Surprise surprise suprise

Radio New Zealand reports on results from Auckland Uni's youth survey. Smoking and drinking rates among young Maori are well down. It shouldn't be a surprise to anybody. The MoH's survey shows substantial reductions in drinking among youths. But folks determined to see crises will keep being surprised.

The report shows the number of Maori youth who drink alcohol at least once a week has more than halved in the past five years - something which comes as a surprise to Alcohol Healthwatch director Rebecca Williams.

The survey bucks the trend of many other reports but, nonetheless, any indication of a move away from alcohol consumption should be celebrated, Ms Williams says.

No, the survey is entirely in line with the other data that's been coming out. These results are only surprising if your priors are so immune to updating that nothing else has been able to get through. Hard to dismiss the conclusion that MoH is paying Healthwatch on the order of $600k per year for derp herping. [Thanks Nicola!]

Picking winners

Treasury's comments in Cabinet Papers on the expansion of the film subsidy scheme are blunt, and rather likely right.

Treasury Comment 

96. Treasury does not support any further subsidies for the film industry. The two evaluations of the current subsidy regime show at best small economic benefits, with limited evidence of spill-over benefits within the film industry, tourism and New Zealand in general. Further subsidies will only increase costs and offer weak benefits. The 2011 evaluation indicated that the LBSPG delivered net economic benefits of $13.6m over the 7 years 2004-2011, at an annual rate of return of less than 1%. In addition, the 2011 evaluation is based on generous assumptions about premiums paid by large productions on goods and services. The current regime is also estimated to have had an overall negative fiscal impact of $168m once tax revenue that would have been earned anyway is taken into account.  

97. Other jurisdictions are offering large subsidies to attract films and further New Zealand subsidies will simply add to this cycle and future demand for larger subsidies. Permanently matching overseas subsidies to generate activity in New Zealand is not a sound basis for economic development policy and favours the film sector over other industries. 

It doesn't seem implausible that Lord of the Rings provided a tourism boost. The sales job provided by the films probably even made it easier for me to convince Susan that we should move here. But boy does that seem the kind of thing that would be hard to replicate.

Why can't the TPP include a line "None of us will provide any treatment for the film industry that differs from that which is provided to every other industry"?

We're helping to make things worse.

HT: @Economisive

Posting has been light as I am between offices. The open plan sheds we've occupied since July 2011 were packed up late last week for a move into our new offices in the refurbished law building. We were supposed to have moved in on Tuesday. But the building isn't ready. And so I'm between offices until, they now expect, 6 January. Happy holidays folks.

Alcohol Healthwatch

From the full version of the Rankine report for AHW on women and alcohol:

The BERL analysis was critiqued for its methodology by Crampton and Burgess (2009), who called the final BERL figure ‘grossly exaggerated’ (Crampton, 2009). Crampton and Burgess estimated external alcohol costs at $662 million, which they said was almost matched by the $516 million received in alcohol taxes. Crampton and Burgess cited literature indicating that drinkers earned at least 10% more than equivalent non-drinkers, that moderate drinking increased benefits from experience and education, that moderate drinkers lived longer, and that alcohol saved more lives than it cost. They also questioned BERL’s estimate that 50% of costs were avoidable. Crampton and Burgess’s conclusions were unsupported by other research reviewed above, including studies cited in section 9.1: New Zealand health benefit estimates, and section 10: Alcohol-related health problems. 

Later, related research by Crampton, Burgess and Taylor critiquing alcohol cost studies was commissioned by the Australian National Alcohol Beverage Industries Council (NABIC). Crampton presented it to the national conference of the Australian Liquor Stores Association, and at NABIC’s request spent a day in Canberra discussing the research with media and ministry officials (Crampton, 2012).

I wish that they'd cited our 2011 working paper or the 2012 NZMJ summary version. The 2009 version, referenced by AHW as a link to the blog, contained an error that we only caught on going through the Collins & Lapsley report on which the BERL report was based. The corrected figure had social costs closer to $975 million. We also there noted that we'd missed excise revenues collected at the border, for a total excise take of $713 million. We only caught the error understating alcohol's social costs when we took this on as a paid project by NABIC. So the net effect of industry funding was to substantially increase the measure of alcohol's social cost in New Zealand; I think that AHW is trying to insinuate otherwise in the last paragraph. They didn't mention that some of my current work is industry-funded, but I expect that will change quickly enough. I'd be curious to know how much money Alcohol Healthwatch sucks out of MoH every year.

One of the biggest problems in the BERL report was double-counting. We argue that you can't simultaneously count the productivity losses associated with premature mortality and the intangible costs of lives lost where the MoT survey-based measure of the value of a statistical life is inclusive of the lost productivity. BERL added both of those together, along with a strange assumption about that the economy's at full capacity so a deceased worker can never be replaced with either another worker or more intensive use of capital. They also specifically zeroed out all of the alcohol aetiological fractions where alcohol use reduces the burden on the health system, despite that their source, Collins & Lapsley, allowed alcohol to both increase and decrease burdens on the health system, depending on the disorder.

Further, whether the excise take matches the social cost doesn't necessarily imply anything about the direction of optimal regulation. If excise does more to deter drinking's harms than to curtail moderate consumption, it's possible for it to make sense to increase excise even if the total tax take is well in excess of alcohol's social costs. Conversely, if excise does more to deter moderate drinkers' consumption and to reduce heavy drinkers' consumption mostly on non-binge days, then it's harder to justify tax increases even if the total tax take is below social costs. The latter seems to be the case. We really need cost-effectiveness measures that weigh up both the value of harm avoided and the costs imposed on non-harmful consumption for any regulatory measure, whether excise or otherwise.

If we look back to Section 9 of the AHW report, they rightly note that some early studies on the J-curve combined never-drinkers with former drinkers, but take this as debunking the J-curve entirely, citing Fillmore (of course). They ignore di Catelnuovo and Donati. They note Rimm and Moats, but in the most superficial way. They write:

Rimm and Moats (2007) restricted analysis in a large prospective study to non-smoking men who exercised and ate a good diet. They found that among these men, those who drank moderately had a lower rate of coronary heart disease (CHD) than non-drinkers. They concluded that moderate drinking reduced the risk of CHD. However, the same possible confounders may apply and there are also harmful effects from moderate drinking. For women any such benefit may be outweighed by an increased risk of breast cancer.

Rimm and Moats picked a sample of very healthy men with good health behaviours. Within that group there remained strong protective effects of moderate alcohol consumption. The possibility for residual confounding among a group pre-selected for very healthy behaviours is much lower than among a pooled group with larger unobserved heterogeneity in health behaviours. And the effect was very large. I'd summarised the overall literature a while back.

And if AHW were right that "for women they [the benefits of moderate drinking] are outweighed by health dangers from moderate drinking, such as an increased risk of breast cancer", then we would hardly expect to find that the J-curve is stronger for women than for men, albeit with peak protection at a lower level of consumption than for men. Again, here's di Castelnuovo and Donati:

A J-shaped relationship between alcohol and total mortality was confirmed in adjusted studies, in both men and women. Consumption of alcohol, up to 4 drinks per day in men and 2 drinks per day in women, was inversely associated with total mortality, maximum protection being 18% in women (99% confidence interval, 13%-22%) and 17% in men (99% confidence interval, 15%-19%). Higher doses of alcohol were associated with increased mortality. The inverse association in women disappeared at doses lower than in men. When adjusted and unadjusted data were compared, the maximum protection was only reduced from 19% to 16%. The degree of association in men was lower in the United States than in Europe.

They also cite bad effects subsequent to the dropping of the alcohol purchase age and ignore Stillman's findings.

