Freakonomics and Shmitta

justanothermother ↓

Sun, Jan 20 2008, 9:25 am

This is long, so I will post in parts.

Quote:

The Case of the Red-Cockaded Woodpecker

Freakonomics on NYTimes.com
Authors Steven Levitt and Stephen Dubner bring their blog to The Times.

One year from today, a new president moves into the White House. This president will be eager to carry out any number of plans — including, surely, plans to help the segments of society that most need help. Extending a helping hand, after all, is one of the great privileges and responsibilities of the presidency.

But before charging ahead with such plans, the new president might do well to first ask him- or herself the following question: What do a deaf woman in Los Angeles, a first-century Jewish sandal maker and a red-cockaded woodpecker have in common?

A few months ago, a prospective patient called the office of Andrew Brooks, a top-ranked orthopedic surgeon in Los Angeles. She was having serious knee trouble, and she was also deaf. She wanted to know if her deafness posed a problem for Brooks. He had his assistant relay a message: no, of course not; he could easily discuss her situation using knee models, anatomical charts and written notes.

The woman later called again to say she would rather have a sign-language interpreter. Fine, Brooks said, and asked his assistant to make the arrangements. As it turned out, an interpreter would cost $120 an hour, with a two-hour minimum, and the expense wasn’t covered by insurance. Brooks didn’t think it made sense for him to pay. That would mean laying out $240 to conduct an exam for which the woman’s insurance company would pay him $58 — a loss of more than $180 even before accounting for taxes and overhead.

So Brooks suggested to the patient that they make do without the interpreter. That’s when she told him that the Americans With Disabilities Act (A.D.A.) allowed a patient to choose the mode of interpretation, at the physician’s expense. Brooks, flabbergasted, researched the law and found that he was indeed obliged to do as the patient asked — unless, that is, he wanted to invite a lawsuit that he would probably lose.

If he ultimately operated on the woman’s knee, Brooks would be paid roughly $1,200. But he would also then need to see her for eight follow-up visits, presumably with the $240 interpreter each time. By the end of the patient’s treatment, Brooks would be solidly in the red.

He went ahead and examined the woman, paying the interpreter out of his pocket. As it turned out, she didn’t need surgery; her knee could be treated through physical therapy. This was a fortunate outcome for everyone involved — except, perhaps, for the physical therapist who would have to pay the interpreter’s bills.

Brooks told several colleagues and doctor friends about his deaf patient. “They all said, ‘If I ever get a call from someone like that, I’ll never see her,’ ” he says. This led him to wonder if the A.D.A. had a dark side. “It’s got to be widely pervasive and probably not talked about, because doctors are just getting squeezed further and further. This kind of patient will end up getting passed on and passed on, getting the runaround, not understanding why she’s not getting good care.”

So does the A.D.A. in some cases hurt the very patients it is intended to help? That’s a hard question to answer with the available medical data. But the economists Daron Acemoglu and Joshua Angrist once asked a similar question: How did the A.D.A. affect employment among the disabled?

Their conclusion was rather startling and makes Andrew Brooks’s hunch ring true. Acemoglu and Angrist found that when the A.D.A. was enacted in 1992, it led to a sharp drop in the employment of disabled workers. How could this be? Employers, concerned that they wouldn’t be able to discipline or fire disabled workers who happened to be incompetent, apparently avoided hiring them in the first place.

How long have such do-good laws been backfiring? Consider the ancient Jewish laws concerning the sabbatical, or seventh year. As commanded in the Bible, all Jewish-owned lands in Israel were to lie fallow every seventh year, with the needy allowed to gather whatever food continued to grow. Even more significant, all loans were to be forgiven in the sabbatical. The appeal of such unilateral debt relief cannot be overestimated, since the penalties for defaulting on a loan at the time were severe: a creditor could go so far as to take a debtor or his children into bondage.

So for a poor Jewish sandal maker having trouble with his loan payments, the sabbatical law was truly a godsend. If you were a creditor, however, you saw things differently. Why should you lend the sandal maker money if he could just tear up the loan in Year Seven? Creditors duly gamed the system, making loans in the years right after a sabbatical, when they were confident they would be repaid, but then pulling tight the purse strings in Years Five and Six. The resulting credit drought was so damaging to poor people that it fell to the great sage Hillel to fix things.

↑ justanothermother ↓

Sun, Jan 20 2008, 9:26 am

Quote:

His solution, known as prosbul, allowed a lender to go to court and pre-emptively declare that a specific loan would not be subject to sabbatical debt relief, transferring the debt to the court itself and thereby empowering it to collect the loan. This left the law technically intact but allowed for lenders to once again make credit available to the poor without taking on unwarranted risk for themselves.

The fallow-land portion of the sabbatical law, meanwhile, was upheld for centuries, but it, too, finally gained a loophole, called heter mechira. This allowed for a Jew to temporarily “sell” his land to a non-Jew and to continue farming it during the sabbatical year and then “buy” it back immediately afterward — a solution that helped the modern state of Israel keep its agricultural economy humming.

