student loan debt | Normative Narratives

July 4, 2018
by bzupnick 1 Comment

Labor, Education, and Apprenticeships

Image result for apprenticeship

Long time no see folks. It’s well past time to shed that post-policy depression (tax code) and get back to it. In doing so let’s consider a topic I have discussed often, one that should have bipartisan and Trump administration support, but has unfortunately yet to get its due–apprenticeships.

The Trump administration just concluded it’s “Task Force on Apprenticeship Expansion” in May. Here are some key recommendations from the final report:

“The Subcommittee on Attracting Business to Apprenticeship recommended that the Industry Recognized Apprenticeship program should streamline and simplify program funding through various methods, such as updating Federal funding criteria, streamlining State grant access, and exploring sector-led financial options.” (p 10)
“According to recent research by the U.S. Government Accountability Office (GAO), there are more than 40 workforce development programs across nine Federal agencies. Data shows that these programs were funded with more than $42 billion, although less than half that amount ($17 billion) went to employment and training activities. Based on this data, there is a clear need to streamline and simplify programs by developing an organized approach that recognizes and preferentially funds apprenticeship.” (p 27,28)

Who can argue against greater efficiency? Nobody. However these efficiency increasing measures were already implemented, according to the Government Accountability Office (the very entity the Task Force cited regarding inefficiency in the first place)–that low hanging fruit has already been picked.

The Trump administration wants the private sector to share in the cost of scaling-up apprenticeship programs–another sentiment that is difficult to argue with. The problem is that it has not offered any incentive for the private sector to do so. Private companies are currently bringing in record profits while under-investing in apprenticeships; why would these companies change their behavior now, when times are good, without a new incentive to do so? Instead of increasing spending or leveraging the recent corporate tax giveaway to provide such an incentive, the Task Force cites measures to increase efficiency that have already been implemented.

The private sector needs to play a role in developing the curricula for apprenticeship programs, but can we stop pretending it will provide meaningful financing for them? Maybe if we cut corporate taxes even further they would, right!? If only we could’ve done away with that pesky corporate income tax completely, surely they would have (well, there is no more corporate alternative minimum tax now)…OK, clearly I’m still salty about tax reform…

It is time to admit that private businesses have largely abandoned the apprenticeship model. Sure there will always be anecdotes about successful training programs, particularly from large corporations that can afford to attract top talent. Unfortunately nothing currently exists on the scale required to meet the needs of the average American worker or business.

The results are obvious: underemployment, stagnant wages (a modest uptick in wage growth recently does not make up for decades of stagnancy), and ballooning tuition rates / student loan debt as everyone feels they must go to college to make a decent living. If the Trump administration’s answers to these societal problems are reaching some unattainable level of efficiency and expecting the private sector to suddenly become more altruistic, nothing will change from today’s unacceptable status-quo. If, on the other hand, apprenticeships were adequately invested in, they could provide an affordable alternative to the four-year college path, and revive America’s dwindling middle class.

The Trump administration just proposed merging the Labor and Education Departments. In talking about it, a friend asked me if I thought the proposal was a good idea. My answer was that it could be a good idea, but under this administration it would not be. If, for example, the merger really reduced redundancies and opened up more resources for programs like apprenticeships, that would be a positive trade-off in my opinion (again, greater efficiency is hard to argue against, in theory).

But lets be realistic, that is not the point of the Trump proposal. Look at Trump’s big Apprenticeship Task Force, which would fall squarely within the proposed agency’s mandate. Where’s the beef? SHOW ME THE MONEY! It’s simply not there…

As a nation we invest in what is important to us. No amount of free-market rhetoric, appeals to “greater efficiency”, or other forms of lip-service are going to shrink Americans’ skills gap or “make America great again”. Only investing adequately in our greatest asset–the American people–can accomplish that feat.

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(Note: When considering what we do spend tax dollars on, don’t forget that the recent spending bill appropriated $61 billion MORE for defense spending–$655 billion total, compared to $42 billion for workforce development programs. Also, don’t forget that the recently passed tax code will reduce tax revenue by over $1 trillion dollars over the next decade)

January 26, 2016
by bzupnick 1 Comment

Economic Outlook: Why to NOT Raise The Social Security Retirement Age–Labor Force Participation and the “Life-Cycle of Employment”

Original article, courtesy of Politifact:

During the Republican presidential debate in North Charleston, S.C., Sen. Ted Cruz, R-Texas, took aim at the nation’s economic record under President Barack Obama.

