April 26, 2016

Extraordinarily Difficult to Reduce Entitlements

[From article]
The entitlements that dominate our consciousness are big ticket items such as Social Security, Medicare and Medicaid, unfunded sinkholes ranging from 50 to 200 trillion, depending on who’s counting. These staggering obligations may threaten to wreck national budgets and lay waste to society, but they have little to teach us about the fundamental, and very scary, nature of entitlements. Life’s little lessons are far more instructive. Lesser entitlements that resonate with our everyday experience are more human-size: a pay raise, an inflated school grade or a free drink at Moe’s Tavern on your birthday. We rarely think of these examples as entitlements, but once awarded, just try to get them back.
[. . .]
psychologists Daniel Kahneman and Amos Tversky discovered a profound asymmetry in human behavior they dubbed loss aversion. Through a gamut of social experiments, they demonstrated that people strongly prefer avoiding loss to acquiring gain, a human imbalance that initiated the rewrite of traditional cost–benefit models.
[. . .]
The principle of loss aversion describes how a benefit – any benefit – becomes an entitlement.
[. . .]

Life, for our forebears, was at least precarious and challenging, if not truly “solitary, nasty, brutish and short,” as opined by Thomas Hobbes. Resources were precious. An extra caribou in the larder, a few more fur skins to guard against the elements or a roomier cave were certainly causes for celebration, but the loss of any amount of food, clothing or shelter was dangerous. Gain was valuable, but loss could be lethal; loss aversion makes evolutionary sense. Whether loss aversion remains beneficial or simply vestigial, it appears to be deeply embedded in our genes.
[. . .]

The political wishful thinking that we can cut, manage or even tame big ticket entitlements, if and when we so choose, belies eons of human history.
The time to plan for the control of entitlements is at their inception.


April 19, 2016
The Only Way to Cut Entitlements
By Dean Kedenburg

No comments: