Free School Lunch: How we got it and where it’s going

The USDA reports that in 2024, 20.5 million children received free lunches and 900,000 children received reduced-price lunches. While the square pizza in the American Public Education system seems omnipresent, it’s a relatively recent phenomenon. 

School lunches were born out of the postwar era, when President Truman signed the National School Lunch Act of 1946. The policy aimed to stabilize the agricultural labor force and reduce chronic child malnutrition. The number of people engaged in farming dropped 67% in 20 years, from 17 percent of the total workforce in 1940 to six percent in 1960. The National School Lunch Act supported farmers by creating a guaranteed market for agricultural goods. In addition, policymakers saw school lunches as a way to address child malnutrition.

The school lunch program has been a convenient partnership for agricultural surpluses, especially dairy. As post-war agricultural production ramped up, the federal government often found itself with too much milk, cheese, and butter on hand. To prevent these goods from going to waste and allowing prices to tank, the USDA bought the excess and distributed it through schools. 

By the 1980s, this relationship with the dairy industry became so significant that critics referred to government stores as “the cheese caves” due to the massive stockpiles of processed cheese. School lunches became a way to stabilize agricultural markets while feeding children, making items like milk and cheese fixtures in cafeterias nationwide. 

While school lunches were federally supported by the mid-20th century, school breakfasts were not institutionalized until later. The National School Lunch Program expanded steadily after its initial rollout. The Child Nutrition Act passed in 1966 which laid the groundwork for school breakfasts. Support for these programs, however, often reflected the political will of the moment. Grassroots organizations filled the gaps of the school meal program.

One of the earliest large-scale, community-led efforts to solve child hunger came from the Black Panther Party. Huey P. Newton and Bobby Seale founded the Black Panther Party in 1966 and they served their first free school breakfast in January of 1969 within an Episcopal church. Without government funding, Panther members solicited local grocery stores for donations, consulted with nutritionists to determine what would make a good breakfast, and then got to work serving it up. The children received chocolate milk, eggs, meat, cereal, and fresh oranges.

School officials immediately reported results in kids who had free breakfast before school. “The school principal came down and told us how different the children were,” Ruth Beckford, a parishioner who helped with the program, said later. “They weren’t falling asleep in class, they weren’t crying with stomach cramps.”

In 2010, President Obama signed the Healthy, Hunger-Free Kids Act. This policy introduced more nutritious food into school lunches and aimed to reduce the number of children diagnosed with obesity within one generation. A study conducted on children who ate the reimbursed meals before and after the introduction of the policy found that their Healthy Eating Index scores increased by 30% for low-income students, 31% for low- to middle-income students, and 19% for middle- to high-income students.

In more recent years, attention has turned to the impact of school meals on students’ academic performance. In 2017, the Brookings Institution published research on how the quality of school lunches affects test scores. Among students enrolled in 9,700 California schools, access to healthier school lunches was associated with improvements in test scores of 0.03 to 0.04 standard deviations, or roughly four percentiles.

Reducing class size is another strategy aimed at improving test scores. The same Brookings study compared the relative cost of healthier school lunches—around $80 per student per year—to the gains achieved through smaller class sizes. Reducing class size by one-third cost about $2,000 per student in 1999. While reducing class sizes requires hiring more teachers and thus comes with higher labor costs, this approach is about five times more expensive than improving school lunch quality for a comparable increase in test performance.

In response to the instability wrought by the COVID-19 pandemic, the federal government picked up the tab for universal free school lunches provided to every public school student in the country. For most states, this policy expired in 2022, revealing the unmet need of many school children. Six states—California, Connecticut, Maine, Massachusetts, Nevada, and Vermont—opted to bolster their school lunch programs with state dollars immediately following the federal withdrawal of support in 2022. As a result, food insufficiency among school-aged children was 1.5 percent higher in states that did not extend universal free meals into the 2022–2023 school year compared to those that did. 

What began as a way to deal with agricultural surpluses and reduce child hunger has become a significant social safety net element for American children. The presence of milk and cheese in American lunches is more than a dietary choice, it's the legacy of economic policy. With more than 20 million children reliant on the school lunch program, Harry Truman’s words still ring clear: "In the long view, no nation is any healthier than its children or more prosperous than its farmers."

Can being a better neighbor save lives?

A few weeks ago, I wrote about new data from the World Happiness Report on the impacts of sharing meals. I encourage everyone to go read the full report in that post, but in case you haven’t already done that I wanted to talk about another finding I found interesting. 

Chapter Six of the report focuses on the connection between prosocial behavior and deaths of despair. For context, “prosocial behaviors” are activities like volunteering, donating, and offering help to strangers. “Deaths of despair” is a term for deaths due to suicide, alcohol abuse, and drug overdose. 