“The millionaires and billionaires are doing great under Obama,” Cruz said. “But we have the lowest percentage of Americans working today of any year since 1977. Median wages have stagnated. And the Obama-Clinton economy has left behind the working men and women of this country.”

Cruz is on to something. One key employment statistic known as the civilian labor force participation rate is at its lowest level since the 1970s. This statistic takes the number of Americans in the labor force — basically, those who are either employed or who are seeking employment and divides it by the total civilian population.

Here’s a chart going back to the mid 1970s.

When the civilian labor force participation rate is low, it’s a concern, because it means there are fewer working Americans to support non-working Americans.

…a notable factor in the decline of the labor-force participation rate is the aging of the Baby Boom generation. As more adults begin moving into retirement age, the percentage of Americans who work is bound to decline.

…there’s another way to read Cruz’s words. He said “the lowest percentage of Americans working” since 1977, which could also refer to a different statistic, the employment-population ratio. This statistic takes the number of people who are employed and divides it by the civilian population age 16 and above.

The difference in this case is that using the employment-population ratio, Cruz’s statement is incorrect. Unlike the labor-force participation rate, the employment-population ratio has actually been improving in recent years, although it’s below its pre-recession highs.

Here’s a chart showing this statistic over the same time frame:

If you exclude the Great Recession, the employment-population ratio was last at its current rate in 1984, not 1977. So by that measurement, he’s close.

(Note: this blog will not meaningfully address the other major labor market issue raised by Senator Cruz–stagnant wages. Nor will it discuss strategies to alter America’s aging demographic. The primary focus is labor force participation by different age groups, the relationship between older workers staying in the workforce longer and youth unemployment, and how those issues are related to America’s Social Security system.

It is not my intention to spark inter-generational warfare, but rather to point out that a “fix” commonly floated to bring America’s fiscal house in order–raising the Social Security eligibility and retirement ages–could have significant unintended negative consequences).

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A declining labor force participation rate is worrisome. Even the more positive statistic (employment-population ratio) is cause for concern.

But as important as what is happening, is why it is happening. Failure to accurately answer this question risks the wrong policy response, which would at best fail to solve the problem and at worst further exacerbate it. The conservative camp would undoubtedly focus on the welfare state and disincentives to work. The liberal camp would probably focus on economic inequality and the resulting lack of opportunity facing many poor, mostly minority youths.

I am not interested in getting into a partisan debate, although my regular readers know which side I generally fall on. What neither side is likely to consider (because it does not fit neatly into either economic narrative) is in what age ranges most of the employment to population ratio change has taken place. To shed some light on this, lets look at a recent analysis done by the Bureau of Labor Statistics (The BLS numbers use the 16 and older employment-population ratio definition. In the interest of full disclosure, I work for the BLS, but not in any employment statistics capacity. Furthermore, the views expressed in this blog are my own, and are not the views of the BLS).

Group	Participation rate			Percentage-point change
Group	1994	2004	2014	1994–2004	2004–14
Total, 16 years and older	66.6	66.0	62.9	-0.6	-3.1
16 to 24	66.4	61.1	55.0	–5.3	-6.1
16 to 19	52.7	43.9	34.0	-8.8	-9.9
20 to 24	77.0	75.0	70.8	-2.0	-4.2
25 to 54	83.4	82.8	80.9	-0.6	-1.9
25 to 34	83.2	82.7	81.2	-0.5	-1.5
35 to 44	84.8	83.6	82.2	-1.2	-1.4
45 to 54	81.7	81.8	79.6	0.1	-2.2
55 and older	30.1	36.2	40.0	6.1	3.8
55 to 64	56.8	62.3	64.1	5.5	1.8
55 to 59	67.7	71.1	71.4	3.4	0.3
60 to 64	44.9	50.9	55.8	6.0	4.9
60 to 61	54.5	59.2	63.4	4.7	4.2
62 to 64	38.7	44.4	50.2	5.7	5.8
65 and older	12.4	14.4	18.6	2.0	4.2
65 to 74	17.2	21.9	26.2	4.7	4.3
65 to 69	21.9	27.7	31.6	5.8	3.9
70 to 74	11.8	15.3	18.9	3.5	3.6
75 to 79	6.6	8.8	11.3	2.2	2.5
75 and older	5.4	6.1	8.0	0.7	1.9
Age of baby boomers	30 to 48	40 to 58	50 to 68

The change in labor force participation seems to have been driven primarily by:

Fewer younger people working
More elderly people working

In fact, the decline of prime working age labor force participation (say 25-55) over the last 20 years has been quite small.

