Thursday, 21 June 2018

Morning roundup

The survivors in the browser tabs, each of which likely deserves its own post.
  • The mess at Tolaga Bay seems one where you should get the right solution by applying liability. It's impossible for you or I to tell how much value the forestry companies get from leaving slash on hillsides - it can be important for soil regeneration. And it's impossible for you or I to tell how much it would cost them to avoid landslips and mess during storms. But if companies are liable for damages caused, then they'll have incentive to weigh that all up properly. 

  • Drunk people are better at creative problem solving. Well, tipsy people (just under .08). Harvard Business Review only just wrote this up, but it looks like the underlying research by Jarosz, Colflesh and Wiley is from 2012. Or at least I think that's the underlying research. HBR doesn't link it and doesn't mention either the name, year, or journal of the study. Usual skepticism about small-n psych experiments should apply, but it does accord with fairly common experience (drink while writing, edit sober), and with a later similar study

  • Colby Cosh on the history and robustness of the Dow Jones Industrial Average.

  • The Taxpayers Union' finds a continued, and growing, public sector wage premium. The correct first response to this kind of finding is that the public sector will be more likely to draw a different skill mix than the private sector. What you really then want isn't the difference between average pay in the private sector and average pay in the public sector, but rather whether workers of similar characteristics enjoy different earnings in the private or public sector. On that one, the most recent New Zealand work I know about is John Gibson's 2009 piece showing a rising public sector pay premium from 2003-2007, adjusting for everything then observable about workers.

    From Gibson's abstract:
    This note reports propensity score matching estimates of the public sector pay premium in New Zealand for each year from 2003 until 2007. Comparing with observably similar private sector workers shows that public sector workers have received a pay premium that has grown in each year, from almost zero in 2003 to 22% in 2007. Unless there have been unmeasured changes in worker qualities or in the attributes of public sector jobs that give rise to compensating pay differentials, this rising public sector pay premium is most plausibly attributed to an increase in non-competitive rents. 
    Remember too that an employee's total compensation bundle isn't just pay - it's also conditions and job security. If public sector employment is, on average, viewed as having more security and less onerous conditions than private sector employment, we should not expect a positive wage gap. Perhaps there are other conditions in public sector employment that require paying a premium to draw in suitable staff.

  • The government's to be subsidising firms who take current beneficiaries as new apprentices. I expect wage subsidies are an appropriate solution here. I note that countries like Switzerland that have robust employer-provided training schemes don't constrain firms with a minimum wage - young trainees start on very low wages and quickly move up to wages closer to those of skilled workers as they develop those skills. If you ban firms from starting apprentices on wages that reflect productivity, you'll have to subsidise firms taking on apprentices. In this case, I expect that the subsidy would also help ensure meeting a participation constraint on the employee side. UPDATE: I've been corrected! Wages for Swiss trainees remain low during the training phase, though it varies by sector. In a lot of cases, they remain between 10% and 25% of skilled workers' wages. But it enables a sector that can train skilled workers. 

  • Katherine Rich is awesome. I don't know how many times I've seen the public health brigade shout about how industry should be denied a place at the table and should never be consulted about anything, and that the loudness of industry screams is a proxy for the benefits of a policy. Well, know what happens when you shut out industry? You wind up making stupid mistakes that you could have found out about earlier if you'd only bothered asking people who know more than you do. So instead of a referee report allowing you to fix errors before publication, you get an embarrassing letter in the journal your article was published in from Katherine Rich pointing out important problems.
    Madam
    The paper by Chepulis et al.(1) published online by this journal contains errors, inconsistencies, unsubstantiated statements and a lack of evidence to support its conclusions. The following comments refer to the different sections of the paper as published.

    Abstract
    There is an error in the abstract and on p.4 of the paper, which reports that New Zealand had the highest percentage of beverages with added sugar while the UK had the lowest with 9%. The UK figure should have been 39%. The erroneous figure was seized upon by the New Zealand media to demonstrate how far behind New Zealand was from the UK and to highlight the potential impact of a sugar tax. ...
    It goes on from there. Katherine talks more about it here, and notes that the journal now has an updated corrected version up - which will be covered in zero of the newspapers that pointed to the original work. All of this is consistent with a model of public health research that cares far more about getting a couple days of screaming headlines with incorrect figures than about truth-seeking. 

  • Brendan Harre pulls together several of his suggestions around housing affordability. I agree with the broad thrust - we have an incentive-alignment problem where central government reaps the bulk of the benefit of growth but local councils have to find ways of funding the infrastructure to enable it. Interesting suggestions throughout.

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