In the United States, we have a particular problem with deaths of despair. Between 2000 and 2019, the United States had the largest increase in the rate of deaths of despair among countries in the World Happiness Report. Among the countries that the World Happiness Report has data for, the United States does not have the highest rate of deaths of despair, but most other countries saw decreases in their rates over this same time period. Even if we include the rise in deaths of despair in the United States, the average rate across the globe has decreased. 

The new research highlighted in the report finds a connection between the rates of prosocial behavior and the rate of deaths of despair. Their regression analysis estimated that for every 10 percentage point increase in the share of people participating in prosocial activities, there is one fewer death of despair per 100,000 people. People age 60+ benefit even more, with an effect size nearly double compared to the general population. 

Those numbers are a bit hard to understand, so let's put it into context. In high income countries like the United States, about 35% of people participate in prosocial behaviors. If we increased that by 10 percentage points to 45%, that would mean an extra 34 million people engaging in prosocial activities. That would result in one fewer death of despair per 100,000 people, or about 3,400 per year across the country. 

Simplifying the math a bit further, for every 10,000 additional people who participate in some type of prosocial activity, one fewer person will suffer a death of despair each year. That seems like a pretty achievable goal to me. 

From an economic perspective, encouraging people to participate in prosocial behaviors seems like a very efficient way to decrease deaths of despair. Helping a stranger is often a very low cost activity, sometimes only taking seconds out of your day. 

Unfortunately, this is not necessarily something that policymakers have a lot of influence over. This is the same issue with trying to encourage people to share meals with each other: public policy is not very effective at changing social behaviors. 

Still, there are some things policymakers could explore to help encourage prosocial behavior. We’ve done past research that shows similar interventions are beneficial to the public. There also already exist tax incentives for people to donate money. Maybe there could be a way to incentivize people to volunteer their time in a similar way, like the Illinois volunteer emergency worker credit. 

Hopefully this information can encourage more people to go out of their way to help people in their communities. I know that I probably don’t engage in enough prosocial behavior myself, and I want to change that. Small changes in behavior add up in major ways. Helping each other out can actually save lives.

Raising Minimum Wage to $15 Would Sharply Improve Housing Affordability Across Oklahoma, New Analysis Finds

A new report by Scioto Analysis reveals that raising Oklahoma’s minimum wage to $15 per hour could significantly reduce housing insecurity for tens of thousands of residents, cutting costs for both households and public services.

The report, Minimum Wages and Housing Security in Oklahoma, highlights the connection between income levels and housing stability. With over 430,000 Oklahoma households currently spending more than 30% of their income on housing, the state is facing a growing crisis of affordability.

“Our analysis shows that raising the minimum wage is not just good for low-wage workers — it will likely improve housing security for thousands of Oklahoma families,” said Rob Moore, Principal at Scioto Analysis.

Key findings from the analysis include:

• 40,000 fewer households would be cost burdened — meaning they’d no longer need to spend over 30% of income on rent — under a high-impact scenario.

• 32,000 households would be lifted out of severe housing cost burden, where rent exceeds 50% of income.

• Up to 550 fewer Oklahomans would experience homelessness each year, including a reduction of 150 in chronic homelessness.

• Emergency service use would decline, with an estimated 630 fewer annual emergency room visits and up to 330 fewer shelter beds needed statewide, translating to over $500,000 in potential healthcare savings.

• Housing cost burden would drop most for those struggling the most, including households headed by women and Black Oklahomans, as well as young adults aged 17 to 24.

• “These aren’t just numbers. They represent people — single parents, young workers, and elderly renters — who will be able to afford safe, stable housing,” Moore added.

The analysis simulated 1,000 economic scenarios using data from the American Community Survey and labor market projections from the Congressional Budget Office. The majority of models showed that increased wages lead to substantial housing improvements across the state.

The study arrives as Oklahoma debates how to respond to a doubling of the state’s homeless population since 2021 and an escalating shortage of affordable housing. With construction costs up 42% since 2018 and vacancy rates falling statewide, families are increasingly forced to choose between rent and basic needs like food or healthcare.

Americorps cuts hit Ohio classrooms

My partner is a 10th-grade geometry teacher at Mifflin High School, a Columbus City Schools secondary school on the northeast side. For the past three years, she has had an assistant from the City Year program.

This is an AmeriCorps program that places qualified full-time volunteers in schools to support teachers and the development of children.

Her City Year volunteer was a kind person who supported children and helped with her workload of teaching math to high school-age children. It wasn’t rare for her to come home telling me she didn’t know what she would do without her City Year volunteer.

