Exit versus Voice

Malcolm Gladwell has written a very good piece for the New Yorker about Jeremy Adelman’s biography of Albert O. Hirschman.  Below the fold, I provide a thought provoking quote and contrast how a Chicago economist thinks versus how Dr. Hirschman approaches the same question.

“The closest Hirschman ever came to explaining his motives was in his most famous work, “Exit, Voice, and Loyalty,” and even then it was only by implication. Hirschman was interested in contrasting the two strategies that people have for dealing with badly performing organizations and institutions. “Exit” is voting with your feet, expressing your displeasure by taking your business elsewhere. “Voice” is staying put and speaking up, choosing to fight for reform from within. There is no denying where his heart lay.

Early in the book, Hirschman quoted the conservative economist Milton Friedman, who argued that school vouchers should replace the current public-school system. “Parents could express their views about schools directly, by withdrawing their children from one school and sending them to another, to a much greater extent than is now possible,” Friedman wrote. “In general they can now take this step only by changing their place of residence. For the rest, they can express their views only through cumbrous political channels.”

This was, Hirschman wrote, a “near perfect example of the economist’s bias in favor of exit and against voice”:
In the first place, Friedman considers withdrawal or exit as the “direct” way of expressing one’s unfavorable views of an organization. A person less well trained in economics might naively suggest that the direct way of expressing views is to express them! Secondly, the decision to voice one’s views and efforts to make them prevail are contemptuously referred to by Friedman as a resort to “cumbrous political channels.” But what else is the political, and indeed the democratic, process than the digging, the use, and hopefully the slow improvement of these very channels?

Hirschman pointed out the ways in which “exit” failed to send a useful message to underperformers. Weren’t there cases where monopolists were relieved when their critics left? “Those who hold power in the lazy monopoly may actually have an interest in creating some limited opportunities for exit on the part of those whose voice might be uncomfortable,” he wrote. The worst thing that ever happened to incompetent public-school districts was the growth of private schools: they siphoned off the kind of parents who would otherwise have agitated more strongly for reform.

Beneath Hirschman’s elegant sentences, you can hear a deeper argument. Exit is passive. It is silent protest. And silent protest, for him, is too easy.”

Hirschman is arguing that the exit option allows people with resources to shirk on their civic responsibilities.   As Gladwell said, if educated people know that they must send their kids to center city public schools then they will invest their time and effort to improve those schools.   But everyone (including Bill Clinton, Al Gore and President Obama) does have the option to exit the public school sector if they can pay the market price for private education.

In the language of economics, Hirschman thinks that society would be better off by closing some markets and limiting personal freedom of choice.    This is an interesting claim but it requires some evidence.    Denying personal freedom is a dangerous path.  In China today, the domestic passport system of Hukoo is being relaxed allowing more Chinese urbanites to “vote with their feet” and migrate (exit) to cities offering better opportunities. Given that “voice” is not an option in China, I have argued in my 2014 University of Chicago Press (“Blue Skies”) book that China’s growing number of urbanites need more “exit” options.   Would Hirschman agree? Or would he say that if the Chinese urbanites cannot “vote with their feet” that the rise of democracy will come sooner to China’s cities because people power will seize the day?  Is he right or is there another ugly potential outcome of bloody civil war?   Multiple equilibria raise troubling issues.  I believe that the “exit” option defuses what could be a very nasty situation.

Returning to public education in the U.S,  if parents know that they do not have the opt out option of “exit” and they believe that their kid is receiving a bad education, then they would start to lobby the other parents and make appointments with the Principal.   Hirschman appears to believe that “voice” can influence political outcomes.  I wish this was the case but is it the case?   In the 2013 Mayor’s election in Los Angeles roughly 20% of the electorate voted.  Is that “voice”?    That’s standard free riding.  In small groups, an individual’s voice could matter but in larger organizations each individual’s impact shrinks to zero.

 

Author: Matthew E. Kahn

Professor of Economics at UCLA.

24 thoughts on “Exit versus Voice”

  1. False comparison. I’m very concerned about who my kids interact with on a daily basis, but no matter who is elected mayor the trash will be picked up tomorrow, clean water will come out of the faucet, and the waste water will flow to a treatment plant. If these municipal functions were to fail, you would hear the voices of much more than 20 percent!

