## Thursday, 31 January 2013

### Do Catches win Matches? (UPDATED)

The University put out a press release yesterday describing some summer research I did on this topic with a summer student, Marcus Downs. It has been picked up by a few electronic media outlets, including the Hearld, and the two of use were interviewed by One News, with the plan to include it on the the Six O Clock News tonight. (UPDATE 1: It appeared on Sunday 3 Feb. It will be here till the 9th. The clip starts at around 33:14.)

What we did was to go through the cricinfo commentary for 122 ODI matches played in 2011 and 2012, and identify every ball where there was an opportunity for a fielder to bring about a dismissal, either by taking a catch, effecting a run-out, or making a stumping. We then used the commentary to characterise the degree of difficulty of the opportunity (blinder, difficult, normal, absolute dolly), and find the probability that the dismissal would be made for each of these difficulty levels.

We then used the same analysis that produces the first-innings score predictor in the WASP (see my previous post on that here), to calculate how many runs a batting team's expected score in the first innings would increase by after each ball. Batters get credit (discredit) for all of that increase (decrease), whereas the credit or discredit is shared between bowlers and fielders in those cases where there is a fielding dismissal opportunity, with fielders getting more of the credit for a blinder, and more of a penalty for dropping a dolly.

We calculated a distribution across all batters, bowlers, and fielders in our datbase. What we found was that a batsman who is one standard deviation above the average contributes about 8 runs more to his team than an average batsman; a bowler who is one s.d. above average contributes about 6 runs more (that is, he restricts the opposition's score by about 6 runs more than an average bowler), but a one-s.d.-above-average fielder contributes less than 2 extra runs. 8 runs may not sound like much, but an additional 8 runs can make quite a difference to the chances of a first-innings score being successfully chased. (UPDATE 2: Scoring 8 runs more than par rather than par, pushes up the chance of winning from 50% to 56%.)

We still have some improvements to make to the analysis, but they are only going to further minimise the relative importance of fielding.

There are two main reasons for why catches and run-outs are not that important (notwithstanding the recent 2nd ODI between NZ and South Africa, where 5 run-outs tipped the balance in New Zealand's favour). The first is that a lot of the run-outs and catches in ODI games occur near the end of the innings where their impact on the score is not so great. The second is that most of the opportuntities that arrive are ones that are (or should be) straightforward for an international cricketer. We all recall moments of fielding brilliance, but those opportunities simply don't arrive often enough to make the contributions of great fielders worth a place in the team for that reason alone.

There are a couple of caveats to any coaches taking policy conclusions from this.
1. We have only looked at dismissal chances. If we were able to get good data on ground fielding, it might make a difference. I suspect not, though.
2. We have only looked at ODI cricket. I supsect the role of catching might be greater in test cricket. (I am showing my age here, but I continue to believe that Jeremy Coney should have been in the NZ team between in the 76-78 period, simply to make sure there was someone who could hold on to the slip catches that Richard Hadlee was generating and having continually dropped at that time.)
3. It may be that fielding is more dependent on coaching and practice rather than natural talent, relative to batting and bowling, and so the reason that the better-than-average fielders are not that much better than average, is because coaches have correctly emphasised bringing all fielders up to a minimum standard, and have not selected players who don't meet that threshold.
Notwithstanding the caveats, I think it is still fair to say that the "catches win matches" cliche should be put to bed.

### Consent constraint

From the Christchurch Press.

Item the first: there's a boom in building consent applications.
With the rebuild ramping up, the Christchurch City Council is struggling to find enough qualified people to process the hundreds of building consent applications it receives each month.
Building activity in the city has jumped markedly in the past four months, with the number of consent applications now at levels unseen since the peak of the 2007 building boom.
Many applications then were for minor building work that is now exempt from building consent requirements.
The council is dealing with a similar volume of applications, but the work is complex residential earthquake repairs and rebuilds.
Wow, they're busy. Ok. Item the second:
Of the 281 new homes approved in November [for the Canterbury region as a whole], 96 were in Christchurch and 185 in other Canterbury districts, figures show.
So Christchurch Council in December 2012 approved the construction of ninety-six new houses. 96.*

The Canterbury region as a whole had 4037 new dwelling consents approved in 2012.

If you go to the StatsNZ underlying data, you'll find Christchurch City approved 1,506 new dwellings in 2012.

Auckland as a whole had 4,581 new dwelling approvals. Auckland has a lot more people than Christchurch: roughly four times as many. And they only had three times as many new dwelling consents as Christchurch did.

So Christchurch Council approved a few more new dwellings than Auckland did, relative to population.

But more than 6000 homes in Christchurch were set for demolition because they sat in the Red Zone. And there are non-red-zoned houses that have to be demolished.

Some low income families in Christchurch live in tents and garages.

None of the low-income cohort that feature in the all-too-frequent Press exposes of Christchurch housing problems would ever be able to afford any of the stuff now being built, nor could they even if consenting were eased such that land prices could drop. They benefit instead when richer people move into new houses,  freeing up space in existing housing stock.

If approving new dwellings is too complicated and hard, Council could ease its burden by making it legal for owners of existing dwellings to build a rental flat into the existing house. A couple interior walls, a kitchen, and a bit of plumbing - pretty simple. Shame it's banned.** And, again, even if the people currently living in tents and garages couldn't afford those new units, they might be able to afford the places vacated by those moving into the new units. Or the places vacated by those moving into the places vacated by those moving into the new units.

Sometimes, allowing that more steps be built at the top or the middle of the ladder isn't a bad way of letting the folks at the bottom climb up a rung.

* In January, Christchurch Council also closed 31 social housing units because they no longer met earthquake spec.

** And see here.

### Cats: internalising the externality

The typical North American housecat cat is declawed: a veterinarian surgically removes the cat's front claws. Or, at least that was the case when we lived in North America. The norm in New Zealand is not to declaw as it's viewed as cruel to the cat and being not unlike amputating your fingers above the last joint. Some online sources suggest it is illegal to declaw cats in New Zealand.

If declawed cats are less able to indulge in their murderous ways, it can be the case that something somewhat cruel to cats is nevertheless on net animal welfare increasing. And, it seems a fairly appropriate way of internalising the relevant externality: the cat gets to exist,

Imagine yourself behind the Veil. You do not know whether you will be born a cat or a bird. In the state of the world in which cats are declawed, you are more likely to get to exist, get to exist as a cat, have a less happy life if a cat, and have a happier life if a bird. Do you, behind the veil, choose to prohibit, allow, or mandate declawing? It'll depend on how unhappy declawing makes cats, and how much effect declawing has on cats' ability to torment birds. The first isn't easy to assess, though I'd definitely pick declawed cat over non-existence. Does anybody know anything about the second?

Declawing: to help reduce the risk.

Conflict of interest watch: after our eventual extensive home repairs (earthquake), we'll likely have to get another cat. I prefer that that cat be declawed even counting the losses to the cat. I don't think this colours my analysis above.

## Wednesday, 30 January 2013

### Insulation

I didn't know that the government commissioned work on the effectiveness of its Clean Heat programme which provided subsidised insulation. Arthur Grimes reports in the latest MOTU update that they matched treatment homes with a set of comparable control homes and ran difference-in-difference estimation on the effects. He writes:
The energy study showed that insulation treatment caused a statistically significant, but small (0.7%-1.0%) fall in metered energy consumption. The small drop in energy use is consistent with an economic model in which energy efficiencies were obtained from the insulation so that the effective price of heating fell, in turn resulting in increased consumption of heat (i.e. a warmer house). Greatest energy savings were experienced in cool areas. Measured energy use was shown to increase slightly with the installation of clean heat installation (no data were available on nonmetered energy use).
So free insulation will not help reduce energy demand: people respond to the reduced cost of heating by consuming more of it. This is worth knowing as some parties think that improved insulation is a substitute for greater generation capacity.