The trouble is that many of the most observant Israeli Jews reject this maneuver as a sleight of hand that violates the spirit of the law. Many of these traditionalists are also extremely poor. And so this year, which happens to be a sabbatical year, the poorest Jews in Israel who wish to eat only food grown on non-Jewish land are left to buy imported goods at double or triple the regular price — all in order to uphold a law meant to help feed the poorest Jews in Israel.

Such well-meaning laws surely don’t end up harming animals as well, do they?

Consider the Endangered Species Act (E.S.A.) of 1973, which protects flora and fauna as well as their physical habitats. The economists Dean Lueck and Jeffrey Michael wanted to gauge the E.S.A.’s effect on the red-cockaded woodpecker, a protected bird that nests in old-growth pine trees in eastern North Carolina. By examining the timber harvest activity of more than 1,000 privately owned forest plots, Lueck and Michael found a clear pattern: when a landowner felt that his property was turning into the sort of habitat that might attract a nesting pair of woodpeckers, he rushed in to cut down the trees. It didn’t matter if timber prices were low.

This happened less than two years ago in Boiling Spring Lakes, N.C. “Along the roadsides,” an A.P. article reported, “scattered brown bark is all that’s left of once majestic pine stands.” As sad as this may be, it isn’t surprising to anyone who has examined the perverse incentives created by the E.S.A. In their paper, Lueck and Michael cite a 1996 developers’ guide from the National Association of Home Builders: “The highest level of assurance that a property owner will not face an E.S.A. issue is to maintain the property in a condition such that protected species cannot occupy the property.”

One notable wrinkle of the E.S.A. is that a species is often declared endangered months or even years before its “critical habitats” are officially designated. This allows time for developers, environmentalists and everyone in between to have their say at public hearings. What happens during that lag time?

In a new working paper that examines the plight of the cactus ferruginous pygmy owl, the economists John List, Michael Margolis and Daniel Osgood found that landowners near Tucson rushed to clear their property for development rather than risk having it declared a safe haven for the owl. The economists make the argument for “the distinct possibility that the Endangered Species Act is actually endangering, rather than protecting, species.”

So does this mean that every law designed to help endangered animals, poor people and the disabled is bound to fail? Of course not. But with a government that is regularly begged for relief — these days, from mortgage woes, health-care costs and tax burdens — and with every presidential hopeful making daily promises to address these woes, it might be worth encouraging the winning candidate to think twice (or even 8 or 10 times) before rushing off to do good. Because if there is any law more powerful than the ones constructed in a place like Washington, it is the law of unintended consequences.

Motek ↓

Tue, Jan 22 2008, 6:45 pm

thanks, I found it interesting, but when I emailed it to my father he wrote back:

Quote:

It’s too bad that they know nothing about the laws of shemittah and generate so much misinformation.

When I asked him to explain, he wrote the following in red:

Quote:

How long have such do-good laws been backfiring? Consider the ancient Jewish laws concerning the sabbatical, or seventh year. As commanded in the Bible, all Jewish-owned lands in Israel were to lie fallow every seventh year, with the needy allowed to gather whatever food continued to grow. Even more significant, all loans were to be forgiven in the sabbatical. The appeal of such unilateral debt relief cannot be overestimated, since the penalties for defaulting on a loan at the time were severe: a creditor could go so far as to take a debtor or his children into bondage.

The Rambam says that only instance that the courts sell a person as a Jewish slave is if he stole and could not repay what he stole.

So for a poor Jewish sandal maker having trouble with his loan payments, the sabbatical law was truly a godsend. If you were a creditor, however, you saw things differently. Why should you lend the sandal maker money if he could just tear up the loan in Year Seven?

Because one of the lavin in the Torah is not to refrain from lending just because you may not get paid back. The same person who refrained from planting in the Shemittah year, knowing that God can make up for any of his agricultural losses, knew just as well that He could make up for the monitory losses. In fact, as long as Shemittah was a Torah mitzvah, there was no enactment of prosbul.

Creditors duly gamed the system, making loans in the years right after a sabbatical, when they were confident they would be repaid, but then pulling tight the purse strings in Years Five and Six. The resulting credit drought was so damaging to poor people that it fell to the great sage Hillel to fix things.

So Hillel was much smarter that God who couldn’t figure out that this might happen! By the time Hillel enacted the prosbul there was no Torah mitzvah of Shemittah.

His solution, known as prosbul, allowed a lender to go to court and pre-emptively declare that a specific loan would not be subject to sabbatical debt relief, transferring the debt to the court itself and thereby empowering it to collect the loan. This left the law technically intact but allowed for lenders to once again make credit available to the poor without taking on unwarranted risk for themselves.

The fallow-land portion of the sabbatical law, meanwhile, was upheld for centuries, but it, too, finally gained a loophole, called heter mechira.

This too was allowed only because there was no longer a Torah mitzvah of Shemittah. The Rabbis who enacted it were not trying to fix up yet another law that God messed up, as is implied by the article. They initially implemented it because they believed that there a pikuach-nefesh situation that had to be addressed.

