I’m about to take a departure from my usual ways. I’m about to throw untold numbers of people under the proverbial bus, one with a big “Sick Days” sign on it. Stay tuned.
A few colleagues recently said they were surprised, after reading a post on this blog, that I’m not more aggressive or strong in my condemnation of people I disagree with on one issue or another. That’s a fair observation. There’s a reason why I generally don’t lose it on such people.
If I don’t verifiably know a person or group is dead wrong on an issue, I try to exercise charity in critical thinking terms. I give people the benefit of the doubt. If they are wrong, I assume they are mistaken instead calling them liars, unless I can prove they lied. If they say something ambiguously, I assume they meant the best possible interpretation of what they said. I’m not charitable; the process of reasoning is. In my view, not as much charity is due to those who I’m about to toss under the bus.
In a March 29, 2016 story, the Globe and Mail reported that teachers’ sick days are costing Ontario school boards nearly $1-billion annually. As reported there and elsewhere, in 2012 the Ontario government reduced sick days for teachers from 20 to 11 and ended their ability to bank unused sick days. Teachers could previously cash-out a proportion of their unused sick bank when they retired.
Bankable sick days were seen by many legislators, pundits, and citizens as an entitlement virtually never seen in the private sector. True. Many other public sectors previously enjoyed bankable sick days and those are rapidly decreasing as new contracts come to those sectors. The main financial argument against sick banks is that allowing employees to bank unused sick days leaves a significant fiscal liability on taxpayers, even if those pay-outs are capped. True again. Teachers and a growing number of workers in other public sectors are being granted a maximum number of sick days per year, and unused sick days are not carried over, a system often dubbed use-it-or-lose-it. Governments, pundits and others point out that this is how the private sector deals with illness. Yet again, true.
I should point out that although I teach full time I am not in any teachers’ union, and no family member is either; I was unaffected by the changes. I have friends who are teachers and I respect the profession greatly but I have to look at this through the view of a taxpayer. That affects me. So here’s where someone slips under the bus.
The government and school boards were foolish in doing away with bankable sick days. That’s right, my view is that the government and school boards were wrong, not the teachers.
The Globe and Mail report, and others, indicates that government efforts to reduce costs through ending sick banks backfired, badly. Worse still, that backfire was easily predictable with even a cursory view to economics. Surely economics should factor into economic decisions.
As reported, teachers previously took less than their allotted sick time but now take almost exactly what they are allowed. They apparently use it before they lose it. When they use it, school boards must pay supply teachers to fill in for the absent ones while they also pay the absent ones. Before you start judging teachers on the morality of taking sick days when they may not always be sick, and that’s not easily proven, let’s look at why this government move was doomed to fail. It has little to do with morals and everything to do with moral sentiments.
Although many people believe economics is about money it is much more about people and what makes us tick. As Steven Levitt and Stephen Dubner wrote in Freakonomics, “Morality, it could be argued, represents the way that people would like the world to work – whereas economics represents how it actually does work.”
Adam Smith first identified how it works, how we work. Smith is widely considered the father of political economy and has been studied by many for centuries. Sadly, not everyone who should have studied him has, and some missed his points if they did. As economist Jonathan Wright wrote (The Treatment of Smith’s Invisible Hand), “Human history is littered with failed attempts” to ignore Smith’s principles and advice. So what were his principles and advice?
In his 1759 book, A Theory of Moral Sentiments, Adam Smith provided the first principle that applies in the sick-bank debate: incentives make us tick. He outlined the three main incentives people respond to: selfish, social, and anti-social. Selfish incentives are good for you and your family (money, pleasure, fame, etc.). Social incentives are good for other people and society. Anti-social incentives are negative effects which you don’t want to suffer by doing wrong (financial loss, jail, becoming a social outcast, etc.). Modern economists call these financial, moral, and social but I stick to the original terms here for clarity. As Levitt and Dubner explained, some people refrain from stealing because getting caught is costly in many potential ways, some refrain because they are morally repulsed by stealing, and some refrain because they don’t want to be seen as a thief and be treated like one. Economists have identified other incentives, one also relevant here: the herd mentality, whereby people want to feel in line with their peers.
Some people do bad things anyway. Some people do bad things solely for their own benefit or enjoyment (think thieves and serial killers), and some go along with the crowd (think tax evaders and rioting looters). Yet most of us are naturally inclined toward a rough balance of incentives provided we were not raised by wolves. Arguably, even wolves display social behaviour, and they definitely display a herd mentality in that they operate in packs .
In his 1776 book, The Wealth of Nations, Adam Smith explained how certain outcomes can occur even when unintended, even when no incentive is triggered. He called this The Invisible Hand. For example, even if baker opens a bakery solely to make money, his bakery benefits consumers who buy his products, other merchants from whom he buys supplies, and whoever benefits from those suppliers making money and buying from others. If another baker opens in the same area, the first one needs to lower his prices, increase his quality, or both if he wants to survive or thrive in the business, yet that too benefits others.
Smith also gave some warnings. One is that government regulations are needed to curb selfish merchants if natural market forces don’t do that, and another that creating any system which ignores incentives and human nature is foolish. An example of both warnings not being followed: Imperial Russia ignored the needs of her poverty-stricken people in lieu of the Tsar and aristocracy, and the Soviet Union ignored human nature by expecting everyone to put the state before any and all personal goals. Both governments eventually collapsed.
