Why the EMA should be saved

Fiona Millar's picture
This is a very good letter to the Guardian from a group of economists, explaining why the Budget should seek to reinstate the Education Maintenance Allowances.
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Hi Fiona,

The problem with quoting economists in support of your argument is the third law of economics, which is for every economist there is an equal and opposite economist. Now I certainly wouldn't claim to be equal, and I'm not sure that I'm altogether opposite, but I am sufficiently pedantic to point out some flaws in the arguments that were made. They principally concern the following excerpts from the third paragraph.

"The government has chosen to ignore this rigorous and independent evidence, and has instead argued that the abolition of EMA is justified by high levels of "deadweight" – ie that many young people in receipt of the EMA would remain in education even without it. But even if this is true, it is not a sound economic argument for abolishing EMA - it could equally be argued that the government should not vaccinate children against meningitis or polio, since the vast majority of children wouldn't contract these diseases anyway."

This is a false analogy. Diseases are communicable, whereas not staying in education is far less likely to be. It is far more important to stop any cases to begin with, than to allow symptoms to develop and then treat individuals. Furthermore, the government's argument is that it is poorly targeted. Being male, I think it is quite sensible that I am not routinely screened for breast cancer (even though men can suffer from this), but by the economists' analogy they would screen everyone. Perhaps not the best use of limited NHS resources.

They go on to say...

"Virtually all government programmes, even the most successful, have some deadweight cost. The real question is whether the benefits, economic and social, of the EMA exceed its costs overall."

This is definitely not the correct question to ask. The correct question to ask is whether the net benefit of the EMA as a proportion of the resources invested is better than the net benefit of the resources invested in alternative schemes. Resources are limited and we want to do the best we can for vulnerable people in society, this means making often value based decisions about what will work best (value based as alternatives are often not yet in existence and so can't be empirically analysed). So just saying there is a net benefit is not good enough. On that basis the government would just say yes to everything and the state would grow ridiculously big and create dire consequences for the national accounts were there to be any exogenous shock to the system - seriously, it could happen.

If you accept my second point then the in-depth econometric study that the economist quote is certainly useful in coming to a decision, but it shouldn't make the decision for us.

Sorry to be so pedantic but I do encourage my students not to be sloppy thinkers and not to accept just anything coming from an authoritative source. As I say, not being completely familiar with all the arguments and alternatives, I have no firm views on whether the EMA in its current form needs reform or not.

Janet Downs's picture
Wed, 16/03/2011 - 16:58

Many of the government's measures to reduce the deficit are targeted at young people: abolition of EMA; higher university tuition fees and reducing school budgets (unless the bribe to become an academy is accepted). This is unfair. Young people are not responsible for the country's economic problems which are, in any case, being used as an excuse for savage cuts. Cutting the EMA will only increase the number of young people not in education or training.

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