She will have to figure that out soon. Earlier this week, she arrived at school to find her City Year volunteer was gone. By the end of the day, an announcement was made to the school: Columbus City School’s 30-year relationship with the City Year program was over. This was a direct result of the federal Department of Government Efficiency’s decision last week to cut 41% of the AmeriCorps program budget.

AmeriCorps was the beginning of my career. I enrolled as a full-time volunteer a few months after graduating from Denison University and was selected to serve as a community organizer supporting neighborhood associations for the mayor of Omaha, Nebraska. At the same time, my mother, back in the workforce with her three children out of high school, enrolled in AmeriCorps to evaluate literacy instruction programs for young children.

In 2020, my firm Scioto Analysis conducted a cost-benefit analysis of AmeriCorps programs in Ohio. We found that the programs have significant impacts on the trajectory of participants. People who enroll in the program have much higher future earnings and lower chances of criminal justice involvement. The best evidence available tells us cutting AmeriCorps will result in lower wages and higher crime rates for Ohio. We found that the net benefits of the program in Ohio range somewhere from from $1 million to $30 million and that expansions of the program could push net benefits into the nine-figure range.

It seems that the decisions being made at the federal level are blind to one side of the accounting ledger. In the fervor to reduce spending and cut administrative offices at the federal level, DOGE leader Elon Musk and other decision makers are failing to consider the benefits of programs they eliminate. I have no doubt in my mind that there are reasonable cuts that can be made to federal programs. The problem is that the current approach is not reasonable: it is the public finance equivalent of conducting open-heart surgery with a chainsaw.

The sad thing about this from the perspective of the fiscal hawk is that these cuts will have very little effect on the federal debt. According to the Committee for a Responsible Federal Budget, even a spending cut 1,000 times the size of the AmeriCorps cut last week would only reduce the federal-debt-to-GDP ratio by one percentage point in the next decade. Cutting AmeriCorps is a drop in the bucket in the context of U.S. debt.

The benefits of cutting Americorps funds are hard to divine. Its costs are clear. In the meantime, volunteers will be lost and children from low-income families in a high-poverty school district will have one less resource available to them in their already under-resourced classrooms.

This commentary first appeared in the Ohio Capital Journal.

Banking on Food Banks

I’ve been on both sides of the food pantry check-in table. As a college student, I worked the desk at the University of Iowa food pantry, tucked into a quiet corner of the Student Union. You’d never find it by accident. Each week, students and faculty lined up with reusable sacks, filling them with dirt-dusted carrots, bruised broccoli, and boxed cornbread mix. The produce was often misshapen, a little off-color—but fresh all the same.

Two years later, I was the one in need. I coasted into a gas station with just enough in my account to fill the tank halfway and maybe buy a sandwich. My stomach growled. At my new part-time job, I asked—ashamed—if staff could use the food pantry. “Absolutely,” they told me. “That’s what it’s there for.”

So when I read the headline, “After Trump Cuts Aid, Food Banks Scrounge and Scrimp,” I deeply appreciated the hot cup of coffee in front of me. The Trump Administration cut $1 billion from two major federal food assistance programs: The Emergency Food Assistance Program and the Local Food Purchase Assistance program. The Emergency Food Assistance Program and the Local Food Purchase Assistance Program support food-insecure households by increasing access to nutritious, locally sourced food while supporting small-scale farmers. 

Due to the cuts, farmers aren’t receiving their expected payments from the federal government. Their harvests, instead of moving quickly through the food banking system, sit in storage until they rot. Workers running the soup kitchen typically expect to receive a main dish, a starch, a vegetable, a fruit, and a dessert. They are now receiving only one of those categories at any given time. 

These shortages trace back to the food banks themselves. When funding to the Local Food Purchase Assistance Program was cut, it disrupted the system that has coordinated America’s food assistance for decades. Farmers once sold surplus crops to the federal government; food banks purchased those surplus goods using federal funds.

While often used interchangeably, food banks and food pantries are distinct in form and function. Food banks are the distributional backbone of food assistance. They staff warehouses, provide refrigeration, and manage the trucking capacity needed to move massive quantities of food. In Ohio, this is coordinated by the Mid-Ohio Food Collective.

Food banks turn over their inventories almost daily, ensuring that local food pantries and soup kitchens have the supplies they need. Food pantries are where individuals can pick up cooking ingredients like fresh produce, box mixes, dried pasta, and occasionally toiletries or diapers. Soup kitchens provide hot, ready-to-eat meals directly. Many require individuals to show proof of economic need.