Smith’s invisible hand arguably spawned the theory of unintended consequences. As French economist Frederic Bastiat explained that in 1850 (What is Seen and What is Unseen), “…the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” Incentives, the invisible hand, and looking for unforeseen consequences have been known for many generations. Yet, that knowledge is clearly not universal.
Teachers are human and inclined by human nature to respond to incentives. So let’s look at the sick-bank and use-it-or-lose-it systems through the perspective of human nature.
We all have days when we feel like crap to one degree or another. With sick banks accruing and eventually paying them, many teachers likely dragged themselves into work (selfish incentive). That helped colleagues and students who needed them in the classroom (social incentive). It was seen as admirable to drag yourself into work if you were not too ill, not to mention financially prudent (anti-social incentive). And, most colleagues also sucked it up if they were a bit under the weather so individual teachers were apt to follow suit (herd mentality incentive).
With perishable sick days, a teacher feeling under the weather has no selfish incentive to crawl into the classroom, especially if that classroom is filled with periodic petri dishes dressed like students. Taking a sick day provides supply teachers (peers) more work and pay, it helps the class by not bringing more sickness there, it sets a healthy example for peers to also take care of themselves, and it makes peers’ sick days less suspect when they book off sick. All these are social incentives. Since most teachers seem to take all their sick days, there is little prospect of standing out in the crowd and being targeted for (anti-social incentive) consequences. And since almost everyone else is doing it, it could be viewed as stupid, self-destructive and/or against the herd not to do so. Anyone who understood incentives could see this coming.
If you knew nothing of incentives, and Ontario teachers were the first ones to use up all their perishable sick days, perhaps the backfire response would be a surprise. The fact is, these teachers were not the first ones or close to it.
In a previous post, I told readers about Bill. He periodically harangues me about various conspiracies and tells me to wake up but, as I wrote in that post, he tries to help me on many fronts too. To my point, he alerted me to this sick bank issue with teachers and marvelled at how the government didn’t see that coming. I know that Bill did not previously know about incentive theory because I previously harangued him about it and he put me on ignore, which might have been fair on his part. Bill saw it coming because he was once a correctional officer who saw first-hand how peers used up their perishable sick days. They reportedly planned some of them well in advance to be sure their shifts were covered and that peers weren’t left in danger within the jails. It seems unlikely to me that they were the only public sector workers to do that.
The use of sick days in the public sector, if not who abused those, is easily accessed by those in power. I have no idea if legislators looked at those numbers or factored them into their decisions. The results suggest NO on both counts.
If you’re thinking, “These teachers and other public sector folks are scammers and need to be brought to heel”, don’t. First, how well or not anyone feels on a given day is relative. With no incentive to err on the side of healthy, the scales can tip pretty quickly toward sick. Second, some people may view perishable sick days as something to help their overall wellness. Avoiding a bad bug at work or spending a day with family arguably helps wellness. Third, cracking down on fake sickness requires investigation by supervisors. That requires administrators to do home visits that their schools can’t afford them to make (they are needed in their schools), accusatory interviews with teachers returning from sick days (causing stress, more days off or labour litigation), or hiring new staff to investigate teachers reporting off sick. And fourth, any attempts to target what could be legitimately sick people, given the already fragile relationship between school boards and teachers’ unions, could cause major litigation or labour disruptions. Most of those outcomes would raise costs even further.
From a taxpayers perspective, a strategy meant to spend less money has cost taxpayers more of it, and efforts to fix that problem could cost us even more. Sometimes it is better to live with the existing effects of your earlier blunders than to aggravate those with further blunders.
I’m not advocating a return to teachers’ bankable sick banks. It might not help anyway. Backfires have a way of not being reversible.
In Think Like a Freak, Levitt and Dubner wrote of several reasons why some incentives or schemes, even by smart and well-meaning people, backfire so badly. Their second reason was that “It’s easy to envision you’d change the behavior of people who think just like you, but the people whose behavior you’re trying to change often don’t think like you and, therefore, don’t respond as you might expect.” Their third was that “…the very nature of incentives suggests that when a rule changes, behavior changes too although not necessarily…in the expected direction.”
The next time you marvel at how badly someone’s idea went wrong, think about how predictable that may have been, whether that someone was you or another person. Bernie MacDonald is a wise former colleague with a quiet, sharp sense of humour. When he sees bad results he rhetorically asks, “Gee, what could possibly go wrong with that plan?” It seems that a whole government and several school boards could have used Bernie’s wisdom if not also his humour.
Evidently, they didn’t have Bernie’s wisdom, didn’t have an historical understanding of economics and human nature, didn’t consider any information about how previous public sector groups responded to perishable sick days, didn’t examine the savings or costs of those responses, and didn’t understand that “sick” is a relative term that means different things to different people. Even if no one picked up a book by Smith, Bastiat, or Levitt and Dubner, it would have been nice if someone had picked up a dictionary.
Now the damage is done. Taxpayers and/or parents will pay the price. I have thrown a whole group of government members under the bus because of that. Nothing more to see here, folks. You might as well be on your way.