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The Limits of Good Intentions

The Limits of Good Intentions

The payday-loan debate revisited.

· 22 min read


It was the first time I had ever searched for reviews of a product I was not remotely interested in purchasing. After reading several news reports that were highly critical of the “predatory” payday loan industry, I wanted to understand the perspective of typical borrowers. How did they feel about a financial product that consumer-protection advocates insist the federal government should heavily regulate or outright ban? My assumption was that the majority of the reviewers would be hostile. What were the most frustrating aspects of their experiences? Who bore the brunt of their anger?

What startled me about the first dozen or so of the reviews I read of one of largest payday lenders in the country was the genuine affection that a majority of borrowers seemed to express not only for the employees with whom they interacted but the businesses themselves. I kept scrolling through the comment section because the general tenor of the reviews was so puzzling. I read dozens of reviews at one site, and then switched to another site, and I kept on reading until I had read hundreds of reviews on a handful of different platforms. Enough of the reviewers were critical of various aspects of the payday-loan industry to suggest I was not merely reading comments curated by self-interested intermediaries. Here are three representative examples: 

I’ve been coming here for my payday loans for over a year and every experience I’ve had here has been 5 stars and my most recent experience was no different. Milly was friendly, efficient, amazing, and helpful all the way through my loan application process. This company gets the job done right.
Always a smile, always polite, always friendly. I could go to multiple stores closer to where I live but this particular store would be my favorite. They actually care about their clients and kindly work with everyone.
What an incredibly difficult company to work with! I don’t think I’ve ever had a positive experience with this specific location! Computers are down and the manager is absolutely rude and unhelpful!

The statistics provided by critics of the payday-loan industry are deeply worrisome. The fees on these short-term loans translate into annual percentage rates of 400 percent or more. Twelve million Americans rely on payday loans to access emergency cash in between paychecks, and borrowers are collectively charged nearly ten billion dollars annually in fees. The typical customer is about 40 years old, earns between $30,000 and $40,000 dollars a year, and has limited if any savings. The average payday-loan borrower takes five months to pay off his initial two-week loan and ends up paying approximately 800 dollars to close out a 500-dollar loan. Payday lenders are now ubiquitous in low-income neighborhoods, and private-equity firms—not known to include the public good in its purchasing algorithms—are now big players in the industry. Lobbyists—who also merit skepticism—are paid millions of dollars a year by the payday-loan industry to convince legislators that payday lending is a valuable service that should not be more tightly regulated.

These facts suggest a serious problem that warrants government intervention. They seem to tell a rather straightforward story: working-class people are the victims of an under-regulated industry in which powerful financial actors take advantage of customers in precarious financial positions. The online reviews, however, hint at a more complex story. How are we to reconcile the predation narrative with the surprisingly favorable feedback? Critics of the payday-lending industry are in a slightly awkward position. If this is indeed an unambiguous case of predatory behavior, we would have to assume that customers who post positive reviews of payday lenders are oblivious to their own self-interest. Or, worse, that they are unwittingly complicit in a nationwide scam to exploit their fellow low-wage workers. As for the employees of these enterprises, we would have to dismiss them as hustlers interested only in padding their commissions or as corporate shills who hawk products they don’t fully understand to customers whose future financial troubles they conveniently rationalize away.

Glenn Loury and the Great Partisan Divide
Loury’s scholarship deserves particular attention because he has grappled with the issue of racial inequality from both sides of the structure-agency debate.

More from the author.


Predators plunder and destroy, victimize and maraud. They move stealthily through tall savanna grasses before pouncing on their prey and devouring it. When we think about predators, we envision carnivores, red in tooth and claw. Our human ancestors feared being eaten by lions, tigers, bears, wolves and crocodiles, among other predators. They also had good reason to fear their fellow Homo sapiens.

Today we are wary of members of our own species not because we worry about contributing directly to their caloric needs or being sacrificed to their angry and insatiable gods, but because we know that not all of them are motivated strictly by a concern for our welfare. Even if we exclude psychopaths and sociopaths from our analysis, we know that plenty of perfectly normal human beings prey on other people’s weaknesses, and that this unfortunate reality justifies caution when we interact with other members of our species.

The fact that humans sometimes act toward each other in a predatory manner means that some businesses will be driven by similarly crude motives. Given this inevitability—what we could reasonably call a “natural law”—when should governments intervene to protect consumers from predatory actors? And when should they restrain from such interventions, even if—and this is a very important distinction—some people are hurt by the status quo?