A report by the United States Department of Agriculture recently found that 18.0 million U.S. households were food insecure at some time during 2023. That’s 13.5% of all households in the country. Feeding America reports that 100% of counties in America have food insecurity. The same report found seven states with rates of food insecurity above the national average: Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Kentucky, and South Carolina. 

These states with the highest rates of food insecurity are home to groups advocating for churches to serve as primary providers of social welfare, including food assistance. The World Food Policy Center released a 2020 report detailing the many unique ways that faith communities support food insecure individuals in their communities like providing Halal or Kosher foods that are harder to find at public food pantries.

While faith-based organizations play a crucial role, relying solely on them overlooks the scale of need and the infrastructure required to address it comprehensively. Churches don’t have access to the trucking or refrigeration capacities necessary for large scale food distribution.

As political and economic climates change, America must face its paradoxical wealth. The United States is one of the wealthiest countries in the world, if not the wealthiest, yet food security persists among its residents. 

The barren images of food pantry shelves and food bank walk-in freezers harkens back to the Cold War Era obsession with the abundant, beautiful food lining American grocery store shelves. But as food prices and hunger rise, we must ask, what have we been fighting for? 

States and municipalities around the country have implemented numerous strategies to combat rising hunger during this period of instability. 

1. Indianapolis, Indiana

Indianapolis is home to the Community Access Food Coalition, a community-driven, independent allegiance of community members who are passionate about expanding access to fresh foods. This organization is composed of diverse residents, constituents, business owners, farmers, educators, community organizations, and other stakeholders. They receive funding through the city-county council and serve as a community liaison regarding food policy. 

2. Waterbury and Naugatuck, Connecticut

Ahead of federal budget cuts, food banks in Waterbury and Naugatak, Connecticut organized private donations and adjusted their budgets to ensure the longevity of dwindling food supplies. Organizers hope these proactive efforts will maintain a consistent level of support for the increasing number of people reliant on food assistance. 

3. Ohio

In the summer of 2024, Ohio’s Department of Job and Family Services expanded Electronic Benefits Transfer to include additional aid during the summer months when children lack access to school lunches. This program is called “SUN Bucks,” and was created to help low-income Ohioans stretch their food budgets and buy healthy food. 

4. Sacramento, California 

Sacramento County is part of a guaranteed income pilot program that provides families with young children $725 each month. This program, Families First Economic Support Pilot Program,  was started to alleviate economic hardship and reduce the number of families involved in the child welfare system. Electronic Benefits Transfer like SNAP function essentially as a cash payment to low-income families. $100 in SNAP benefits frees up $100 you might otherwise have had to spend on groceries.

Do cell phones belong in school?

On April 3, 1973, Martin Cooper placed the first ever cell phone call. He held the Motorola DynaTAC. Weighing 2.5 pounds and measuring 9 inches long, “The Brick” required a 10-hour charge to power just 35 minutes of conversation. 

Cooper could not have known that 50 years later, there would be more mobile phones than people on Earth. As they have become more compact, efficient, and useful, mobile phones have become more popular. Initially a tool reserved for the wealthiest, those who could afford a car phone, now cellphone ownership is ubiquitous.

In 2024, Pew released a survey finding 98% of Americans own a phone with 46% of American teenagers reporting being online “almost constantly.” A far cry from “The Brick,” modern cellphones weigh less than 6 ounces, the weight of a tennis ball. These new devices can charge within 30 minutes and last up to 30 hours. 

Now cellphones are often “smart phones.” Smart phones allow users to access social media websites, video streaming, artificial intelligence, and more. It’s akin to having a computer in your hand all the time. Because of their convenience and ubiquity, children and adolescents are encountering digital content at younger ages, with fewer barriers to access than ever before. 

A 2023 UNESCO report argues that smartphones should be allowed in classrooms only when they will bolster learning. Unstructured smartphone use exacerbates decreased student engagement and attentiveness. These challenges may be more pronounced in under-resourced schools, where limited staff capacity can make classroom management more difficult. As a result, disparities between students in low-income neighborhoods and more affluent areas may be further intensified.

A lot of resources are dedicated to addressing literacy in schools, but there appears to be another educational issue emerging in Ohio. Keyboarding classes are becoming less common, with younger students opting to type out entire papers on cellphone touch screens. The Journal reports that in 2000, 44% of high school graduates completed a typing class. In 2019 that number had fallen to just 2.5%. Without access to technological education, students may fall behind not only in reading literacy but also in digital literacy, which is an increasingly important skillset for the modern workforce. The Mid-Ohio Regional Planning Commission discussed the tech divide in Franklin County in their Technology and Broadband Access report. 

