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College Savings Plans are the Modern Dowry

Because baby Madeline is half-Indian and half-regular-person, she has both Indian friends and regular-person friends. The parents of her Indian friends worry about dowries, which are expensive gifts that they have to hand over when their daughters marry, and that they have to save for until then. The parents of her regular-person friends worry about college savings plans, which are expensive gifts that they have to hand over when their daughters matriculate college, and that they have to save for until then.

Both represent fairly nasty Prisoner's Dilemmas. "Save for dowry/tuition" is a dominant strategy, which leads to the unattractive "Everyone saves for dowry/tuition" equilibrium, which is pareto-inferior to the (non-equilibrium) "No one saves for dowry/tuition." To sustain the "no one saves" optimum you need some sort of rule-changing side-deal.

Because the government of India is run by a bunch of amateurs, they introduced a (revenue-neutral) law that bans dowries. If they had any political savvy at all, they'd instead be selling revenue-generating pre-paid dowry plans. (If you're reading my blog, Indian government, I suggest a clever name like Dowry Opportunity Provision Experience.)

A common objection to this line of thinking is that a dowry buys your daughter something useless (a husband) whereas a college savings plan buys her something useful (a degree in "Chican@ and Latin@ Studies" and also tens of thousands of dollars of nondischargeable debt to pay the tuition and fees above and beyond what's in the college savings account). This is a subtle point, which I'll explore in my future posts "Student-Loan Debt is the Modern Indentured Servitude" and "Dressing up as a Sheep and Waving a 'Mattress Sale' Sign is the Modern Working at Borders."

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