Thursday, 18 April 2019

Howling at the Treasury moon

I like the headline that The National Business Review put on this week's column. It isn't online yet; I've a few snippets below:
Big organisations get up to a lot of stuff that looks pretty silly from the outside – and even from the inside. Corporate retreats with ridiculous team-building exercises. Awkward social functions. Corporate family picnics when you would all rather prefer to be out with your own friends.

Anybody who has ever worked in a big organisation knows this. Even smaller organisations sometimes get into this game. It is hell for the more analytically minded and introverted among us, and doubly so for analytically minded, introverted economists, but such exercises seem to serve a functional purpose. It is easier to work with people if you know them better. And it is important to know people outside your own smaller team because others might know things you need to know.

Last week, Treasury caught critique, and even some ridicule, for hosting an event with Heartwork scheduled for 17 April.

On the face of it, the event did look risible. The event teaser, after all, initially invited readers to “Imagine surprising Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!” After featuring on the evening news and in a question to the Prime Minister in Parliament, the Heartwork event’s invitation has been toned down just a little.

In any case, it is definitely not your father’s Treasury. But perhaps your woke nephew’s Treasury.


But is a failure to consult sun and moon feelings really at the root of Treasury’s problems?
After going through the declining capabilities in economics at Treasury, often canvassed here, I hit some of the implications:
All of that would make for a very difficult workplace environment with a change in government. Rapid changes in policy priorities and direction require staff with the training and expertise to shift quickly into new areas. Where Treasury has not been able to keep up with an outflow of economic expertise, a greater burden would fall on those analysts able to handle the work. Rebuilding capability in Treasury’s core work would reduce pressure on staff, improve outcomes in external surveys, and help Treasury in its role as advisor to government.

But there seems to be a schism within Treasury.

Some have taken the government’s wellbeing agenda to heart, and put it within an economic framework of a kind. Others seem to have taken the wellbeing agenda to mean rigour is passé, quantification is bad, and advice should be based on holistic views that lack an underlying economic framework. In that view, little economic expertise is needed in policy analysis beyond that which can be provided in a few days of training sessions on-the-job.

George Mason University Professor of Economics Peter Boettke likes to say economics puts parameters on our utopias. Putting the different measures of wellbeing into a consistent cost-benefit framework reminds us that we live in a world of trade-offs. Resources put to the pursuit of one wellbeing objective are generally resources not put toward the pursuit of another. Getting rigorous assessments of the effects of policy is needed if the government’s wellbeing agenda is to be taken seriously.

All that then brings us back to the Heartwork card game. Big organisations like Treasury will have this kind of thing. But even if it helps staff to better understand themselves and each other, it is far from addressing the underlying problem at Treasury. Worse, it feeds into a sense of wellbeing as woo at Treasury. Even worse, can you imagine being one of the relatively few remaining economists at Treasury and being asked to play a game about your sun and moon feelings?

A Treasury that addresses symptoms of the underlying problem with sun and moon games rather than by strengthening its capabilities may not be a Treasury that can do its necessary part in improving the quality of government services under the wellbeing agenda. It is remarkable that two senior Treasury managers have made the wellbeing game a priority.

Secretary Gabriel Makhlouf’s tenure as Chief Executive ends mid-year. While no announcements have yet been made about his successor, it is critically important that a strong appointment be made. Treasury needs to be able to rebuild its core capabilities and needs a Chief Executive who takes that work seriously. But it is hard to throw a stone in Wellington without hitting someone who will tell you it is not in the interest of the State Services Commissioner to provide a strong appointment.

I very much hope Minister Grant Robertson will be watching this appointment process closely and ensuring that the candidate can provide him the kind of Treasury he needs. It is important. We may all yet wind up with moon feelings otherwise.

If all of that's too depressing, here's some Ozzy Osbourne to help. 

Bark at the moon.

He's a failure on top of everything else.

"His greatest shortcoming is that he's unable to do the thing I don't want him to do! What a blistering fraud!"

I love the alt-text on today's Wondermark.

It sounds too much like Question Period here.

Monday, 15 April 2019

Easton on schools

A recent contribution has been from the NZ Initiative’s report Tomorrow’s Schools: Data and Evidence. [EC note: I've updated the link to the Initiative's site rather than Scoop] Unfortunately it is only note of six pages, which does not meet the standards of a research report, so I can hardly comment on the quality or veracity of the findings.

The note observes there are performance differences among schools (it uses NCEA attainment as a measure). No one is surprised that higher-decile schools outperform lower-decile schools by a large margin (on average). However, once the NZ Initiative adjusted for the effect of family background (they dont explain how), they found that the average differences in education outcomes across school deciles disappears. The report concludes that the inequality in education outcomes evident in school league tables is not a result of large differences in school quality, but rather of large differences in family background, particularly differences in parental education.

The NZ Initiative concludes that their ‘research’ demonstrates that the current schooling system is working and should be retained. Maybe; one wants to see the research first, especially as it contradicts the international literature. (I can think of a number of ways one could do the exercise – not all of them would be valid.)

What strikes me is that the NZ Initiative barely observes that the research suggests that the main source of educational inequality (and a whole lot of life opportunities which follow on from it) is ‘family background’, whatever they mean by that. The implications for inequality are hardly explored. As far as I can infer, the NZ Initiative is so besotted with defending the competitive model of schooling it is uninterested in the wider questions of the sources of and policies for children’s opportunities,; issues central to the egalitarian society. That, I think, captures a deep attitude of the elite right; ‘who cares about social inequality providing we are doing all right’.

Indeed there is celebration of inequality when the rich display their wealth. Of course there was inequality in the egalitarian society before 1985, but it was rare for the rich to show it, to display, what Thorstein Veblen called, ‘conspicuous consumption’. After 1985 it became common to flaunt how rich you were.
Our analyst, Joel Hernandez, spent about a year in the IDI lab on this one.

The mission we gave him: start by figuring out how much of the variability in school performance is due to things outside the school's control, like family and student background. Current league-tables could easily mostly be picking up parents' education or income. We need to be able to find the schools that are doing a superb job despite difficult circumstances, so that we can learn from them. The measures out there just aren't up to spec for doing that kind of work.

So he spent the last year merging a ton of administrative data sets and cleaning the data. It is not a small job.* For the population of students who completed NCEA from 2008 through 2017, there's a link through to their parents. From their parents, to their parents' income. And their education. And their benefit histories. And criminal and prison records. And Child, Youth, and Family notifications. And a pile more. Everything we could think of that might mean one school has a tougher job than another, we threw all of that over onto the right hand side of the regressions.

It's student-level observations with a ridiculous number of control variables enabled by the data linkages in the lab.

The point of the exercise wasn't to precisely identify coefficients on each of the independent variables. The point rather was to mop up all of the variation that comes from family circumstances. There's no structural equation modelling here or any attempt at getting at causality among those variables - just a giant reduced-form kitchen sink.

Plus, five hundred or so indicator variables for each of the country's secondary schools.