A decade ago, the Pew Research Center released the results of a 2015 survey finding that more than half of adult Americans lacked what they called “digital readiness”—a set of skills needed to use the internet and technology for more complex tasks. Americans with digital readiness tended to be younger and had higher incomes and education levels than those without these skills. They were more comfortable using and troubleshooting technology, as well as in their ability to seek out and evaluate trustworthy information.

Globally, some countries have taken legislative steps to restrict smartphone use in schools. UNESCO relays that in Zhengzhou, China, cellphone use in primary and secondary schools have been further restricted, with schools demanding that parents provide written consent for pedagogical use of the cellphone. 

In France, a ‘digital break‘ was suggested in lower secondary schools. The digital break requires French middle schoolers to turn off their cellphones and hand them in at the start of the school day. Students receive their phones back at the end of the day. 

At the opposite end, Saudi Arabia reversed its ban due to the opposition by disability groups for medical purposes. For example, students with a chronic illness like diabetes are able to monitor their blood sugars through an app on their phone. Additionally, disabled students with speech delays may be cut off from their communication devices, which help them to participate in conversation. 

Domestically, states are handling the cellphone conundrum in different ways.

According to the Education Commission of the States, Florida’s HB 379 passed in 2023, prohibiting students from using cell phones during instructional time and requiring teachers to designate an area for cell phones during instructional time. 

South Carolina took a slightly different approach by legislating that all schools needed to have a minimally sufficient student conduct policy. To be minimally sufficient, schools had to include directives for cellphone use at school.

In May 2024, Ohio Governor Mike DeWine signed HB 250, which requires all school districts to place an emphasis on limiting cell phone use and reducing cell phone-related distractions in classrooms. HB 250 includes exceptions for students who require a cell phone to monitor a health concern or for student learning as determined by school officials. In Ohio, students with disabilities are permitted to use their phones if such an accommodation is outlined in their 504 or Individualized Education Plan (IEP). 

The question doesn’t seem to be whether smartphones belong in schools, but under what conditions their presence enhances or hinders learning. It’s not enough to simply restrict access. Given the interwoven nature of cellphones and modern life, educators and families will need to take an active role in teaching young people how to think critically about the information they consume online, how to stay safe, and how to protect their private information. 

We can’t go back to a life without cellphones, but we can craft policies that use technology to enhance equity, rather than broaden the gap. Here are some policy options for districts working to navigate this territory.

Establish Clear, Consistent Usage Policies:

Communities can develop district-wide guidelines specifying when and how smartphones are used during school. These policies should distinguish between instructional time and free time. Policies should also provide explicit expectations for both students and staff.

Implement Technology-Free Zones and Times:

Rising anxiety rates among adolescents has been linked to their increased screen time. Schools may benefit from designating phone-free times and places—such as during instructional time in the classroom or during the lunch hour—to encourage focused study and face-to-face interactions. One study by the Centers for Disease Control and Prevention found that about 1 in 4 teenagers who had at least 4 hours of daily screen time have experienced anxiety (27.1%) or depression symptoms (25.9%) in the past 2 weeks.

Invest in Digital Literacy Education:

Schools should teach students how to use smartphones responsibly and to critically evaluate online information. Individuals need to be informed about the lasting impact of their digital footprint. 

Additionally, many adults lack basic digital literacy since the “.com boom” happened after completing their formal education. Expanding digital literacy classes to adults can improve community-wide use of technology.

Provide Alternatives for Technology-Integrated Instruction:

Providing each teacher or classroom with a set of laptops has become increasingly common, often called the “chrome cart." When cellphones or personal computers are integrated into instruction, students should be given the opportunity to use their own device or to borrow one from the school. By providing access to every student, but allowing for flexibility, schools can potentially reduce inequality.

Include Students in Policy Implementation:

As students are growing up immersed in digital technology, they can offer valuable insights into how these tools are used in educational settings. Including student perspectives in the development of digital use policies can help ensure that such policies are practical and reflective of real-world experiences.

Monitor and Evaluate Policy Effectiveness:

Data collection on student engagement, academic performance, and overall wellbeing may provide valuable insights as we adjust our society bit by bit. Each misstep in technology use policy provides us information to better approach the problem going forward.

The benefits of cost-benefit analysis

On his inauguration day, January 20, 2025, President Donald Trump issued an executive order to immediately rescind 78 Biden-era executive orders. Among these was Executive Order 14094, the Biden Administration’s revision of Circular A-4, the guiding document of the use of cost-benefit analysis in federal regulatory activity. This reinstated the previous Circular A-4 language, adopted in 2003 during the Bush Administration.

Cost-benefit analysis has been in standardized use in U.S. federal regulatory decisionmaking since the Reagan Administration, though most trace its roots back at least to Army Corps of Engineer dam projects during the New Deal era of the Great Depression. Cost-benefit analysis has been affirmed by the seven administrations in the United States since, with each adding their own spin while  keeping to the spirit of the Reagan Administration’s original executive order.