Health outcomes improved consequent to better heating. The MOTU reports found a 3.9:1 benefit-to-cost ratio, but that 71% of total benefits were from reduced mortality. As a public health intervention to reduce mortality, this could be fine. But it is hard to make a market failure case for the subsidy scheme.

Imagine two possible policies. Policy A gives cash to households and lets them choose whether to insulate their house with it; they're also given a pamphlet listing all of the benefits of insulation including increased life expectancy. Maybe it also has a nice narrative about how nice it is being in a warm house. There are lots of suggestions about how the money should be used for insulation, but it leaves the choice up to the household. Policy B gives a voucher for home insulation that can only be used for home insulation. If in the Policy A world households choose things other than insulation, can we really say that the the insulation subsidy programme passes cost-benefit analysis relative to the "give money to poorer households" programme? I don't think so.

Sure sure, there are other benefits where you could make a case: reduced hospitalisation and the like. But if 71% of the benefits were reduced mortality (ie reduced losses in VSL), then the benefit to cost ratio without the VSL gains drops to 1.131:1. And if people would demonstrate that they value other things by more than the VSL gains, it's hard for me to see the case for Policy B over Policy A.

Note: I've read only Grimes's summary and not the underlying work.

### Inflation expectations

Bill Kaye-Blake notes the macroeconomic consequences of the delayed Christchurch rebuild, and wonders whether we consequently should have more stimulatory monetary policy:
First, I could see the logic in the plan. Austerity for reasons of national economic policy — reducing the debt, placating overseas money markets — while getting some Keynesian intervention through Christchurch. Secondly, it didn’t work. It became clear in 2011 that it wasn’t working. Nevertheless, the Government stuck with the plan longer than I think they should have, and longer than the state of the economy warranted.
He puts up graphs showing RBNZ estimates have been optimistic relative to experienced reality for the last several quarters, that core CPI has been low, and that unemployment remains high.

I'm happy to agree with Bill that the stalled rebuild had macro consequences, as well as the general awfulness for folks stuck in very poor housing. But let's have a look at some inflation expectations.

I'm here drawing from iPredict's quarterly markets on inflation rates. The table below has the risk of inflation outcomes above 3% and below 1%, based on the price of shares in the relevant markets.

 Quarter Probability inflationless than 1% Median expected rate Probability inflation greater than 3% March 2013 84% Less than 1% 1% June 2013 23% Between 1% and 2% 5% September 2013 34% Between 1% and 2% 10% December 2013 15% Between 1% and 2% 15% March 2014 18% Between 1% and 2% 19%

Inflation risks look pretty balanced over the medium term.

The markets are also expecting no change in the OCR in any quarter through the end of the forecasting horizon. The greatest likelihood of any change is a 21% chance of an 25bp increase in December 2013, though the markets also are pegging pretty stagnant GDP growth rates and an unemployment rate unlikely to drop below 6% before September quarter 2013.

You could maybe justify a small cut to the OCR on that risks currently should be weighted towards breaching the top rather than the bottom of the bound, and on that the median expected rate converges to a shade below 2% rather than a shade above it. But it's hard to see much case for that RBNZ has been grievously tight when they're targeting a medium term.

## Tuesday, 29 January 2013

### Immigration - falling behind

Another from the I-freaking-told-you-so department.

I suggested NZ grant permanent residence automatically to foreigners here completing a degree at one of our main universities. Three great effects:
• NZ gets the benefit of a big pool of talented people;
• A big pool of talented people currently stuck in bad places get better lives;
• Foreign students in NZ universities massively cross-subsidise domestic students. We could provide a better quality product for domestic students at little cost to them.
But America may wind up beating us to it. A bipartisan Senate committee recommended the following:
The framework features extra money for border enforcement and the establishment of a border commission composed of governors, attorneys general, and the like from border-area states. It will provide for automatic green cards to "immigrants who have received a PhD or Master's degree in science, technology, engineering, or math from an American university." It will also create what I take to be an enlarged agricultural guest-worker program, only with some mechanism for veteran guest workers to earn green cards. It will provide a mechanism for unauthorized migrants to turn themselves in, pay a fine and back taxes, and receive provisional legal status.
Matt Yglesias recommended widening this; I'd be a bit surprised if the anti-immigration lobby didn't wind up restricting it further. But the US suddenly becoming less stupid about immigration will not be to New Zealand's immediate benefit.

New Zealand has to get better faster to avoid falling behind.

Update: Brad DeLong and Greg Mankiw put it well a few years ago....

### One block of Estuary Road

We're a month from the two year anniversary of the February 2011 earthquake. SCIRT, the road infrastructure repair agency, endeavors to repair each street in one go, when it's able to. Here is the story of our 500-metre block of Estuary Road since February 2011. Some roads on the east side of town are far worse; others have fared better.

April 2011, work started for replacing a pumping station. We were very glad to be able to use our toilets again.

They closed up the roads and traffic was back to normal. For about three weeks if I recall correctly. Then, they opened everything up again to replace the sewer line. We thought they were done, then they opened it up again because they'd installed at the incorrect depth. The project ran from early July 2011 until June 2012: they were just shy of the one-year mark. Our road enjoyed very limited access for the duration. For a good part of that winter, it was a one-way cul-de-sac with a Jersey wall at the end. We raced toy wooden boats in the sump water that ran along the side of the road.

Work began again late November 2012 to replace the storm water drains. I'm sure there's some good reason why this wasn't done in the prior round. They closed the road up for the Christmas break, then opened it up again to continue the job after Christmas, for which I thank them. The notice here says work began 7 January; that was when work resumed after a month of works before Christmas. I'm not sure why the pre-Christmas works are not noted. They hope to be done late March.

On a rough count, this five hundred metre section of road has been in normal service for about 8 of the last 24 months. We are grateful that at all times we have been able to access our driveway. But we also wonder whether one guy with a single shovel, and a bit of forward planning and determination (and maybe a hoist to get the heavier pipes in and out), couldn't have had the whole thing finished by now.

Repairs to the Bridge Street Bridge began in August 2012 - shortly after repairs to Estuary Road took a hiatus. The bridge's current one-way flow adds 10 minutes to our evening commute. It will be like this for a year. Pages Road through Bexley, the recommended alternative as it provides the next river crossing to the north, is in very poor shape and is also under ongoing repair. When repairs to Bridge Street Bridge began, simultaneous work on Pages Road made for a minor disaster. That has eased, but repair work on Pages still seems to be necessary. I had expected that more might have been done to make this road serviceable before a detour doubled its traffic load.

SCIRT rejected alternatives of:
1. One-way outbound in the morning; one-way inbound in the afternoon (sensibly - it's an evacuation route for tsunami).
2. Placing temporary traffic lights so that cars could take turns. I'm sure they had a good reason for it, but I have not seen it adequately explained. This would be especially appropriate on evenings and weekends when traffic is exceedingly unlikely to back up to Dyer's Road.
The diverted commute up Pages Road through Bexley continues to take us past abandoned, boarded up, and heavily tagged former homes, and some that are still occupied. The old retirement apartments on Anzac Drive are gutted and exceptionally heavily tagged. I hope that they are soon demolished. Eyesores appear in the east faster than they are torn down. We stopped on our way home a fortnight ago to call the fire department about a (hopefully abandoned) house on Admiral's Way where flames were licking through the roof. I expect that the gutted shell will be there for a while.