These questions are not easy to answer. Despite what many ideologically driven social scientists assume, we do not at present have a simple set of tools to help us determine what makes one set of business practices predatory, and therefore a worthy target of government regulation, and another set of business practices, if not exactly the product of altruistic motives, a reflection of private entities understandably trying to make a reasonable profit. Given these limitations, how are we—concerned voters who are not necessarily legal scholars, administrative theorists, regulatory experts, or professional economists—to think about the wisdom of regulating the payday-loan industry? 

An advantage of the current debate over payday loans is that it has not been grossly distorted by the tenor of our current culture wars, and this allows us to interrogate some of our fundamental values and principles in relative tranquility. Many of us have strong opinions about government regulation and the payday-loan industry, but since we do not have quite as much invested in this debate as we do in our very heated “conversations” about immigration, abortion, crime, school curricula, and racial inequality, we do not have to worry as much about ending our investigation into the subject in the same place we began.

What do we need to know about markets and government regulations in order to determine whether we think the payday-loan industry should be heavily regulated, lightly regulated, grudgingly tolerated, or perhaps, despite high profit margins, quietly celebrated?


The Consumer Financial Protection Bureau (CPFB) characterizes a payday loan as “a short-term, high cost loan, generally for $500 or less, that is typically due on your next payday.” To qualify for such a loan, borrowers need to have both a job and a bank account (they cannot be unemployed or unbanked). What outrages consumer-protection advocates about these contracts is that payday lenders are not obliged to consider a borrower’s ability to repay the loan in a timely fashion, and this omission, they claim, has very specific and predictable consequences. It’s bad enough that people who need money in an emergency have to pay a fee of $15 per $100 borrowed (which equates to the frequently cited annual percentage rate of approximately 400 percent). What consumer advocates consider unconscionable is the fact that many borrowers can’t repay the loan when it comes due and have to “roll over” the loan, which means they get hit with an additional high fee.

The frequency with which borrowers fall into this “debt trap” is why activists are convinced that the loan industry is predatory. A person who borrows $500 from a payday lender will have $575 automatically withdrawn from his bank account in two weeks ($15 per $100 borrowed). If he can’t meet this obligation for whatever reason—as 70–80 percent of borrowers reportedly can’t—he has to roll over the loan, and now he owes $650 (another $15 dollars per $100 borrowed). A month after taking out an emergency $500 loan, he already owes $150 in fees. If he can’t repay the loan within four months, he will owe more in fees than the original cost of the loan.

These numbers and percentages strongly suggest that a majority of borrowers think a payday loan will help them out of a financial emergency but soon discover that they have inadvertently plunged themselves into an even more perilous situation than the one they were desperate to escape. The consequences can be profound: utilities cut off, cars repossessed, jobs lost, families evicted from their homes. Irrespective of what we generally think about the wisdom of government regulation, the frequency with which payday-loan borrowers find themselves worse off after taking out a loan should make us all a little queasy.

Should those of us least able to afford high interest rates when we borrow a few hundred dollars to cover an emergency expense really be charged the highest rates, while the lowest borrowing costs are reserved for the wealthiest among us? Is there not something fundamentally wrong with a financial system in which a low-income renter in need of $500 to pay for an emergency medical bill pays an annual percentage rate of approximately 400 percent, while a homeowner who borrows two million dollars to buy a second home at the beach pays a single digit rate over the course of a stress-free 30-year mortgage?

We need not be democratic socialists like Bernie Sanders (“The reality is that today’s modern-day loan sharks are no longer lurking on street corners breaking kneecaps to collect their payments”) or public-interest crusaders like Ralph Nader (“The subjugation of civic values to commercial values represents one of the worst crises of our times”) to think that stricter regulations on the payday-loan industry would be morally sound and economically wise. We may shrug it off when wealthy retirees unnecessarily pay their financial advisors tens of thousands of dollars in annual fees—even in years when their portfolios lose money—but it is callous to respond with the same nonchalance when low-income borrowers are preyed upon by businesses that are able to pay their executives millions of dollars a year in annual bonuses.


Consumer-protection advocates—who, for simplicity’s sake, I will call protectionists for the rest of this essay—rail against what they believe to be the greed-driven exploitation of low-income workers already struggling on the margins of society. Small-government conservatives and liberals—who I will henceforth call libertarians—recoil from the rhetoric of protectionists, people who assume they have a monopoly on the truth and claim they would deliver a just and equitable society to the struggling masses if only self-interested libertarians (and their wealthy, self-interested backers) would get out of the way.

