Archive for the ‘American Enterprise Institute’ Category

Solar radiation management: An evolving climate policy option

June 7, 2013 Comments off

Solar radiation management: An evolving climate policy option

Source: American Enterprise Institute

Measures to reduce greenhouse gas (GHG) emissions have long dominated public discourse about responses to man-made climate change. However, major institutional and political hurdles dim future prospects for controlling emissions. While adaptation to climate change can accomplish much, flawed institutions are likely to limit its efficacy.

Solar radiation management (SRM) appears to promise at least some capacity to offset the warming caused by the rising atmospheric GHG concentrations. SRM would seek to enhance and manage physical processes that currently reflect sunlight back into space. For example, most researchers have envisioned implementing this concept by adding to the layer of sulfuric acid that is already present in the lower stratosphere. All else remaining equal, global mean temperatures would fall even though GHG levels would not; the Intergovernmental Panel on Climate Change estimates that physical processes such as these already offset about 40 percent of global warming. By lessening the rise in temperature, SRM might lessen some of the risks of global warming.

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Preserving Medicare for Future Generations: Market-Based Approaches to Reform

April 22, 2013 Comments off

Preserving Medicare for Future Generations: Market-Based Approaches to Reform

Source: American Enterprise Institute via Robert Wood Johnson Foundation

These Robert Wood Johnson Foundation-supported reports from the American Enterprise Institute highlight market-based solutions to Medicare’s sustainability crisis and the inherent inefficiencies of the current system.

The nonpartisan Congressional Budget Office (CBO) projects the cost of providing benefits to Medicare enrollees will increase at an annual growth rate of 7 percent, reaching at least $1 trillion in fiscal year 2022.

America’s fee-for-service Medicare program represents the third-largest category of federal spending and has been under scrutiny for decades for spending more on health care benefits for enrollees than taxes can generate to pay for them. The CBO estimates that over the next 10 years, the number of Medicare enrollees will increase by one-third—approaching 67 million Americans.

Initiatives for containing the cost of higher education

April 19, 2013 Comments off

Initiatives for containing the cost of higher education

Source: American Enterprise Institute

How to contain the cost of colleges and universities is attracting much attention in higher education policy circles. The reasons for the attention are not hard to fathom. Students and parents labor under ever-rising tuition rates. Schools feel they must spend more in real terms to build or protect their brand, by boosting faculty research and scholarship, enhancing the student experience, and so on. And to round out the perfect storm, most states are curbing higher education appropriations because of rising budget pressures.

The result is that many colleges and universities are experiencing financial difficulties in spite of yearly tuition increases—difficulties that often erode the quality of undergraduate learning. For example, restricted course offerings, large class sizes, and a high proportion of classes taught by adjuncts and other casual-payroll teachers are common features of the undergraduate experience at many universities. Faculty feel ever more stressed by these money-saving changes—which makes it more difficult to achieve innovations in the methodology and culture of teaching or even to sustain current levels of quality.

Failure to change will make traditional universities vulnerable not only to political forces but also to disruptive innovations from for-profit universities and online offerings. In time, much of the traditional sector will be seriously weakened, or worse, if it does not reinvent itself. Many, including myself, believe this would be extremely unfortunate because it would strand massive amounts of human and physical capital, damage our global competitiveness, and deprive both the best and most vulnerable in our population of the face-to-face teaching and mentoring that are best delivered in a campus setting.

So far, however, more has been said than done. The lack of traction is a major problem for students, their families, and the state and federal agencies that fund higher education. So what is to be done? The good news is that traditional campuses do not lack for opportunities to effect needed improvements. The bad news is that organizational and market forces work to sustain the status quo.

See also: Addressing the declining productivity of higher education using cost-effectiveness analysis

See also: Public policies, prices, and productivity in American higher education

The Truth Behind Higher Education Disclosure Laws

November 14, 2011 Comments off

The Truth Behind Higher Education Disclosure Laws
Source: American Enterprise Institute

Recognizing that higher education is a market driven by consumer choice and reluctant to regulate college behavior directly, state and federal policymakers have created a host of college information disclosure and reporting requirements. Armed with better data, the theory goes, students and parents will vote with their wallets, putting pressure on low-performing colleges to improve while avoiding direct government intervention.