The kid's play fort at the South Brighton park that was hit by arson last Christmas has recently been replaced by a Flying Fox. I am glad they replaced that part of the former park. Large sections of the park remain fenced off due to trees in danger of falling over. A pleasant walking trail through it has re-opened; the pier remains fenced off. The community centre that once housed the neighbourhood toy library is currently under demolition. There's a big sign warning against site entry because of asbestos. There are no noticeable tarps covering anything on the site; dust blows, depending on the wind, into the playground of the South Brighton Elementary School, across the street from our house. I trust that the asbestos is contained, or that medical technology will have progressed such that new lungs can be printed on demand in thirty years' time. South Brighton Elementary School is due for merger with Central New Brighton School. We are placing our children at Ilam school, right next door to the University, to add 45 minutes to my working day rather than to avoid the merger process. But I fear that if consolidation closes the facility across the street, the buildings will be abandoned and left to ruin rather than converted to parkland or put to other purpose like so much else in the East.

Quality of life on the east side of town remains in need of improvement. Aucklanders weary of Christchurch whinging are invited to rent a car in Christchurch and drive the neighbourhood around Kia Ora St.

No such problems exist near the University; students considering Canterbury can effectively ignore that the east side of town exists.

## Monday, 28 January 2013

### Afternoon roundup

Today's afternoon news roundup.

Item the first: NZ's organ donor rate remains low; the kidney waiting list in particular remains long. Andy Tookey again suggests compensating cadaveric organ donors with subsidised funerals to encourage donation. I agree.

Item the second: if you're a small country, and the US ignores a WTO ruling in your favour, your options are pretty limited. Antigua gets points for creativity. HT: Susan.

Item the third: the National Business Review reprinted a couple of my posts this past weekend; here's cost-benefit analysis and banning cats. Their comment pool is a bit different from the one we have here. I'll be talking with Jim Mora and Radio New Zealand's The Panel on the topic around 4:15 this afternoon. [Update:  embedded below]

Item the fourth: American crime rates seem more sensitive to number of police on the streets rather than number of people in jail; the policy recommendation is to spend less on imprisoning people and spend more instead on community policing. A small portion of this effect is may be due to that crimes committed by police may be less likely to show up in the crime rates. The Bridgeport, Ct. police officers filmed stomping on the head of an immobilized and tazered individual are on desk duty rather than under arrest, at least so far. At least the guy who filmed them is unlikely to be arrested; had it happened in another state results could have been different. But I do agree with the overall policy recommendation - so much the more so if it could be done by diverting police resources away from victimless crimes.

Item the fifth: SciBlogs is running a survey on scientific literacy. I got a perfect score on it, but only because I lied a little bit about one of my answers. One question asks what makes a scientific result most credible: peer review, reputation of the research team, or a couple of other options. I knew the right answer was peer review. But I often put a lot more weight on researcher reputation. Things are so infrequently replicated, and results so often fragile when replicated, that I far more typically weigh a bundle of researcher reputation, publication, and topic. A new working paper from somebody who's credible is just worth more to me than a published piece from somebody who has a bit of a reputation for results that are fragile to specification search.

Item the sixth: +Jeet Sheth rightly wonders whether this is inconsistent with our usual assumptions around transitional gains traps. I'd think of it more in terms of a Peltzman regulatory model. In New Zealand, older used cars must undergo a basic safety inspection every six months while newer ones only need it every year - the Warrant of Fitness. They don't seem to be a profit centre for most garages except inasmuch as they give garages the opportunity to sell other (hopefully needed) services to those getting inspected; some garages specialise in only doing WoF checks on a quick while-you-wait basis. The national government proposed moving to annual inspections for vehicles first registered in 2000 or later. Recall that in the Peltzman model, regulation always balances the public interest with that of the regulated party; that balance changes as technology changes. The mechanics' trade association lobbied against the change, painting it as a road safety issue; the Automobile Association lobbied in favour of it despite also providing WoF checks. While dedicated WoF stations could have been earning some rents from the regulations, free entry into providing WoFs would have meant those rents would not have been huge. It's better viewed in a Peltzman model where deregulation (or a loosening of regulations) can emerge when a technological shock makes the regulation less beneficial to the regulated and to customers. Here, mechanics who weren't WoF specialists would have been seeing less benefit from the regulation as car manufacturing standards improved over time (and so potential gains from on-selling other services were smaller); the regulation's incidence was also pretty obvious to car owners.

Item the seventh: having this particular lotto number selection strategy isn't clever, it's just a way of increasing your winnings if your main numbers happen to come up. It's a bit nuts to purport that any number selection strategy is more clever than any other. It's a random draw guys. Random.

Item the eighth: Andrea Marchesetti points to a nice little story perhaps illustrating Caplan's rational irrationality model. Recall that in Caplan's model, when beliefs are of low cost, you'd indulge your bliss belief; when beliefs contrary to truth become expensive, you scale back demand for them. The Wall Street Journal reports that "haunted" homes in Hong Kong no longer trade at much of a discount; the property boom has pushed prices up. Entrepreneur Ng Goon Lau buys up at discount houses where an unnatural death has occurred, rents them out to expats who don't believe in ghosts, then later sells them - presumably with reports from the renters showing there to be no ghosts. It's unclear from the story whether the Hong Kong boom has brought in sufficient expats that haunted houses were bid up to standard prices without locals changing their beliefs, or whether the absolute increase in housing costs induced locals to put up with spooky ghost problems.

So concludeth the closing of the browser tabs.

### A little respect

Shouldn't hospitals have some facilities for smokers?

In September, the New Zealand Medical Journal published a letter to the editor noting one consequence of the Smokefree Environments Act:
A peculiar perversity of the Smokefree Environments Act, which has very successfully prevented indoor smoking in public places is to very visibly concentrate smokers, both patients and staff, at the front entrance or close by the entrance to many New Zealand hospitals. As legislation prohibits smoking on hospital grounds this often involves moving smokers to the street. At Wellington hospital, for example, smokers have been gradually encouraged to move further and further away from the hospital’s front entrance and down onto the street. Similarly, at the Hutt hospital, smokers have been moved further away from the hospital entrance.
One potential risk associated with this is that should they [patients] collapse they will need to re-enter hospital by ambulance. Those on telemetry who collapse in the street will not be able to rapidly access the hospital resuscitation team thus decreasing the chances of successful resuscitation.
Of course, for most hospitalised smokers in hospital, nicotine replacement which is now widely offered as part of the ABC programme2 is an important therapy which prevents much of the physical and psychological symptoms associated with nicotine withdrawal. It is likely to be only the very nicotine addicted smoker who needs to brave the elements and stand in the street to smoke.
The smokefree environments legislation was not designed to stigmatise smokers or have them in hospital gowns on the street, but it is an unintended consequence. If we consider tobacco smoking, to be a nicotine addiction that is tough for many to break, and that nicotine replacement is insufficient for some smokers, then we should assume a more compassionate stance and consider the provision of at least some shelter and privacy for patients. The upside will be to reduce the visibility of smoking and have patients where they can maintain close contact with the hospital and where cessation advice and help could be offered directly. The downside is that this may be seen as condoning smoking, a retrograde step in the smokefree vision, and it may require a law change.
In the latest NZMJ, an Auckland physician urges a more compassionate approach:
I was encouraged to read the letter from Crane et al1 pointing out the “peculiar perversity” of the Smokefree Environments Act which has moved patients with a smoking addiction from within to the public spaces around our hospitals. Their major concern is with patient safety.
I am astounded at the lack of dignity we give such patients. Our profession has abjectly ignored our obligation to treat such patients with respect. In Auckland Hospital we have a continuous band of smokers in wheelchairs on the main thoroughfare (Park Road). They sit in their hospital gowns, often with bandaged stumps or clinging onto drips or pumps displayed for the derision of the passing motorist or bus passenger. This is akin to the old village stocks where miscreants were placed for the amusement of others. Those unfortunates who are unable to make it to the open road are condemned to experience every nicotinic cell in their body crying out for its fix. The only comfort being transdermal nicotine, which is nothing like the real thing. We enforce such withdrawal on those who only have a few days or even hours left to live.
Smoking is legal. The Government receives significant revenue from the habit. We deny our smoking patients the respect that is due to them. This is in contrast to the opiate addict. Their habit is illegal, there is no cost recovery and yet we, rightly, treat them with compassion, dignity and privacy.
It is time for the Medical Profession to redress this balance and advocate for our patients while maintaining our support of policies to reduce the prevalence of smoking within our communities.
What good is done by making a terminally ill patient run the gauntlet for a last cigarette?

