Child Welfare’s Principal-Agent Problem: An Open Letter

Dear Daniel Heimpel, Sean Hughes and Richard Wexler,

Your three-way exchange of views in The Imprint (May 4, 2016) may benefit from consideration in a larger context. The larger context is what economists and lawyers call the “principal-agent problem.”

The principal-agent problem arises because we humans need to do many important things that no one person can accomplish. Protecting a population of children at risk of maltreatment and neglect is one such thing. If we want thousands of at-risk children protected, we, the “principals,” must hire people, a lot of people, to do the protecting.

Those people are our agents. All employees, governmental and private, are in that sense agents. That includes executives, administrators, and front-line workers. The “agency problem” is that all agents have their own agendas, such as money, power, security, leisure and respect. Those individual motives never coincide perfectly with the purposes of the principal(s). Often they conflict.

For example, the administrator of a foster family agency is supposed to use child welfare funds to perform quality control on a string of family foster homes. That’s what her contract calls for. She also would like to drive a Mercedes Benz and enlarge her swimming pool. In the absence of effective oversight, the Mercedes Benz and the pool often wins.

The principal-agent problem is more intractable in some contexts than in others. Factors that make it more difficult include:

Multiplicity of intermediary agents

The public wants child abuse minimized. But between John Q. Public, the taxpayer and any particular caregiver are dozens of intermediaries: legislators, judges, CPS executives, administrators, supervisors and one or multiple caseworkers. All have personal agendas, just like you and me. With so many people involved, the credit for putting the job first and the blame for putting one’s personal agenda first are so diffuse that in most cases credit and discredit don’t attach in a meaningful way to anyone. The ability of the principals to control the agents via rewards and sanctions dissolves into an impenetrable bureaucratic swamp.

Bureaucratic efforts to manage the principal-agent conflicts in such situations – legalistic and impenetrable rulebooks, inflexible policies, micromanagement, multiplication of control-oriented forms and reports – can divert so much time and resources that only modest fractions of time and funds remain to do the intended work. When that happens, morale plummets. What is the point of subordinating one’s own needs when the agency’s task has become hopelessly enmeshed in bureaucratic knots?

Low-status beneficiaries

Powerful people get good service. Most people, most of the time, get mediocre service. Powerless people, such as foster children … We all know how that sentence ends.


When agents work in secret, control by the principal is difficult. Often it is impossible. When agents and agencies fail to accomplish their principals’ goals, the agents and agencies are motivated to find reasons why their work “must” be done in secret. Result: the temptation to concentrate on personal goals rather than the organization’s mission is strong, for the fear of meaningful consequences is minimal. Want an agency to fail in its mission? Let it convince you that its work must be confidential.

Group pressure

Most people, most of the time, follow the example of the people around them. They get along by going along. That principle of human nature is not about to change. When an organization has become demoralized, when many of its people are putting their personal agendas ahead of the agency’s official goals, it is easy to go with the flow and difficult, even dangerous, to resist.

Long latency for the principal to experience the consequences of the agent’s failure

It is relatively easy for an agency and for its agents – its administrators and employees – to limp along with poor performance when the consequences for its principals, the public, will not become apparent for five, ten or fifteen years. That is the situation for child welfare agencies. The immediate consequences of failure are barely visible to the public. The long-term consequences are streets littered with the homeless and penal institutions overflowing with unskilled, barely educated, and under-socialized “graduates” of foster care. Taxpayers pay dearly to fence in or fence out these troublesome populations. Few taxpayers understand the link between their tax bills today and the actions of their agents in child welfare agencies a decade ago.

This list of principal-agent problems is a start. It is far from complete.

It seems to this observer that all three of you – Daniel Heimpel, Richard Wexler and Sean Hughes – may agree that the principal-agent problem is especially difficult, especially intractable, in child welfare for the above reasons, and more.

It seems that Sean Hughes’s implicit response is: We should do more. The need for better child welfare is great, even greater than generally has been recognized, so we need to put more money into it. Is that all? What more?

Richard Wexler’s take on the issues, as I interpret it, is: The principal-agent problem has so paralyzed our child welfare system that more of the same – more funding for the same system – would just compound its failures. A system that does as much harm as good is unlikely to improve that ratio if empowered with more money. Fix the harm-to-good ratio first, he counsels. What we need is a different agency, not necessarily a larger one. What would that different agency look like?

Does Sean Hughes see a need for substantial changes other than large budgets? Let’s hear what those changes are.

And, Daniel Heimpel, and readers of The Imprint: Do you agree with Richard Wexler, with Sean Hughes, with neither, or both?

The Heimpel-Wexler-Hughes exchange has raised important questions.  I hope for answers.

Edward Opton
Edward Opton,
Ph.D., J.D., is an attorney, formerly a psychologist, at the National Center for Youth Law.  Since 2013 he has worked on NCYL’s Psych Drugs Action Campaign to reduce the use of psychotropic medications for controlling children in foster care.

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