Jedi Truth [Updated!]

Lots of folks are reporting on the rise in the number of Kiwis reporting "No religion" in the latest Census. Where "No religion" used to outnumber any single Christian denomination, we now almost outnumber the combined Christian variants. As there are also adherents to other religions in New Zealand, Christians are now a very slight minority.

But nobody yet has reported on that we have no clue how we're faring on the Jedi Gap. Recall that New Zealand had 20,000 Jedi in the 2006 Census. In the 2013 Census, we see that we have 19,000 Sikhs, 18,000 Jehova's Witnesses, and almost 15,000 Seventh Day Adventists. But no listing for Jedi.

Maybe the number of self-identified Jedi were too small for Census to list them. But we have 6 adherents to the "Commonwealth Covenant Church", "Japanese Religion not elsewhere categorised" gets 15, and so too do "Tenrikyo" and "Chinese religions not elsewhere categorised". I would bet that there were more than 6 Jedi.

Over 28,000 Kiwis' answers were deemed "Response Outside Scope"; another 16,000 were classed as "Religion Unidentifiable". 225 were "Other religions not elsewhere categorised"

Maybe there's some strategic military reason for seeking to bury our Jedi numbers into those other categories.

As I noted back in May when Canada munged its Census such that they could no longer reliably identify Jedi numbers:

Recall that New Zealand had 20,000 Jedi in 2006; we have yet to see figures from the 2013 Census. Our Census remains mandatory. While we know that while Jedi will not lie, they may refrain from identifying themselves as Jedi if it's voluntary.

This has important national defence implications. While New Zealand has been able to cut defence spending down to trivial levels, trusting in its strong cohort of Jedi in case of any emergency, Canada cannot really tell whether they really need the Joint Strike Fighter because of dwindling Jedi numbers, or whether the Jedi just failed to complete the voluntary forms.

It also has implications for ongoing negotiations in the Trans-Pacific Trade talks. If Canada can no longer rely on Jedi mind tricks to defend supply management in dairy, perhaps New Zealand's Jedi will be able to push us towards free trade.

Our daughter, born on Star Wars Day three years ago, is one of the Jedi in the 2013 New Zealand Census.

I hope that the Census stops hiding the truth about our Jedi numbers.

UPDATE: Statistics NZ emailed in response to my data request; it seems that the Herald also asked for Jedi data. 19,089 people wrote "Jedi" in response to question 18, "What is your religion?"

I had also asked whether it would be tough to get cross-tabs out showing whether Jedi were more or less eduacted than others, their relative income, number of younglings and the like. Getting that data looks like it would be a bit tougher, as it's codefile data. But it also sounds like somebody at another University requested Jedi data even before the Census came out. So stay tuned.

Career Lesbians

First, a short summary on the gender wage gap. Men on average earn more than women. When we correct for differences in education, work experience, industry, and time outside of the workforce, the differences are much smaller but they do not disappear entirely. There's been a lot of work done on that women often choose professions or jobs that provide less in salary but more in non-pecuniary benefits like more generous leave, easier flex-time arrangements, or fewer expectations to work more than a 40 hour week. These differences in choices can result in differences in observed pay packets even in the absence of any wage discrimination. See the posts linked at the end for some of the evidence.

One hypothesis that's intrigued me: while wage regressions will adjust for number of children, and find that having kids hurts women's wages, they don't really account for employers' forward looking expectations of job separation or time out of work due to fertility. If an employer is weighing up two job applicants, one of whom, statistically, has a much higher chance of taking 3-12 months off on maternity leave sometime in the next three or four years, then the employer might shy away from offering the kinds of jobs that require strong job attachment - the same kinds of jobs that lead to progression through the ranks and to the upper echelons of industry. Worse, this can easily lead to the kind of bad equilibrium that Glen Loury posits for human capital acquisition across races: if you expect that employers will reckon you'll drop out of the labour force to have kids and that you'll have a hard time getting to the top because of it, why make the human capital investments that would be necessary to do it?

Occupational segregation arguments then start having more force: women are disporportionately employed in industries with lower skill depreciation rates and lower penalties for temporary workplace separation, or in the public sector, not only because those sectors are friendlier to families but also because making investments to go into other industries are riskier where you can't credibly signal that you won't separate from the workforce.

My Masters student, Hayden Skilling, presented his thesis to the Department on Tuesday. Lesbians earn more than heterosexual women. Some of this is due to occupational choice, some of it is due to having had fewer kids. But some of it also seems due to that lesbians are less likely to have children than are heterosexual women. Hayden shows this in a few ways. First, the age patterning of realised fertility outcomes among lesbians and heterosexual women explains some of the wage gap between lesbians and heterosexual women after correcting for a host of other variables in Census and ACS data. Second, state-level policies that differentially affect fertility by sexual orientation also affect the wage gap between lesbians and heterosexual women in the predicted direction. For example, mandatory insurance coverage for IVF makes it easier for heterosexual couples to have kids; where the insurance coverage typically requires conception failure subsequent to an extended period of natural attempted conception, married heterosexual couples will be at an advantage. Similarly, legislation making it easier for homosexual couples to form stable legal recognized couples make it easier for them to have or jointly adopt children. Both of these affect the wage gap in the predicted ways.

I'll be blogging more of Hayden's work after he's given me the final draft. In the meantime, here's another great piece of evidence supportive of the basic hypothesis we've been exploring. Tobias Schmidt points me to this piece over at IZA. Stijn Baert at Ghent ran an audit study where Belgian employers were sent vitae for homosexual and heterosexual women. Apparently it's not uncommon in Belgium not only to list your marital status but also your partner's name on your vita. This is great because it lets them provide a signal of sexual orientation that doesn't simultaneously signal, for lack of a better word, stroppiness: membership in a gay rights organisation as an "other interest".

They found that there was no discrimination against homosexual women in general but that younger lesbians are more likely to get positive callbacks from potential employers than are young heterosexual women. They also expect this is due to employers' expectations about fertility.

If an important part of the pay gap is employers' expectations about the costs of employees' fertility decisions, then optimal policies to address the pay gap and optimal policies to support family formation will vary. For starters, we should be reticent to impose costs on employers who hire women who then go on to form families.

Previously:

• Wage gaps and Maternity
• Mommy track vs partner track
• That pesky pay gap
• Odd Japanese labour markets
• Fertile Employment
• More pay gaps
• Parental leave and benefits
• Gender pay gaps and nonpecuniary benefits
• The lesbian pay gap
• Wage discrimination: the evidence
• Critiquing the Ministry of Women's Affairs paper on pay gaps (and here)

Pandemics and public health

Gordon Tullock had two standard lines for the (many) anarchists in our grad programme. One was that government was needed to mandate interconnection between private roads. The other was that we need government to enforce quarantines during pandemics.

And so it's great that Otago's Nick Wilson has been doing some work on pandemic preparedness. The Press reports on his work on the topic; here's his blog post. In the 1918 influenza pandemic, some communities remained clear with strict internal entry controls. He also recommends closing the borders and emptying communal living facilities in advance of a pandemic hitting New Zealand, depending on the pandemic's seriousness.

If "closing the borders" does not imply shutting down international trade, it's pretty plausible that this could pass cost-benefit for a sufficiently serious pandemic. If the flu (or other) virus can only survive outside the body for n days, then continue to allow ships to offload shipping containers, put them into holding areas, then release them post-quarantine. It'll be a big costly hassle, but potentially better than losing a reasonable fraction of the population. If it means shutting the border to trade entirely, well, the "how serious a pandemic" hurdle gets much higher. Were some version of ebola to come out with a week-long incubation period, followed by a few days' high infectiousness, followed by death, then temporary autarky wouldn't seem so bad by comparison.