Shouldn't the physician's default be compassion and the easing of suffering, rather than the punishing of sin?

Hospitals in general should be smokefree environments. But would it really be that hard to have a dedicated and well ventilated room for these patients? They're already covering the health costs of their habit three times over in taxes paid; surely we can do better for them.

## Friday, 25 January 2013

### Optimal cats

I'm not sure that you can make a case for the phased abolition of cats from New Zealand within a utilitarian framework, even one counting animals' utility directly, without arguing that you also have to abolish any carnivore elsewhere in the world whose prey is not at the Malthusean fringe.

It's conceptually easy to add animals' utility to utilitarianism; read Peter Singer. Animals utility will be weighted by their self-awareness and capacity for pleasure and pain, but it counts positively and directly in the social welfare function. This interview of Peter Singer by Tyler Cowen is superb, though it doesn't hit this topic directly.

If the marginal increase in terror imposed by cats on their prey*, accounting for that cats may have greater self-awareness and greater capacity for pain and pleasure than do prey species, outweighs the cat's enjoyment of its own life (including all the murder) and the cat owner's enjoyment of the cat, then a Singer framework would support getting rid of cats. If pet owners get particular disutility from the forced euthanasia of their pets relative to not being allowed to get a new one, then it could be consistent with Gareth Morgan's proposed mandatory neutering and non-replacement.

But it's also consistent with other required policies. The proposal above is only optimal where prey animals would otherwise have had happier lives and deaths: trading starvation at the Malthusean fringe for death by cat might not be all that bad. But consider rabbits and mice in Britain that feed on crops and are not at the Malthusean fringe. Foxes that eat them then do harms little different from the harms imposed by cats here. And what of the terrors keas impose on helpless sheep?

Aha, you might say: rabbits and mice are not endangered, while some New Zealand native bats and birds could be. This matters in a Singer setup to the extent that people value endangered species more at the margin than they value rabbits and mice, and to the extent that any extinction may have flow-on effects elsewhere, but we also have to weigh it against cat owners' enjoyment. And given the likely rather large consumer surplus provided by cats, well, I'm not sure the case is obvious.

If you step outside of the utilitarian framework, it's perhaps easier to derive a "abolish cats but leave foxes alone" conclusion. Harry Clarke puts up a biodiversity standard, arguing that biodiversity should be sought for its own sake and regardless of whether people gain enjoyment from biodiversity. But if there's a continuum of policies that could be undertaken to encourage biodiversity, and if some are very costly, we have to draw a line somewhere about trading off biodiversity against other goods. And that puts us back into a utilitarian cost-benefit assessment even if we're adding in biodiversity as a non-preference-related constraint.

I'm not against this kind of messy pluralism; it's close enough to my own messy pluralism, where I invoke liberty side-constraints on utilitarianism rather than biodiversity side-constraints. But isn't it worth weighing up the shadow prices of the incremental gains? You have to put ridiculously high weight on the side constraint to reckon we shouldn't even consider cat owners' forgone enjoyment. And I'm not sure that there isn't a fundamental underlying anthropocentrism even to biodiversity standards where at least some of it seems to require choice among equilibria, and a lot of weight put on particular ex ante status quos. If many of New Zealand's species arrived here long after separation from Gondwanaland, and then evolved here, how far back should we go in turning back the clock? Sure, there was a stable equilibrium here before the arrival of Maori. But there would have been a stable equilibrium before the arrival of bats and buttercups too. And if the pre-human equilibrium was the 'best' one because it included some best stable set of creatures that didn't exist elsewhere, and we should invest resources in maintaining that set of creatures at the expense of other ones, why shouldn't we also invest resources in developing new creatures that do not exist elsewhere? There are lots of ways of increasing biodiversity.

* Every animal dies of something, eventually. If the cat kills an animal that otherwise would have died a painful death of Malthusean starvation, it has done no harm and may have done good. If the cat kills an animal that otherwise would have had a long and happy life because the environment is well below carrying capacity because there are too many predators, then it has done harm. If it kills an animal that otherwise would have soon been eaten by a weasel, rat, stoat or possum, then it's done no harm. See discussion of vegetarianism and eating fish in the Cowen-Singer discussion above-linked.

### Small things that bring me joy

Ali Spagnola's come up with something that simultaneously ought to annoy the anti-alcohol brigade and trademark trolls. I love it.

Anyone who ran the Centurion as an undergrad will be familiar with the Power Hour variant: a shot of beer per minute for an hour.

Ali came up with a fun bar/concert event based on it: she plays 60 one-minute songs, and the audience has a shot of beer at every song change. Great fun idea, right? It was, until a trademark troll ran her through the courts for three years. Why? He'd managed to get a trademark on "Power Hour" for a DVD version of that drinking game. The Amazon reviews are very poor; it looks like he did it only so that he could sue people otherwise using the term "Power Hour". The video's safe for work in reasonable places... she calls the trademark troll some names though.

According to Ali, it took three years and \$30k to get the courts to fix this. If her account is right, something's broken.

## Thursday, 24 January 2013

### McDonald's vs McWorld

You can get great bibimbap just about anywhere. But you can only get a McDonald's bulgogi burger in Korea.

Jeb Boniakowski wants a giant McDonald's that carries all of its different global offerings. But if part of the point of travel is obtaining experiences you can't get elsewhere, and if we're not far off from being able to get everything everywhere,* the only force countering McWorld may well wind up being McDonald's regionalisation. And wouldn't that just piss off Naomi Klein. I say keep things as they are.**

Update: McDonald's should issue a special passport. Collect a stamp in your passport when you eat a country's special regional McDonald's dish. And some kind of prize for the person who collects the most stamps. You'd need to have a picture in the passport to stop folks' just mailing the passport to friends.

HT: Matthew Yglesias.

* Except for Ethiopean food in New Zealand. Why oh Why can't we set our immigration policy to give priority to underrepresented cuisines? [Update: Keith Ng tells me that this place is still open; I'd heard it closed. Hoorah!]

