articulate and concerned parents who would also be the first to<sup>exit under avoucher plan,then</sup> the underlying dynamics are those of divergence and<sup>ghettoization.31</sup>

# **The Logic of Exit/Replacement** Versus **the Logic of Commitment/Transformation**

Two logics cut across human affairs. If the characteristics of<sup>resourcesandstructures(or uses)</sup> are taken as fixed, then efficiency is seen through the logic of<sup>exit and replacement.Resources</sup> should exit or be replaced in a given use if there are feasible<sup>higher-valued allocationsof</sup> resources to uses. That leads to allocative efficiency. If,<sup>however,the locationof the resources</sup> in a use is taken as essentially fixed ("commitment") but<sup>thecharacteristicsof the resourcesand</sup> structures are taken as variable, then efficiency is seen through<sup>thelogic of commitmentand</sup> transformation. How can the given resources and<sup>surroundingstructuresbetransformedto reach</sup> a higher value outcome? That is the domain of what has<sup>beencalled"X-efficiency".Insome</sup> formulations, the contrast between allocative and X efficiency<sup>might be renderedas static (fixed</sup> characteristics of resources and uses but variable allocation<sup>of resourcesto uses)versus dynamic</sup> efficiency. The two logics are elaborations of Hirschman's<sup>treatment of exit versus voice[1970]</sup> and the choice of taking characteristics as fixed or<sup>variable is analyzed by Hirschmanas "trait-</sup> taking" or "trait-making" [1967].

# _Box 7. The Two Logics Elsewhere_

It might be useful to see the problem of finding the best combinations<sup>of thetwo logicsin other contexts.When</sup> optimizing in a multi-peaked but cloudy landscape,<sup>thereis the logic of commitmentto climbingthe hillyou are</sup> on (fight rather than switch), and there is the logic of<sup>exittotryto jumptoanotherhillthatmightbethetrue</sup> peak (and not waste time climbing the wrong foothill,<sup>i.e.,switch ratherthanfight).In evolution (includingits</sup> mathematical versions in genetic algorithms), there<sup>is theprocessof selectionwhich,asitwere,startswiththe</sup> commitment to the existing set of genetic possibilities<sup>andthen exploitingorrefiningthemtodeterminethe</sup> fittest, or there is the process of variation (e.g., mutation<sup>andcrossover or sexualreproduction)whichworks to</sup> exit the given hill on the fitness landscape and explore<sup>other possibilities.In searchinga tree of possiblepaths,</sup> the two logics become the choice of breadth-first versus<sup>depth-firstsearch.Isit best tocommit to abranchand</sup> exploit it in depth or should one emphasize breadth by exploring<sup>manybranchesbutwith lessdepth?Doesa</sup> detective spend more time following up a given clue<sup>or searching formoreclues?Shoulda managermakea</sup> commitment to a given team and focus on developing<sup>thecapabilitiesof the team,or shouldthemanagertake</sup> those characteristics as given and focus of shuffling in and out different<sup>teammemberstryingtogetabetter</sup> combination?

Every potential migrant faces a similar situation: to make<sup>a commitmentto stayinghome andtryingto betterit,</sup> or to take its characteristics as given and search elsewhere<sup>for anew and betterhome.Committomaking home</sup> better, or exit to find a better home. Economic models of<sup>migrantbehaviortend tomodel only theexitoption</sup> and ignore the other possible logic of commitment<sup>withitsinherentuncertaintiesabout thepossibilitiesof</sup> transformation.

31 For instance, New Zealand tried an thorough-going<sup>voucherprogram, Tomorrow'sSchools,in the early1990s.</sup> But the better schools soon filled with hand-picked students<sup>and turned away the hard toteachpoor or minority</sup> students who then had no alternative but return to their<sup>nowmore depletedoldschools.Thus thedynamicsof</sup> divergence left the schools even more stratified along<sup>socioeconomicandethnic lines.[see"Vouchsafe?"in Letters,</sup> _The Economist,_ May 31, 2003] 39