My personal experience with this fact became apperant to me well before I studied economics or even knew what economics was. When I was seven years old and in elementary school, I got my first lesson in incentives.

When I was in second grade, I did not enjoy the assigned reading material and I read, outside of class, much more advanced and interesting books. They were usually history books or books about dinosaurs and they were well above grade level.

My refusal to read the assigned books got me put into a remedial reading class. I was actually happy with the arrangement because I and the other remedial reading students spent an hour or two out of every school day in a small group, where we could pick the books that we wanted to read and we had a teacher on hand to help us. I was delighted because I could take time out of class and read what I wanted and I knew that I could read even more advnaced material and have the teacher help me with any novel words that I might encounter (I was smart but still only in second grade).

I liked the situation but my parents did not like the fact that I was branded as a remedial reader. When they talked to the remdial reading teacher, they found that other smart kids were in this "remedial class." I asked my mother why smart kids were being put in a class for "stupid kids."

She said that it was because the government gave the school extra money for having more remedial reading students. That all made perfect sense.

It would take several years until I started to understand economics and to generally embrace classical liberalism. However, that lesson, learned at a very young age, in perserve incentives and how they create perverse outcomes have always stuck with me.

When I was in my late teens I had a tryst with statism. That brief rommance with socialism was, however, tempered (I never though that communism was a good idea and advocated for democratic socialism and a mixed economy) and short lived because as soon I took my introductory Economics courses, the material in those class came to me easil yand intuitively.

I believe that that early and vivid lesson about the power of incentives laid the ground work for my interest in economics as well as my general contempt for government.

I constantly hear about kids who narrowly don't qualify for special ed based on a battery of intelligence tests, and input from their teachers. Many of these kids would benefit from special education (often, they have weak verbal skills, but compensate for them by working really hard elsewhere, or something similar) but are denied special ed because they don't meet the rather rigid criteria for what qualifies a student for special ed. It would seem that these borderline students would probably be pushed into special ed if the cost to the district was offset by additional funds from the state.

In many cases, these aren't kids that will need 12 years of special ed, rather many of them just need a few years to catch up to their peers.

I can't say for certain what impact the programs have on the students as a whole. That said, I know a number of the high school (there's only 1) alumni, all in their mid to late twenties, disproportionately comprised of lawyers, and accountants, with a few stock brokers in the mix, and a bunch of people who work at “think tanks.”

What does a worker at a “think tank” do all day?

Just wanted to say I worked at a charter school that did not get extra money for SpEd kids. (At least that is what they said) By October the "director of special education" (a 23 year old with just a teaching cert that had never classroom taught a day in her life) was telling me that 7th graders who could not add were regular ed. A senior who has spent his life with an IQ below 80 was also suddenly regular education and no longer MR. That was a shady place and I didn't stay there till Chirstmas, but I just wanted to point out that the incentives can also run towards kids not getting the services they need.

Since the Feds limit how man SpEd kids can be in a classroom with just one teacher there is a incentive to mainstream these guys so you can have 30 kids per class and pay less salary.

I will agree somewhat with Steve that Asperger's is seems to be way over diagnosed. Students who are difficult in a hyper manner are automatically ADD/ADHD. Students who are socially inept have Asperger's. Goes with out saying the victims here are the kids that DO have ADD/ADHD or Asperger's.

My better half is a speech pathologist who now works with the elderly, but previously worked in a "bad neighborhood" school system. She worked with kids who actually had REAL problems, like they banged their head on the floor. She reports that the pressure is strong in Parent-Teacher meetings where several teachers and case workers gang up on a parent who feels overwhelmed, and they convince the parent that their child has "special needs".

Of course the school has an incentive in more "special needs" kids. Unfortunately, this reduces the time and personal that can be devoted to the kids who REALLY have needs (I went on a trip to the zoo with these kids, and believe me, we're talking
*serious* needs versus essentially normal kids).

On another note, "autism" has been redifined several times so that now it means you're kid is shy, or has a low tolerence for a boring teacher. Imagine the doctor saying you have a broken arm, when the X-ray looks fine. Autism as a real and serious condition, but 1 in 166 children do not have autism. 1 in 166 children probably are introverts, or if you are familiar with Myers-Briggs Personality Type, they are SP or NT children, usually Extroverted SP's, or Introverted NT's. (Future economists there). Since schools are overwhelmingly run by SJ's, students who don't fit the SJ mold used to just be "troublemakers". Now there are actually incentives to categorize them as "autistic".

Final thought: I have a cousin who was labeled with "Asperger's Syndrome", supposedly a mild form of autism. In actuallity, my cousin is a very intelligent introvert who is a little cold to people who are obviously intellectually inferior to him. This is a character issue, not a medical diagnosis. So the point is this, he is now attending a prestigious college and building new types of robots. The other day I read an article that nursing homes in Japan are pioneering robots which are designed to help care for the elderly. The robots are designed to look appealing, they are sanitary, never drop the patients, never get tired, and never get frustrated. I smiled at the thought of my socially awkward cousing contributing to the future care of some elderly. I love capitalism.

http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1249

Maybe it is just me, but I find "This American Life" to routinely be about economics too–they are just not overt about it.

There's also a feedback loop — when you get a concentration of disabled students, their parents tend to band together (typically through "support" organizations) and are collectively able to demand more support.

For reasons I don't understand, intelligent parents appear to have a relatively higher incidence of children with autism and other significant disabilities. And, such parents are more likely to advocate for their children.

The end result is that you end up with clusters of disabled children and relatively strong support for those children in the school district.

whereas the elderly are the richest segment of the population (fact?),

whereas the social security system being a paygo system favors the early recipient generations,

whereas students who work 20 hours a week do poorly in their classes,

whereas debt-ridden graduating seniors make perfect subprime mortgage material,

why not raise the retirement age 5 years and give a pension to people in the 18-23 range?

(I'm sure there would be unintended consequences aplenty, but I don't know what they would be…)