Protectionists highlight stories about low-income borrowers who take out small-dollar loans to pay for emergency medical bills or car repairs and end up trapped in cycles of debt. Libertarians do not deny that some payday-loan borrowers do indeed end up in truly dire circumstances because they struggle to repay their loans. Admittedly, by the law of sheer numbers—approximately 10 million people take out payday loans each year—protectionists can marshall enough horror stories to make a compelling case for government intervention. But protectionists ignore the fact that regulations rarely work as intended, and that tighter restrictions on the payday-loan industry will only hurt the average borrower by forcing many providers out of business and driving up the price of small-denomination loans.

Libertarians insist that the ubiquity of payday-loan offices in working-class neighborhoods is not an indictment of the industry but a sign of a competitive market. Payday-lending branches increasingly resemble gas stations. Multiple gas stations at every exit along a highway is a sign that the market for gasoline is functioning well. Gas stations generally have to set their prices as low as possible to avoid losing business to their competitors, one of whom might be located right across the street. Consumers can often see the prices from a distance, and they will only pay a few cents more if it saves them from having to make a U-turn.

Contrary to what protectionists assume, competitive forces are also at work in the payday-loan industry. And where competition has yet to reduce profits to a bare minimum, the best thing our government can do to help low-income borrowers is let this market mature without government intervention. If protectionists—who are really just anti-capitalists in disguise—had their druthers, they would ban payday loans altogether, or impose such draconian caps on the fees they can charge that this intervention would effectively act as a ban because loan providers would be driven out of business. What protectionists refuse to accept is that, in this “ideal” scenario, the most distressed borrowers will be the first group to lose access to the emergency-loan system. If there is anything consumer-protection advocates should worry about, it’s freezing low-income borrowers out of the consumer loan market altogether.

What alternative do protectionists think these people have? If payday-loan operators were in fact making excess profits, libertarians argue, nonprofits, foundations, and other financial institutions could easily saunter into the market and offer more reasonably priced services. The absence of such alternatives indicates that the payday-loan industry does indeed fill an important role and that the high fees they charge are a prerequisite for staying in business. The crusade against payday loans, libertarians argue, is yet another example of good intentions gone awry.

Libertarian Limitations
Andrew Koppelman’s analysis of libertarianism is rich in detail and full of thought-provoking ideas.


The idea that we should not protect consumers—especially vulnerable consumers—seems to violate our most basic moral values. No moral philosopher would argue that we should stand passively by while a member of our community drowns in the ocean. Why, then, should we not do everything in our power to help people who are at risk of drowning financially? Does basic human decency not demand we try to protect our fellow citizens from entities that have no interest in their actual well-being?

I came up with a list of questions to test my intuition. If we need stronger regulations to protect consumers from the perils of the payday-loan industry, do we also need regulations to crack down on:

  • Electronic game machines at casinos, knowing that they are designed to make the experience of pulling levels and pushing buttons as addictive as possible, and that the owners of these machines make a large percentage of their profits off a small percentage of their consumers, most of whom struggle with a gambling addiction?
  • State lotteries that raise significant funds for public education but also spend millions of dollars on advertising to coax low-income consumers to spend more of their limited resources on lottery tickets, even though state bureaucrats know that lottery players lose roughly 35 cents for every dollar they spend and that most low-income people would be much better off if they put their money in a savings account?
  • Real-estate agents who slip flyers into residential mailboxes and repeatedly leave messages on people’s cell phones in the hope of sweet-talking older, less well-informed residents into selling their homes at below-market prices, or home-security companies that knowingly distort neighborhood crime data when they target these same residents in order to sell more home-security systems?
  • Companies that sell junk food even though they know their products are packed with unhealthy and addictive ingredients, that better labeling tends to help only a minority of health-conscious consumers, that an emphasis on “individual responsibility” has done very little to address our obesity crisis, and that these products are marketed to the very people who desperately need to adopt a healthier diet?
  • Alcohol consumption, given that 10 percent of American adults consume 50 percent of the alcohol sold in our country, that 30 percent of all traffic-crash fatalities involve drunk drivers, that alcohol abuse is a major cause of domestic violence and family strife, and that alcohol is responsible for the deaths of 140,000 Americans every year?
  • Video-game use, following the lead of Asian countries that have imposed limits on the amount of time minors are allowed to play video games (one hour on weekdays, and up to three hours on weekends, for example) and enforce 10pm–8am video-game curfews in order to protect a minority of obsessive young gamers from undermining their own social and academic development?