** Yes, part of my policy advice here is spite-based. Spite can be a reason.

### Efficient excusing

I have twice been excused from jury service when the jury duty conflicted with exam preparation and supervision; fortunately, I haven't been called during times of the year when I'm not teaching.

The Herald wonders whether lawyers Googling jurors helps them craft more convincing arguments for that particular jury. But that's gotta be a massively second order effect relative to Googling's effect on jury selection. Any Crown attorney Googling me would find I support jury nullification* in drug cases or for any other victimless crime and would knock me out before I made it onto the jury. Any Defence attorney would find I support that those actually imposing harm be made to make the victim whole, and likely would knock me off the jury on that basis. So it's efficient that I not be in the jury pool at all: the odds that I'd fail to be knocked out by one side or the other are exceedingly low, my time is worth something, and the process of being excused from a series of trials because of challenges is lengthy.

But think about the pool of people who would not be challenged by either side in a world where a rather substantial portion of potential jurors blog, tweet, or put stuff on Facebook.

It actually makes for a fun option value / optimal stopping rule problem. Here's the game, as described on the Justice website:
The sequence of events at the beginning of the trial is as follows: the persons who have been called for jury service ("the jury panel") are brought into the courtroom where they sit at the back.7 Once court staff, counsel, the accused and the Judge have entered the court room the counts in the indictment are put to the accused, who pleads to them. Then the jury is chosen by ballot from the jury panel. The Registrar calls out each name as it is chosen, and that person walks from the back of the court to the jury box. If the person sits down before being challenged, they become a member of the jury unless they are discharged.
The page above is out of date; the number of peremptory challenges has dropped from six to four; I trust that the rest of it hasn't fallen out of date. But here's the basic game. Each side can challenge potential jurors as they are drawn from the pool of 30-40 who sit at the back of the room. If a juror is actually not qualified to serve, he can be challenged. Each side can challenge four without cause - peremptory challenge. I am not sure if there is a limit to the number of challenges for cause that can be made, but the judge has to be happy with the cause. Presumably my "anybody caught smoking a joint, and who admits having smoked a joint, is nevertheless innocent regardless of the law" views, as well as my three-day-a-week-anarchist status, would have me challenged for cause.

Suppose you're a lawyer who has to decide when to use your challenges to best serve your client's interests. So, when you got the list of potential jurors a couple days before the trial, you Googled them and gave each a score on the [-1, 1] interval indicating how hostile they were likely to be to your client's interests; you might also have noted your uncertainty about each score.** If you're the defence attorney on a drug trial where it's only a possession or trafficking charge, you give Crampton a +1 with zero variance (but you also know the Crown will veto); if you only find that somebody has 420 on his Facebook page, maybe you give him a +0.5 with a wider confidence interval. When you walk into the room, you check to see who is in the jury panel for the day; you then array the jurors from most to least hostile along with the scores you'd already given them. As each juror is called, the composition of the panel and of the jury changes, and so too then should the value of a held peremptory challenge: you have to weigh the hostility of the juror you reject with certainty against the odds that a more hostile juror might come up when you've run out of challenges.

I'd be pretty surprised if this hasn't been modeled before. But if it hasn't been, it would be a fun honours project. It would also be fun to see whether you can make an efficiency case for the reduction in peremptory challenges from 6 to 4 as lawyer certainty about juror views tightens up when they can Google potential jurors. File it under "Potential Honours Projects", if it hasn't already been done.

* UPDATE: It occurs to me that many Kiwis will have no clue about jury nullification. In short, it's the idea that a juryman must evaluate both the facts and the law. If the law is unjust, the jury must acquit no matter what the judge says. Juries are only a bulwark against tyranny if they are willing to overturn unjust laws by refusing to convict peaceful people for doing peaceful things. That's the point of juries. Expert judges will beat juries in assessing the facts, and especially so in complicated cases. Read Lewis Carroll on the competence of juries. But juries can assess whether it would violate the community's norms if the law were upheld. Consequently, there are no circumstances under which I could render a guilty verdict in a case involving victimless crimes. And so I know that I would never be chosen to be part of a jury. I do not expect or purport that most people here or anywhere else agree with me about the desirability of nullification; if they did, there wouldn't be prohibitions in various places on telling juries about nullification.

** Doubt lawyers do this explicitly; would expect decent ones do it implicitly such that a Friedman "as if" move works. Note that most of my knowledge of actual jury selection comes from an old Al Pacino movie. Keanu Reeves couldn't really Google the jurors in 1997. But things have changed....

## Wednesday, 23 January 2013

### Nanny's drinking problem

Christian Kerr wonders about the Australian public health lobby.
In May 2011 the Cancer Council released a position statement that warned "any level of alcohol consumption increases the risk of developing an alcohol-related cancer." Last March chief executive Ian Olver baldly stated "the risks from alcohol start from zero consumption upwards". Just days ago the council, Diabetes Australia and the Heart Foundation launched an advertising campaign pushing for a tax on soft drinks and advertising restrictions.

"They're deliberately replicating the tobacco campaign," one source says. "Their latest target is alcohol, with their secondary target obesity. They're trying to do so in a way to keep the alcohol industry out of the debate by trying to say anything that the alcohol industry touches is corrupt."
The source is not a lobbyist for the liquor companies. Instead, this individual is a former senior Labor Party figure who helped develop some of the most influential anti-smoking and other public health campaigns Australia has seen.
After saying a few nice words about my work on Australian social cost figures, he wonders why dodgy numbers get produced.
Why do the activists play this game? There is considerable public funding and academic prestige at stake. Small and often overlapping teams of researchers at the University of Sydney received well over \$2 million for projects beginning between 2009 and last year looking at smoking, "What is influential public health research" and "Corporate influences on media reporting of health".
Sydney and two other unnamed institutions were awarded just under \$2m for a project not only aiming to improve "media literacy" but also "the potency of policy advocacy among health professionals". Industry also charges an ideological element is involved.
"The Australian preventative health industry regards itself as the medical wing of the progressive left movement," one long-serving industry figure says.
Those grants typically come from government agencies and so cannot possibly influence the work that gets done.

And, again, what crisis?
Last May the Australian Bureau of Statistics said our apparent per capita drinking peaked at 13.1 litres of pure alcohol a person in 1974-75, remained relatively steady for the next five to 10 years, then fell over the following decade, to 9.8 litres a person in 1995-96.
Consumption gradually rose to 10.6 litres in 2006-07 and 2007-08, but fell to 10.0 litres of pure alcohol a person in 2010-11.
In October the Bureau also reported "Australians are . . . drinking less, with a drop of 1.4 percentage points in the number of people drinking more than two standard drinks on average per day."
One alcohol industry figure flings a particularly sharp barb at the anti-alcohol brigade off the back of these figures.
"These people are the climate change deniers of the health sector," he says.
Read the whole thing....

HT: Sinclair Davidson at Catallaxy Files; Simon Grose. Thanks!

### Hobbit budgets

I do not know how much NZ central and local governments spent on Lord of the Rings and on The Hobbit. There are conflicting reports, and nobody seems particularly clear on how much was subsidy in the sense of "they paid less in tax than they would have if they were some other business, but they might not have come here without it, so we don't know if the net effect on total taxes paid was positive or negative, but we're going to assume a counterfactual of that it would have been done here and assess on that basis" and how much was a straight-up grant. Gordon Campbell reports that, for LOTR, it was done as tax rebate and that it's now a grant. I've seen other sources counting a GST concession as a Hobbit tax break, but all products and services produced for export are GST exempt so inputs for that export product would always get a GST rebate. I'd love to see an authoritative figure.