On the left-hand side - a few measures of performance at NCEA. But that's just the starting point. We're going broader. Employment after graduation. Income after graduation. Progression to tertiary. NEET status (Not in Education, Employment or Training). Benefit uptake. We could even put future criminal activity in there. So far, it's just NCEA though.

After separating out all of the variability that comes from family background, the coefficient on each of the schools' indicator variables tells you the average effect of that school on outcomes.

Our plan had been to put up the big report in July(ish) with all of the method and the first set of results. Then, short reports would follow regularly on different outcomes.

But then the Bali Haque report came out. The report said that there are huge differences in student outcomes across schools, that those differences showed up as differences by decile, that decile differences were inequitable, and that the entire school system needed to be overturned because of it. Currently self-managed schools operating under school boards would be replaced with hubs managing dozens of schools.

There are indeed very real problems in board governance in some failing schools. It's something that features regularly in stories of persistent school failure. But if the justification for abolishing school boards and putting in place a big new governance structure is strong differences in school outcomes by decile, well, we know that that wasn't the case.

So we moved. Because we're a think tank. Forward the short report on the variability in outcomes by decile after separating out the family background effects.

And then Brian thinks we're hiding stuff or trying to downplay the family circumstances, perhaps trying to hide the evidence that big income redistribution schemes are warranted.

It would have been irresponsible of us to put up the coefficients on the other correlates. We have a kitchen sink of variables to mop up effects, not to precisely identify the coefficients on any of them. Putting up all of those coefficients without checking their sensitivity would have been premature. We control for whether the child is from a single-parent household. Whatever the sign on the coefficient, it would feed into culture wars around divorce and the desirability of two-parent families. We control separately for mothers' and fathers' incomes, and mothers' and fathers' educations. Results could feed into arguments around two-earning families. Most of those control variables would fuel one interest group or another. And even if we were sure we had the numbers right, they're still not causal. If you find that kids of well educated parents perform better at NCEA, that doesn't mean you should start giving degrees to parents to boost their kids' chances.

We'll have more in the full report. What we have so far though lends zero support to arguments around redistribution. Parents' education matters a ton. Income - not so much when education is controlled for. But we need to play with it more before we say anything more. If we have to suffer Easton's grouchiness for it, oh well.

But our object here is the exact opposite of Easton's imaginings. If we can identify the schools that do a fantastic job with kids that other schools have a hard time helping, that means the Ministry or ERO could go into those schools and see whether they're doing anything differently from schools that aren't doing such a good job. Sure, it would take a policy change around operational use of IDI. But it is entirely doable. Learning from that can help lift performance for those that too many schools are currently failing.

And there are all kinds of ways of handling it.

Within the current model, you could get reports from the Ministry to every school board telling them where they're doing well, where they're doing poorly, and which schools they might want to learn from (and which might need their help). The reports would help empower school boards that cannot tell whether poor outcomes are because the community is disadvantaged, or because the Principal is failing. And if the data were available to the parents, that could encourage parents to take a more active role in board governance in places where there is underperformance. Both voice within the school, and exist from underperforming schools, could help encourage better performance. And don't pretend that this is bad because the status quo is some paradise where all the schools are doing great and everyone sends their kid to the local school. Right now, parents use worse proxies for school performance and will happily walk by an excellent low decile school to get their kid into a higher decile school that's further away. The local school might be the one who could do more to help their kid. But we can't tell without better data.

Within a hub-based model, the reports provided by the Ministry could help the overarching structure to manage performance among their schools, to send investigators in to figure out why one school is doing particularly well in ways that nobody had noticed before, and to use what they learn to help others. They could use it to test the effects of different kinds of practice on outcomes. In the data lab, what goes on in the schools is a black box. We just don't know. But the hubs might know that one school never shifted to modern learning environments and the other one shifted to them 6 years ago. It could look at whether those kinds of policies had any effect.

Either way, it would also help the Ministry in similar ways. It could help ERO check whether any of their interventions improve student outcomes.

There is just so much that can yet be done with better use of the data we have. I've been pointing to it for years. Nothing's being done about it. The Ministry has a staff of 3000; we have Joel. We don't have time to do all of it. That's one reason we're opening up all our code in the lab for others to build on.

Imagine if every guidance counsellor in every school received a report from the Ministry for every student. The report for each student finishing Year 10 would say "Here are a thousand kids who looked a lot like you 5 years ago, and another thousand who looked a lot like you 10 years ago. Here are the choices they made about paths through school, through to tertiary or vocational training, and their later employment outcomes. Here's what the kids like you who chose a Bachelor's Degree are doing now. Here's what's happened for those who chose vocational training. Many of these choices may never have occurred to you." It is entirely feasible to do this right now. It would take a few months' coding. After that, it's just push-the-button. And it isn't being done. 

What difference could it make for a kid who never considered university a possibility, because of the community she grew up in, to see that other kids with similar academic records had done brilliantly at uni and that they'd better push to do the UE courses? What difference could it make for a kid whose parents were pushing university to see that kids with comparable records did far better pursuing a trade? Better information has to help.

We have a pretty big work programme here on deck. Once Joel's code is up in the data lab, I'll put up a note about it. I've already been in touch with friends back at Canty. One substantial barrier to assigning IDI projects for Masters thesis work is that you spend a year in data cleaning and matching (and just learning your way around) for any big project. You can't dump that on a Masters student without strong risk that the project falls over. But you can assign projects that build on an existing codebase.

Academics won't put up their code because their incentive is the opposite of ours. They'll want to get the vita lines on every possible way of dicing the data after fronting the fixed cost of merging it. Just look at access around the Dunedin Longitudinal survey, or some of the others out there. Tons of publicly funded work locked up for the benefit of those who ran the surveys.

We want ours to be as open as possible within the constraints set by StatsNZ around the data lab. We want way more people using that code base to see what's going on in education. And if any of them find ways of improving the code to improve match rates, even better!

Our work here is a starting point.

* Even worse, it seems to be a much-repeated job, with anyone doing work in the area duplicating efforts. Joel will be getting all of his code up into the StatsNZ wiki for others to build on - the process for getting it in there isn't trivial though.

Thursday, 11 April 2019

Continued census whoas

Stats has started providing some detail on the missing response figures in the last Census.

Motu has followed Brian Easton's earlier call to bring forward the next Census to 2021, returning us to the timings we were on prior to the Christchurch earthquakes.