A bell curve is the informal name statisticians use to describe variables that adhere to a normal distribution. Take male height, for example. The average height of an American male is 5 ft 10 in. The average simply tells us that half of all American males are above 5 ft 10 in, and half are below. A bell curve allows us to see how many men are under 5 ft 4, and how many men are over 6 ft 4:

r/dataisbeautiful - [OC] Body Height Reported by U.S. Men

Two bell curves concern us here. The first is the distribution of consumer sophistication. We will never have a measure of consumer sophistication that is as precise as we have for male height because we are trying to measure something much more complex. Nevertheless, we can safely assume that it adheres to a relatively normal distribution. A bell curve for consumer sophistication reminds us that we can describe people to the right of the mean as fairly or very sophisticated, and people to the left of the mean as mildly or dangerously unsophisticated. No self-proclaimed sophisticated consumer is as sophisticated as he thinks, and he is undoubtedly too quick to describe consumers who have different tastes, values, and concerns as being unsophisticated. But when it comes to our ability to successfully navigate the more dangerous streets in our financial system, our differences are not quite so subjective. 

The second bell curve I want to introduce captures the willingness of companies that sell goods or services to use their knowledge and expertise to take advantage of unsophisticated consumers. In our era of big data and computer modeling, businesses can use the wealth of information they accumulate over time to target specific customers. Not all businesses put profits over all other considerations, including ethical ones, but some percentage certainly will, and some industries are more likely to rely on unsophisticated consumers to generate profits than others. There are laws to protect consumers from outright fraud, so these are not businesses that break the law. They are businesses that strategically violate the spirit of the law.

What I want to highlight here is the relationship between these two bell curves. How sophisticated are consumers of payday loans? They are probably less financially sophisticated on average than people who never have to use them, but among the total population of borrowers, some are more sophisticated than the average, some less so. How unethical—how predatory, we could say—are providers of payday loans? Not all payday lenders intentionally target unsophisticated consumers because they know they are likely to fall into a cycle of debt and end up paying more in fees than the original amount of the loan. But the business plans of some payday loan companies are designed to take advantage of particularly unsophisticated consumers, even if they offer services to any consumer who has a job and a bank account and is interested in taking out a loan.

With these dynamics in mind, we can ask the following question: Can we protect unsophisticated consumers from unethical businesses without hurting the majority of consumers, who need access to emergency loans, or the majority of loan providers, who provide a valuable service to many low-income borrowers?


With any controversial subject, each side will claim that the weight of the evidence is firmly on their side. The weight of the evidence on payday loans? Can we declare with confidence that the industry is either as predatory as its critics insist or as innocuous as its defenders claim?

The anecdotal evidence suggests that many consumers fall into debt traps because they do not realize how hard it will be to repay their loans when they come due upon the receipt of their next paycheck. The Center for Responsible Lending has collected a host of personal stories. No one wants to argue that someone who has to borrow a few hundred dollars in an emergency should end up paying a much greater amount in fees because they predictably struggle to repay the original loan. Sandra, for example, is a low-income woman who turned hopefully to payday lending:

After several rollovers, Sandra’s first loan was due in full. She couldn’t pay it off, so she took a loan from a second lender. Frantically trying to manage her bills, Sandra eventually found herself with six simultaneous payday loans. She was paying over $600 per month in fees, none of which was applied to her debt. Sandra was evicted and her car was repossessed.

The empirical evidence, however, is less one-sided. Donald Morgan and Michael Strain, for example, scholars at the Federal Reserve, released a report based on how households in Georgia and North Carolina fared when these states banned payday loans in the mid-aughts. They compared them to households in states that continued to permit them, and concluded that households in Georgia and North Carolina “bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate.” Payday credit, though expensive, they point out, is still cheaper than the alternatives to raise emergency funds, which include bounced check protection, sold by banks and credit unions, and turning to pawn shops.