The problem, according to Education Sector’s Kevin Carey and Andrew P. Kelly, a research fellow at the American Enterprise Institute, is that the reporting requirement provisions are not working nearly as well as intended. In The Truth Behind Higher Education Disclosure Laws, to be released this Thursday, Carey and Kelly investigate scores of four-year colleges and universities to gauge their compliance with the information requirements of the Higher Education Opportunity Act.

The researchers examined five areas of strong interest to policymakers and the general public:

  • Pell Grant graduation rates;
  • Credit transfer and articulation agreements;
  • Employment and graduate school placement;
  • Textbook prices; and
  • Private student loans.

Researchers first looked at each school’s website for the elements of the disclosure provisions. For those elements that were not publicly available, researchers contacted the colleges via phone or email.

Carey and Kelly found that compliance rates vary widely. There is nearly universal compliance on the requirement that schools post their credit transfer criteria (99 percent). But just 25 percent of institutions meet the requirement that schools disclose the six-year graduation rate for students who receive a Pell Grant.

+ Full Paper (PDF)

Linking Costs and Postsecondary Degrees: Key Issues for Policymakers

September 17, 2011 Comments off

Linking Costs and Postsecondary Degrees: Key Issues for Policymakers
Source: American Enterprise Institute
From press release:

With the costs of college rising, policymakers and institutional leaders have struggled to cut spending while improving student-success rates. In “Linking Costs and Postsecondary Degrees: Key Issues for Policymakers” (published by AEI’s Future of American Education Project), Nate Johnson offers practical advice for decision-makers struggling to rein in college costs while improving productivity. Johnson, who previously served as executive director for planning and analysis for the State University System of Florida, currently works as a higher education policy consultant with a particular expertise in effective cost management.

Johnson provides a step-by-step guide to different approaches for calculating costs. He highlights the tremendous variability in cost across programs within institutions, and documents some of the “hidden costs” of higher education. Rather than cut budgets across the board, as many cash-strapped schools have done, officials should make budget decisions based on clear and reliable data that prioritize performance and productivity, Johnson argues.

Johnson offers five simple “rules of the road”:

  • Acknowledge that different degrees do not all cost the same. Decision-makers should keep the variability in program and degree cost in mind as they seek to reduce spending and balance budgets.
  • Private-sector colleges and universities show where growth in enrollments is possible even without massive state subsidies. Policymakers would be wise to examine what private colleges are doing and how much it costs them to do it.
  • Larger institutions are less costly because they benefit from economies of scale. Smaller institutions may be able to share facilities or merge entirely.
  • Policymakers must distinguish between enrollments and degrees. Low-cost, high-enrollment programs with low rates of student success can be a false bargain.
  • Past program performance may not be the best indicator of future success. Institutions with high costs per degree may have the most room for productivity gains.

+ Full Paper (PDF)

See also: Opportunities for Efficiency and Innovation: A Primer on How to Cut College Costs

Managing Flood Risk

August 10, 2011 Comments off

Managing Flood Risk
Source: American Enterprise Institute

Key Points

  • While flooding is a fact of life, studies show that humans are poor at evaluating the risk of flooding and insuring themselves against potential losses.
  • Voluntary, private insurance markets underperform for several reasons: people tend to underestimate flood risks; government flood-control efforts reduce consumer incentives to insure; government insurance regulations hinder private insurer competition; and expectations of post-flood government assistance may increase risk taking.
  • Policy options include reforming government assistance to remove perverse incentives, such as expanded development in flood-prone areas; measures that undermine people’s inclination to buy insurance, or pay the full cost of risk; and third-party risk subsidization.
  • Mandatory insurance may be necessary: some studies suggest that the only way to guarantee that those taking the risks are the ones paying the price, is to mandate the maintenance of fully priced private insurance policies as a pre-condition of property ownership in flood-prone areas.

More Than Meets the Eye: The Politics of For-Profits in Education

July 15, 2011 Comments off

More Than Meets the Eye: The Politics of For-Profits in Education
Source: American Enterprise Insitute
From press release:

While many of the recent debates about for-profit companies in K-12 and higher education have reflected traditional ideological divisions between Democrats and Republicans, a closer look reveals that these lines in the sand are far from constant, particularly when it comes to the Democratic position.

