If you’re a gardener, you know the struggle against weeds taking over your plot. Weeds take space and resources away from the plants you’re trying to grow, so each one extracts a cost in terms of garden productivity. If asked what the optimal number of weeds in their garden would be, most gardeners would probably say zero. If that were true, though, a gardener would have to be relentless in pursuit of every single weed, checking the garden every hour to pull up every nascent offender sprouting between the vegetables. In reality, a gardener is likely to wander through daily, perhaps spending significant time weeding only weekly, meaning that a certain number of weeds are going to be present at all times. Perhaps the optimal number of weeds is 5% of garden space, especially if the gardener wants to have a life or job outside of the garden. With this example in mind, what is the optimal amount of waste, fraud, or abuse in any given system? The answer isn’t what most people think.
There comes a time when tracking down waste costs more than the waste itself. In 2012, photographer and then-Stanford student Ved Chirayath was inspired to stage a photograph in a Palo Alto park, depicting viking-clad reenactors encountering NASA satellites, a sort of visual pun on the theme of exploration. He put the photos up on a website for the amusement of friends and colleagues and moved on. Because Chirayath has a small grant to take science-themed photographs, though, a citizen concerned about the possibility of waste and abuse contacted senator Chuck Grassley (R-Iowa) to see if the viking photographs were shot on the public dime. By the time the investigation was over, the government spent (probably) somewhere between $40K and $600K of taxpayer (or borrowed) money to find out how much taxpayer money was spent on this photo, only to find that the answer was zero.
A common target of the citizen waste police is the meme of the drug-addicted welfare recipient. Several states have passed initiatives tying the receipt of public assistance to passing a drug test. For four months in 2011, the state of Florida tested prospective aid recipients. A small number (2.6%, or 108 of 4,086) of people failed the drug test, mostly for marijuana use, and an additional 40 people canceled their claims without taking the test. Because Florida was required to reimburse the cost of the test (about $30) for people who passed, though, they ended up spending more to enforce the drug-testing requirement than it would have cost to provide benefits to the people who failed the drug test. Other states such as Michigan have found similar results. As of May 2016, Michigan’s pilot drug-testing program covered three counties and tested over 300 applicants, with nobody testing positive for drug use. Missouri’s program resulted in 48 positive tests out of nearly 39,000, at a likely cost of $1.35M over three years. Mississippi found two positive results out of 3,656 after five months of testing, at a cost of about $5,000. One possible interpretation is that the masses of drug-addicted poor people who are applying for welfare drop out once they are asked to pee in a cup, but this may be tainted by conservative confirmation bias, as those who choose to interpret the results this way often already “know” that lots of drug addicts want welfare benefits. Another equally plausible interpretation is that poor people, especially those desperate enough to take on the social stigma of welfare, simply don’t have the money to be buying illegal drugs. Perhaps it would be wiser fiscal policy to invest the money spent on drug testing on other, worthier goals, such as remaking a system that is not so bleak that people have to turn to drugs to make it through their days. If a government insists that we really must keep drug users off welfare despite the cost, a rational compromise might be to announce the possibility of randomized drug testing for recipients. The feeling of always potentially being caught would have the same effect, but at a lower price.
Perceived waste of taxpayer money has taken on a moral aspect in recent years. I know it feels good to try to be 100% waste free, but trying to clear up every molecule of waste can and does cost more than the waste itself costs, once you’ve eliminated the major sources and cleaned up the low-hanging fruit. The optimal amount of waste is that which costs less than it would to eradicate it. Beyond that, we’re spending money only for the satisfying feeling of moral correctness. I’ll leave it to the reader to decide how valuable it is to spend money in this fashion, while supposedly being on a mission to save the taxpayers’ money.