Wednesday, October 1, 2014

Density happens, if you let it.

For as long as I've been following the politics of urban regulation in New Zealand, I've been hearing Hugh Paveltich lauding the successes of Houston in successfully delivering affordable housing on the city's outskirts through the use of innovative infrastructure funding models, and Kiwi urbanists excoriating the Houston model for sprawl.

And now Houston's showing that up can go well with out.
More Houstonians are choosing to live in high-rise and mid-rise buildings and the trend is about to spread to an unlikely place — outer suburbia.
Consider this: A developer is considering a mid-rise apartment in Pearland, the Brazoria County ‘burb, south of Houston. And a high-rise condo is being talked about for The Woodlands.
Amazingly, a significant number of home buyers have been requesting high-rise living units in the suburbs, realty experts say.
Amazing. Suburban areas where people are free to put up apartment buildings, without NIMBYs blocking them everywhere with complaints about denigration of local amenities or planners insisting that density can only happen in specified areas where they think it ought to happen.
Downtown also has a number of mid-rise apartment buildings underway, typically seven, six or five-story projects.
Two-story apartments just aren’t being built any more. Land is so expensive that developers are forced to build taller buildings to cover their costs and make the project financially viable.
Many of the new Inner Loop apartment projects have at least four floors of living units stacked atop two-level parking garages.  So even though it may not be high-rise, the residences on the sixth level often get a very decent view of the skyline. The Inner Loop of Houston has a significant number of mid-rise multifamily projects under development — the most in decades. 
The trend is even spreading to the suburbs.
Pearland is about get a four-story mid-rise residential building, just west of Highway 288, says realty broker Brad LyBrand of NewQuest Properties.
“It’s a first for Pearland,” LyBrand says.
The dense urban-like development plan for the Pearland site makes sense because two hospitals (read: job base) are under construction within walking distance, says Houston developer Allen Crosswell, who has owned the acreage for several years.
Bottom line: Houston is changing. Houston led the nation in population growth last year. The city is more urban and residential development is more vertical.
I wonder how they've managed to get suburban apartments without NIMBY action.

That there not be competing views

I poked Canterbury's Arin Basu on Google Plus, asking what's going on with the Health Sciences' group's attempts to block anybody else from doing funded research where the funding comes from sources they don't like. He there replies:
Hi Eric ( +Eric Crampton) , thanks for bringing attention to this news item. I am not sure Health Sciences has anything to do with the University's decision not to accept funds from dairy industry (I do not know but I can ask or check with my colleagues if they know of any influence from Health Sciences).
On that note, you make some very interesting points in your blog. However, I'd encourage you to consider the larger public health perspective as well. As you may appreciate, there is substantial evidence of the harm that tobacco, and alcohol cause to public health (see for instance,http://www.who.int/substance_abuse/facts/global_burden/en/). Therefore as public health professionals we consider that it is unethical for UC to receive funds/sponsorship from alcohol industry -- irrespective of the funder-fundee relationships between HRC/Ministry of Health and public health researchers (your points there are well taken). Hopefully, you will see the contradiction for a publicly accountable institution such as UC to accept money from an industry that is known to cause harm to health of the public while at the same time engaging in research to characterise that harm.  It's for similar reasons why I wouldn't want my doctor to invest in tobacco industry. 
 An interesting position. Here's an econ re-framing.

"Hopefully, you will see the contradiction for a publicly accountable institution such as UC to accept money from government granting agencies pursuing policies that are known to cause harm to the economy while at the same time engaging in research to characterise that harm. It's for similar reasons that I don't want my doctor to have opinions on economic policy."

I wouldn't say such a thing, because I have some minimal appreciation for that it can be useful to let competing ideas bash against each other rather than try to squelch dissenting ones. Arin, and his group, doesn't.

The Econ signal

Economics majors have the highest lifetime earnings, says Slate. Why?
Part of it is that the finance and consulting industries like recruiting them, not necessarily for their specific skills, but because they consider the major a basic intelligence test. Granted, we're probably not seeing the effect of Goldman Sachs or Private Equity salaries in these charts, since they only stop at the 95th percentile of earners—but banking is a big industry, and it pays well. 
Economics departments generally didn't follow others in pursuing grade inflation. Grade-seeking students of lesser abilities drop economics for other majors; those who are left earn their grades.