  2. “Multiple equilibria raise troubling issues. I believe that the “exit” option defuses what could be a very nasty situation.”

    An argument for increasing the robustness of particular, existing, social structures.

    1st question: are these existing social structures ones that we prefer to be made more robust?

    2nd question: in the original text, attached to the discussion on public schools, there is a discussion on the benefits of “spinelessness” for attenuating the magnitude of evil in practical (public) social systems. (This stuff is around p. 105 of my copy of EVaL.) That’s another robustness argument. AOH seems clear about the distinction between the cost/benefits of the exit option from public and private social structures.

    It seems you have elided these public/private distinctions of AOH from your blog post. What do you think about them?

  3. “In the language of economics, Hirschman thinks that society would be better off by closing some markets and limiting personal freedom of choice.”

    Facts not in evidence (and I base this on reading EV&L, not Gladwell): I don’t see Hirschmann as saying “Society would be better off … by limiting” anything. rather that to claim that exit, and market pressure, is always the best way to change things may not always be the best way. The narrowing of options here comes from economists’ making normative statements based on overly-narrow views.

    More snarkily, this is the first time I’ve seen voting for school boards characterized as the first step on The Road to Serfdom.

  4. I am not sure the choice is this stark. The possibility that people could exit makes service providers more inclined to listen to those who try to use their voice to make things better where they are. In that sense, the freedom to leave sometimes maximizes the freedom to stay.

    1. Agree entirely. My cable company could care less about my “voice” — in my particular location, I have no other option. They don’t have toll-free service numbers, the wait for an answer is inevitably long, my bill is wrong about three times a year, corrections promised for the next month’s bill are not made, etc.

      My wireless provider, on the other hand, knows I have several other options, and despite their huge size have always been surprisingly responsive.

  5. I’m not sure what Matthew’s argument is.

    Is he trying to argue that exit, everywhere, is superior to voice? This is insane.
    Is he trying to argue that exit is often superior to voice? Even Hirschman admitted this.
    Is he making a narrow argument about school choice? ymmv. Matthew appears ambivalent about this. (He also seems to say that elections can’t matter because of the free-rider effect: a statement that is often clearly empirically false.)

    Unlike Matthew, I work as a bureaucrat in a bureaucratic business organization. I therefore know a little something about bureaucratic employment practices, albeit only anecdotally. I can assure him that any management that primarily relies on exit information is way behind the curve. When the cost of exit is high (as it is in most employment), almost all forward-looking information comes from voice. Employment exit is only useful for upper levels of management, who need some accessible metric to evaluate lower levels.

    There is a way to generalize this. The invisible hand is–ultimately–the invisible hand: incentives matter. Lousy monopolists ultimately collapse. But the force and fingers of the invisible hand are often social structures, if not its direction. If you want to know why a particular lousy monopolist collapsed at a particular time, the invisible hand isn’t going to help you–you have to look at particulars, such as internal organization and external responsiveness. Economics is an equilibrium science; not a kinetic one. And in the long run, we’re all dead, so we may as well look at social structures if we want to do policy in our short-term world. This has the appropriate level of generalization for a Chicago economist to understand, but maybe too little intellectual imperialism for a Chicago economist to appreciate.

  6. Exit with a loud voice is best. A famous anecdote from Bernstein & Woodward, The Final Days. The time, Nixon’s and Kissinger’s decision to bomb Cambodia. The scene, the NSC basement full of hard-bitten civilian analysts, who have concluded the bombing cannot work. One of them is William Watts, who in an altercation with General Haig threatens to resign.

    “You’ve just had an order from your Commander in Chief,” Haig said. Watts could not resign.
    “F**k you, Al,” Watts said. “I just did.”

  7. Thanks to so-called reforms of the Progressive era, the Mayor of Los Angeles has very little power. The institutions of the city in general have been designed to minimize the effectiveness of mass political participation, which was so mistrusted by elites.