It would be a fun (but likely infeasible) honours project to work out some ballpark numbers on expected mortality rates sufficient to justify different pandemic quarantine levels, ranging from nurses / health checks for incoming flights at the airport, to quarantine facilities for incoming visitors, to the complete sealing of the borders. I expect that working out the likely real costs of some of these measures would be a bit beyond the scope of an honours project. But it also seems the kind of thing where the government should have set plans: if the combination of communicability and morbidity hits different thresholds, then different measures get rolled out.

Student housing

A very welcome press release from the University of Canterbury:

The University of Canterbury (UC) announced today it plans to take some pressure off the Christchurch housing market by building accommodation for students in partnership with the private sector.

Construction is expected to start next year on a new 240 bed hall of residence, to be completed in time for the 2015 intake.

...

"We will be talking to neighbours and interested parties about the project as it advances and, to help Christchurch, we are keen to provide more accommodation in future on the Dovedale campus as the University continues to contribute to the rebuild.

"Other temporary and medium term accommodation projects are also being progressed on and off campus.

"We have already spent $180 million in our campus remediation and we expect to spend $1.1 billion revamping our campus over the next 10 years.’’

Dr Carr said as student numbers were likely to rise to pre-quake levels by 2017, there was an urgent need to take positive action in the best interest of the city.

UC is also looking into short term housing options for up to 72 students on Ilam Fields for the 2014 academic year.

All accommodation developments will be undertaken within Christchurch City Council planning requirements. The University already provides 1949 halls of residence beds. Applications for 2014 are higher than in recent years.

...

"An extra 140 beds have already become available in the halls for next year after the relocation of the College of Business and Law back to the remediated School of Law building.  However, applications to enrol from new to UC international students have increased by over 600 or nearly 50 percent compared to this time last year and applications from out of town new to UC students have also increased,’’ Dr Carr said.

A big part of the University's current financial distress has been due to housing availability. Construction workers and displaced families outbid students for flats, so students head elsewhere.

I wonder if anybody here has done a full accounting of the costs of the decision to temporarily turn some of the student apartments into staff offices; I'd expect every one of those converted flats represented a lost first year student, with continuing effects for the next two years. The Economics Department here, being a rather collegial bunch, decided to stay in the open plan temporary barracks-style offices here on Kirkwood Oval. We move to the remediated and repurposed law building next week.

I look forward to again having an office and space for all the books that have been in temporary storage since 2011. I also look forward to the University's being able to accommodate a robust student intake.

A welcome turn

A NZ Herald editorial last week rightly criticized the country's growing nanny state. 

In themselves, the Government's proposed amendments to the Fencing of Swimming Pools Act contain a reasonable degree of common sense. What can be wrong with changes that aim to reduce the risk of children drowning? And if the new law would mean even portable or inflatable pools need to be fenced off, isn't it right to encourage parents to adopt best practice and empty them after each use?

The only problem is that the proposal is a further sign of a Government regulatory itch that is now of eczematous proportion. It is an odd situation for an administration that places much importance on personal freedom, prides itself on reducing rules and regulations, and criticised its predecessor for a nanny-state approach.

The extent of that regulatory itch was outlined in the Weekend Herald. Examples include the ever-decreasing speeding tolerance threshold, the reining in of bars' happy-hour promotions, a ban on using cellphones while driving, prohibiting the sale of wine in dairies, and making beneficiaries immunise their children. Each was appropriate in its own way but each would also have engendered claims of social engineering if it had been the work of the previous Government.

Indeed, with both cellphones and immunisation, the Key Government has ventured where Labour declined to go.

The proposed swimming pool regulations, I suppose, crossed a line for the Herald's editors. A year ago, the Herald on Sunday described itself as "campaigning" for lower drink-driving limits and regularly runs features on the horrors of alcohol.

They're right now though.

The Herald's Isaac Davidson enumerates National's nanny moves:

Alcohol
• Can't buy beer and wine from dairies and convenience stores.
• Bars no longer allowed to advertise discounts over 25%.
• Can't buy beer from bottle stores after 11pm and in bars after 4am.
• Minors need express consent from parents to drink.

Smoking
• Plain packets for cigarettes (proposed).

Driving
• Speed tolerance cut to 4km/h.
• Breath-alcohol limit lowered.
• Mobile phone use banned in cars.

Recreation
• Licence to hunt specific types of game animals.
• Snapper catch reduced (proposed).
• Fines for not fencing permanent paddling pools (proposed).

Health and welfare
• Raising age for child booster seats from 5 to 7.
• Harder to get cold medicine with pseudoephedrine.
• Beneficiaries' non-school-age kids must be enrolled in early childhood education and doctor's clinic.
• 16- and 17-year-old beneficiaries have an adult assigned to them who pays their bills and handles their money.

I support a few of these. Requiring that beneficiaries have their kids enrolled with a GP (free in NZ) seems the kind of regulation that has the potential to do much good while imposing little cost. And I wouldn't rule out that having youth beneficiaries get a bit more guidance on managing their money might help. Snapper quotas and hunting licences can be an important part of overall conservation management; I expect that the regs here are to ensure a sustainable harvest rather than to run people's lives for them.

But the others do grate.

Maybe I'm a terrible driver, but I have a hard time keeping within a 5 km/h plus-or-minus range around the speed limit. I'm there 95% of the time, but New Zealand is a very curvy and hilly driving environment. It's easy to miss that you've started onto a decline until you notice that the speedo's hit 110. And that's fine, when you're allowed a 10 kph tolerance. But at a 4kph tolerance, I'll have to double the frequency of speedo checks to make sure that I'm not over the limit. Or, get a radar detector for highway travel. In the former case, I'll be driving less safely because I'll be diverting attention from the road. In the latter case, well, I might be tempted to go a bit faster than I otherwise would have. I also expect that others might start targeting 95 kph to avoid going over 104 kph, which will also be rather annoying in places without adequate passing lanes.

I suppose that the best that can be said for the proposed pool regs is they'll encourage more people to come around to my way of thinking about government.

We live on Estuary Road in South Brighton. If you cross Estuary Road, you go through a park leading to the Estuary. The Council maintains paths leading right up to the water's edge. Before the earthquake, a dock went out into the water, with no particular railing to keep people from mistakenly going over the side; steps at the end led right into the Estuary. If you go East instead of West from my house, you cross Pine Street, then cross Marine Parade. Then you'll come to a wonderful set of sand dunes. The Council maintains an easy footpath to climb over them. On the other side is the Pacific Ocean, with nary a fence nor a lifeguard in sight. Gorgeous. Council did a lot to enhance the natural amenity value by easing access for everyone.

In my backyard, there's a swimming pool. My back yard is entirely fenced, so nobody can get to the pool without passing a barrier into my back yard. The pool area is fenced off from the rest of the back yard. When we purchased the house in 2005, we specifically requested that a Council zoning guy come in and assure us that the pool was completely compliant and that we'd have no issues in buying the house. He said it was all good.

In 2009, we had a half-dozen visits from a different Council pool compliance person. Each time, something different was wrong with the pool fencing. Each visit was followed by a threatening letter. Nothing had changed in the regs. Nothing had changed in the fencing. Different pool inspector, different result. Once we had demonstrated sufficient obeisances, she signed off on it. I suspect that some Council officers just get off on making people prove submissiveness and enjoy making people do stupid pointless things just for the sake of it. For now, it's best to know how to lose. Come the revolution....

More binge drinking reports

StatsChat reports on local hype about increased hazardous drinking among women.