A correspondent raises a few further questions, which I hope are answered in the full report on the 2018 Census:

  • There are substantial differences between responses with a missing question or two, and responses where the respondent has only filled in their name. How big of a mess are we looking at?
  • The web-based Census may have had some problems, but it may also have provided some opportunities. Like, how many responses suggest the respondent isn't really taking things seriously - for example, by ticking the first box on every question. This could have been done in real-time, prompting a follow-up visit. Did Stats do any of this?
  • My correspondent finds it odd that there are more people who didn't do the Census at all than that left at least one question unanswered. I'm not so sure there - if you're filling in the web form, it can prompt that you've missed a question before it lets you move on to the last page. I'm not sure if the survey did that or not though. 
A have a few others:
  • If they're interpolating data from other administrative sources, are they filling blank cells from relevant admin data, or putting in an average based on matched other respondents' answers? How are these generated answers flagged in the data? This will matter for researchers doing things like checking the correspondence between census responses and administrative data to see how well the two line up. But it'll also matter for any research using those generated answers. I expect Stats will be well on top of this. 
  • We keep hearing Labour partisans blaming National for not sufficiently funding Census. Did the Government Statistician raise any specific risks in the shift to the online Census under that funding arrangement? If the Government Statistician had raised a lot of concerns about the viability of the Census under the funding provided, and National went ahead anyway, then pretty fair to sheet it back to National. I do not know what warnings of risks were provided.
  • I had thought that the funding allocation for the 2018 Census built in some of the expected costs of shifting to an online census model, with the prospect then of lower cost censuses to come. Given the problems in 2018, will that have to be revisited? 
  • We hear rumours around that non-responses were concentrated among particular communities. Stats' statement doesn't get into that yet, as they weren't asked. We should expect to see more detail on that in the full reporting yet to come.

Wednesday, 10 April 2019

A bleg for knowledge about knowledge

If I want to know what people know about politics and their political systems, I know where to go. Jack Vowles's New Zealand Electoral Survey has some basic civics knowledge in it; for the US, I'd look to Dye & Ziegler or Scott Althaus.

But I'm now looking for work on general knowledge. If there's any decent work out there, and especially if it gives international comparisons, on basic public knowledge of basic facts, I'd love to hear about it. Like basic facts about geography, science, world history, that kind of thing.

Any pointers appreciated.

Tuesday, 9 April 2019

A compassionate Treasury

Your regular reminder that Treasury today is rather different from the Treasury of the 80s and 90s.

I'm going to copy and paste rather more of this than I usually would, just in case the thing gets deleted.

There's a $35 registration fee for this event at Treasury.

I have no clue whether the money goes to the folks running the session or what; I suspect it covers a cost of the deck of cards provided. But they recommend that attendees buy a deck of their cards in advance as practice as well, so attendees would wind up with double the compassion. It's wonderful how Treasury is helping to promote a small business by hosting it and encouraging folks to buy its products.

Minister Jones would approve, if Heartwork were based in the Provinces.

Here's the pitch. Treasury is Love.

Imagine surprising Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!



+ Fiona Ross - The Treasury Chief Operating Officer

+ David Dougherty - The Treasury Manager Strategy and Performance

+ 24 curious and creative people at The Treasury

have been experimenting in the social lab.

We’ve created a "compassion starter culture" - a network of people who want to create a more compassionate culture in Aotearoa, starting where we are - in our workplaces.
We’ve been playing and rapidly prototyping with the Heartwork Wellbeing Card Game* - now available publicly.
We know that the intention for what we want to create has a huge power.
We don’t have all the answers. And we can't do this mahi alone.

So we’d like to invite you into this social lab.

So we can grow an even more beautiful, and more resilient strain together.
We'll share what we’re learning while we’re still metabolising.
Heartwork and The Treasury
Come along to:
  • Hear from Fiona Ross about what she’s been learning from her experiments with the Heartwork cards in her work as Chief Operating Officer of the Treasury.
  • Meet the Heartwork team and understand the potential they see for people to be 1) meeting their own needs 2) meeting each others' needs and 3) creating more delightful outcomes together with Aotearoa.
  • Learn at least three powerful ways you can use the Heartwork cards to cultivate a 'win-win-win' culture for Aotearoa, your teams and yourself.
  • Play the card game and share stories with other people who care deeply about people.
  • Connect with other people who want to cultivate compassion throughout Aotearoa.
  • Contribute ideas and co-create with us as we consider how to take this kaupapa forward together.
Heartwork's Wellbeing Game

Simon Sinek quote

Watch our video about the card game here.

"The cards are a really good way to recognise what you need to do to end up with positive outcomes. After using them I felt more complete, certain of what [the other person's] feelings and needs were, and was able to come up with different strategies to find solutions for negative feelings I was having." - Penny
Heartwork and The Treasury
"Before having [a] chat I used the cards to check in on what I wanted to feel and not feel, and what I wanted them to feel and not feel. This really helped me identify my needs and what I wanted out of the conversations- which then helped me put together a really quick plan. And it took 5 mins tops. So I went in more prepared emotionally as well as intellectually; and being more intentional is a work-on for me.
As a result I feel the conversation went well and I am more confident in my decision and the reasons for it..." - Sam
what could we create together with the power of win-win-win intentions
*win-win-win: good for you, good for others in your organisation, and good for society as a whole.

FAQS: (contact us if you have other questions that aren't answered here)

It sounds like this event is targeted to people who work in government. Can I attend if I don't work in the public service?

Yep - if this invitation speaks to you, you're more than welcome to attend.

Can I take home my Heartwork cards on the night?

Yep. We recommend ordering your cards through our website now, and we'll give you a pack to take home on the night.

I can't make it until 5.30pm. Can I arrive late?

No can do sorry. The Treasury security system means that you will need to arrive promptly at 4.45pm to be able to get into the building.
Heartwork's Wellbeing Game
Heartwork's Wellbeing Game

I, for one, love that this is a priority both for Operations and for Strategy and Performance at Treasury, as indicated by the attendance and presumed endorsement of the Chief Operating Officer and the Manager for Strategy and Performance.

Just imagine how better Treasury would have been prepared for the currency crisis after Muldoon lost election if they had thought to consult both their sun feelings and their moon feelings. I don't know how New Zealand came through it without that. But we will be far better prepared for the next crisis. Treasury may have few remaining economists, but every single person who remains there will care deeply.

And surely that matters more than anything else.

Update: Here's Newshub's take on it, with reporting by Tova O'Brien. The Prime Minister doesn't know what moon feelings are; Treasury refused to answer questions about it.

Friday, 5 April 2019

Census Whoas

If Stats NZ does not produce detail for Parliament on non-response rates in the last Census, its Chief Exec may be up on Contempt of Parliament. 

Here's Stuff:
Government Statistician Liz MacPherson is facing contempt of Parliament after being ordered by MPs to produce census information.

In an unusual move, a select committee has placed a standing order on Statistics NZ chief executive to produce the number of partial responses were received in Census 2018.

MacPherson was first asked by to provide the answer by the governance and administration select committee during its annual review in February, and again on Wednesday. Both times she declined.

The chief statistician now says she will provide the information – which could further reveal the extent of Census 2018 issues – not on the given April 10 deadline but as part of an announcement promised later in the month.
National's been a bit displeased with Stats, or at least so goes the rumour 'bout town, since GDP revisions and immigration figure revisions that, had they been correct the first time round, might have affected the last election. But this is a unanimous request of the committee for information - it isn't just Nick Smith.
MacPherson was unavailable for an interview on Friday, but in a statement remained firm that it was not the appropriate time to release the number of partial responses to Census 2018.

"It is my hope that the committee will appreciate that I have made this determination after careful thought and application of statistical best practice.

"Without the appropriate context, these individual numbers would be open to misinterpretation," MacPherson said.