But it can be useful to put the figure purported for The Hobbit into a bit of context. The most commonly cited figure for government support for The Hobbit is \$67 million. I do not know whether this was a cash grant based on a proportion of their domestic expenditures, a tax concession, or something else. But I do know that for the 2012/2013 budget year, Vote.Tourism allocated \$83.9 million for marketing New Zealand as an international tourist destination.

Imagine that the only benefit we get from the whole LOTR/Hobbit franchise is as tourism marketing campaign.

For 2012/2013, which did more to market NZ as an international tourist destination: The Hobbit, or everything else the government might have done in tourism promotion? Which seems more likely to inspire travel to New Zealand: 100% Pure, or Middle Earth?

Now I'm not sure that the government should be involved in tourism promotion in the first place.* But if they're going to do it, and if more tourism is a good thing,** is it crazy to think that LOTR/Hobbit could have delivered at least as much per dollar spent as the rest of the Vote.Tourism funding for overseas promotion?

I don't like differential tax treatment for different industries. And races to provide tax breaks for films mainly benefit Hollywood (see here and here and here and here). But imagine that Peter Jackson had submitted a GETS tender to deliver international promotion of New Zealand. He provided The Hobbit - a 3 hour infomercial for New Zealand - and delivered it to maybe 90 million sets of eyeballs*** for \$67 million. Could Tourism New Zealand have done better if they'd won that contract instead of its being outsourced? I'd try to evaluate the government's investment on that basis rather than on economic impact measures.

Marginalia follows below.

* The main plausible market failure case would be that any firm attracting more tourists to New Zealand only recoups a small portion of the returns and that there are too many of them out there plausibly to coordinate. But there are ways around that kind of problem: The country's two main international airports could have coordinated things along with Air New Zealand, with LOTR sponsors getting access to LOTR tourist packs for incoming visitors. Affiliating sponsors could be listed on Hobbit Trails and the like on the tourist maps.

** I wonder about it whenever cruise ships come into town. Princess Cruise Line's Diamond Princess visits regularly, carrying 2,600 elderly Americans, most of whom seem to get bused downtown at the same time. Christchurch's total population is about 360,000; Dunedin has about 120,000. This is just me being grouchy though.

A free idea for somebody planning on entering the 48 Hour Film Festival: a man suffering severe caffeine withdrawal realizes that the passengers being bused into town from the cruise ship are actually zombies. The ship was infected en route. Nobody else in town notices that they're zombies because, well, their behaviours aren't that different from cruise ship passengers: slow shuffling from tourist photo spot to tourist photo spot, moving in herds attracted by noise and light, biting people. Film two versions: one where he does what's necessary about the zombie invasion, with the I Am Legend twist at the end [we'll all be elderly cruise ship passengers, some day, and they're just like that], the other where he tries and fails in raising the alarm because everyone worries about effects on local restaurants, etc. Idea perhaps inspired by that the quest for my first coffee Sunday morning was very slightly delayed by herds from the cruise ship.

*** US domestic gross \$287m; international gross \$608m (and counting). A U.S. movie ticket averages under \$9. If we assume \$9 per ticket, then that's almost 100 million people who sat and watched a 3 hour infomercial for New Zealand. That's likely an underestimate as foreign ticket prices should be less than those in the US, and lots of people will have seen the movie via torrented illegal copies.

## Tuesday, 22 January 2013

### Kill all the kittens

Gareth Morgan wants to eradicate cats from New Zealand. His campaign website does a good job in describing the various evils cats perpetrate upon our ridiculously pacifistic native wildlife. But it's missing the first thing I'd have expected in a policy campaign coming from an economist: a cost-benefit analysis.

First, how much consumer surplus is generated by cats? It has to be pretty big. The New Zealand Companion Animal Council claims* that the 48% of NZ households owning at least one cat spend on average \$838 per year on their cats. 1.419 million cats at \$466 per cat is about \$660 million spent on caring for cats. I don't know what the price elasticity of demand for cat ownership is, but aggregate surplus seems awfully likely to be big.

Second, how elastic are wildlife numbers to cats' presence? Cats kill a lot of things; they're awfully murderous. But if they weren't there, would native wildlife rebound, or would the population of other predators expand with the reduction in competition?

Finally, how much value do we really place on native wildlife? Sure, we get some existence value from the birds and lizards that cats eat, and it's nice seeing them and hearing them. But is it enough to trump the consumer surplus that people get from cat ownership? I don't know and neither does Gareth. But I'm not the one wanting to kill all the kittens.** Shouldn't we have to run a cost-benefit analysis before considering kitty genocide?

Gareth does recommend a few potentially useful things, like belling cats. I doubt that the cats who do the most damage would be the ones that are belled, but the proposal at least doesn't seem likely to do much harm. Another option: make your next cat a Persian. Our last one was so ridiculously over-bred*** that she could barely eat kibble, much less do any harm to, well, anything other than furniture, carpets, clothing, and my dignity.

* I have no clue how reliable their survey is.

** Ok, he isn't really saying we should kill them all, just that we should phase them out over time. But, still, I'm pretty sure that every time you drink a Coke, Gareth Morgan kills a kitten.

*** We got her from the Cat Protection League's cattery. Long story there. After we moved to New Zealand, Susan insisted we get a cat. I asked that it please please please not be another long-haired one. She sent me to the bank machine to get cash to pay the Cattery after we'd been looking at a nice short-haired one. When I got back, she'd signed all the paperwork for a defective Persian with a substantial underbite. The cat was lost eight years later consequent to the earthquakes.

### Choosing your degree

Students choosing majors may well worry about employment options after graduation. The NZ Ministry of Education has released some data on post-study outcomes by major. Read the whole thing here; I've copied a few relevant bits below. Earnings aren't everything, but they ought to count for something.

I tend to advise students considering Economics at Canterbury to do it as an Arts degree with a minor in something demonstrating strong literacy skills, like politics, philosophy, or history, or in a discipline that offers complementary skills, like a minor in geography with an emphasis on Geographic Information Systems. Or, if they want to double with Finance, or if they want to add in a lot of math for a technically focused degree, a B.Sc in Economics works well. Students taking Economics as part of a Commerce degree must complete the Commerce Core, which prescribes a very large proportion of the student's first year. The Commerce prescribed core is fine for those students who want that particular mix of courses, or who know at the outset that they want to do a double major between Economics and either Management or Accounting, but if you want to choose your own mix, the Arts or Science degrees provide more freedom. Unfortunately, incoming students have to make this choice before they start their first year.

I've turned the PDF into a Google spreadsheet.

Students graduating in Economics and Econometrics earned \$57,785 five years after graduation. 74% of them were in employment at that point; 15% in further study; 2% on the dole and 10% in other activities. Accountants earn \$60,473, 80% are employed, 8% in further study, 0% on the dole and 11% doing other things. Lawyers earn \$56,894, 74% are in employment, 15% in further study, 1% on the dole and 9% in other activities. Other management areas like "Business and Management", "Sales and Marketing" and "Tourism" don't do quite as well. Only 63% of those in Political Science and Policy Studies are in employment 5 years after graduation.