A Canadian alcoholism activist is in New Zealand promoting a book. It looks like Alcohol Healthwatch has used the book tour as a hook for a report on female drinking habits in New Zealand. I was a bit surprised to see reporting on big increases in female binge drinking; there's really nothing there in the Ministry of Health data.

Granny Tut-Tut (who recently complained about Key's Nanny State) reported:

Women's alcohol consumption is on the increase, and "we don't really know why", they said, something which was hindered by "gaping holes" in the available research and data. However, they said key target areas for the Government should be pricing, how the alcohol industry markets its products, and availability.

If you don't know why something's increasing, I'm not sure you're well placed for recommending policy interventions. But what's the evidence for increasing female consumption?

 The AHW paper on which the news stories are based says the following:

One recent survey reported that between 1996 and 2012 the rate of hazardous drinking among women remained relatively stable at around 12% of drinkers²⁵. However, other surveys indicate that women of all ages have increased their alcohol intake in the last two decades, and this has been most marked in younger women^{26 27 28.}. The proportion of female secondary students who were current drinkers dropped significantly from 68.5% in the first Youth 2000 survey, to 45.5% in 2012^{29 30}. This is consistent with results from the New Zealand Health Survey, where the proportion of 16 to 17-year-old young women drinkers significantly reduced from 79% in 2006/7 to 59% in 2011/12^{31 32}. However, of those secondary students who did drink, 28% had five to nine drinks in an average session in 2001, and 30% in 2012^{33 34}. About 10% usually had 10 or more drinks a session in 2012.

Ok. So we have a great big reduction in the proportion of young women who drink and a tiny increase in consumption among those who do drink. Is that our crisis? Seriously? Let's look at their cited sources on increased intake among younger women.

Footnote 25 is the MoH data linked above.

Footnote 26 is Fergusson et al. It is a survey piece offering no independent evidence on time trends. They cite only the Law Commission report on that there's any increasing trend in drinking among young women.

Footnote 27 is Freyer et al's ALAC monitor report 2009-2010. This is a fun one. They specifically say "Comparisons between years should only be made between 2005-06 and 2008-09. Comparisons with 2009-10 should not be made because of a change in the way "Moderate Drinkers" and "Binge Drinkers" has been defined. So keeping that in mind, what do they say about female heavy drinking?

• There was a substantial drop in the proportion of binge drinkers who were women. In 2005-2006, 55% of all binge drinkers were women; in 2008-09, 31% of binge drinkers were women.
• Some stats on all youth drinkers first. Table 8 shows a slight increase in youth non-drinkers and, among drinkers, a slight increase in the proportion counted as binge drinkers. Table 10 shows that a decreasing proportion of youth drinkers report having consumed 5+ drinks on the last occasion, though the difference isn't statistically significant. Table 11 shows that the mean number of drinks consumed by youth drinkers has been stable. Table 12 shows that the mean number of drinks consumed by binge drinkers at the last session has had no change from 05-06 through 08-09. Further, Table 14 shows a slight increase in the median age of drinking initiation, though it's still sometime between the 14th and 15th birthdays in both years.
• Table 15 shows that the proportion of youth drinkers who were female increased from 48% to 51%, but the difference was not statistically significant. An increasing (but not statistically significant) proportion of moderate youth drinkers were female; a stable proportion of binge drinkers were female. 

I can't see any increasing drinking trend among women in the Freyer et al data. Maybe there are unpublished results providing cross-tabs by gender of the trends among all adult drinkers reported in tables 2-4, and maybe those show some kind of crisis among female drinkers, but they're not published and they're not here cited that way either.

Footnote 28 is Huckle et al's summary of trends out of SHORE data. What did they find?

• At page 44 they note a statistically decreasing trend in drinking prevalence among women both in the past 12 months and from 1995 to 2011, though the difference is very small. The number of past-year drinkers reduced from 85% to 83%.  
• At page 45 they find, among drinkers, an increase in drinking frequency. Women reported drinking 57 times per year in 1995 and 82 times per year in 2011. In Figure 3, they show that women aged 16-24 years showed the smallest change - eyeballing the picture, the trend for that cohort is entirely flat. Women aged 55-65 showed the largest increase in drinking frequency. However, at page 48 they find that the quantity consumed per drinking occasion went up by a quarter, from 30 ml to 37.5 ml. Young women's consumption increased from 1995 to 2000, declined through 2008, then increased again in 2011, making for a flat overall trend 2000-2011 after an increase from 1995-2000.
• At page 49 they have the stats on heavy per-session consumption, with a five 15mL drink lower bound. I'll quote: "The proportion of young female drinkers consuming 5+ drinks at least once a week increased from 19% to 28% between 1995 and 2011 (and this was a statistically significant increase). Most of this increase, however, occurred between 1995 and 2000." The SHORE data is pretty much flat from 2000 through 2011; 2011 looks to be slightly below 2000. 

On the whole, the SHORE data is consistent with an increase in heavier drinking among younger women from 1995 to 2000 and a flat trend since then. I would be exceptionally hesitant to describe this as an increase "in the last two decades" because the increase, such as it was, was entirely from 1995-2000. The phrasing makes it sound like we have this increasing trend instead of a level shift. 

So, let's weigh this all up then. Alcohol Healthwatch says that while the MoH data shows stable rates of hazardous drinking among women, three other sources show "women of all ages have increased their alcohol intake in the last two decades, and this has been most marked in younger women". I can't see that their cites support that statement. One shows no significant trend, one just cites the Law Commission, and the last one shows an increase from 1995-2000 and a flat trend since then.

Read and judge for yourself. I can't see that there's any big crisis here.

A few other notes:

• At page 6, they say that evidence around safe or beneficial levels of consumption has been contested, citing Corrao on cancer. Corrao also was the author of a metastudy showing the cardioprotective effects of alcohol consumption. As always, it ought to be all-source mortality that counts, not any particular condition. 
• At page 6 they cite BERL saying alcohol causes $5.3b in health and social problem. Note that BERL retracted that figure for a smaller one after I told them that they couldn't count drinkers' excise taxes as a social harm. The other problems in that report were very large.
• At page 8, they cite a study of residence hall students at Waikato as being representative of drinking habits among all tertiary students. At least where I went to undergrad, the residence hall students drank substantially more than the students who lived at home or elsewhere. Maybe it's different here.
• At page 9 they claim that 44% of women aged 55-70 drink hazardously. The study they cite uses a lower AUDIT threshold than is standard. Further, the same study says that only 16% of women in that age category engaged in binge drinking over the prior year. Ahem.
• Their measure of the prevalence of drinking in pregnancy comes from 2001; there've been a lot of public health campaigns since then.
• Page 9 gives a pile of ethnic differences in drinking and cites trends from 1996 to 2006 but ignores all of the trend data in the 2011 MoH survey. 

The standard disclaimer on alcohol posts now applies. But it didn't apply to these prior posts:

• What crisis?
• Again, what crisis?
• A real alcohol crisis (warning, may not contain actual crisis)
• More on the alcohol crisis
• Our manufactured drinking crisis

Crowded house

Christchurch districts that experienced bigger increases in house prices from 2008 through 2013, the dates of easily available QV data, also experienced larger increases in the proportion of census households reporting two or more families living in the same household. This isn't particularly surprising. Where housing supply is inflexible due to Council regulatory constraints, increases in the number of families, whether due to kids reaching adulthood, immigration, or divorce have to be accommodated somehow. That somehow is multiple families living in the same household.

On Friday last week, the Christchurch Press called the University looking for a few folks to provide them commentary on the Census, released this Tuesday. Stephen and I put together the following as op-ed. The Press decided to turn it into a news story instead; the story appeared here. But our original piece is below.