It is true that once you get to the older age brackets (especially 60+), the group represents a smaller percentage of the overall population (see Table 1), so you cannot compare different groups percent changes directly. But even factoring in percentage of the total population, increases in elderly workers have had a significant impact on overall employment. As America’s population continues to get older, it will have an even greater impact:

Furthermore, according to BLS Employment Projections (2014-2024), these age related labor trends are expected to continue into the future:

The labor force participation rate for youth (ages 16 to 24) is projected to
     decrease from 55.0 percent in 2014 to 49.7 percent in 2024. The youth age
     group is projected to make up 11.3 percent of the civilian labor force in
     2024 as compared with 13.7 percent in 2014. In contrast, the labor force
     participation rate for the 65-and-older age group is projected to increase
     from 18.6 percent in 2014 to 21.7 percent in 2024. This older age group is
     projected to represent 8.2 percent of the civilian labor force in 2024 as
     compared with 5.4 percent in 2014.

One could argue that older and younger people generally do not occupy the same job. Sometimes this is true, sometimes it is not. Furthermore, any given firm could have an older person making a lot of money in a position they intend to fill with more than one entry level worker. This is all anecdotal–without doing more research the exact relationship between older and younger workers and job openings is unknown–but surely there is some relationship (probably one that varies greatly by industry).

Next time a politician talks about raising the Social Security eligibility and retirement ages, consider:

Poorer people (who rely on Social Security the most) are not living longer.
Keeping people working longer means less jobs available to younger people. This also contributes to the exploding student loan debt problem in America (even those who do graduate college have a difficult time getting good paying jobs, at least partially because of competition from older, more qualified workers).

Both of these related issues–youth un(der)employment and student loan debt–create a drag on the economy, as younger people delay starting their “adult lives” (starting families, buying homes, etc.). This drag on the economic growth leads to–you guessed it–less job creation. Based on the BLS numbers, we clearly need to make youth employment a greater priority, as ignoring the problem compromises both current and future economic growth.

When we consider raising the Social Security eligibility age, we must consider unintended consequences. To responsibly increase the eligibility age, the government would have to launch a youth employment program. This could offset most (if not all) of the savings associated with raising the retirement age. Perhaps instead of raising the eligibility age, we should consider making social security a needs-based program, eliminating the cap on taxable income, or both. This may not be “fair” to people who have paid the most into the program (or those who have been more financially conservative throughout their lives), but it would make the Social Security system more financially sustainable, without the unintended negative consequences.

America does not have to enact policies that exacerbate youth unemployment and/or discomfort poorer elderly people in order to save a few bucks. Our strong financial system and global faith in America’s creditworthiness ensures we can continue to finance important programs (for people of all ages) with long term economic implications. But this global faith in America’s creditworthiness is predicated on the belief that we can correctly identify and address our structural economic problems (and thus continue to grow and repay our debts). To preserve this faith, we must work across the partisan divide to responsibly and sustainably address these problems, not recycle stale partisan arguments that are largely unrelated to the problems at hand.

October 14, 2015
by bzupnick 3 Comments

Economic Outlook: For-Profit Failures Further Support Free Community College Plan

New Research:

On Thursday (9/10), two researchers — Adam Looney of the Treasury Department and Constantine Yannelis of Stanford University — released an analysis of a new database that offers much more detail. It matches records on federal student borrowing with the borrowers’ earnings from tax records (with identifying details removed, to preserve privacy). The data contains information about who borrows and how much; what college borrowers attended; their repayment and default; and their earnings both before and after college.

…the data suggests that many popular perceptions of student debt are incorrect. The huge run-up in loans and the subsequent spike in defaults have not been driven by $100,000 debts incurred by students at expensive private colleges like N.Y.U.

They are driven by $8,000 loans at for-profit colleges and, to a lesser extent, community colleges. Borrowing for both of these has become far more common in recent years. Mr. Looney and Mr. Yannelis estimate that 75 percent of the increase in default between 2004 and 2011 can be explained by the surge in the number of borrowers at those institutions.

