Thursday, July 21, 2011

Middlemen and repugnance

Luke Coffman has shown how employing a middleman can reduce the apparent blameworthiness of an action ( Intermediation Reduces Punishment (And Reward) , forthcoming, American Economic Journal: Microeconomics, , November 2011)

But being a middleman is complicated. Just as adding money to some transactions can sometimes change them to something that is regarded as repugnant and perhaps illegal (e.g. selling a kidney versus donating one), so can adding a middleman.  And it matters how the middleman is compensated.

Inside Higher Ed reports on the controversy surrounding middlemen who act as marketers for colleges: Holding the Line on Agents

"The National Association for College Admission Counseling has long had a policy barring commission payments to anyone for recruiting or enrolling students. The policy is consistent with U.S. law with regard to domestic students -- a statute that was developed in part out of concerns over admissions practices at some for-profit institutions.

The U.S. law doesn't apply to the recruitment of foreign students -- and a growing number of colleges have employed agents, who are paid in part on commission, to recruit abroad. Advocates for the use of agents have been encouraging NACAC to consider differentiating between the recruitment of foreign and domestic students, and permitting commissions for recruiting the former. But NACAC appears headed in the opposite direction. The association's board has released a draft policy revision that clarifies the issue only by being more explicit that the ban on commissions applies whether the recruited students are in the U.S. or abroad.
"NACAC is not opposed to the use of agents or agencies to recruit international students," the draft states. "We believe, however, that the use of agents who are compensated in the form of bonus, commission or other incentive payment on the basis of the number of students recruited or enrolled creates an environment in which misrepresentation and conflicts of interests are unavoidable."

The Chronicle of Higher Ed also covers the matter:
Use of Paid Agents to Recruit International Students Sparks Lively Debate at Forum

"The practice of using commissioned agents to bring in foreign students to American colleges and universities came under sharp criticism during an international-education conference organized by the U.S. State Department, with one panelist comparing it to contracting out the student-recruitment process to a car salesman.
"The practice of paying overseas agents for the students they recruit has become more contentious as it has grown more common among American colleges. Proponents say it can help attract students in an increasingly competitive global student market, and they note that other countries, like Australia and Britain, rely on foreign representatives to bring in students.
But a primary membership group for admissions officials, the National Association for College Admission Counseling, or NACAC, has released a proposed policy statement that would expressly forbid colleges from using commission-based agents to recruit domestically or internationally. (Institutions cannot pay commissions for domestic students if they receive federal financial-aid funds.)
"One person who was clear about where he stood was Mr. Nassirian. "It's a very simple proposition," Mr. Nassirian said. "It stinks to high heaven."
In his comments, Mr. Nassirian criticized the American International Recruiting Council, a group that has begun to set standards for and accredit overseas recruiters, calling its efforts "laughably inadequate."
"It's like attempting to regulate bribery overseas so it is done ethically," he said.
Officials for the recruiting group, which is known as AIRC, were not present at the event, and no supporters of paying overseas commissions were included on the panel. In an e-mail message, Mitch Leventhal, AIRC's founder, called Mr. Nassirian "long on bombast and short on facts."
"It is unconscionable to stand in the way of these developments, which are aimed at protecting students and which are being undertaken from within the mainstream of American higher education," said Mr. Leventhal, who is vice chancellor for global affairs at the State University of New York. "Rather than inventing facts, these critics would be well served to read the AIRC standards and suggest specific modifications, which will lead to a better outcome."

And here is the AIRC site, which includes a memo reply to NACAC:
"AIRC agrees with NACAC that “it is in the interests of institutions of higher education, as well as the public diplomacy of the U.S. itself,  to maintain high standards for the recruitment of students.” We also agree that there is potential  for misrepresentation, fraud,
and other unethical behavior in an “unregulated” international student recruitment environment.

"However, AIRC is convinced that the proposed ban on commission-­‐based international
recruitment would not be an effective way to achieve these goals."

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