Census 2013 focus: The hidden cost of housing regulation

Eric Crampton & Stephen Hickson

More Kiwi families are having to double-up as housing supply has failed to respond to demand pressures. The Census tells us how many families live in each household. In 2006, fewer than 40,000 households, or about 2.8 percent of all households, included two or more families living together. In 2013, that figure rose to just over 51,000 households, or about 3.4 percent of the total. Had the proportion of multifamily households stayed at the 2006 level, 9,100 fewer households would have had two or more families bunking together.

Economists call this an increase in the intensity of housing use. It’s one of the ways that people can respond to increases in housing costs. When housing gets more expensive, people buy less of it. One way of buying less housing is to share a house with one or two other families. The pattern of increased housing intensity suggests that cost pressures are behind it.

We paired district-level housing intensity increases between the two Censuses with Quotable Value data on residential house values from November 2008, the earliest month in their freely available data series March 2009 and March 2013, the month of the census.* The increase in two-or-more families living in the same household is strongly related to house price increases within each district (for the statistically minded, the correlation coefficient is 0.66). This is just a first cut as the Census has only just been released. But it is informative.

Selected Territorial Authority Areas	Number of households with 2 or more families, 2006	Number of households with 2 or more families, 2013	Percentage increase in multifamily households	Percentage increase in QV property value, November 2008 – March 2013
Far North	546	639	17%	-14.5%
Whangarei	648	672	3.7%	-9.9%
Auckland Area	19977	27042	35.4%	22%
Waikato	612	684	11.8%	2.5%
Rotorua	744	735	-1.2%	-2.8%
Napier	426	459	7.7%	0%
Wellington City	1215	1659	36.5%	5.4%
Nelson	216	303	40.3%	9.1%
Grey	51	39	-23.5%	-10.1%
Waimakariri	225	420	86.7%	26.4%
Christchurch	2295	3132	36.5%	19.7%
Selwyn	204	369	80.9%	30.5%
Dunedin	519	621	19.7%	10.2%
Southland	75	81	8%	-5.4%

We see this as one of the hidden costs of New Zealand’s very rigid approach to town planning. City Councils make it hard not only to expand housing supply out into the suburbs but also to increase density within town limits. When it’s hard for housing supply to respond as population increases, prices of existing houses increase. This brings supply and demand back into line, but by forcing families to make some pretty costly decisions by bunking together. Until Councils start taking housing supply seriously, expect the situation to worsen.

I emphasized to the reporter that demand side measures to try to hit housing prices really don't help. If we have fewer houses than families that want to be in houses, then we're going to have multiple families in a household regardless of any measures we might put in affecting house prices. Those measures can affect the price at which the market clears but don't really change which families wind up in which houses. Worse, where some measures targeted at demand can reduce building, they can make things worse.

* Looking back at it, Stephen had pulled QV data running March 09 through March 13. The latter is the month of the census; the former is the first March in the QV data. While November 2008 would be earlier, we then risk getting seasonal / month effects mixed in with things.

Obesogenic environments?

Gareth Morgan wanted restrictions on where "fake food" outlets might be located.

Placement of junk food outlets – local communities have a say over the placement of alcohol outlets, but we can’t stop junk food outlets setting up around our schools or clustering in poor neighbourhoods. This could be changed if planners had to take health into consideration in their decisions.

From The Lancet, online version 29 November 2013:

Influence of the retail food environment around schools on obesity-related outcomes: a systematic review
...
This review of the scientific literature found very little evidence for an effect of the retail food environment surrounding schools on food purchases and consumption patterns, but some evidence of an effect on bodyweight. Given the general lack of evidence for association with the mediating variables of food purchasing and food consumption, and the observational nature of the studies included in this review, it is possible that this finding is a result of residual confounding.

Alcohol work

Until now, the only bit of paid work I've done on alcohol-related matters was an analysis of the Collins & Lapsley figures on the social costs of alcohol for NABIC. That was handled as a consultancy contract through the University's Research and Innovation office.

I've been interested in alcohol policy issues for rather a while. Since moving to New Zealand, I'd loved the kind of drinking and brewing environment that's been enabled by our regulatory and tax structures. On landing here, we joined the University Wine Club, which maintained an excellent cellar and introduced us to all that New Zealand had to offer. Then we started discovering New Zealand craft beers at the University of Canterbury Staff Club. Charles, the bartender, stocks great beers and runs beer tastings, often hosted by Ralph from Three Boys' or Richard from Dux de Luxe. New Zealand's the kind of place where a home brewer can gauge market demand for his product at farmers' markets, then go on to open a brewpub. So long as you pay your excise if you're selling product commercially, the government doesn't much get in the way.

And so I've taken it as my bit of the 'critic and conscience' duties at Uni to keep an eye on regulatory and tax policy in the area. It bothers me when basic statistics are misrepresented to purport that there's some kind of drinking crisis going on; it bothers me more when economic method is abused in support of regulatory policies more likely to do harm than good.

For the next three years, and potentially longer, I will be able to devote a bit more of my time to this area. The Brewers Association of Australia and New Zealand has entered into a three-year agreement with the University to free up a bit of my time that I might spend it on alcohol-related research and policy work that interests me.

The contract between the Brewers and the University maintains pretty strict academic freedom. While I'll be having some chats with them about which projects we both might find interesting, I maintain IP rights over everything I do and so can blog or publish as I like. The three year contract is subject to renewal at the end of the second year, so if I wind up doing a bunch of work they don't like, well, I'll have another year to keep at it before the contract winds up. And since everything between the University and the Brewers, my job doesn't depend on keeping anybody happy.

I'll use Andrew Leach's Q&A about his Enbridge Professorship as model here.

What are the basic terms? The Brewers Association is paying the University an amount roughly comparable to 20% of my salary plus overheads. In addition, the award provides a discretionary research fund of $5,000. The award does not change the terms and conditions of my employment agreement with the University of Canterbury and does not change my rank; I remain Senior Lecturer. As internal accounting within the Department, but without variance to my employment contract, my teaching and other obligations will be reduced by roughly 20% to permit me time to work on alcohol policy related research.

Does this mean that the Brewers Association is paying part of your salary? Yes and no. The Brewers are providing the University with funding roughly equivalent to 20% of my cost to the University; the University pays my salary.

Can the position be revoked at the Brewers' request? No. But, the contract is only for three years. In two years' time, the Brewers, the University, and I will have the opportunity to discuss extending the arrangement. Either way, my employment agreement with the University will not change.

Are you required to be supportive of the Brewers' actions, statements, or policy preferences? No. The only expectation is that I'm able to spend some of my time at the University working on issues related to alcohol policy. The contract between the University and the Brewers strictly stipulates my full independence; academic freedom is also built into my employment contract with the University.

Does the arrangement specify subjects that you should or should not address in your research? The award does not place restrictions preventing me from undertaking any areas of research. I will be talking with the Brewers about the research projects I might undertake over the next three years, but the contract isn't particularly limiting. The Brewers will expect that I be available to provide quick economic analysis of research and policy around alcohol - the kind of analysis I've been providing on the blog and in other forums over the past several years anyway.

Do you expect me to believe you aren't conflicted by this arrangement? I cannot control others' beliefs. I invite the concerned reader to look back over the several past years' worth of alcohol policy analysis and commentary on this blog. Whatever bias I might have towards standard economic methods and methodological individualism is pretty well established. I expect that haters are gonna hate regardless of whether my work on alcohol issues is funded.