It’s not hard to see why. The traditional borrowers from four-year colleges tend to earn good salaries out of college and pay back their loans, even during the recent years of economic weakness. The typical borrower who left a less selective four-year college in 2010 earned $35,000. For those leaving more selective colleges, the figure was $49,000. Those salaries obviously aren’t lavish, but they’re high enough to let most people meet their initial loan payments — and they tend to lead to bigger salaries in later years.

Borrowers at for-profit and community colleges, by contrast, earn low salaries — a median of about $22,000 for those exiting school in 2010 — and have had difficulty paying their loans.

The new findings are consistent with earlier data — such as statistics showing that default rates are actually lower among borrowers with large loans than among borrowers with small loans.

But the new data, which goes back two decades, shows how much the landscape of borrowing has changed. Today, most borrowers are older and have attended a for-profit or community college. A decade ago, the typical borrower was a traditional student at a four-year college.

Why did the face of borrowing change so rapidly in just a few years? During the recession, millions of students poured out of a weak labor market and into college to improve their skills. Historically, these students would have gone to community colleges. But with state tax revenues taking a nose-dive, community colleges were starved for funds and unable to expand capacity to absorb all of the new students. Students took their Pell Grants and loans to for-profit colleges. Enrollments at these schools spiked, and so did borrowing.

Behind the increase in for-profit college loan defaults is an underlying problem. How did these for-profit schools become so prominent so quickly? During the Great Recession, there was a spike in demand for schools where people could acquire marketable skills cheaply. This is exactly what economic theory told us would happen:

With a larger pool of people looking for work (higher unemployment), employers could be more selective, requiring greater credentials for a given job than they otherwise would have been able to.
As the labor market worsened, the “opportunity cost” of obtaining required skills (foregone wages) decreased.
As people’s income decreased (both as a result of the recession, but also part of a long-term trend of stagnant median incomes versus increasing tuition costs), demand for the “inferior good” (in this case, for-profit and community colleges) increased.

Compounding the issue, many War on Terror veterans we’re returning home, with GI Bill tuition-assistance in hand but little idea of what to do with it.

At the same time, the recession resulted in lower tax receipts, and municipal and state budgetary restraints became more acute. Instead of increasing funding to deal with the predictable influx of students, community colleges faced budget cuts. The resulting surplus of students was readily snapped up by for-profit colleges.

For-profit colleges are, on average, four times more expensive than community colleges, and return poorer graduation rates and career outlooks. In other words, for every one student the federal government paid for to go to a for-profit school, it could have sent four students to community college. Furthermore, those four students would be more likely to graduate and have better career prospects.

People have different reasons for wanting to attend community college. Some people want to learn a specific marketable skill, with no intention of pursuing a bachelors degree (or beyond). Therefore, in order for community colleges to be eligible for new proposed federal subsidies, they should have to offer specialized vocational training programs.

For other people, community college is a stepping stone towards a more advanced degree. For these students, a free community college option would allow them to find out if “college is for them”, without taking out loans (I would argue that the absence of debt itself would lead to better academic outcomes). Another requirement for receiving expanded federal assistance should be making it easier to transfer community college credits to four-year college.

Of course, it is not solely up to community colleges whether four year institutions accept their credits. The Federal Government could, however, use the power of the purse and scale grant eligibility based on a four year school’s willingness to accept credits from community colleges. I bet community college credits would become more transferable if this were the case…

Perhaps some of these reforms are already baked into the Obama plan–if so, good. Either way the government, with the assistance of academic and private sector partners, should develop guidelines to help community colleges meet technical program and transfer-ease requirements.

With these requirements are met, community colleges could better serve their two target groups–returning adult-students looking for technical skills, and out-of-high-school prospective college students who think they want to pursue a bachelors degree, but do not have the conviction and/or financial resources to jump right into a four year college.

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If properly tailored, a tuition-free community college plan would not greatly increase government spending. Rather it would be, in large part, a transfer of funding from for-profit (which rely almost exclusively–86% of revenue–on federal grant money to operate) to community colleges, in exchange for reforms that allow community colleges to better serve their students.

Some figures here might help put this “transfer” into context. Obama’s community college plan calls for $1.4 billion in funding in 2016 and $60 billion over the next decade. Compare this to the $32 billion the Department of Education spent on for-profit grants and loans from 2009-2010 alone.