But give it time. Combine hard bums-on-seats financial pressures with a dearth of numerate high-school graduates who can do serious versions of economics, then add on a Minister who reckons* that darn near every numerate student should be pushed into Science, Technology, Engineering or Mathematics rather than other disciplines that require numeracy.

Equilibrium then has a fairly substantial dumbing-down of econ offerings.

I do think that Slate has some of this wrong though. Plenty of degrees select for intelligence: just look at relative GRE scores by intended major. Econ fares well, but philosophy, physics, and mathematics are hardly slouches.

What economics provides instead is a very general purpose rationality technology. It forces thinking about human behaviour within a consistent framework allowing us to work through comparative statics and dynamics: if one part of the system changes, we can make reasonable assessments about what is likely to happen as consequence. You don't necessarily need the full-calculus version of intermediate microeconomics to be able to do this, but it does help. And it especially helps with most of these kinds of high-value economics applications:
Economics and logisticsAll businesses seek to control costs; they don’t need an economist to tell them why it’s important or how to do it. But there are some very important exceptions. Companies in the transportation and communications business face complex optimization problems that mathematicians and economists have figured out how best to solve through “linear” (and later “non-linear”) programming methods. Firms in these industries and their customers who thereby benefit from lower prices (admittedly through processes they never see) benefit greatly.
Economists and big dataFor several decades after World War II, economists used statistical techniques to build increasingly complex models to forecast key macroeconomic variables, notably, GDP growth, inflation and unemployment. Economists who had statistical skills worked at leading forecasting firms such as Data Resources, Inc and Wharton Econometric Forecasting Associates (the two have since merged and been absorbed into Standard & Poors). Many large banks, other financial institutions and some large manufacturing companies also had their own economic staffs.
This has all changed. Macro models are now largely out of vogue, though still used along with human judgment at institutions like the Federal Reserve Board and the International Monetary Fund. Forecasters never were very good at predicting turning points in the economy — recessions and recoveries — and it is not clear they will get better over time, though some will try.
Instead, the “Big Data” revolution ushered in by the ease of capturing, storing and analyzing large bodies of data has generated new demands for economists and statisticians. High tech companies like Amazon, Yahoo and Google, among others, now employ economists to sift through all kinds of data — retail transaction data, browsing patterns, mobile phone usage — to fine tune their product offerings, pricing and other business strategies.
Economists and market designMost markets “clear” by having prices signal producers to make just enough that purchasers are willing to purchase. But a relatively new strand of economics, known as “market design” or “matching theory,” has focused on markets where “fit” is much more important than price in directing resources or decisions is gender neutral: matching of medical residents to hospitals, organ donor banks and on-line dating. For example, drawing on his Nobel prize-winning work shared with Lloyd Shapley, Harvard Business School emeritus professor Alvin Roth has used matching theory to design the national medical resident assignment program and kidney donor exchanges.


* I don't know whether he reckons it. But the big funding push for STEM is having that effect.

Tuesday, September 30, 2014

Canadian content

Suppose that you're a government agency charged with ensuring that the greatest number of Canadians get to hear Canadians' own stories.

And suppose some new technology came in allowing Canadians, for a low monthly fee, to stream and watch whatever they might want.

Would you:
  1. Try to make it really really easy for that company to licence Canadian content, so that Canadians and everybody else might get a chance to see it?
  2. Hassle the company and demand that they subsidise the production of Canadian content?
If you're the CRTC, well, they've picked option 2
During CRTC hearings on the future of Canadian television regulation, both companies argued they shouldn't be subject to CRTC regulation, which would force them to be licensed, host a quota of Canadian content and subsidize Canadian television production.

Google and Netflix argued they stream and produce plenty of Canadian content without the CRTC looking over their shoulders.

Both refused to hand over their Canadian content and subscriber information to the CTRC to back up those claims.