She said the number of full and partial responses would now be provided in an announcement later this month, when Stats NZ would also detail when the first census results would be released.

"This is simply a question of timing ... When we produce information for the public we outline the methodology and limitations of any data produced," MacPherson said.
Fair enough, but it has been more than a year since the 2018 Census.
University of Otago professor Andrew Geddis said it was "very unusual" for such an order to be placed on state sector chief executive.

"I can't remember a time a public servant has refused after being told they must answer."

If a complaint was taken to the speaker or the House, Macpherson could be forced to apologise or be censured by the privileges committee.

"That would be a very major escalation. I would expect that the House treat it as contempt."
Meanwhile, other parts of Stats are still trying to figure out how to measure spirituality

Thursday, 4 April 2019

Migrant acceptance

Arthur Grimes' latest column at Newsroom covers migration and wellbeing. 
The happiest countries in the world tend to be quite affluent but also tend to have strong social support programmes. In 2018, the ten happiest countries according to the Gallup Poll were (in order): Finland, Norway, Denmark, Iceland, Switzerland, Netherlands, Canada, New Zealand, Sweden and Australia. Thus New Zealand, at 8th, is (despite our grumbles) a great place to live.

Often migrants come from poorer, and less happy countries. The process of moving to happy countries (e.g. in Northern Europe, Canada and Australasia) leads to a significant boost in their welfare.

Indeed the top ten ranking countries for average happiness of migrants (i.e. of the foreign born) is almost the same as for overall happiness: Finland, Denmark, Norway, Iceland, New Zealand, Australia, Canada, Sweden, Switzerland, Mexico (Netherlands slips fractionally to 11th). Note that New Zealand rises to 5th in the ranking of happiness of migrants.

An important factor for explaining migrant wellbeing in their new country is the local attitudes of the domestic population towards migrants. The report finds that countries which are highly accepting towards migrants tend to have both greater migrant happiness and greater happiness for the domestically-born population.

This aspect is one in which New Zealand scores particularly highly. According to the Gallup Poll data, Iceland and New Zealand are neck-in-neck at the top of the most accepting countries for migrants. Intriguingly, acceptance of migrants is not strongly related to country incomes: the next five places after New Zealand in the acceptance stakes are Rwanda, Canada, Sierra Leone, Mali and Australia. (People in Eastern European countries are particularly unaccepting of migrants. Of the eleven countries who are, on average, least accepting towards migrants, ten are in Eastern Europe; the other is Israel).
He links through to the underlying data, from the 2018 World Happiness report. That report constructed a migrant acceptance index:
In reaction to the migrant crisis that swept Europe in 2015 and the backlash against migrants that accompanied it, Gallup developed a Migrant Acceptance Index (MAI) designed to gauge people’s personal acceptance of migrants not just in Europe, but throughout the rest of the world.

Gallup’s Migrant Acceptance Index is based on three questions that ask respondents about migrants in increasing level of proximity to them. Respondents are asked whether the following situations are “good things” or “bad things”: immigrants living in their country, an immigrant becoming their neighbor and immigrants marrying into their families.

“A good thing” response is worth three points in the index calculation, a volunteered response of “it depends” or “don’t know” is worth one point, and “a bad thing” is worth zero points. We considered volunteered responses such as “it depends” because in some countries, who these migrants are may factor more heavily into whether they are accepted. The index is a sum of the points across the three questions, with a maximum possible score of 9.0 (all three are good things) and a minimum possible score of zero (all three are bad things). The higher the score, the more accepting the population is of migrants. 
Polled Kiwis gave the second highest average score in the world: 8.25, just 0.01 points below Iceland's 8.26. The survey questions were asked in 2016 and 2017.

Michael Reddell's post earlier this week on immigration suggested that policy allowing reasonably liberal immigration represents an 'elite' ideology.

It may.

But if it does, it's an elite ideology that appears very broadly shared - at least in the Gallup data.

Wednesday, 3 April 2019

Hard to short housing

Mike Reddell points to Phil Twyford's speech on housing and wonders why, if folks with money on the line take him seriously, house prices haven't started dropping yet: The housing supply agenda looks good, but if it were credible, house prices would already be dropping.

It's a good question. My answer to it: it's darned hard to short housing.

Think about other markets covered by the NZX or futures markets. People there are betting all the time on whether prices will go up or down. If you think prices will rise relative to current price expectations, buy now or buy futures. If you think they'll drop, sell futures or buy options to sell in the future. There are lots of ways for people to trade in future prices, regardless of which way they think things will go.

Suppose you wanted to bet on Twyford's being right and you only own your own home. You might sell your house, rent another house, and hope to buy a house at a much reduced price in a few years time. But you'd have to live in a rental for a few years, and current broken housing markets have meant that the rental market sucks. It's an expensive option. If you think the price of soy beans will drop in a couple years, you can make a few clicks and have some options in your portfolio. You don't have to go without food for a couple years.

And everyone who thinks Twyford is wrong - well, it's easy to put a bet on house prices increasing. Maintain your current property portfolio or expand it.

There is a related literature. During the GFC, there were bans on short-selling. Those bans reduce the efficiency of prices and lead to bubbles that can persist and make crashes more likely.

There's no ban on short-selling housing here. But neither is there any obvious ability to do it. There are no Case-Schiller indices here. Other mechanisms are more complicated. Short companies or funds with lots of exposure to property? Even if house prices drop, the value of a set of properties could rise if more intensive land use is allowed. If there were some company that owned a pile of landbanks on the fringes of Auckland, and it were publicly traded, you could try shorting that one.

Just because I can't see any obvious way of shorting housing doesn't mean there isn't one. But the asymmetry in ease of going long versus short can make prices more persistent.

I put reasonable odds on Twyford's actually being able to get this done. Here's a likely sequence of events in that case.

After new infrastructure financing vehicles come on-stream, new leapfrog developments are announced. The first few advertise all-up prices (including the levy that funds the bond that funded the infrastructure) not far below current prices, but far enough to attract interest.

Existing landbankers see what's happening, recognise Twyford's serious, and rush to get their properties developed and sold before prices fall the rest of the way down to paddock price plus infrastructure cost plus construction cost.

Capacity constraints in construction will be even more binding. That will slow down the price drop unless government is able to progress other parts of the supply agenda that are less advanced, or not even yet on the table. Building material supply regulation. Ability to access foreign construction workers. Ability for foreign developers able to build at scale to work in the New Zealand market given the constraints of the OIA, the foreign buyer ban, building material supply regulation, and ability to bring in their own workers.

And Council risk-aversion in consenting driven by joint-and-several liability remains an issue - though if the government's Urban Development Authorities can not only provide resource consents but also sign off on final building certificates, that might help.

So without complementary policy easing other constraints, the path to new equilibrium prices will not be a fast one.

If you want a handle on why prices haven't dropped yet, it'll be the combination of those other capacity constraints pushing out the date for getting much lower fringe prices and the inability to short.

If Case-Shiller markets in Auckland housing existed, I'd be looking about 4-5 years out - but I'd also want to be talking with some construction folks before doing anything.