Isn’t better educating more people, for far less money (per person), exactly what student aid programs should strive for? Now, to be sure, pushing more people towards community college would increase the cost of the tuition-free plan. As many people have pointed out, to make the plan less costly tuition assistance could be reserved for less wealthy applicants with good academic records (high school grades and/or standardized test performance).

August 23, 2013
by bzupnick 3 Comments

Economic Outlook: Neo-Classical Economics, Perfect Competition, and the Cost(s) of Attending College

Student loan debt in America is a controversial subject. Some countries subsidize higher education, the U.S. does not. In the context of the past decades in America, marked by increasing inequality and decreasing social mobility, the issue has become even more controversial. Yong adults, often without parental support, are sold the panacea of higher education as a means to a better future. While it is true that college graduates make more and experience lower unemployment rates, simply “getting a degree” can often be counter productive. If the degree is in a field with very limited job opportunities, or due to cyclical economic factors outside individual’s control (i.e. a prolonged recession), a young adult may be saddled with student loan debt; far from enabling social mobility, an ill planned college decision can leave a person with a lifetime of debt and actually push them into a “poverty-trap”. Further exacerbating the problem, the importance of a college degree has drastically increased the demand of a college education, pushing up the average cost of attending college.

In America, public student loan debt is somewhere between $900bn and $1 trillion dollars–most economists agree that student loan debt and poor job prospects have caused young adults to put off moving out, depressing overall consumption and further prolonging the (growth) recession. Against this backdrop, the Obama administration has attempted to stymie the rapidly increasing costs of college education. Obama’s plan is essentially two fold, 1) subsidize student loan debt with fixed preferential rates, and 2) rank institutions–based on tuition, graduation and retention rates, student makeup and graduates’ earnings–and then tie federal aid to those rankings.

The Obama administration has already passed a watered down version of its proposed student loan plan. The plan will tie rates to the government borrowing rate (T-bill) plus a premium depending on the level of the degree being pursued. While a short term fix while the economy stagnates, a capped rate of 8.25% does not provide the stability or low costs of fixed subsidized rates that many were hoping for. The Obama administration kicked the can down the road; how far down the road remains to be seen and is largely independent of the merits of a college education. Hopefully this short-term fix remains a fix for a while, and only becomes an issue again in a less contentious economic and political climate.

The second part of Obama’s plan, revealed yesterday at the University of Buffalo, proposes to publish information to make the decision process more transparent for prospective college students. Ultimately, Obama wants to tie federal aid to these rankings, creating an incentive for schools to keep costs down. If this part of the plan does not pass through congress, at least the information campaign segment of the plan is isolated from political gridlock. Opponents of the plan say that and results based plan will compromise the integrity of a degree, causing schools to make graduation easier. I find it hard to believe that a school would give up quality control over its most valuable asset–a degree–simply for student loan money.

Opponents of both of these plans contend that the government should get out of the student aid business and allow market forces to determine the price of a college education / student loan. At the root of this argument is the belief of neo-classical economics that perfect competition produces optimal outcomes for consumers, producers, and society as a whole. However, empirical evidence suggests a different outcome–rising costs of a college education without a related increase in the benefits of that education (and arguably decreasing benefits, as an undergraduate college degree becomes more commonplace and therefore less of a differential in hiring decisions). How could this be? Have people been duped into believing college is more valuable than it really is? While poor decision making by borrowers and lenders has surely exacerbated the problem of student loan debt and college tuition increases, the real culprit is in the assumptions underlying neo-classical economics and perfect competition. While no market in the real world completely fits these assumptions, the markets for college education and student loans are particularly ill matched.

Neo-Classical Assumptions:

People have rational preferences among outcomes — This could not be further from the truth. I have never met someone who is 100% rational (think Spock from Star-Trek). Some people are mostly rational, but in general people tend to be very short-sighted with consumption and investment decisions (or lack-thereof)–particularly those at the bottom of society who have little reason to be optimistic about their futures;
Individuals maximize utility and firms maximize profits — Well it is certainly true that firms (in this case schools) move to maximize their profits. However, maximizing utility is more difficult to evaluate–everyone values things differently, has different discount rates for consuming now vs. saving for later, different values work vs. leisure time, etc. This assumption cannot be refuted, but really does not tell us much because of its ambiguity (peoples preferences are different and cannot be compared);
People act independently on the basis of full and relevant information — Far from full and relevant information, often times power and knowledge asymmetries lead to very poor decision making. The second part of Obama’s plan intends to overcome this information gap.

