years, meaning that their real cost over time is less than the $1,200 a year typical American family spends on cable television.) I myself am all for doing many of those things, though I do not think that government very often is the best instrument for getting them done. But if we are going to use government, then, by all means, let’s use government in the most honest, transparent, and straightforward way we can. Forget the insurance mandate and just write the check.

In that regard, Democrat Governor Gina Raimondo’s free tuition would be preferable to some other policy that tried to force somebody else to pay for it — homeowners insurance or something like that.  Of course, other basic economic lessons come into play, which struck me when WPRI’s Dan McGowan tweeted:

DanMcGowan-031517-freetuition

“Affordability” is a measure of price against value.  Following Williamson’s price estimate for hearing aids, in-state tuition at the Community College of Rhode Island (CCRI) is less than the average family cable bill.  Rhode Island College (RIC) and the University of Rhode Island (URI) are substantially more, but both saving and borrowing spread out the payments.

Considering that the average monthly student loan payment for all years of all colleges is somewhere around $280, two years of in-state tuition in Rhode Island would be much less.  That means young adults are valuing a large number of other things — cable, cell phones, video games, weekly dinners out, and so on — more than they’re valuing education.

Pushing the price down for them doesn’t make them value the education any more.  What it will do, though, drive up tuition and hurt taxpayers.



  • Rhett Hardwick

    Why free hearing aids? Medicare doesn’t cover them for the elderly.

  • Pushing the price down for them doesn’t make them value the education any more

    And it also doesn’t make college any more “affordable” either… it just changes who pays for it.

    I haven’t heard or read anything about it, but does the Gov’s plan force URI/RIC to accept any RI’er who applies? The financial effect of having to accept more in-state kids who already pay less could cause the $30MM cost of Raimondo’s plan to go sideways.

    • Mike678

      I argue that it will make college more expensive overall as the “state” (taxpayers) will start paying the bill. Spreading pain usually means each individual can bear more pain…

      • Guest

        In Hawaii after a pilot program tied to the education
        Department “55 by 25 Initiative” goal to get 55% of graduating high-school classes enrolled and graduating with a 2 or 4 year college degree by year 2025
        (preparing graduates to be 21st and 22nd Centuries workforce ready.), 20 high-schools
        (public, private and charter state-wide) offer students FREE dual-credit college courses (taught by collage professors on high-school campus during regular hours). The outcome so far is indicative of fewer Hawaii college bound applicants
        requiring remedial college level english and mathematics courses plus more students applying for college after high-school graduation.

        State of Hawaii has a one state-wide school district run by the state government financed by state income tax, sales tax and state license fees or other not taxed fees; one school superintendent and one university/community college system beside private universities and community colleges. Counties/municipalities do not fund schools systems in Hawaii only the local county government.

        • Mike678

          Relevance?

          • Guest

            In Hawaii after a pilot test program “FREE college courses” taught by college professors has been expanded to all Hawaii high schools (public, private, charter high schools) during normal school hours because more and more students are taking them, passing the courses, earning college course credits
            and more students are not needing to enroll in remedial college English or Mathematic classes after high school graduation plus more high school graduates are applying to attend college after high school graduation.

            The cost of attending University of Hawaii, Hawaii Community College or any of the other private universities, colleges or community colleges within the state has not gone up.

            These facts were published in an audit by the public/private partnership Hawaii P-20 Initiative in conjunction to the Hawaii “55 by 25 Initiative”. Properly educated, prepared and motivated students are capable of advanced level college courses and we see that in our K-8th grade
            students that attend University of Hawaii STEM laboratory classes on weekends.

            There is a right way and there is a wrong way plus a sloppy way to do things. I was first class of RI Junior College with cost per semester of $100.

            Gina has not verified in detail what she means by “FREE College”. Is it the Hawaiian way of receiving “dual credit” taking FREE college level course classes in high school 9th, 10th,11th and 12th grades or FREE Rhode Island Community College for all state residents and maybe FREE University of Rhode Island and FREE Rhode Island College for all state residents. That is yet to be determined.

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