Cost-benefit analysis is also widely used in the United Kingdom. Its practice began in public infrastructure and defense projects during post-WWII economic planning and later became a central part of HM Treasury’s Green Book, the official guidance for appraisal of policies, programmes, and projects for central government policymaking.

Where did the idea of cost-benefit analysis come from? In the United States, many trace cost-benefit analysis to a letter penned by Benjamin Franklin.

…my Way is to divide half a Sheet of Paper by a Line into two Columns; writing over the one Pro, and over the other Con. Then during three or four Days Consideration, I put down under the different Heads short Hints of the different Motives, that at different Times occur to me, for or against the Measure. When I have thus got them all together in one View, I endeavor to estimate their respective Weights; and where I find two, one on each side, that seem equal, I strike them both out. If I find a Reason pro equal to some two Reasons con, I strike out all three…

…’tho the Weight of Reasons cannot be taken with the Precision of Algebraic Quantities…I think I can judge better, and am less liable to make a rash Step; and in fact I have found great Advantage from this kind of Equation, in what may be called Moral or Prudential Algebra.

While Franklin lays forth a practical approach to analyzing costs and benefits on a personal level, why should we apply this to a society? For this answer, I turn to two great European thinkers: Jeremy Bentham and Vilfredo Pareto.

Bentham famously characterized his ethical framework of utilitarianism as “the greatest happiness of the greatest number that is the measure of right and wrong.” He argued this was a “fundamental axiom” of moral thinking.

Anyone who has taken an introductory philosophy of ethics course can tell you how fraught this claim is, but its simplicity is timeless and alluring. All other things being equal, a state of greater happiness for a greater number is desirable to a state of less happiness overall.

The Italian polymath Vilfred Pareto aimed to devise a more narrow definition of moral rectitude, defining a “Pareto improvement” as an improvement of the state of affairs that makes at least one member of society better off without making any members of society worse off.

Seeing this as too high of a threshold to meet for public policy, British Economists John Hicks and Nicholas Kaldor each devised an alternate test: if a state of affairs can come about where the winners could hypothetically compensate the losers from the policy, that can be seen as a policy improvement. So it’s not an actual Pareto improvement that justifies public policy, it is a potential Pareto improvement that does.

Okay, so there is your history of what brought us to the point we have arrived at today. Cost-benefit analysis is an analytical approach that puts the Hicks-Kaldor criterion into operation. It does this by ascribing value using our classic welfare economic tools: what do people themselves value according to their willingness to pay for goods produced?

While some may argue that it is not obvious what a “cost” or a “benefit” is, in the practice of formalized cost-benefit analysis, costs and benefits are clearly defined terms. Costs and benefits are what people who are affected by a policy are willing to pay or to accept for the outcomes of the policy.

Let’s use a practical example. Say a national environmental protection agency is considering whether to require coal-powered electricity plants to install technology that will reduce their particulate matter emissions. The agency conducts a cost-benefit analysis to determine the costs and benefits of the policy. Analysts estimate (a) the cost of installing and adopting the technology, which will lead to lower yields for investors or higher costs for ratepayers and (b) the benefits to local residents of lower risk of death due to less particulate matter exposure.

Estimating the cost of installing and adopting the technology is a technical–but possible–undertaking. Similarly, estimating how many lives can be saved will not be easy per se, but is possible.

What is difficult to the non-economist is how we put a value on those lives. What economists do is say “we won’t put a value on lives, because people do that themselves.” The current approach to valuing reductions in risk of death is to use labor market data to estimate how much people trade off lower incomes for lower risk of death. This way they can elicit what price people themselves place on incremental reductions in risk of death achieved by policy interventions such as this.

From this example, you should be able to see some of the limitations of cost-benefit analysis. I don’t think you need to buy into Hicks-Kaldor, Pareto, or even Bentham to see what analysts are doing: they are estimating the economic costs and benefits of a policy intervention. This type of analysis does not claim to tell us anything about cultural values, fairness, or democracy. At its heart, it focuses on a narrow question: do the economic benefits of a policy exceed its economic costs?

I would endeavor to say this is a question worth answering for policymakers making large decisions about economic policies. No, it is not the only question worth asking when evaluating a public policy. But to be fair…I have never heard of a policymaker, analyst, journalist, philosopher, podcaster, blogger, dinner-table contrarian, or any other person saying that it is. Whether economic benefits outweigh economic costs needs to be a part of the policymaking process, but it will never be the sole factor of the policymaking process outside of some sort of fantasy dystopian technocracy which we are far from living in today.