Perhaps it's self-serving bias, but I still think our recommendations to students aren't all bad. If you want to take a degree in Politics or Philosophy, combining it with minor in Economics will likely improve your employment chances. While Law looks like a more sure-thing employment option, the data shows little difference between Law and Economics - earnings and employment are very similar. A third of those choosing natural and physical sciences are in further study five years after undergraduate graduation. If you've a passion for chemistry or biology, expect reasonable odds that you'll need to go on to post-graduate study.

The government has been encouraging Universities to offer more places for students in engineering relative to things like the creative arts. It's then interesting to compare the percentage of students on a benefit five years after graduation. Six percent of graduates in "Mechanical and Industrial Engineering and Technology" are on the dole five years after graduation - the highest of any subject. Five percent of graduates in "Manufacturing, Engineering and Technology" are on the dole - the same proportion as for subjects like "Performing Arts" and "Visual Arts and Crafts", and worse than the three percent of graduates on the dole after graduating from Philosophy, languages, or graphic design.

The most depressing bit: graduates in public health earn more than graduates in economics.

### Banning craft beer

My old home province of Manitoba didn't quite make commercial brewing of craft beer illegal. But they might as well have. Bartley Kives delves into the morass of Manitoba liquor regulations. Keep in mind that many of these regulations are the kinds of things that New Zealand's neo-prohibitionists would support. Fortunately, things look set to ease up in Manitoba. A bit.

Here's Kives:
Right now, licence holders are not overly pleased. There are 12 different liquor-licence categories in the province, each with its own set of rules and annoyances.
For example, hotels may obtain a licence to sell alcohol in a "beverage room," but only if they also have a liquor licence for a "dining room," which must remain open when the beverage room is open. As well, hotels can only obtain a beverage-room licence if liquor authorities grant something called a hotel certificate, an official stamp of approval the Manitoba Hotel Association dislikes because it may apply to businesses that actually function as long-term rental-apartment blocks, as opposed to actual hotels where tourists and business travellers stay for a short period of time.
Restaurants, meanwhile, may also obtain a dining-room licence, but must ensure alcohol sales do not exceed 60 per cent of gross revenue. Restaurants may also obtain a "cocktail lounge" licence where customers do not have to purchase food, but the combined restaurant-lounge must still maintain the 40-60 food-to-alcohol ratio.
There's also a cabaret licence, which does not demand any food sales but does require licence holders to exhibit two hours of live entertainment every day. That entertainment must be visible from every room in the venue and must not involve recorded music.
As a result of these regulations, hotels that rent out space to pizza parlours in an effort to fulfil the dining-room requirement of their beverage-room licence have been hit with violations when the sole dining-room employee goes out to deliver a pizza.
Popular restaurants with lounges are forced to turn customers away simply to maintain food-to-alcohol ratios. And cabarets cannot satisfy the live-entertainment provisions of their licences by booking club DJs, many of whom are among the biggest draws in live music today. That's because of a literalistic interpretation of a cabaret-licence provision against recorded music, which was created to protect jobs for musicians in the age of jukeboxes.
It gets worse:
When cabaret owners offer to circulate a guitarist, accordion player or some other wandering minstrel around a level with no live stage, they are told those musicians must be miked up and broadcast, too.
"Even they say it's stupid," Kendrick said.
Hua, meanwhile, was forced to puzzle over which licence would best serve the Rec Room, his new Pembina Highway sports lounge, which will feature foosball, Ping-Pong and arcade games. "There's no licence for an entertainment hall that has Ping-Pong," he lamented.
And once you have a whole industry in place that has fixed investments based on a set of stupid regulations, it's harder to get rid of the regulations:
John Scoles, the proprietor of the Times Change(d) High & Lonesome Club, a Main Street roots-music venue, said he believes small venues will benefit the most from liquor-licensing reform.
"Small venues are the ones that struggle the most to meet licence requirements," said Scoles, who found the right formula for his own small venue in 2004 when he converted it into a private club from a restaurant and lounge.
"It never seemed success in this business was based on entrepreneurial ingenuity. It was based on what parameters you were forced to observe. Nobody could just have a great idea. They had to have a great idea that was shaped by something else."
But Manitoba isn't moving toward a free-for-all. For example, the new liquor-and-lotteries act will still require restaurants to maintain some form of food-to-alcohol sales ratio, Chomiak said.
There's a social benefit to serving meals with booze, he said. And more politically, the province isn't prepared to undermine entrepreneurs who've invested heavily in restaurant-lounge concepts such as Earls, Moxies and the Keg, which have proven extremely successful in recent years.
"We're not going to step all over people who've invested in infrastructure," said Chomiak, referring to independently owned restaurants as well as the chains.
Kives reports that there are zero brew pubs in Manitoba - population about 1.2 million.

Manitoba has a state monopoly on liquor sales: the Manitoba Liquor Control Commission. They keep prices fairly high. The province has a 0.05 drink driving limit.

And yet alcohol is a factor in over 40% of all traffic accident fatalities in Manitoba (2007 figures). In New Zealand, alcohol and drugs are implicated in about 30% of traffic accident fatalities. The total number of deaths will be higher, as we have roughly four times Manitoba's population and our roads are terrifying.

Note that percentages in the table below can add to more than one hundred as accidents can have multiple causes.

Table 26a from the same document shows about a ten percentage point drop in the fraction of accident fatalities involving alcohol from the late 1980s / early 90s to present.

I hope that the local-level regulatory activity enabled under New Zealand's recent revisions to alcohol regulations do not wind up making parts of New Zealand look like my old home province.

## Monday, 21 January 2013

### Housing, with a bit of English

Deputy Prime Minister and Finance Minister Hon. Bill English weighs in on New Zealand's housing affordability problem in the latest edition of Demographia's international housing affordability survey.

He writes:
In its response to the Productivity Commission, the Government agreed with the Commission’s analysis that supply side factors explain the deterioration in New Zealand’s housing affordability. The Government’s response to the Commission’s report concentrated on land supply, infrastructure provision, costs and delays due to regulatory processes, and improving construction sector productivity.

Housing affordability is complex in the detail – governments intervene in many ways – but is conceptually simple. It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses. It simply takes too long to make new land available for development.

We may be seeing the beginning of a repeat of the mid-2000s demand shock. As interest rates stay below historic norms, expectations are shifting that these rates are here to stay. As a result, demand for real assets has increased, observed in booming equities markets in 2012. Demand for real estate is also increasing, with the median house price in Auckland recently exceeding the highs of 2007.

Costs of other housing inputs contribute to New Zealand’s affordability problem. Building materials cost more in New Zealand than neighbouring Australia. The structure of infrastructure financing, and the timing levies are to be paid, raises the market price for housing. Appeals under the Resource Management Act, New Zealand’s land use regulation, can hold up developments and city planning for a decade or more in some cases. Time is money because development is risky.
...

From the Government’s perspective, worsening housing affordability creates a number of problems. Fiscal pressures increase because financial assistance for housing is tied to its market price. Home ownership provides financial security and a form of savings and lowers dependence on public assistance later in life. Worsening affordability increases demands for direct intervention through rent controls and public housing. We are aware of the results of these sorts of interventions overseas and must avoid them.

New Zealand is not alone in its housing affordability problem and there seems to be increasing awareness around the world that the planning pendulum may have swung too far. Land use regulations and intrusive development rules have consequences.
The first step is admitting we have a problem. And I expect that English has a rather good idea of the things that need to be done. But many of them are outside his portfolio, and more of them wouldn't make Councils happy.