I'd balk pretty hard if academic freedom ever came under threat as consequence of this arrangement. I can't see any mechanism by which the Brewers could try to compromise my academic freedom. I also expect it would be exceptionally contrary to their interests to do so. But were it ever to come up, I'd be going pretty quickly to my Head of Department and Pro-Vice Chancellor to seek redress or to cancel things.

Party time

ACT is in search of a new leader. The liberal right may also be in search of a new party. These together make for interesting trading times at iPredict.

I've reckoned that a party on the right economically does best by being firmly liberal on social matters. Not only does that coincide with my own preferences, but it also provides strategic opportunity for such a party to go into coalition both with National and with Labour/Green. Economic liberalism is advanced in coalition with National while, hopefully, preventing backsliding on social issues; social liberalism is advanced in coalition with Green/Labour while, hopefully, mitigating some of the backsliding on economic issues.

ACT hasn't been terrible on social liberalism under Banks, but neither could they ever really be leading on that front. Banks is a social conservative who wound up being stuck leading a liberal(ish) party. I can't fault him for his performance in that role given the constraints. I was very happy when he supported Louisa Wall's gay marriage legislation; his speech in support of the legislation was very good. A lot of the time he had seemed to be playing the part of a liberal leader, representing values other than his own because it was his job to do it - which itself is something for which he should be commended. On the gay marriage bill, he genuinely seemed to have come around substantially.

What problems on social liberalism ACT has had under Banks have come less from Banks than from divisions within the party. ACT's support for the GCSB/TICS legislation seemed to reflect the true preferences of rather a few within the Party rather than being just a necessary part of a coalition agreement. I think ACT missed a really big opportunity. Even just working out a couple of achievable improvements to the legislation and pushing them publicly as civil liberties wins for ACT would have gone a long way to avoid alienating the civil libertarian wing of the party.

I ran the numbers on the 2008 NZES election data suggesting there was room for a properly liberal party, whether ACT or otherwise. I'll have to re-do that with the 2011 figures.

iPredict has a series of contracts up on the ACT leadership. There's been lots of movement in those contracts since they were launched this morning. It's currently looking like a two-way race between Jaime Whyte and David Seymour, with Whyte on $0.60 and Semour on $0.20. Seymour worked in John Banks' office before heading to work for the Frontier Center in Canada; Whyte has a background in journalism and management consulting. Both would be great, though I'd be surprised if the still rather youthful (ie younger than me, a category that keeps getting larger) Seymour were picked. I have 100 buy orders in on Whyte at $0.50; 100 sell orders on Seymour at $0.30. I expect that either of them would represent a welcome shift towards a more classically liberal party.

There's also an "Other to be the ACT Party leader" contract, which pays $1 minus the payouts on all the other leadership contracts. This makes it not simply an "other leader" contract, but also a contract that pays out in the event that the liberal wing of ACT decides they do better starting a new party and that the Party then folds before deciding on a new leader. I've 100 buy orders in on that one at $0.01.

Finally, there are separate contracts running on who will be ACT leader on nomination day. There's always some chance that the next leader will not be leader on nomination day, though it seems odd that Banks is there running at $0.05.

I love that we get real-money trading on these kinds of contracts pretty much immediately. Thanks, iPredict!

Update: Hooton suggests a summer's thinking over whether there should be a new party. [NBR gated].  There were a lot of conversations on the right after the 2011 result wondering whether the liberal wing of ACT ought just go off and set up its own party; obviously, that obviously didn't wind up happening. I doubt a new party can really launch while ACT is still around. Choice of dooms, really. ACT has a lot of baggage and problems, regardless of any new leader. But launching a new party is incredibly difficult. A relaunch and rebranding building on an existing seat and accompanying Parliamentary resources wouldn't be a good as a new party that had access to similar resources, but a new party wouldn't have those resources.

Southern Response and Arrow Bleg

Tomorrow marks 1016 days since the February 2011 earthquake. It will also be the first day we will have had a visit from our insurance company.

New Zealand's insurance regime around earthquakes splits liability for earthquake damages between the Earthquake Commission and your private home insurer. Every home insurance policy comes with a mandatory EQC levy. EQC handles claims resulting from natural disasters, covering damages to your house up to about $120,000 and any necessary land remediation. They also cover outbuildings like garages. Damages to your house above $120,000 are called "over-cap" and require complicated negotiations between EQC, your insurer, and whatever builder you might wish to use. This substantially slows down the rebuild. We would do better to have private insurance companies handle everything and bill EQC for the amount up to the $120,000 cap, with some ex post audits to make sure this didn't just result in insurers providing free gifts to their clients on EQC's dime.

Damages to paths, sidewalks, driveways, swimming pools and fences are called "Out of scope" claims. These are handled by your private insurer as they do not come under EQC's coverage.

We might have expected quicker assistance from our private insurer on our out-of-scope claims than we've received from EQC. We're now on our fourth round of quotations going back and forth from our builder to EQC - this one on a newly revised EQC scope-of-works. I don't know when they'll get that sorted out. But at least we've had a half dozen visits from EQC. This will be the first time we see Southern Response.

Southern Response is the company formed out of AMI after the earthquakes. AMI was Canterbury's largest insurer. We signed up with them because their rates were reasonable and, with their name plastered all over everything in Christchurch, we expected there to be close to zero chance they'd ever fall over - no chance an insurer that's that prominent would be allowed to fail. Turned out that they hadn't bought enough reinsurance and so the total claim liability was a bit higher than their coverage. And so the government split out all their earthquake liabilities along with all their reinsurance assets and a bit of a government top-up into a new company, Southern Response. Southern Response has been very very slowly visiting everybody.

In September 2012, they told me:

At  this instant, I am not able to give you a specific timeframe as to when Arrow will move into the South New Brighton area; they are currently working mainly in the TC1 Grey suburbs where land remediation is not required. Currently Southern Response is estimating that the projected timeframe to have all out of scope claims assessed is approximately 3-5 years.

And so our visit is coming a bit ahead of when I'd expected it. There is no land remediation necessary at our house. But we have substantial heaving on one footpath (broken heaved cement), some broken cement on the drive, a damaged wooden boundary fence, and damage to the in-ground swimming pool.

Tomorrow comes with a bit of trepidation. There have been lots of angry stories about Southern Response and their affiliated contractor, Arrow. The stories suggest that Southern Response has been under cost pressure because the government is on the hook for anything above the reinsurance bundle. It's not at all implausible.

I wish that the government had taken a different approach to the AMI bailout. A better alternative would simply have had all of us take a haircut. Suppose that on a quick assessment total liabilities were 10% over total reinsurance and other assets. Give everyone a 20% haircut on the total value of their claim, then later distribute the remaining funds proportionately. Instead of chiselling costs down by dragging out the assessment process and giving everybody a rough time, they could have just been upfront about things, told us they only had enough money to cover a fraction of our total insurance claim, and paid us our fractional shares. The total amount each of us would have been paid out would not have been much less, but it would have been faster. And because we all would have known that we were getting a fractional payout, we'd move from the combative "I paid for full as-new replacement so dammit give it to me" to a recognition that we paid a discounted premium for a discounted product and that we all need to take our proportionate lumps. Assess each claim relative to its full value as though the insurance company hadn't failed, then pay out the fractional shares instead of pretending that some cheap repair job constituted full and fair replacement. In that world, it doesn't matter if quantity surveyors are highballing all the estimates: everybody's claim gets inflated by say a quarter, then everybody takes a bigger haircut relative to the highballed claims. Highballing can only affect your proportion of the fixed pool of money, but if everybody does it, it's neutral.

I welcome advice about dealing with SR and Arrow from those who've already been through the out-of-scope process.