In More Than Meets the Eye: The Politics of For-Profits in Education, the second report of AEI’s Private Enterprise in American Education series, AEI research fellow Andrew P. Kelly, who was recently named one of sixteen next-generation leaders in education policy, illustrates how the typical political divides do not tell the whole story when it comes to the appropriate role of for-profits in education.

Some of his interesting findings include:

  • In K-12 education, Democrats have been amenable to for-profit involvement on policies like Supplemental Education Services and school turnarounds, where the for-profit role is limited to support services or a small subset of troubled schools.
  • In higher education, Democrats are divided on the ‘for-profit question.’ A surprising coalition of 58 Democrats–including some of the most liberal–broke ranks and joined Republicans in their effort to prevent the enforcement of proposed gainful-employment regulations.
  • At the K-12 level, roughly 75% percent of the public is supportive of for-profit contracting for peripheral services like transportation and facilities management, but only 25 to 30% are comfortable with for-profit management of entire school sites and instruction.
  • At the higher education level, the majority of Americans approve of for-profit colleges and universities, though they consistently see them as lower quality than public or nonprofit institutions.

+ Full Paper (PDF)

Creating a Public Square in a Challenging Media Age

June 25, 2011 Comments off

Creating a Public Square in a Challenging Media Age
Source: American Enterprise Institute

Much has changed in media and communications technologies over the past fifty years. Today we face the dual problems of an increasing gap in access to these technologies between the “haves” and “have nots” and fragmentation of the once-common set of facts that Americans shared through similar experiences with the media. This white paper lays out four major challenges that the current era poses and proposes ways to meet these challenges and boost civic participation.

+ Full Paper (PDF)

Lessons of WikiLeaks: The U.S. Needs a Counterinsurgency Strategy for Cyberspace

June 6, 2011 Comments off

Lessons of WikiLeaks: The U.S. Needs a Counterinsurgency Strategy for Cyberspace
Source: American Enterprise Institute

Over the past 10 years, the United States has devoted significant resources to the development of a counterinsurgency strategy for fighting non-traditional enemies on the ground. As the global scandal caused by the unauthorized publication of classified government material on the infamous WikiLeaks Web site has demonstrated, it is time for a counterinsurgency strategy in cyberspace as well. While the U.S. government has authored a number of cybersecurity strategies, they all focus too much on technology and not enough on a comprehensive approach to battling cyber insurgency. This Heritage Foundation Backgrounder explains what the U.S. should do if it wants to win the escalating cyber battle.

What’s wrong with ROTC today?

May 27, 2011 Comments off

What’s wrong with ROTC today?
Source: American Enterprise Institute

After a faculty meeting today, Yale University is expected to join the ranks of other elite schools where, after four decades of exile and estrangement dating back to the Vietnam War, the Reserve Officers’ Training Corps (ROTC) is returning to campus. With the repeal late last year of “don’t ask, don’t tell,” a policy affecting gays in the military, America’s leading universities–Harvard, Yale, Columbia, and Stanford–are renewing their ties to the ROTC.

Yet, welcome as these changes are, the ROTC continues to decline in large sections of the country, undermining its original purpose–to create an officer corps that reflects the nation as a whole. In a new American Enterprise Institute (AEI) report, Underserved: A Case Study of ROTC in New York City, Cheryl Miller of AEI’s Program on American Citizenship focuses on New York City, America’s largest and most diverse metropolis, where the ROTC has been largely abandoned.

In fact, today’s ROTC has become increasingly southern and rural. For example, Virginia (population 8 million) has twenty ROTC programs–eleven Army, six Navy, and three Air Force. Alabama (population 4.7 million) has ten Army programs. Mississippi (population 2.9 million) has nine ROTC programs–five Army and four Air Force. By comparison, New York City, with 8.1 million residents, has only four ROTC programs–two Army, one Navy, and one Air Force.

Among the report’s key findings:

  • The absence of ROTC units on urban campuses, especially in the Northeast, prevents the military from taking full advantage of their large, ethnically diverse populations.
  • The ROTC’s one-size-fits-all approach fails to account for the unique needs of each market. Urban ROTC programs have logistical, outreach, and transportation challenges incomparable to those at the typical southern state school.
  • By overlooking institutions like the City University of New York–among the top producers of African American baccalaureates–the military is not accessing minority officers fully reflective of the population.