"The Commission cannot carry out its duties based on mere anecdotal evidence," the CRTC wrote. "As a result, the hearing panel will reach its conclusions based on the remaining evidence on the record."
I note that Netflix recently lost streaming access to The Kids in the Hall. But Trailer Park Boys still features prominently.

Wouldn't it make more sense for the Canadian government to hit the back catalogues of everything the Canadian government has helped to fund, from The Beachcombers through Degrassi and KITH and everything in between, and help Netflix to get the bundle of rights to allow for streaming? They could also make it a condition of every future funded TV show that the streaming licence is available to all-comers at a reasonable price? If the objective is to ensure maximum dissemination of Canadian content, shouldn't that be the approach?

Netflix doesn't have to run a Canadian outlet. They could kill the official Canadian version, then simply fail to notice that a pile of Canadians sign up using geounblocking services and a 90210 zip code.

One-sided scepticism: research funding edition

It seems the University of Canterbury has been discussing some pretty comprehensive restrictions on research funding.

The Herald reports:
Research funding from the dairying and soft drink industries could be declined on ethical grounds under proposals being worked through by the University of Canterbury.
The university is in the midst of a wide-ranging debate about ethical research funding - who academics should and shouldn't accept money from, and for what research purpose.
Currently, research funding from the tobacco and armaments industries could be declined.
Some academics have argued that should extend to certain industry-funded alcohol, gambling, dairying, mining and soft drink research.
Others believed there should be no prohibition and that the acceptance of funding should be left to individual moral judgements.
Suppose that you're a researcher whose work could draw industry support. You could either solicit that funding quietly, outside of the University's auspices, and draw the money as income for work you do in your spare time, or you could route that funding through the University's Research and Consultancy office.

In the former case, you do not have access to University resources for the work, but nobody really monitors whether you're using your computer, library access, or office time for consulting work. If there's overlap between your research work and your consulting work, it would be impossible to separate anyway. You can charge higher fees because you have no overhead loadings, you have no hassles from ridiculous University rules around how you can spend your earned funds, and nobody pays any attention because you haven't stuck your head up to be shot at.

In the latter case, you do have official access to the University stuff. That access comes with strings. Some of those strings are desirable. It is always better to be upfront and honest about one's funding arrangements. Where there is substantial overlap between funded work and your research work, it seems fair that the University be able to recoup some of that in overheads, even if that halves the amount you might get out of any funded work because of the overhead burden. And, that your work is run through the University means that it is subject to investigation by the University should you engage in dodgy research. That threat of sanction both makes your work more credible and reduces potential reputational risk to the University if roguish academics do naughty things in their spare time. On the downside, you lose a pile of the money in overheads and the University makes it almost impossible to spend any of the money coming in; it's perhaps purely coincidental that unspent money gets swept into the consolidated account at year-end.

When the Department of Economics was facing horrible financial times last year, I sought industry funding for some of my position. I had been doing work on alcohol policy as part of what I considered to be "critic and conscience" duties at the University; I no longer believed that I could spend much time on that work at the University without its being funded.

Other than a pretty small research budget, I got nothing out of it but administrative headaches from the University. The University got a fair bit of money out of it, between salary recovery and a very large administrative overhead charge. We built a ton of academic freedom into the contract, with everything disclosed on the blog. Well, I didn't put dollar figures on it because those would be commercially sensitive. But they covered a fifth of my time plus very substantial overheads with the money going to the University; you figure it out.

Where funding routes through the University, we have the greatest possible ethical safeguards on any undertaken research. Dodginess on a minor consultancy project could put your whole tenured position at risk. So who'd try it? Research misconduct is really really serious.

And so it's just bizarre that parts of the University would wish to block some categories of industry funding rather than simply insist on that all consulting work route through the University, that all work is subject to University guidelines on research and misconduct, and that all funding sources are disclosed.