Update: The surveyor measured up the paths and pave that need replacing, will book in somebody to come and look at the pool, reckoned the fence damage mostly not earthquake [it wasn't like that pre-quake, but damage also consistent with wood twisting over time so hard to prove either way], and will send through by February some quotes for cash settlement. I'll run those by our contractor to see if they make sense. Stay tuned.

The coming disintermediation

The great Eli Dourado shows the way:

What’s even more exciting is the next generation of disintermediating technologies. Bitcoin could displace some financial institutions—to varying degrees, banks, the Federal Reserve, Western Union, and credit card companies.Mesh networks could solve the last-mile problem of Internet service delivery, which tends to be monopolized or at least concentrated. 3D printers could disintermediate supply chains. 3D chemical printers could disintermediate drug companies and the FDA.

Delivery drones like Amazon Prime Air‘s arguably disrupt package delivery services, though not entirely because FedEx and UPS will still run drone-utilizing distribution networks. More importantly, delivery drones disintermediate the real estate market for small businesses. It will no longer be important, if you run a local business, to have a storefront in a prime location. Your customers can order online and items can be delivered to them in half an hour straight from the factory or artisanal workshop. It could be the Etsyfication of the economy.

If information, electricity, money, and production all get disintermediated, what is left? If these trends continue, the future will be one in which human interaction is unmediated, and to a surprising degree, unregulable. It will be difficult to stop a willing buyer and seller from transacting. Information about the proposed transaction might not be censorable. Payment via Bitcoin or other cryptocurrencies can’t be stopped. Production and delivery of the item may be difficult or impossible to detect and intercept.

Intermediaries are often used by governments as points of control. As we shed intermediaries, it may become possible to live one’s entire life without any particular authority even knowing that one exists. I doubt that we’ll ever get that far in the process, because using non-abusive intermediaries often makes economic sense. But for the next few decades, at least, I expect the trend to continue and the world to get a lot more interesting.

I've wondered when we'd start getting chemical printers; I love that they're in progress.

The various commenters at SciBlogs who reckoned it entirely right and good that the FDA stomp all over 23andMe may have collective apoplexy over the pharmaceutical implications of chemical printers. They're right that 23andMe didn't pay obeisances to the FDA; I don't think they ever should have had to. But it's irrelevant where people will be able to route around the regulatory blockages. Something like 23andMe will start running out of Singapore or China if the US kills it. If chemical printers are banned in the ban-things regimes, they'll get developed elsewhere. And they'll either be printed here or people will sneak them in.

And then, oh and then.

Whether or not you think ChemPrinters are a great thing (I think they're a great thing), if you think they're likely to emerge, here are a few implications:

• Drug patents won't much work anymore. Sure, Pharma will try for DRM restrictions on chemical printers to ban their production of patented chemicals, but it will be no more effective than DRM restrictions on other media in the longer term. 
• If you try to force things back through the regulated channels by having doctors report on patients who are given prescriptions that never get filled, you risk hastening the disintermediation of medicine. What do I mean? Online self-diagnosis via improved versions of Doctor Google. 
• If you want that new pharmacological compounds be developed, you need to move to a prize system rather than patents. Set a prize for "compound that effectively (as defined) treats X (as defined) with no more than Y costs in side effects (as defined)", pay the developer directly on proof of effectiveness. This is probably worth doing anyway as it would at least help some new antibiotics and new vaccines to get developed.
• Update, thanks to Ryan: Note that in this world, we will need new antibiotics faster than in the current world. And things are looking very bad indeed on that front in the current world. Where chemical printers are ubiquitous and easy, there will be plenty of clowns who decide to jump straight to the compounds that kill the resistant bugs. And then we'll get quicker resistance development. I don't see any easy way to prevent such uses. While I think it's great that people will be able to route around those who make it hard to get E, the same tech will also make it easy to get around the gatekeepers who help to prevent antibiotic resistance.
• If you want compounds to have gone through at least some safety checks, you need to cut down the costs of going through any approval process. Otherwise, people will just start printing whatever compounds they think might help. That whole deal where dying people have to fight to be allowed to try experimental drugs before they're approved? Well, they'll print their way around that nonsense whether you like it or not.
• Hey, Peter Dunne. Guess what. I'm gonna print me some pseudoephedrine. I don't want methamphetamine. I want cold medicine that works. First we get the ChemPrinters. Then we get the inks. Then we get the cold relief....

There's still better than even odds that the ban-things countries will be able to make it very hard to have your own ChemPrinter. If they can ban pseudoephedrine because it's a potential precursor to meth, they can ban ChemPrinter ink cartridges. And think of the DHS's reaction when somebody puts up a recipe for printing plastic explosives. 

But I'm hopeful. At worst, we get ink cartridges that can be filled at home, more complicated ChemPrinters, and users buying elements of the periodic table. One chance in four within the next two decades? Even odds within the next three?

Wage gaps and maternity

Another for the "the gender wage gap has less to do with sexist employers and more to do with productivity characteristics" file: having children reduces the intensity of market work. In a nice study on Norwegian data, where effects are identified by comparing against women who had miscarriages, women having children see earnings reductions of 16%, driven mostly by reductions in the number of hours worked rather than by labour force exit. HT: Ole Rogeberg

We find that each of the first children has a large impact on female earnings, which on average are reduced by 16%. The largest decrease in earnings are driven by women with average earnings reducing their labor supply and thereby earn less. There are small effects on earnings for those who are marginally employed or women in the higher end of the earnings distribution. Labor force participation is not affected much by having children, indicating that in the Norwegian context, the combination of market work and family obligations is clearly feasible. The intensity of market work is however reduced. Women work on average 2 hours less per week per child, and the effect does not decrease (much) when the child grows older. Motherhood therefore plays a significant role in explaining female part-time work. We find no evidence of an adverse health effect of having children as neither sickness absence not disability seem to increase due to motherhood.

Since they're identifying on the difference between women having miscarriages and those with successful births, the estimates will be the partial effect of having had a child rather than the total effect of both preparing to have had a child (perhaps reducing investment in on-the-job training) and of having the child. The total effect will be larger.

Previously:

• Mommy track vs partner track
• That pesky pay gap
• Odd Japanese labour markets
• Fertile Employment
• More pay gaps
• Parental leave and benefits
• Gender pay gaps and nonpecuniary benefits
• The lesbian pay gap
• Wage discrimination: the evidence
• Critiquing the Ministry of Women's Affairs paper on pay gaps (and here)

Social Bonds

I hadn't heard of this one before Rebecca Stephenson called asking for comment. New Zealand is looking to pilot a "social bonds" project. The full documentation is here; the redacted cabinet papers are here.

In short, NGOs and private providers interested in delivering projects they think will achieve objectives sought by the government, whether initiatives to reduce criminals' recidivism rates or to help drug addicts get clean, can pursue funding for their initiatives through a bond issue. If they beat the programme's target expectations, the investors get a nice return scaling with the project's success. If they don't the investors lose out.

The project certainly looks worth trialing.

KPMG provided a case study based on alcohol intervention programmes. I rather like the idea: projects then are targeted at truly harmful use rather than broader interventions. Unfortunately, they illustrated some of the potential savings from such initiatives by pulling in social cost figures from the BERL report. However, they do provide a nice caveat in Appendix 3:

The Berl analysis has been independently critiqued and it is likely the social costs have been overestimated.²² The analysis is referred to in this business case to illustrate the social cost, not provide evidence of the social cost. The scale of total costs and the comparative proportions of the cost components should not be relied on for the Social Bonds pilot, however the work does provide an illustration of the different types of social costs that should be considered for alcohol and drugs. 