At its heart, cost-benefit analysis is about its method.

This means comprehensively measuring direct costs. Understanding direct costs of a policy will help us understand the magnitude of the economic impact of a policy and who will be impacted by it.

This means comprehensively measuring indirect costs. Understanding what unintended consequences could be borne by members of society helps policymakers understand the broader impacts of public policy and how its impacts can be felt in unexpected ways.

This means monetizing tangible benefits. Monetization helps policymakers understand the scale of the policy and how much economic benefit could be generated by a policy, even if its costs are high.

This means monetizing intangible benefits. Putting dollar figures on impacts to health, environment, and other goods that we have rigorously-derived valuation for puts them on equal economic footing with more traditional economic benefits and costs.

This means measuring benefits and costs against alternatives or a baseline. Comparing policies to what will happen without implementation helps policymakers conceive what the costs and benefits of inaction are.

This means discounting benefits and costs to current year values. Discounting helps policymakers understand risks and opportunities inherent with policymaking with multiyear impacts.

This means disclosing key assumptions. Transparency helps policymakers understand the weak points in analysis.

This means conducting sensitivity analysis. Analyzing how results change with different assumptions helps policymakers understand how sensitive a model is to its assumptions and how it will change if assumptions change.

While books and dissertations have been written on cost-benefit analysis, conferences are put on by professional societies on the topic, and government administrations fight over different ways to carry out this project, the eight points listed above are the core of what makes a good cost-benefit analysis.

The goal of cost-benefit analysis is not to distill the science of decisionmaking into a simple formula. If anything, cost-benefit analysis does the opposite: it lays bare the complexities of decisionmaking. By understanding what economic costs are levied on society, unintended consequences of a policy, who directly benefits, what spillover benefits are felt, when costs and benefits are incurred, and what happens if we don’t act, policymakers gain key information that helps them make better decisions.

No, cost-benefit analysis is not a perfect formula for knowing definitively if a policy is “good.” Policymakers still need information on the impacts of policies on poverty, inequality, health, education, and subjective well-being. And all other things being equal, having a society with more of the things people want is a good thing. Finding out how to create that world deserves focus for analysis of public policy.

Ohio economists say cutting library funding will harm human capital development

In a survey released this morning by Scioto Analysis, 11 out of 14 economists surveyed agreed that cutting funding from Ohio's public libraries will reduce human capital development of Ohio residents. This comes after the Ohio House passed its budget proposal which allocates about $90 million less for public libraries than in the Governor’s proposed budget.

Kevin Egan from the University of Toledo agreed with this statement, saying “Both of my children still love to read due to our weekly local public library visits. Every time we went to the public library it was full of citizens utilizing its resources: many different types of human capital development beyond just reading, including public access to computers for online job applications and resume preparation; study rooms for students to prepare for their classes and do homework, helpful staff to locate whatever you are interested in learning.” David Brasington from the University of Cincinnati disagreed, saying “Other sources of information have made libraries redundant or replaced them.”

When asked about the impact that libraries have on small businesses, economists were split. Five respondents agreed that cutting funding from Ohio's public libraries will reduce formation and longevity of new businesses in Ohio, one disagreed, and eight were either uncertain or had no opinion. One of the economists who agreed was Bill LaFayette from the firm Regionomics, who wrote “Libraries have a wealth of information relevant to understanding markets and competitors, and business operation. Librarians have the training and experience to help people access and understand this information.”

The Ohio Economic Experts Panel is a panel of over 30 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.

Is the social safety net efficient?

As a human, I like giving people gifts. I like picking something out that I think a friend or loved one will like and giving it to them. As an economist, I know that gift giving is inefficient. 

I’m being facetious here (many economists including myself agree gift giving is not inefficient), but for a moment ignore the sentimental value of presenting a friend a gift and just think about the object itself. If you go to the store and spend $50 on a sweater as a gift, what do you think the odds are that your friend would have picked out that exact same sweater if they were in the store? 

Maybe they would have gone with a different color, or a different size. Maybe they wouldn’t have bought a sweater at all. If you just gave this person $50, basic economic theory says that a rational, utility maximizing individual will spend that money in the best possible way. The only chance you have of matching the same total utility with your sweater gift is if that is the exact way your friend would have spent that money. 

In economic parlance, we call these two ways of gift giving in-kind transfers and cash transfers. Usually when we’re talking about cash vs. in-kind transfers it is not in the context of gift giving between friends, it’s in the context of our social safety net. 