Friday, 29 March 2019


Juha Saarinen's pointing to an old Australian censor's compilation of naughty words reminded me to check up on whether New Zealand's Broadcast Standards Authority has updated its list.

Long-term readers will remember the BSA surveys of a decade ago looking at the offensiveness of different terms. I'd then written:
New Zealand's broadcast standards authority stops stations from using naughty words before 8:30 at night or so. But how can you tell what's acceptable? 'Bugger' used to be terribly naughty; now, not so much.

Turns out they run a survey.

And, before last year, the survey was run face to face. Now it's online.

David Farrar feels sorry for the poor folks who had to go door to door with their list of swear words, asking the folks answering the door how offensive they found each one.

Maybe there's too much of the Eric Cartman in me, but get me on the right day, I might even pay money to do the polling work. Avoiding cracking up half-way down the list, and avoiding adding new ones to the list, would be the hardest part.

Now imagining Cartman actually being hired to do the survey and interviewing Mrs. Broflovsky...
And a few months later I noticed the time trend showing declining offense-taking. Some of that's now suffered link-rot.

But there have been updates since then anyway.

This 2013 fact sheet, "Unacceptable words on Television and Radio: A comparison of words that respondents found totally or fairly unacceptable in 2013, 2009, 2005 and 1999" has a great time series. Most things become less offensive over time, or at least for things at the top end of the distribution of offensiveness.

The 2018 update continues to show drops in the offensiveness of the most offensive terms - I've cut the column giving the specific words, but you can check it out for yourself if keen.
They also note "small but notable increases in proportion who find some gender-related words totally unacceptable", and that the "level of unacceptability for some blasphemies has decreased significantly."

The full report goes through offensiveness of different terms in different contexts, like whether the term is used by a talkback host or by a caller; as part of a show on television early in the evening or later. 

It also finds NZ Europeans are most accepting of swear words, followed by Maori, followed by those of Asian background, followed by those of Pasifika backgrounds. Females, Christians, and those on lower incomes are also less accepting of swear words - although this isn't a multivariate analysis as best I can tell, just cross-tabs. 

I love that the Broadcast Standards Authority runs these polls rather than asking a committee of expert prudes about community standards. It's all a bit moot with folks shifting to streaming from broadcast, but I still like it. 

And I still imagine Eric Cartman running the survey, and using it to get away with uttering the vilest phrases imaginable with an innocent look on his face, utterly free from consequence. 

Gemmell's foil

Norm Gemmell takes my piece over at the Spinoff on the Tax Working Group's recommendations as foil in his Public Finance Chair update at Vic Uni.

It's a bit weird. I agree with what Norm says, and don't think it disagrees with what I'd said at the Spinoff, but it's presented as though there are differences of opinion.

I suppose I'll start at the start, where there's potentially the biggest disagreement. 

Norm writes:
The Spinoff brought together a number of interested parties, including the economics blogger at the New Zealand Initiative, Eric Crampton.

Interestingly, Eric reports that his US experience backs up claims that a CGT which exempts the family home, encourages families to ‘divorce’ for tax purposes (so more than one ‘home’ becomes CGT-free). Here is Eric’s comment: “If you’re laughing, note that family friends back in the United States would divorce and remarry semi-regularly for tax purposes. They’d have a small party each time they did. Good luck to IRD in policing that.” Of course, the US allows married couples to choose between separate or joint taxation, which New Zealand does not. Do we really believe that this will be a substantive tax avoidance trick used with a New Zealand CGT? Unlikely I suspect, but perhaps the Family Court should be getting prepared!
I noted the American anecdote mostly to allay the scepticism of marriage-fundamentalists who can't imagine that anyone would respond to incentives in that regard. I've had others tell me, since my piece at the Spinoff, about their own stories of marrying or divorcing for tax reasons.

Norm seems sceptical here because Americans can already choose to file separately rather than jointly.

I never understood the ins and outs of the couple in the anecdote: they were the parents of friends of my wife's; the divorcing and remarrying was rather some time ago now.

But I know that the 2018 tax changes in the US worked to close a loophole where alimony payments were deductible in ways generating a substantial tax break for divorcing couples in particular circumstances.
Under the current system, people paying alimony can deduct those payments — no matter how big the amount — from their income before calculating what they owe in taxes. That deduction provides a significant benefit to the wealthiest Americans, whose top tax rate is 37 percent and who would otherwise owe taxes on all of their income, including what they paid out in alimony. Right now, the rich disproportionately deduct alimony — about 20 percent of taxpayers who currently claim the deduction are in the top 5 percent of household income earners.
If you file separately, the high earning spouse's income is taxed at the top rate. If you divorce, you can punt a pile of the high earner's income into a much lower bracket. Or at least you could in 2018.

Here's Forbes offering 4 reasons to finalize your divorce in 2018 to save money. 

Here's CBS noting couples rushing to divorce to save on taxes. And another. And another.

Bottom line: if the tax system provides strong incentives to do something, you might expect at least some of that thing to happen. With the CGT as proposed by TWG, there will be some couples who will choose to present as not-partnered because being in a civil union or marriage would mean that their second property would become subject to CGT; there will be some who divorce, on paper, to achieve the same end.*

I've no clue how many people will do that. We have only one house so no incentive to. But there is a whole enforcement apparatus around the benefit system checking into whether someone on benefit actually is enjoying support from their child's other parent; it would be odd to think that there won't be enforcement requirements at the top end of the distribution too if the state creates tax incentives for paper divorces.

On to environmental taxes, where I don't think we're disagreeing at all. Norm doesn't like the burden shouldered by 'if they're done well'.
Another TWG’s key recommendation is to shift towards environmental taxation.  Eric Crampton’s Spinoff piece reflects a commonly held economic view: “In principle, this has a lot of merit. Taxes that correct underlying distortions provide a double dividend. Not only do they raise revenue, but they also improve overall economic efficiency if they’re done well.” Of course, it can be hard to avoid the tautology here that ‘if they are done well’ they will be efficient; and ‘if they are efficient this must indicate they are done well’!
But, as with a CGT proposal that ignores the income tax and transfer system, a new ‘environmental approach’ to taxation that ignores the rationales for the current system risks the same incoherence. On climate change, for example, we already have an Emissions Trading Scheme designed to take greater account of the social costs of atmospheric emissions. So, whether and how a separate tax on carbon emissions, or a broader set of environmental taxes (such as on energy generation) should be pursued, needs much more careful thought than the TWG could possibly give it.
I completely agree with Norm's argument against imposing a carbon tax on top of the ETS, or other taxes on things already covered via the ETS.

Here's what I wrote.
The group recommended strengthening the Emissions Trading Scheme and having it shift, in effect, to being more like a tax by having the government sell more of the permits over the longer term. That recommendation should be supported if implemented well.
That isn't layering other carbon charges on top of the ETS. It's instead anticipating that eventually the government will be selling credits into the system rather than gifting them to incumbents during this initial phase. When that happens, the revenues from credit sales we can view as comparable to an environmental tax in the overall Crown revenue mix.