This allowed for a Jew to temporarily “sell” his land to a non-Jew and to continue farming it during the sabbatical year and then “buy” it back immediately afterward — a solution that helped the modern state of Israel keep its agricultural economy humming. It sounds like the state of Israel would have ceased to exist if not for the clever Rabbis.

The trouble is that many of the most observant Israeli Jews reject this maneuver as a sleight of hand that violates the spirit of the law.

Also, most observant Rabbis rejected the maneuver as a sleight of hand.

Many of these traditionalists are also extremely poor. And so this year, which happens to be a sabbatical year, the poorest Jews in Israel who wish to eat only food grown on non-Jewish land are left to buy imported goods at double or triple the regular price — all in order to uphold a law meant to help feed the poorest Jews in Israel.
I didn’t know that reason for the Shemittah laws was to help feed the poorest Jews in Israel. I thought that the Torah gave a different reason for the laws of Shemittah.

mumoo ↓

Tue, Jan 22 2008, 7:01 pm

Author/Journalist Stephen Dubner was born to Jewish parents who had 'converted' to Catholicism before he was born.

↑ justanothermother ↓

Tue, Jan 22 2008, 7:05 pm

Motek, please relay my thanks to your father. His comments helped me understand this a great deal. I was disturbed by the implications of the article but could not put my finger on it.

↑ Motek ↓

Thu, Jan 24 2008, 6:25 pm

I told him Smile

glad it was of help.

cassandra ↓

Thu, Jan 24 2008, 6:34 pm

mumoo wrote:

Author/Journalist Stephen Dubner was born to Jewish parents who had 'converted' to Catholicism before he was born.

Oh yes, another Jewish conspiracy. He tried so hard to mask his anti-Semitic, anti-deaf, anti-avian agenda, pro-Catholic agenda, but it is a thin veil. Ban his book! While we are at it, let's ban economics! And statistics too!

From my understanding of the article, his main point about bringing up shmitta that the creation of the loophole of heter mechira, in today's Israeli society, is hurting the poor who were traditionally helped by shmitta. Perhaps it is an overstatement to say that the PURPOSE of shmitta was to help the poor, but it is still ironic, and it still goes to his point that the creation of a well meaning law (heter mechira) may ultimately do more harm than good.

↑ justanothermother ↓

Thu, Jan 24 2008, 6:58 pm

cassandra wrote:

mumoo wrote:

Author/Journalist Stephen Dubner was born to Jewish parents who had 'converted' to Catholicism before he was born.

↑ cassandra ↓

Thu, Jan 24 2008, 7:01 pm

What exactly was the purpose of mentioning his religious background?

↑ justanothermother ↓

Thu, Jan 24 2008, 7:16 pm

There is another thread currently about his book, Turbulent Souls. I just assumed mumoo was making that connection. This could also explain his interest in co-writing something with a Jewish slant.

↑ mumoo

Thu, Jan 24 2008, 7:24 pm

thanks for helping put justanothermother (can I just call you amelia?)

cassandra, what she said
I was just sharing an interesting point.

↑ cassandra ↓

Thu, Jan 24 2008, 7:26 pm

Sorry- I didn't mean to take it out on you specifically, but the way the thread turned into a pointing out of inaccuracies in the article, which served no point other than to prove that we are more knowledgeable in halacha than he is, kind of got to me. I read into your statement more than was there, and I apologize.

↑ Motek ↓

Thu, Jan 24 2008, 8:26 pm

cassandra wrote:

the way the thread turned into a pointing out of inaccuracies in the article, which served no point other than to prove that we are more knowledgeable in halacha than he is,

aha, so you think my father was just showing off

↑ cassandra ↓

Thu, Jan 24 2008, 8:36 pm

I just really didn't get the point, sorry.

↑ justanothermother

Thu, Jan 24 2008, 8:54 pm

I still agree with the point they were making with the article. However, the article in general was making me uncomfortable but I couldn't figure out why. Motek's post helped me see where I was bothered, but that did not take away from the point of unintended consequences.

penina

Thu, Jan 24 2008, 8:57 pm

I for one found the article very interesting and somewhat on point.

↑ cassandra ↓

Thu, Jan 24 2008, 9:00 pm

Motek--Just wanted to add:

I'm sure your father is a nice, smart, knowledgeable person
(I know mine is Wink

) and I don't think he intended to show off. I'm sure he just answered what you asked him, as any nice, smart, knowledgeable father would, and yes there were some minor inaccuracies, but in my mind that didn't detract from the article.

↑ Motek

Thu, Jan 24 2008, 9:02 pm

I didn't ask him anything. I merely sent him the article.

↑ cassandra

Thu, Jan 24 2008, 9:34 pm

All I can say is the apple doesn't fall far from the tree... 8)

Crayon210

Thu, Jan 24 2008, 10:41 pm

cassandra wrote:

All I can say is the apple doesn't fall far from the tree... 8)

I was going to say-wow, you're just like your father!