The Herald called me for comment on the discussions at Canterbury. I have not been part of those discussions, but I know a bit of the background. I was briefly quoted.
Professor Sally Casswell, a Massey University public health researcher with a particular focus on alcohol, said she strongly believed research funding should not be accepted from the alcohol industry.
Such funding was an attempt by the industry to position itself as a partner in policy research, Professor Casswell said, but only industry-friendly policies were supported.
"When universities take money, they are being co-opted into this scenario ... it gives [the alcohol industry] an aura of respectability."
However, Dr Eric Crampton, head of research at the NZ Initiative think-tank, said industry-funded research could be extremely valuable, so long as funding arrangements were disclosed and unethical behaviour could be censured.
Dr Crampton previously worked at the University of Canterbury's economics department and was frequently critical of research on the societal harm from alcohol.
He maintains an adjunct senior fellow position with the department.
One-fifth of his university position was funded through a grant from the Brewers Association of Australia and New Zealand, he said, "and everything that I did was totally up for anybody to look at or comment on, or censure me if I was behaving badly".
"It is distortionary to automatically believe that industry funding is bad and evil and that government money comes with no strings and no agenda."
I'll be a bit more thorough here.

The University's job is to ensure its researchers always behave with the utmost of integrity, both in research conduct and in disclosure of funding. Disclosure is also important.

All funding comes with risk of strings. Had I stayed with the University, and had I produced three years of research saying that alcohol was just terrible, maybe the Brewers' Association wouldn't have wanted to renew the contract with the University even if that research were sound. But that would have been between them and the University. The best way to ensure independence is through longer term contracts and by running the contracts through the University such that the researcher's income or job tenure doesn't depend on keeping the grant provider happy with the findings. Again, I was on a three-year contract with a fair bit of freedom in what projects I thought worth pursuing. People in public health areas reliant on funding from the Ministry, from Health Research Council grants, or from other NGO granting agencies, must keep their funders happy on a project-by-project basis lest the next one not be granted. Consider the incentives under both types of set-up.

One potential concern, though of course I could not know for certain, among those in the Health Sciences group at Canterbury, might have been that the relationship between the Economics Department and the alcohol industry, through me, might undermine the relationship between the University of Canterbury and the health sector. I expect that such a concern, were there such a concern, speaks worse of both the funders and the fundees in that sector. So long as the funding relationship is disclosed, and so long as the University maintains robust processes for disciplining research misconduct, nobody in any other part of the University should worry about how other parts are funded.

If one group in the University fears that their relationship with their funders will be damaged because of the funding arrangements elsewhere in the University, that constitutes a violation of academic freedom in and of itself. If a funding group is sufficiently powerful that its fundees fear for the relationship because of things going on elsewhere in the University, the University might well wish to examine what on earth is going on between that group and its funders. Personally, if the Brewers had ever suggested that they'd have boosted its grant to the University if the University put a thumb on anything going on elsewhere, or that they'd have cut it were the Health researchers to keep getting MoH grants, I'd have told them to get stuffed and immediately disclosed to the Associate Vice Chancellor for Research.

Finally, the kind of attitude that says that it's a-ok to accept government health grants but always evil to accept industry funding is fundamentally antithetical to academic freedom. It's one-sided scepticism again. Governments, and its particular bureaus and funding agencies, have their own agendas.

Those who would bar all but politically correct funding sources doom academic inquiry. Universities with no connections outside of the University are ivory towers. Those only with research and funding connections to politically correct government sources are worse than that: they're ivory leaning  towers.

It simply may be getting to be too difficult for industry to bother trying for engagements with academia when substantial parts of the Universities will work to undermine those arrangements simply because of the funding source.

I continue to be amazed that a University that has had need to seek so much bailout money from the government would countenance blocking legitimate research funding sources.

Monday, September 29, 2014

Defending the asylum wall

I penned last week's NZ Initiative column in the NBR print edition. Do pick up a copy. Here's an excerpt.
The overarching policy priority then, for me, is that New Zealand maintain and enhance its “Outside of the Asylum” status.

Parts of the RMA are clearly daft and need to be reformed. The RMA’s role in contributing to housing unaffordability through its restrictions on land supply, both for building out and for building up, are reasonably well documented.

It is also mad that a building in Wellington is simultaneously required to be demolished, under the Building Act, because it is at serious risk of catastrophic collapse in any earthquake, and prohibited from being demolished, under the Resource Management Act, because of the priority placed on heritage preservation regardless of life-risk. This kind of Khafkaesque situation risks our Outside-of-the-Asylum status. It is right and good that the government consider RMA reform a priority.