There's still heavy lifting in the "if implemented well." But this is hardly the same thing as layering a carbon tax on top of the ETS. And I would absolutely oppose layering other carbon charges on energy and the like - a well-functioning ETS means you don't need any of that sector-specific nonsense in energy or elsewhere.

I thought I'd made that pretty clear in the very next paragraphs, where I remind that stuff like tax breaks for buildings constructed to higher environmental standards are a poor idea:
So too should its recommendation to use congestion charging to help fund the roads – it makes a lot more sense, and is far more equitable, than measures like the Auckland petrol levy that fall very heavily on poorer families with less fuel-efficient cars.

The group also recommended using taxes to improve water quality if the government isn’t able to find better ways of dealing with the problem soon. It suggested water taxes and taxes on fertiliser as potential measures.

Making sure that water users face the cost of that use is important, but tax is a blunt instrument. A tonne of nitrogen fertiliser has very different effects depending on where it’s used. And water taxes have a hard time recognising regional differences in water scarcity. Water should surely be more expensive in Canterbury than on the West Coast, but the government would have a hard time finding the right prices. A cap-and-trade system like the Emissions Trading Scheme is more appropriate.

Other suggestions, like hunting for reasons to justify increasing existing waste levies, or giving tax preference to buildings constructed to tighter environmental standards, might give the appearance of doing good for the environment but seem destined to be a boondoggle if pursued.
I don't particularly disagree with anything in Norm's article, and I have a hard time reading it as disagreeing with what I actually wrote either. But the vibe of the whole piece feels like it's trying to disagree with what Norm thinks I'd written. I must have worded things particularly badly in that Spinoff piece.

* UPDATE: To be very clear: this is just an example of a recent tax change encouraging the timing of divorce. I'd need to dig into the tax code of the early '90s to know what was going on in the anecdotal account I provided. But there are plenty of other potential ones. I've even heard some folks get married to get in-state tuition.

An odd kind of cycle

The UK Parliament seems a mad place.

I used to teach micro theory - or at least when Seamus was on sabbatical. He understood the math better than I did, and would likely have corrected one or two things here.

Completeness was pretty easy. Nobody actually keeps the full set of preference relations in their heads. Most of the time, preference is only discovered in choice anyway. But it's conceptually easy.

Reflexivity - that's just like dotting the i in completing the requirements. Honestly, I've never thought hard about the reflexivity inequality. That an apple is at least as preferred as an apple seemed more like dotting the i in completing the axioms - not something of any particular consequence. Varian's text had the assumption as trivial. For all x in Xx is at least as preferred as x. Yawn.

It would be madness to imagine otherwise. How could something be less preferred than itself?

For my not-all-that-mathematical brain, identity meant this had to reduce to an equality rather than an inequality: if is x, then flipping the x to the other side of the inequality meant the only way it could hold was if it were actually an equality rather than an inequality - but it never mattered. How could an apple not be as preferred as that very same apple? How could anyone possibly be other than indifferent between an option and itself? And if they aren't, how can we say that they're really identical? The failure of it would have to mean that x and x aren't really the same thing. We wouldn't look at somebody willing to pay zero for a bottle of water when standing next to a tap, but willing to pay $5 for it at a music festival, and conclude that reflexivity had failed; we'd say that the goods were different because of differences in time and place.

In any case, we never spent any time on it. It didn't really matter.

When we'd get to the transitivity assumption, things would get more fun. I'd tend to illustrate by example.

If someone had intransitive preferences, you could quickly turn that person into a money pump. If they really prefer an apple to a banana, and the banana to a carrot, and the carrot to an apple, you can structure a series of trades where they keep giving you cash plus their banana for your apple, then cash plus their apple for your carrot, then cash plus their carrot for your banana, and so on. Sylvester McMonkey McBean for the win.

It's a mad sort of preference configuration.

But it comes up in social choice theory where it's far easier to generate intransitive social preferences out of underlying transitive individual preferences, so long as enough people have non-single-peaked preferences if it's a unidimensional choice, or if there's no median in all directions in multidimensional realms. And we'd illustrate that in the public choice classes with the beautiful McKelvey result. Individual rational preferences leading to what seems collective madness and the ability for a strong agenda-setter to arbitrarily choose outcomes.

And that all then brings us to Brexit. I have no clue what's there going on.

Here's the BBC's tally on yesterday's series of votes.

How MPs voted
ForAgainstDefeated by
Confirmatory referendum26829527
Customs union2642728
Labour's Brexit plan23730770
Common Market 2.018828395
Revoking Article 50 to avoid no deal184293109
No-deal exit on 12 April160400240
Malthouse Plan B139422283
EFTA and EEA membership65377312

Recall that in these up-down votes, they're all implicitly running against the status quo. If they're all defeated, the status quo obtains. In the absence of other action by Parliament, no-deal exit on 12 April obtains.

None of the options enjoys majority support. But does that make for an Arrow/Black/Condorcet cycle? Not really. One option did beat all the other options. That option is the status quo. Every one of these options lost to the status quo. That makes the status quo - Brexit with no deal on 12 April - the Condorcet Winner.

It's a Condorcet Winner powerful enough to defeat itself as option 400 to 160 though.

Reflexivity says that an option should be at least as preferred as itself. No-deal exit on 12 April (the status quo) is preferred over No-deal exit on 12 April (the alternative voted on option) by a margin of 240 votes. That makes it at least as preferred as itself. But not if we flip which side of the inequality the status quo and the identical voted-on option are on.

We haven't had the sequence of pairwise votes of each option against the others that might reveal the cycle. But if completeness and transitivity kinda imply reflexivity, perhaps the apparent failure of reflexivity here suggests the failure of transitivity.

I expect the real answer in this particular case is that the voted-on option was not the same as the status quo: it was instead being compared to the other options put in a sequence of up-down votes against the status quo. So Members were registering their dissatisfaction with the status quo as against the other available options, and their desire to maintain the option value of keeping other options open.

It would also help make sense of the utter inability of the agenda-setter to use the McKelvey result to actually get anywhere. No option can ever beat the status quo because the status quo is supported both by those who want a no-deal exit and by those who like the option value of trying again for their more preferred option later.

What a mess.

Tuesday, 26 March 2019

In Medio Stat Virtus

It looks like Statistics NZ no longer produces the median hourly wage figure I used to use to run comparisons between median wages and the minimum wage.

I've kept a running brief on minimum wage hikes here for years, watching the NZ minimum wage rise relative to the median.

So when I had a media query about the minimum wage hike coming next week, I went looking again for the median wage series. I used to draw those out of the June NZ Income Survey releases. But that survey was discontinued.

And while the Earnings and Employment Survey has a lot on average hourly earnings, it doesn't have medians.

After much poking around on the Stats website, through data series now listed under rather than the main site, I tried the Stats NZ live chat. The support agent there was excellent - and we rather quickly figured out that the series is discontinued. QES in Dot.Stat has median weekly earnings, but not hourly. Infoshare has average hourly earnings in QES, but not medians.