It is especially heartening to see English providing this statement as foreward to Hugh Pavletich's survey. Hugh has been the country's most tireless campaigner for fixing the regulatory mess that keeps housing prices up; he's also been a strong and public critic of Christchurch Council rules that have stultified post-earthquake development. This year's report puts Christchurch as worse than Los Angeles, San Diego, and Adelaide but better than Abbotsford, BC or the London ex-urbs.

File this under "Good Omens".

### Economists agreeing: student loans edition

Richard Meadows at Fairfax canvassed economist opinion on New Zealand's zero percent student loan policy. And economist opinion on this one seems pretty one-sided: get rid of zero percent loans and find more effective means of assisting with access to tertiary education.

Who did they survey?
• Tim Hazledine (academic)
• Sholeh Manni (academic)
• Benje Patterson (Infometrics)
• Jean-Pierre de Raad (NZIER)
A pretty broad spectrum of academic and consulting economists seem to agree on this one. We'd probably differ a bit on what would be the ideal replacement, but there's a pretty broad range of policies that would be preferable to the current system.

Previously:

### A rather neat field experiment

My first reaction: what an awesome idea.

My second reaction: they lied to subjects about the purpose of the experiment and didn't fully inform respondents about what the surveys were about; their human ethics committee is far more awesome than others.

My third reaction: I hope this gets published despite that many of the main effects are statistically insignificant.

I've read a bit of the literature on preferences for homogeneity. It depresses me, but I'd hoped that longer exposure to more diverse groups would overcome some of those effects. And as it's hard to tease out causality in population based measures, you could argue the toss on it.

Ryan Enos at Harvard's Department of Government approached things a bit more scientifically. Here's his experimental design. Get a bunch of train stations in ethnically homogenous white areas of Boston. Half of them are controls. The other half get a pair of obviously ethnic Hispanic confederates who are going to ride the morning commute for a week while chatting with each other in Spanish - other commuters could assume that a Hispanic family had moved into the neighbourhood and were commuting into town. Pre-survey people at all stations and get them to give an email address for follow-up surveys. Among the questions, ask about attitudes towards immigration. Half of respondents were invited to answer the survey again three days after treatment began; the other half were invited to do so ten days later.

He finds:

• Ideological conservatives' views did not much respond to treatment, but remained hostile towards immigration. Liberals and moderates became more hostile to immigration as consequence of treatment. But results were not always significant.
• Negative responses were sharper in the three day than in the ten day treatment. But the 95% CI around the effect only failed to include zero for one survey question and only in the three-day treatment: "Should the number of immigrants be increased?"
• Income didn't moderate the effects: the same negative shift in attitudes was pretty uniform across respondent income.
• Treated respondents were more likely to say their neighbourhood had recently become poorer, more diverse, and more unsafe. But the confidence interval is wide.
• Effects were largest among those with low numbers of Hispanic friends; for those with few Hispanic friends, effects were significantly negative on all three questions.
• There was no change in policy attitudes other than those associated with immigration.
Figure 2, replicated below, has the main results.

My take-away is that I should expect increased immigration to make people more hostile towards immigration but that the effect is likely to wash out over time.

## Friday, 18 January 2013

### Death Bias

Siouxie Wiles asks an interesting question: do Kiwis' expectations of what they'll die from, and expectations of current death rates, match up with aggregate death rates?

If people overestimate the risks of some kinds of death, this could lead policy to be biased towards spending too much trying to avoid that kind of death and too little on other risks.

Mike Dickison produced this infographic on actual causes of death in 2009.

They then contrast this with the survey findings:

The full set of slides is here.

I love this initiative. But there's a pretty big problem. If I expected to die of a heart attack, emphysema, or cancer in my 90s, I'd probably say "Old Age" rather than any of those specific disorders on a survey. I might even fail to think about "people in their 90s dying of cancer" when answering how many Kiwis I think die of cancer every year. Somebody in his 50s, that's dying from cancer; somebody in her 90s... I might just not think of it that way. Maybe I should think of it that way, but it's also pretty plausible that somebody dying of cancer in their 90s would have died of something else a few weeks later but for the cancer.

So I'm not sure we can say people are underestimating their risk of dying from diseases associated with old age, like cancer, circulatory disease, or respiratory disease, when "old age" is a survey response. Similarly, I can imagine answering "suicide" to that questionnaire even though I have absolutely no intention of killing myself except in old age if my expected future utility stream is sufficiently low.* Those expecting law changes around euthanasia and thinking that a reasonable end may well answer "suicide".

I'm not sure what the best way of fixing this might be. You could go back to the MoH data and restrict the actual death sample to deaths among those under a plausible "old age" cutoff line - say 70 - and see whether survey expectations among those providing an answer other than "Old Age" matched those expectations. You could re-run the survey, noting explicitly and up-front that the New Zealand death statistics do not consider "Death by Old Age" to be a category, and that respondents thinking about people dying in old age should think of the proximate cause of that death.

This is important. In the slides, when asked whether suicide, melanoma, or road accidents were associated with the most deaths, melanoma got the most votes despite being responsible for the fewest deaths. By survey response, respondents thought that melanoma was the worst, followed by suicide followed by road accidents. In reality, the rank order is suicide, road accidents, then melanoma. This could very plausibly lead to underinvestment in initiatives that prevent suicide relative to investments targeting melanoma. Note also that the "old age" confound is likely to attenuate the degree of measured public bias here if some people would count melanoma deaths as just being old age if the death were experienced by an older person - real numbers could be worse.

I look forward to seeing where Siouxie's team goes with this. It's worth their following up.

* Does "Voluntarily going in for brain plastination or cryonics in old age in hopes of later uploading if the singularity hasn't happened yet" count as suicide, or does failing to do so count as suicide? I'd lean towards the latter.

### Marijuana snark

Ole Rogeberg produced a pretty thoughtful critique of the Dunedin Longitudinal Survey group's finding that marijuana use reduced IQ. And, he subsequently wrote a very nice summary of the dispute, along with some musings about whether scientific progress is helped or hindered by media sniping.

Rogeberg's critique wasn't based on replication of the Dunedin study. Indeed, Rogeberg couldn't even get some summary stats out of the Dunedin group. He writes:
When I originally started looking into this last August, I sent an e-mail to the corresponding author asking for a couple of tables with information on “pre-treatment” differences between the exposure groups. I did not receive this. This is quite understandable, given that they were experiencing a media-blitz and most likely had their hands full. I therefore turned to past publications on the Dunedin cohort to see if I could find the relevant information there.
Do read the whole thing. It has a whole lot of very substantial critique. But this bit above piqued my interest. Because he was criticized by Dunedin's Prof Poulton for, well, you read it:
Rogeberg said the political approach to cannabis could change depending on whether there was a change in young smokers' IQ because of the drug itself, or because of living conditions.
He ﻿﻿said his study did not mean the results of the Dunedin study were discredited, but it was fair to say the New Zealand study's methodology was flawed and the results premature.
But Professor Richie Poulton﻿, co-author of the Dunedin research, said Rogeberg's data was not taken from real people.
"Rogeberg's challenge is based on simulations, but we used actual data on 1000 people to carry out the analyses he suggested," he said. [emphasis added]
I'm going to take this as Poulton offering to share his data with Rogeberg. Because it would be rather, well, gauche to criticize somebody for failing to use data you've refused to share.

I completely understand the Dunedin Longitudinal folks' unwillingness to share data given the rather high costs they've incurred in collecting it; it just seems off to critique somebody for having used simulations rather than data after you've refused to share the data.