Perfect Competition:

Perfectly competitive markets exhibit the following characteristics:

There is perfect knowledge, with no information failure or time lags. Knowledge is freely available to all participants, which means that risk-taking is minimal and the role of the entrepreneur is limited. — The role of the entrepreneur (in this case the student) is not minimal. The availability of information and guidance can make the difference between a “good decision” (for example going to a public college for a STEM degree) vs. a “bad decision” (for example going to a private party school for a poetry degree). The time-lag is particularly pronounced in education decisions, college often requires a large upfront cost based on the belief that the net benefit (higher earnings – college costs – student loan fees – opportunity cost to attend college) will be positive. Even with perfect information today (which is very difficult to obtain) due to uncertainty about future borrowing costs (argument for fixing student loan rates) / job availability / degree obsolescence (the field advances or becomes irrelevant), the decision to attend college is largely a leap of faith–a leap that is continuing to fall short for many people (which is why college costs must be reigned in, to align the costs and benefits of a college education);
There are no barriers to entry into or exit out of the market. — While there are no real explicit barriers to entry, the implicit barriers to entry are huge. Colleges require huge start-up costs, and take time in order to establish “prestige”. The best colleges have an implicit oligopoly (this is not necessarily a bad thing, but it should be noted); while they may partner with public institutions / community colleges, their demand for their services are rival, demand inelastic, and constantly in short supply. Public Colleges, technical schools, community colleges, and more recently online schools or “MOOCs” have become cheaper alternatives;
Firms produce homogeneous, identical, units of output that are not branded. — Related to the previous point; while alternatives to “traditional schooling” are now available, they are generally not seen as comparable to University education (Public colleges are, but community colleges / MOOCs typically are not). Part of this has to do with the stigma attached to these alternative channels of education. Guidance counselors, college advisers, unemployment trainers and even employers should all promote these differentiated services based on the needs and desires of potential applicants. Sometimes going to a technical college / pursuing an associates degree is more beneficial and (always) costs less than going to a traditional 4 year college–sometimes these options can be “stepping stones” to more advanced degrees as the young adult matures and reevaluates his/her priorities;
Each unit of input, such as units of labour, are also homogeneous. — Each “input” is not homogenous–people go to college to explore their potential and study any number of diverse fields. Neither “inputs” nor “outputs” of colleges are in any way homogenous;
No single firm can influence the market price, or market conditions. The single firm is said to be a price taker, taking its price from the whole industry. — No “market price” for colleges; inelastic demand, imperfect information and a shortage of spaces allow certain colleges to essentially charge whatever tuition rate they want;
There are a very large numbers of firms in the market. — True, but this has not led to true competition due to increasing demand;
There is no need for government regulation, except to make markets more competitive. — Well that’s the point…
There are assumed to be no externalities, that is no external costs or benefits. — Certainly not true; there are undeniable positive externalities of college education for both individuals and society as a whole.
Firms can only make normal profits in the long run, but they can make abnormal profits in the short run. — There is no end in sight to the rising cost of schooling without government intervention.

Empirical evidence and a baseline analysis of neo-liberal economics refutes the idea that the costs of college should be left for the markets to decide. One would hope our elected officials would be more educated on the subject, and could offer an alternative other than unfettered belief in the power of markets to produce optimal outcomes. Obama’s proposals seem to hit at the root causes of rising college costs; lets hope his plans are implemented. Even if they are not fully implemented, the short-term student loan rate fix and upcoming information campaign should provide temporary relief and begin reversing the trend of rising college costs.

Please do not get me wrong, I am a strong proponent of higher education. But it is no panacea and it can actually be counter productive if not addressed within a C-B framework. It is the job of the government to keep costs down (as self-regulation of college tuition simply does not exist), and subsidize college education (both loans and tuition) to reward the positive externalities of higher education. It is the job of people, aided by advisers, parents, and in the near future government collected data, to consider the benefits and costs of college, and make appropriate decisions for themselves. Underlying this C-B analysis should be fixed loan rates, otherwise a robust analysis is impossible.

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Note: The inspiration for this blog is “Development Economic Through the Lens of Psychology” , an excellent journal article I highly suggest to my readers.