  8. I hate to say it, but schools aren’t going to get better through public pressure or exiting. The problem with “bad” schools is that they serve populations low in capital – financial, human, social, etc. Schools are currently designed around academic education, not as institutions responsible for correcting the lack of capital in the families they serve. They have neither the time nor the resources to make up for what is essentially the product of enormous inequality in society. No amount of pressure or exiting is going to change the equation of how you get a school to make up the difference between a middle-class, educated, stress-free, two parent household raising their child properly and a child raised by a stressed out, poor single mom who got pregnant when she was nineteen, the daddy split, and has no clue about how to raise a child.

    1. Yes, plus, at least around here, rich parents have little need of exit since residential segregation takes care of a lot of the problem for them, the problem being inequality, as you point out. They also seem quite fond of charters.

  9. The problem is that vouchers don’t create any exit possibility for those who can’t make up the difference in private tuition. The only people they benefit are those who can pay the difference. Those happen to be the ones richest in other kinds of capital. It’s an exit strategy only for the people who have the most power to affect the public school system.

    Vouchers aren’t a path to competitiveness and thus to improvement; they’re a path to a classed school system.

    1. Your formulation doesn’t make sense. You seem to assume that the “richest in other kinds of capital” can’t afford exit without the vouchers, or don’t already use exit by segregating themselves into rich neighborhoods. But they can and they do. Vouchers provide exit opportunities to people other than those. Now it may well be that the price point of current vouchers is too low to meaningfully change that picture, but that is a totally different argument. As noted above, richer people–including a huge number of white liberals already get to use exit, and the absolutely do so all the time.

      1. Not sure, but I think she was saying that both kinds of capital tend to be possessed by the same group of people.

        And I’m not sure why arguing that vouchers don’t work for poor people would be a separate argument?

      2. I think the point is simple. Vouchers enable some people to exit who could not afford to do so without vouchers. They do not enable everyone to exit.

        In other words, vouchers make the conditions even worse for those who can’t afford private tuition even with the help of vouchers.

  10. It seems to me that one of the points being made is that exits drain the system of resources, financial, intellectual,whatever. This is incontrovertibly what is happening in public education today where the forces of privatization are bleeding the public schools. Another example I think of in relation to this discussion is Cuba, where we encouraged mass exit, mainly of the upwardly mobile educated elite. It is not unlikely that if they had opted for voice they would have ended up in prison, as many dissenters did, but they may have had some influence on political change. Another example from our own country is Ithe un-American activities of Congress in the late fifties where eventually the weight of dissident voices wore the repressive forces down. Some Vietnam dissidents left the country, others took to the streets. The voices in the street eventually won, but only after much blood was spilt. Lets face it. The great majority of us opt to shuck our civic responsibilities if the consequences of civic protest lead to any kind of pushback.

  11. If you look at microeconomics texts, it’s pretty well established that choice of product and price paid for a product (essentially the equivalent of exit — especially where each exit is an entrance somewhere else) offer the lowest possible information content of any interaction with a customer. Market interactions are important not because they’re informative but because sometimes they’re the only information available.

  12. “A person less well trained in economics might naively suggest that the direct way of expressing views is to express them.”

    Naively? That snark is naïve. An economist better trained in English writing would know the meaning of the words “direct” and “indirect,” and would recognize that taking a walk is the INDIRECT way of expressing a view.

      1. Negative on the irony, Dude.

        It was the ego of an extreme free-market economist (Friedman) saying economists understand that the way you express your opinion is with your pocketbook. To see that very clearly, simply read the next sentence of the same paragraph:

        “Secondly, the decision to voice one’s views and efforts to make them prevail are contemptuously referred to by Friedman as a resort to ‘cumbrous political channels.’ ”

        Dogmatic free-market economists are contemptuous of others who do not share their single-minded devotion to the marketplace as the arbiter of all issues. It’s not irony; it’s what they believe.

        1. Ken, no, you are mistaken here. Attributing one sentence to the wrong expresser. It’s irony,

  13. Hirschman was never arguing completely against “exit.” In his own life, he exercised the exit option-immigrating to the US. His point is economists like Milton Friedman put too much faith in the exit option and too little in the voice option.

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