If the payday-loan industry were indeed predatory, other scholars have argued, we would see evidence of this in their balance sheets. Flannery and Samolyk, who were granted proprietary store-level data by two large payday lenders to study store costs and profitability, reported that “fixed operating costs and loan loss rates do justify a large part of the high APRs charged on payday advance loans,” and that loan volume, rather than repeat borrowing per se, is a primary determinant of profitability. Scholars critical of the payday-loan industry have questioned the value of the datasets used to draw these conclusions, but the academic debate here is not simply a reflection of protectionists and libertarians being selective with the data. Here is how Flannery and Samolyk concluded their analysis:

While distributional considerations and externalities may form the case for regulation, there is conflicting evidence about whether PDLs benefit or harm consumers. Likely they do both. Used “responsibly” as an alternative to even higher cost borrowing or the failure to pay certain bills, PDLs are likely beneficial—as the industry argues. But when used repeatedly, they can lead to ballooning debt and distress—as critics argue. Any regulation must address how the product is used by the borrower.

People in need of short-term loans clearly face a unique set of challenges. They are almost universally in precarious financial situations, having exhausted their alternative sources of emergency loans (family, friends, church groups, more conventional financial institutions). Could getting rid of for-profit payday-loan operators help alternative, more affordable options flourish? Perhaps, but it is hard to imagine that the arrival of non-profit loan providers into low-income neighborhoods would be an instant success as things currently stand.

If nonprofits are not entering the small-dollar, credit-blind loan business now, it’s a stretch to argue they would fill the void if new regulations drove more payday loan operators out of business. If profits were indeed much higher than the risk of default, operating costs, and reasonable profit margins required, nonprofits, philanthropic foundations, credit unions, and traditional banks would rush into the market and undercut the current market leaders. The absence of a more diverse set of options for consumers suggests that there is a shared belief among potential for-profit and non-profit competitors that they cannot safely lower consumer costs without compromising the viability of their businesses.


It is important to keep in mind that libertarians and protectionists agree on a surprisingly broad range of things. Both readily acknowledge that the government has a role to play in ensuring food safety, drug safety, occupational safety, and transportation safety, as well as in protecting public health and the environment. They do not always agree on the optimum level of regulation, of course, but the overlap is substantial.

The aspect of consumer protection on which they fundamentally disagree and where there is little common ground is the extent to which governments should regulate industries to protect individual consumers from themselves. When, in other words, should the government pass regulations not merely to protect citizens from misinformation, negligence, outright fraud, and negative externalities, but from making poor decisions when they are not obviously coerced into doing so. These decisions could be the result of a lack of time and energy, a dearth of intellectual curiosity, the stresses of living from paycheck-to-paycheck, or a lapse in self-discipline caused by addiction. Whatever combination of variables we use to explain poor decision-making, the consequences can be profound. Do these painful consequences recommend government intervention?

Economic man—Homo economicus—is an idealized representation of our species used by economists to model how we make decisions. It holds that we are rational, self-interested creatures who maximize utility as consumers and profits as producers. Though this model of decision-making is a fairly crude simplification of what we all know can often be a very convoluted and irrational process, it is nevertheless surprisingly good at helping economists make predictions about the choices the average consumer and average producer will make when presented with a particular set of options. The average person, given a certain range of options and restraints—embedded in a particular incentive structure—will, statistically speaking, follow a fairly predictable path. 

In many contexts, it makes perfect sense to treat all consumers equally, substituting the “average” consumer for the actual diversity that exists in any population of consumers. But this methodological finesse draws our attention to what I consider a significant moral and analytical blindspot. The average consumer is not addicted to alcohol. The average consumer does not keep smoking even though he desperately wants to quit. The average consumer does not feed tokens into slot machines for hours on end or return to an ATM machine for the third or fourth time over the course of a few hours because he is convinced it is only a matter of time before he goes on a winning streak and makes up for all of his earlier losses.

The average consumer also does not borrow a few hundred dollars from a payday lender to cover an emergency medical expense or car repair even though he is very unlikely to be able to repay the loan within a reasonable period of time. In these cases, the world that interests us from a regulatory perspective is not the world inhabited by averages. Just as we prohibit gun dealers from selling firearms to some people, but not everyone—and just as we prohibit bars from selling alcohol to people who are clearly drunk, but not to people who are merely tipsy—we may require an approach to consumer protection that engages not with the average consumer and average producer but with people and businesses whose behaviors situate them closer to the extremes.