+ Full Report

Public Opinions on Taxes: 1937 to Today

April 12, 2011 Comments off

Public Opinions on Taxes: 1937 to Today
Source: American Enterprise Institute

With talk of fundamental tax reform in the air, AEI updates the Public Opinion Study on Taxes, which takes a comprehensive look at polling on taxes from 1937 to the present.

  • Forty-eight percent say the federal income taxes they pay are too high. Forty-five percent say they are about right. Only 3 percent say they are too low
  • Late Fall 2010 polls showed the public split on which party could better handle taxes. A new late March-early April 2011 NBC/Wall Street Journal poll shows the Republicans with a 2-point advantage on the issue.
  • Sixty-eight percent in a new AP-GfK Roper poll said “taxes” are an extremely or very important issue to them, ranking far behind such issues as the economy and gas prices. Forty-seven percent approve of the way President Obama is handling the tax issue, 52 percent disapprove.
  • Although Americans’ preference was to not extend the Bush tax cut for those making $250,000 or more, the public supported the December tax cut compromise that extended that tax break.
  • In other areas, public opinion has been stable. Many Americans think the tax system needs major reforms. Polls support a top 25 percent total tax rate. The estate tax is unpopular. In a December 2010 ABC/Washington Post poll, 52 percent supported increasing the exemption on inheritance taxes so that only estates worth $5 million are taxed. Forty-one percent were opposed.

+ Full Paper (PDF)

From School Choice to Educational Choice

April 11, 2011 Comments off

From School Choice to Educational Choice
Source: American Enterprise Institute

+ The “whole school” approach to education reform has made it difficult for specialty education providers to get past bureaucratic rules and offer their services to parents, students, and teachers.

+ “Unbundling” education means offering students an assortment of services instead of an indivisible package of “education.” Such services could be packaged and customized to fit specific student needs and abilities.

+ Virtual schooling and customized educational tools are breaking the whole-school model. Consumers need information on their choices as well as funding options that allow them to choose customized services.

Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries

March 28, 2011 Comments off

Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries
Source: American Enterprise Institute

Substandard and counterfeit drugs represent a global public health crisis. However, there is little economic analysis of the market given the paucity of data. Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low-and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13-18% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs. Indeed, many cheaper non-innovator products pass all quality tests, and are genuine generic drugs. This suggests that policies in favor of these more affordable generic drugs may potentially weaken the signaling effect of price and increase the opportunity for counterfeit entry into the market. One way to counter this effect is directly providing better information about drug quality.

+ Full Paper (PDF)
+ Full Paper (PDF)

Comparing Federal and Private Sector Compensation

March 28, 2011 Comments off

Comparing Federal and Private Sector Compensation
Souce: American Enterprise Institute

Public sector compensation has come under increased scrutiny from politicians and the media, but comprehensive technical comparisons of federal and private pay have been largely absent from the discussion. Drawing from the academic literature and using the most recent government data, this report measures the generosity of federal pay and benefits, including the implicit compensation that federal employees derive through greater job security. Compared to the pay of similar private sector workers, we estimate a federal salary premium of 14 percent, a benefits premium of 32 percent, and a job security premium for federal workers of at least 11 percent of pay. Together, these generate an overall federal compensation premium of approximately 39 percent. Reducing federal pay to market levels could save taxpayers roughly $60 billion per year.

+ Full Paper (PDF)

Report Card on Effective Corporate Tax Rates

February 16, 2011 Comments off

Report Card on Effective Corporate Tax Rates
Source: American Enterprise Institute

At 35 percent, the US statutory corporate tax rate is the highest among all the countries in the Organization for Economic Cooperation and Development (OECD). Since the 1980s, other OECD economies have been steadily lowering their tax rates, but the United States has not cut its top statutory rate since 1993. In the OECD, the United States also has higher-than-average effective average and effective marginal tax rates, which are the best indicators for capital investors of their true tax liability. Policymakers seeking to understand why some companies are moving plants abroad should consider the impact of tax rates on competitiveness. The Obama administration and the 112th Congress should lower effective tax rates so the United States can compete in the global economy.


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