The closest we were able to get to was the table of annual percent change in median hourly earnings reported in their Labour Market Statistics release June 2018 quarter. But since that doesn't have an anchor in levels (the percent changes are overall, and the levels reported are split by gender), you can't get levels out of it either.

Springsteen complained of 57 channels with nothing on. Stats is working on 120 wellbeing indicators including trying to figure out how to measure spiritual wellbeing, but the median hourly wage series is discontinued.

My helpful support agent said my request for reinstating the median series will be passed along though.

I so very much wish that all of the time and effort that has gone into the Indicators Aotearoa project trying to develop 120 wellbeing indicators over things that are often impossible to measure had instead gone into fixing the back-end systems at Stats so that it could have a front-end interface like IPUMS that would just let you query the raw data at the back end.

It would be easy enough to pull up your own median series if we all had the raw survey data (ok, a bit of a pain). But we can't have the raw data. And we can't have a CURF - or at least not yet.

A front-end that could generate the needed tables out of the back-end data, rather than requiring Stats folks to make guesses about which ways of cutting the data would be of interest to users, would just be so much better.

I just don't get a system that prioritises "Hey, let's try to figure out measuring spiritual capital" over having a continuous median wage series.

No sir, I don't like it.

Since the Friday attacks:

  • We've had armed police on the streets. They say it won't be forever. But they've made no case for the need for it. Recall that officers were on the scene within about 6 minutes of the Christchurch attack, and nobody's made any case that having to get the guns out of the trunk of the car were any kind of hindrance in the response. 
  • They're shifting the Cuba Dupa festival indoors. It's great that Homegrown went on, though everybody freaked out about (apparently) one guy with a tattoo. There is no specific threat to Cuba Dupa. 
  • Simon Bridges wants an inquiry into security services, and to increase their powers. Seems odd to want the latter before the former's been done. 
  • The murderer's text has been deemed objectionable. It is objectionable, in the common-sense meaning of the term. But a blanket ban on its possession in New Zealand means that foreign media can read and report from it without seeking permission from the censor's office, while New Zealand media cannot. That's just a bit odd. Mike Reddell has decent summary. So does Graeme Edgeler. Recall that the New Zealand Censor cannot really ban anyone from accessing anything. The Censor can only make it illegal to possess things. So anybody who wants the text to read on their own will find it on the web; any journalists wanting to put the thing in context would be in legally risky position because reporting on it without the Censor's permission means admitting to a criminal act. 
  • Stuart Nash, Police Minister, wants a gun registry. Canada's was advertised at $125 million in the 1990s, wound up costing $2 billion, and was scrapped as being useless. 
None of this is the Outside of the Asylum. 

Friday, 22 March 2019

Right Here, Right Now

My column in this week's Insights newsletter - now a bit dated. The newsletter comes out at noon; our national moment of silence was an hour and a half after that.
Last week feels like it was a year ago. And the past week has made the world feel a little smaller.

Last night, the Rt. Hon. Stephen Harper, Prime Minister of Canada from 2006 through 2015, addressed members and guests of the Initiative at our annual retreat.

We found that Laureen, Prime Minister Harper’s wife, had lived in Christchurch as a young woman. Streets and buildings that stood as backdrop in news scenes playing in international media, for the second time in a decade and again for terrible reasons, were ones she remembered.

The world is smaller than we think.

Harper’s address reminded us that New Zealand and Canada remain rather special places in a world growing worryingly dark.

While living standards globally are better than ever, Europe, the UK and America have polarised – not along traditional left/right lines but on a newly emerging populist/elitist axis.

Trump and Brexit are obvious examples, but so too are right-wing populism in Germany and France, and the strange marriage of the populist left and right in the Italian government – which Harper likened to a coalition between Trump and Bernie Sanders.

Drawing on his recent book, Right Here, Right Now, Harper said this polarisation is inevitable when mainstream policy stops addressing the concerns of lower and middle-class voters.

In America, for what seems the first time, voters are telling pollsters they expect their kids to have a worse standard of living than they do. That builds an appetite for populism, and while populists have a keen nose for policy failures, they offer no positive policy agenda to solve the problems.

Harper rightly noted that Canada and New Zealand stand apart from those trends. In both countries, household income growth has been broadly shared across the distribution. We have not seen the income stagnation present in America. That makes for a better polity. It also makes for a country better able to accommodate migration; Harper noted Canada’s welcoming attitude to migrants and strong growth in immigration.

Populist resentment fuels anti-migrant sentiment. See Europe, the UK and America. In New Zealand, a broken housing market gave us a too-xenophobic 2017 election campaign. But last Friday’s tragedy brought us together rather than drive us apart.

During our moment of silence this afternoon, let us remember the victims – and renew our commitment to building a better New Zealand for all New Zealanders.
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Thursday, 21 March 2019

Punching Nazis?

In yesterday's Herald, on the relative merits of punching Nazis:
I keep coming back to one tweet. Amid a steady stream of rage driven by pain and sorrow, a note of grace. Twitter stalwart and all-round decent bloke Lew Stoddart wrote:
"The mosque on Clyde Street is besieged by flowers and candles. A steady stream of people from all walks of life arrived during the 15 or so minutes I was there, including local scarfies dressed up for St Patrick's day, with gifts, food, or just to pay respects.

"And their humility and depth of aroha is magisterial. 'We failed him,' they told me. 'He lived with us in this city & we let him turn out this way.' And they expressed sorrow for the decades he will spend in solitary confinement.

"The Clyde Street mosque was his original target."
But it wasn't the only such note. We also heard Farid Ahmed forgive his wife's killer, saying he would pray for him. "I think probably he went through some trauma in his life, probably he wasn't loved … I don't hate him at all, not at all."

And it might be the only way out of this.

A year ago, Mother Jones reported on the American "Life After Hate" movement seeking to reform white supremacists: skinhead members of real and violent gangs. It is a terrible and difficult problem. Those who could not find pride in the content of their character found it instead in the colour of their skin.

When race becomes identity, stopping racism is a lot harder than, as is sometimes suggested on Twitter, finding Nazis to punch. At least according to the activists working to de-radicalise white supremacists, confrontation hardens attitudes rather than changing minds.

One of them said: "The uncomfortable truth is that the best way to reform racist thugs may be to offer them precisely what they aren't willing to offer others, and precisely what many people in this polarised political moment feel they least deserve: empathy."

It is hard counsel when every instinct screams for retribution. It is even harder counsel when we reflect on the injustice. It is blindingly obvious that we would be seeing far less compassion if a Muslim migrant had killed 50 white New Zealanders in a church. Every racist would, in that world, be emboldened.

But the logic of aroha is sound in either case. When attacked for being a member of a group it is far more natural to defend the group than to denounce it — especially when much of one's self-identity is bound up in group membership. It only hardens positions.

An invitation to talk with others who had doubts about their own membership in racist communities, and to then join with other "formers" as a new identity, can simply be more effective.