If we restrict our analyses to the behavior and capacities of the average consumer and producer, we efface the unique dynamic between unsophisticated consumers and unethical producers. We tend to be amused, rather than outraged, when rich people take advantage of the seemingly insatiable desire of other, already-rich people to get even richer, and these already-rich people get fleeced. We chuckle and roll our eyes when a luxury brand comes out with a skincare line for newborns that includes a bottle of scented water that costs over $200. When big companies that pay their executives millions of dollars a year in annual bonuses knowingly target vulnerable customers to pad their already-fat profit margins, however, we are understandably outraged.

In the case of payday loans, we want two seemingly incompatible things. On one hand, we want to protect unsophisticated borrowers from unethical loan providers. On the other hand, we are keenly aware of the imperfectability of human institutions and do not want to put an unwarranted degree of faith in government bureaucrats. Can we reconcile these two very legitimate concerns? 

Richard Epstein, a conservative legal scholar, argues that we should adopt a “presumption against regulation” on the grounds that regulatory agencies have too much discretion over policy and exercise what amounts to arbitrary power. As a legal scholar, his primary objection to the administrative state is that regulators do not face sufficiently rigorous checks and balances before they can impose their “expertise” on their fellow citizens. I share Epstein’s respect for James Madison’s principles of institutional design, and think he’s right to worry that regulatory power will be exercised arbitrarily. Government regulators would be wise to follow a “presumption against regulation” when thinking about sweeping regulations. But is this the best way to think about how we might design regulations with particularly vulnerable consumers in mind?

Payday lending helps many customers address temporary cash-flow problems. There are also a significant number of low-income borrowers in precarious financial situations who are statistically very likely to be much worse off after they take out a payday loan than before they felt compelled to do so. We need to address both of these groups of consumers simultaneously, and that means we want regulations that help protect unsophisticated consumers from unethical businesses without hurting the broader market for payday loans or introducing a set of perverse incentives for borrowers. We need to protect unsophisticated consumers from “predatory” lenders without hurting consumers who are unlikely to fall into a debt trap and will now have a much harder time raising emergency funds.

Friedrich Hayek warned us about the limits of human mastery and the ease with which we are seduced by our own good intentions. Milton Friedman cautioned us against thinking governments can know what is in their citizens’ best interests. We know the path forward is perilous. It will be difficult to implement new consumer protections without triggering the kinds of unintended consequences that undermine our objectives. What would achieve the delicate balance we are after are regulations on the payday loan industry that limit the number of times a loan operator can charge the same customer to roll over a loan. This would amount to a cap not on rates but on annual fees charged. Even though charging customers as much in fees as the cost of the original loan may strike many readers as predatory, our desire to protect consumers from profit-seeking loan operators is an unreliable guide to regulatory policy. Fairness cannot be our standard. We should not support regulations simply because we have a principled objection to businesses profiting from the desperation of low-income consumers.

Epstein thinks regulatory successes will be few and far between because regulators generally do not appreciate the wisdom of self-restraint, and because imposing “one-size-fits-all” regulations on markets characterized by “extensive consumer heterogeneity” is bound to fail. But if we introduce regulations that curtail only the worst of the industry’s practices—if we allow payday-loan providers to charge high but not indefensible fees—we would honor Epstein’s concern about overly broad regulations, and the only payday-loan operators driven out of business would be those that indeed prey on the most financially vulnerable among us. Instead of looking at an industry in its entirety and adopting a propensity against regulation, we should err on the side of over-regulating the specific corner of the payday loan market in which unsophisticated consumers and unethical producers interact. 

It is also crucial that we experiment with these kinds of targeted regulations. Protectionists should not be afraid of rigorous empirical tests because the more successful government regulations are—the fewer unintended consequences—the more support they will garner from the public. Libertarians should also champion experimentation since they generally have a fondness for quantitative evidence and believe small-scale experiments will prove them right. The key is to conduct these experiments in a manner that allows us to learn from our experience. States and municipalities currently have many different payday-loan regulations in place, but we struggle to make sense of their impact because our laboratories of democracy are as much victims of our partisan times as our political discourse.

If we are to have any chance of learning from our future regulatory successes and failures and not merely mining the data to support the talking points of our ideological tribes, we need protectionists and libertarians to collaborate on the design of new regulations, the collection of data, and the analysis of the results. This is obviously a stern challenge in our very contentious times, but it is our only path to genuine progress.

Aaron Hanna

Aaron Hanna is a professor of political science who has taught at Brooklyn College, the University of Maryland, College Park, and Howard University.

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