They do correctly note that there are large potential benefits in reductions in costs to the health and justice sectors from targeted interventions for harmful drug and alcohol use, even if these are overestimated in the Berl report.

I told Rebecca:

Social bonds let investors bet on the interventions they think will work in reducing social problems. This provides rather a few advantages, not the least of which is forcing the use of measurable and achievable performance indicators. While I hope the business cases for particular bond issues will be a bit more robust than the case study provided by KPMG, and that Treasury will be keeping an eye on things to ensure realistic estimates of potential social benefits, the initiative seems well worthwhile.

Teach the Debate!

Oh but Chris Auld is a mischief-maker.

The Guardian has been running a series of half-baked critiques of economics. While economists of left and right recognize them as humbug, demand for humbug remains as strong as ever.

Chris Auld responds by recasting an essay by biologists critical of the idea that schools should "teach the controversy" about intelligent design:

What is wrong with the notion that students should acquire the skills of critical thinking by grappling with the controversies surrounding mainstream economic theory? I argue, first, that materials offered by opponents of mainstream economics are actually designed to misinform and obfuscate the real controversies in economics. Educational materials offered to encourage “critical thinking” consist mainly of “evidence against” mainstream economics — a “catalogue” of specific cases for which economic theory has presumably failed to provide a complete or compelling explanation.

Second, I argue that opponents of mainstream economics confuse the source of economic controversies in two important ways. The first is semantic; Mainstream economics is incorrectly equated with Neoclassical economics, which in turn is incorrectly equated with all modern economic theory. Materials from the Guardian, for example, typically trumpet the shortcomings of neoclassical theory—conveniently ignoring more than a century of research that has expanded, modified, and some cases, even replaced strictly “neoclassical” ideas about economics.

He continues, but you can head there to read the whole thing. Auld concludes:

The gist of the article is that creationists commonly attack introductory biology textbooks on highly questionable and ideologically-motivated grounds, pounce on errors or outdated information in such textbooks, and demand that the obscure and/or scientifically invalid theories which conform to their religious ideology be taught along with mainstream biology.

I do not mean to imply that economic theory is as well-understood as the fact that evolution occurred (although evolutionary theory—modeling how evolution actually occurred—is subject to many of the same limitations as economic theory, and is often based on strikingly similar formalisms). But I do think that the criticism of undergraduate education in economics offered by the Guardian parallels in form and intent attacks by creationists on introductory education in biology: they are thinly-veiled attacks on the discipline itself rather than course content, and they are offered by people with no real understanding of the actual scientific issues on misguided ideological grounds. The only substantive difference is in one case the ideology is religious and in the other it’s political.

There are actually problems with undergraduate education in economics. The point of an academic, as opposed to a professional, degree is to train students to understand and perhaps, if they continue their studies, to contribute to the research literature. Judged relative to that goal, the current curriculum is not sufficiently mathematical and places far too much emphasis on theory relative to empirics, amongst other problems. Some long-standing core material (e.g, the Marshallian theory of the firm) could be ditched to make space to cover more recent theoretical developments and empirical results and methods. This will happen over time, and hopefully we can prompt it along.

But the Guardian and its fellow travellers have quite a different set of reform criteria. Their criteria are political, not scientific. No, we don’t need more courses in Marxian economics, for example. Marxian economics comprises zero percent (give or take) of the academic literature, and thus under the criterion above for academic degrees, even if one thought Marxian approaches superior it would be irresponsible to replace large portions of the curriculum with Marxian theory. It would also be infeasible, as there are zero Marxian economists in the vast majority of economics departments.

I note the difference between academic and professional degrees: it is increasingly difficult to provide academic training in economics in New Zealand. We've been holding the line at Canterbury, keeping the core math theory in our three year undergraduate degree so we can focus on more interesting applications at Honours level rather than using the Honours year to teach the math they missed at undergrad.

I'll further note Auld's rather trenchant critique of "teach the controversy" in case there's suggestion that we need to re-do our undergraduate programmes to take account of the Guardian/Manchester critique.

Slippery slopes: Gareth Morgan edition

Slippery slopes are only a logical fallacy if you don't have a plausible mechanism by which the move to A makes B more likely, and how that then in turn makes C more likely. If you have a mechanism, and if you have repeated real world observations consistent with the theory, it's not a fallacy. It should be the new null unless there's some better theory explaining the data.

A few years ago Chris Snowdon documented the repeated calls from anti-tobacco campaigners claiming that any invocation of that restrictions on tobacco would beget restrictions on other things.

A few plausible mechanisms by which restrictions on one product beget restrictions on another:

• Public health campaigners move on to the next target down the line as grant funding on past targets dries up.
• Marginal cost of extending a control mechanism to a new domain is lower than establishing it in the first place so it is likely that when it starts, it will extend.
• Where the public would oppose the full suite of controls if offered at one go, they're less likely to oppose many small steps leading to the same goal. So if you want to ban tobacco and it is 1978 you only ask for voluntary non-smoking sections as a sensible moderate position. Then mandatory ones. Then smokefree restaurants and public buildings. Then smokefree anywhere a kid might be. Then Smokefree NZ by 2025. Anti alcohol campaigners have already started talking about a .03 BAC limit.

I don't think it is nuts to believe that public health campaigners want far more control over our consumption decisions than they're letting on. It's consistent with the evidence of incremental ratcheted increases in control over each product, and extensions of controls from one product to another.

In today's edition, Gareth Morgan continues his campaign to leave no shark unjumped.* After a few reasonable suggestions for addressing obesity, like teaching basic cooking skills in school, we get:

• Bans on junk food advertising to kids;
• Zoning regs on placement of "junk food outlets"
• Regulating transfat and salt content
• Tax junk food, subsidise healthy food
• Stigmatize "junk food". What does that mean?

  This is the hard part. Like smoking, we have to be careful not to target the addicts who have been sucked in by marketing. The same goes for the overweight who may well be the victims of their own genes and upbringing. Instead we have to work against the tide of marketing and make eating fake food uncool. The watershed in the cultural war against smoking was probably banning it in pubs sending smokers outside to satiate their addiction. This stripped smoking of the sheen it had when front and centre on the movie screen.
  
  Right now, eating unhealthy food is the easy choice. That needs to be flipped on its head. We’ll need to change fundamental things from fundraisers to rewarding good behaviour in our kids. Sausage sizzles and selling chocolate bars for a school trip, even free treats in airline lounges will all one day be shown up for they are – cheap and nasty ways to feed an addiction.
  
  Of course, such a plan will take time and political will to implement. However action is needed, otherwise we truly are facing a zombie apocalypse of diabetes sufferers hitting our hospitals over the next two decades.

Emphasis added above.

Modeled on anti-smoking efforts?

Fake food now kills as many people as cigarettes, and it is time to apply the same solutions as we did to that problem. There is a tried and tested formula to crack this problem – education, regulation, taxation and stigmatisation.

A month or two ago, I tweeted wondering when Otago was going to call for bans on sausage sizzles. Instead the call comes from an economist.

Despair.

Previously:

• Calls for bans on fast-food advertising on public property and their sponsorship of things like Ronald McDonald House.
• Suggestions of plain packaging for alcohol
• Applying anti-tobacco and anti-alcohol to sugar
• Slippery slopes: theory and practice
• Michael Daube on Nicola Roxon's legacy: a Taskforce to push ever onwards
• Janet Hoek wants plain packaging for soft drinks
• Whitman and Rizzo on paternalism and slippery slopes
• Thaler on the fear of slippery slopes

* See also banning cats, taking over soccer, North Korea....