Some of our largest safety net programs are straightforward cash transfers. The Earned Income Tax Credit, Social Security, Temporary Assistance for Needy Families are some of the main examples of programs that provide cash assistance to families. We also have major in-kind transfers like SNAP and Medicaid that provide huge dollar value benefits but are limited to specific uses. 

While gift giving has a sentimental component, I think it is fair to say that our social safety net does not. If you agree with me on that point, then the next logical question is why does our social safety net have in-kind transfers at all? 

I think this is a fascinating question with cases on both sides. I’m not going to try and make a case either way in this blog post, but there are a few more considerations about our safety net as it currently stands that I feel like we need to acknowledge. 

First is that in-kind transfers can be equally as efficient as cash transfers under the right circumstances. In our gift giving example, if you knew your friend was going to purchase that exact sweater then buying it for them is exactly the same as giving them $50 from a utility perspective. 

Compare this to SNAP benefits. All humans need to eat, so if a family receives SNAP benefits that don’t fully cover their monthly food expenses then that is essentially the same as a cash transfer for them. If you gave them the same amount of money, they might end up with the exact same consumption at the end of the month. 

Another consideration is that in-kind transfers could potentially maximize social welfare rather than individual welfare. It might be the case that an in-kind transfer gets someone to consume some good that creates positive externalities. We might not be maximizing individual utility, but society might be overall better off. 

Take Medicaid as an example of this. Healthcare has lots of positive externalities, but some people might individually prefer spending their healthcare premiums on other essentials. By subsidizing healthcare for individuals who otherwise would not have it, we are improving outcomes on average for everyone, at the cost of losing some individual efficiency. 

So, should the social safety net have in-kind transfers, or strictly cash transfers? I don’t have the answer to that, nor does anyone else. The answer to that question is largely subjective, especially since efficiency is not the only criteria to judge a policy on.

Ending Medicaid expansion would devastate Ohio’s economy

Earlier this month, the Ohio House passed its version of the biennial budget, setting priorities for the state with tens of billions of dollars of spending.

The House version of the budget had many significant changes from the governor’s original budget. The House axed tax hikes on cannabis, gaming, and tobacco, the latter of which could have saved tens of thousands of lives by reducing smoking rates in the state. They also cut the state library fund by $90 million, child care subsidies by $180 million, and removed a child tax credit for families with young children that could have directly supported half a million children and grown the economy.

One provision the House preserved from the executive budget, however, was a law that would immediately revoke health insurance for 770,000 Ohioans if the federal government reduced its contribution to Medicaid at the state level.

When the Affordable Care Act was passed in 2010, the Obama Administration and Democrats in Congress had a goal to ensure everyone in the United States had access to affordable health insurance. The Affordable Care Act did this in a number of ways: covering children with their parents’ health insurance until age 26, creating subsidies for lower- and middle-class families to purchase individual insurance, requiring employers to provide health insurance to full-time workers, prohibiting denials of coverage due to preexisting conditions.

One of the biggest elements of this strategy was expanding Medicaid coverage to all Americans  with incomes under 138% of the federal poverty level, with the federal government paying 90% of the health costs for this new “Medicaid Expansion” population. This provision was challenged in courts and the Supreme Court ultimately made this optional for states. To date, 40 states have accepted the federal dollars to provide health insurance to low-income residents, including Ohio.

Today, 94% of Ohio residents are covered by health insurance, one of the state’s strongest health metrics. According to the Ohio Department of Medicaid, 770,000 Ohio residents are covered by Medicaid Expansion, about 6.5% of the state population. If these people lost their health insurance immediately, the number of people without health insurance in the state would double in an instant.

That is exactly what the Medicaid provision introduced by the governor and as passed by the House will do if the federal government reduces its share of the Medicaid expansion support by as little as a dollar. Ohio is likely to join twelve other states by adopting language that would automatically cut the Medicaid expansion population from health insurance rolls if the federal government reduces its match rate.

If this happened in Ohio, 770,000 Ohio residents would automatically lose health insurance. This would also have ripple effects through the state economy. The Kaiser Family Foundation estimates this would lead to a $72 billion reduction in federal Medicaid spending over the next ten years. That’s about $7.2 billion a year in health care spending that would evaporate from the state, roughly equal to 30% of Ohio’s economic growth over the past year, gone overnight.

These costs would compound over time. People without health insurance are less likely to get preventative screenings, leading them to more frequent emergency room use and more costly treatments. Evidence shows Medicaid expansion improved financial security, promoted tobacco cessation, and reduced rates of heart disease and premature death.

Medicaid is not cheap. But the evidence we have on it suggests it pays dividends to society. Legislators should think hard about the consequences of kicking 770,000 Ohio residents back into the ranks of the uninsured.

This commentary first appeared in the Ohio Capital Journal.