Other risks have crept in as well. Individually, none of them are nearly as important as RMA reform. But collectively, they chisel away at the wall keeping the Asylum out.

During the last term of government, National and Peter Dunne implemented an eminently sane regime around psychoactive substances. Demand for mind-altering drugs will exist regardless of legal regime; the system that was put in place allowed safer drugs to be sold. Those of us watching Colorado’s legalisation of marijuana hoped that the New Zealand regime could be expanded to allow sales of other currently illegal drugs on their being shown to be no more harmful than those currently legally available.

Because the implementation of the regime had too few licenced retailers, politically objectionable queues developed outside of those shoppes. Substances that had been allowed for sale during the interim period during safety testing were consequently banned pending testing, killing the legal market. Whether any substance can now satisfactorily be shown to be safe, with John Banks’s ban on animal testing, is not entirely clear. The Herald reported on Tuesday that the grey market has consequently re-emerged, this time with a purportedly psychoactive incense. The populist election-year response to a few Campbell Live stories on legal highs was not consistent with our Outside-of-the-Asylum status.
I also have a column queued for Interest.co.nz for tomorrow.

Electoral lotteries

The Timaru Herald asked me for comment a few weeks' back on my non-voting stance. They used about one line from the email below; I'll share the rest with you here.
“I have not voted in any election since the 1997 Canadian Federal election. I also do not buy lotto tickets. In any large-scale election, the odds of making or breaking a tie, which are the only ways that you can change the election result, are so vanishingly small that you might as well buy a lotto ticket and promise to give any winnings to your favourite charity. And buying lottery tickets is a poor way of supporting charities. Work by Casey Mulligan and Charles Hunter in the United States shows that only one out of every 89,000 votes cast in Congressional elections changed the outcome. They went back and checked every election going back over a hundred years. You would have had to have voted 89,000 times to expect to change one outcome. You could vote diligently over thousands of lifetimes and still not expect to change an election. New Zealand results would not be much different: your vote would have to be the one making or breaking a tie in a critical electorate like Epsom, or the one pushing your preferred party to or over the St-Lague quotient threshold. Neither are particularly likely. So why bother?
Most explanations of why people vote fail. If it’s civic duty that drives voting, there are many better ways of doing one’s civic duty. Voting is not a particularly effective use of one’s time in achieving any reasonable civic objective because of the infinitesimal chance that your vote changes the outcome. The best explanation I have seen is that many people just seem to enjoy voting as a means of self-expression. But it is a bit of a rigged game. If you don’t vote, you’re told you can’t complain about the outcome because you didn’t take part. But if you do vote, and your side loses, or if your side wins but does things you don’t like, you’re also told you can’t complain about the outcome: “We won, you lost, eat that,” as one Minister was reported to have said. I prefer not to play. 
It seems reasonable to object by asking what would happen if everybody else stopped voting because of such calculations. But if turnout were sufficiently low, I would probably go and vote. The odds of changing an election outcome where there is low turnout are much higher than when turnout is well above 70%; when turnout is low enough, voting makes sense even if you do not enjoy voting for its own sake. While it is fun to imagine what would happen if they held an election and nobody came, it is an exceptionally unlikely outcome. The calculus here discussed does mean that, all else equal, those prone to being very bad at assessing the statistical likelihood of things, pivotal votes included, are disproportionately likely to vote and so parties have less incentive to cater to the policy wishes of the numerate. While this is unfortunate, my one vote would not change it.
 As a concluding comment, I would urge those people who insist on voting to vote well. Philosopher Jason Brennan argues that we have no specific duty to vote, but that if we do vote, we have a duty to vote well. Voting well does not mean supporting any particular party or set of policy positions, but it does mean that a voter must look carefully at each party’s proposed policies and assess whether the policies would actually achieve the goals that the voter wishes to further. This is hard work, but the costs imposed on the public if you vote without such careful assessment seem to outweigh whatever civic benefits obtain from higher turnout.”
I tweeted Brennan's line on voting well on election day. I hope that doing so wasn't illegal under New Zealand's bizarre election-day legislation.