The statements of incredible grace from Friday's survivors should make us all want to be better people. If any members of Parliament regret having found electoral advantage in race-baiting and xenophobia, their own path to aroha may inspire others who badly need to make that journey.
Posting has been light and will continue to be this week - I'm up in Auckland for our Member's Retreat.

Friday, 15 March 2019


Hooray, New Zealand gets a measles outbreak. Whether it's due to middle-class antivaxxers, or kids whose parents just have a hard time getting them to the GP - who knows.

But what doesn't make sense to me is why school-based immunisations aren't comprehensive.

Year 7 and 8 students get immunisations at school - for schools that are participating. The kids there get their tetanus, diptheria and whooping cough booster, and the HPV vaccine. 

There's a national vaccinations register, so the public health nurses going into the schools to deliver vaccinations would know which kids haven't had their measles shots. 

So my dumb questions:
  1. Why aren't vaccinations provided at all schools rather than just at some schools? It seems far more efficient to send one nurse out to vaccinate a year-cohort of 20-100 kids than to send 20-100 families each to the GP for a vaccination. 
  2. Why aren't the public health nurses providing the MMR vaccine along with DPT for Year 7 kids for those kids who missed the shot when they should have had it? The shots are government funded anyway already, via the GP. But it's cheaper and more comprehensive for the government to provide them via the public health nurse who's already at the school than through GP offices. 
What am I missing? Is this a doctor-cartel thing where they really like getting the revenue stream from in-GP-office shots?

Thanks to @mikeythenurse for relevant discussion.

Midwife-led care

Midwife and researcher Ellie Wernham and Prof Diana Sarfati discuss their work showing worse outcomes under midwife-led care, and the Ministry of Health's coordination with the College of Midwives in response to that work.

Government policy might not change, but you can update your practice.

The practice we followed a bit over a decade ago:

  1. Find a midwife the second you think you're pregnant - or even earlier. Get one with proper training, not just the midwife certificate. You want a midwife who had rigorous nurse's training prior to going in for specialisation in midwifery. The ones who have training go very quickly. If you wait, you will be left with a midwife with weaker training. 
  2. Pay for shared care with an obstetrician anyway. In 2008, we paid a fixed price of $2k; in 2010, it was $3k. At the time, it was about the same price as a decent flat-screen TV; we kept the old CRT around for a few more years instead. Having your obstetrician available on-call during delivery to provide a c-section if needed is worth it. 

Previously: The Midwives have a history

Wednesday, 13 March 2019

Reducing harm or barking at cars?

There’s an old joke about the neighbourhood dog that loved to chase cars down the road – what would it ever do if it caught one?

The Government has been a bit like that with tobacco harm reduction. A very promising car has come around the corner and stopped. And the puzzled dog is standing there growling at it.

For decades, government has wanted to reduce smoking rates. Why? Smoking causes cancer, myriad respiratory problems, and shortens lives.

To reduce smoking, government used the tools it had at hand – which have gotten some of the job done, even if it was at a cost.

Tobacco excise collects at least three times more in tax than smoking costs the health care system. The 2001 McLeod Tax Review found the relatively low excise rates then in place to be indefensible – if their purpose was to compensate the Government for smoking’s cost to the health care system. Background documents for the Cullen tax review suggested that continued excise hikes would do relatively little to further reduce smoking rates, while imposing substantial regressive burden on poorer communities that continue to smoke.

Plain packaging regulations with graphic warnings may discourage kids from starting smoking, but the evidence is weaker than you might hope: SmokeFree regulations have made smokers pariahs, increasingly barred from places where decent people might witness their habit.

Even though smoking rates have declined, nothing suggests that current policy will achieve the Government’s goal of getting smoking down to less than 5 percent of the population by 2025.

And so we come to the promising car that has come around the corner – new and safer ways of accessing nicotine.

Spend any time walking around a downtown urban centre and you will notice the clouds of vapour coming from former smokers who have switched to a less harmful alternative. Rather than berating smokers for their habit, vaping offered a way of delivering nicotine without combustion’s nasty consequences.

But vaping is hardly the only alternative out there.

Nicotine gum and patches have long been prescribed as stop-smoking solutions, but simply haven’t worked for a lot of smokers trying to quit.

Swedish snus is a powdered tobacco contained in a small sachet that looks like a teabag; users place the sachet behind their lower lip. Snus is far safer than smoking or traditional chewed tobacco, has been an important part of Sweden’s decline in smoking rates since the 1980s, but has only recently became available in New Zealand. And new technology that heats tobacco rather than burn it, and consequently avoids creating the carcinogens that come with combustion, is now on the market too.

There have to be a wide variety of options available for people wanting to cut down or quit smoking because different things work for different people. And making that work requires regulatory and tax frameworks that are fit for purpose rather than refitting those designed for cigarettes.

Last week’s headlines told us Philip Morris offered to stop selling cigarettes in New Zealand if it received a tax break – along with a rather smug reply from the Prime Minister that the company could feel free to stop selling cigarettes any time it liked and shouldn’t need a tax break to do it.

But the reporting really missed what has been going on.

Philip Morris makes one of the newer reduced harm products. Its Iqos device heats non-combustible tobacco rather than burn it. Iqos is less harmful than smoking, but perhaps not quite as safe as vaping – the science is still being settled on that one. Nevertheless, ‘heets’ (the tobacco sticks used in Iqos) face the same tobacco excise rate as cigarillos. Excise on cigarette tobacco is just over $1,300 per kilogram or about $0.92 per cigarette. Excise on other tobacco products, from cigars and cigarillos to snus and ‘heet’ sticks, runs just over $1,150 per kilogram of tobacco.

In every other aspect of tobacco control policy, the Government has been adamant that price is an effective deterrent. That is why it imposes excise taxes that cost a pack-a-day smoker more than $6,700 per year, despite the regressive effects of that tax regularly highlighted in Statistics New Zealand’s inflation updates.

If the Government wants people to switch from smoking to less harmful alternatives, why does it impose the same tax on combustible tobacco as on tobacco that is used less harmfully? A 10-gram packet of snus selling for $21, containing 15 sachets, draws about $11.50 in excise – or about $0.77 per sachet. A 10-gram packet of cigarillos would draw the same excise.

It gets worse. Iqos sticks are subject to smoked tobacco’s plain packaging rules with graphic warnings about the dangers of cigarettes. It could well be worth having a warning on the packs that while they are safer than cigarettes, they aren’t candy. But how does it encourage uptake of reduced-harm alternatives if their packages look just as dangerous as the actually dangerous products?

The dog just does not know what to do with the car it has caught, so it sticks to what it knows – growling. When the Prime Minister quipped that Philip Morris could simply stop selling cigarettes here, she absolutely missed the point. Other cigarette companies would fill the gap in the market. But if reduced-harm products had a greater price advantage over cigarettes through a risk-proportionate excise regime, more smokers overall might switch.

Vaping is a really important part of tobacco harm reduction. But it is not a solution that will work for all smokers. Making sure the regulatory regime is right for other reduced-harm products matters. That means a much lower excise rate for reduced-harm tobacco products – or even zero excise through 2025 – and a bit of sanity in the rules around product packaging.