Afternoon roundup

The worthies on a very much belated closing of the tabs:

• Nice roundup in Nature on psychology's problems in social priming

  A promising field of research on social behaviour struggled after investigators couldn’t repeat key findings. Now researchers are trying to establish what’s worth saving.

• Somebody is gluing miniature cowboy hats to pigeons in Los Vegas.

  “They look like happy pigeons to me. It is hard to know, of course, because they will not talk to us.”

• This one's more depressing. The Dean of the University of Virginia's School of Education writes a column for the Washington Post on education and education funding. You'd expect the column would be decent, right? The Washington Post is one of the newspapers that seems to be doing well on subscriptions; heck, I pay for a subscription there. And he's the Dean of the School of Education at one of the top universities in the US. But he claims that real per-student education expenditures have been dropping. Corey DeAngelis points to the actual data showing a 36% real increase over the period. This was a couple days ago, and there's as yet no correction at the Post.


• Average is over: geographic segregation edition. An ultra-Catholic community in Kansas. Excellent long-read; the kind of thing I'd have pointed to Denis for Arts & Letters Daily, back in the day.


• Randy Holcombe on Gordon Tullock on inequality and redistribution. Self-recommending. We might note, though, that New Zealand's overall system has been one of the more targeted ones - I wonder how that ranking's been affected by sillier policies like extra free years of tertiary study.

  People can afford to be charitable with their votes when they know their one vote will have no effect on the outcome of an election. This may be Tullock’s most important contribution to the literature on redistribution and inequality—the observation that because of incentives inherent in the political process, people are likely to vote for redistribution programs they would not choose if the choice were theirs alone.
  
  Tullock (1971) anticipates the arguments made by Brennan and Lomasky (1993) and Caplan (2007), explaining how people can vote expressively and even irrationally for outcomes that redistribute more than they privately prefer. This adds a wrinkle to Tullock’s analysis of motives and justifications for redistribution. Tullock (1997) dismisses justifications for redistribution and looks at motives—the desire to receive transfers, the wish to help the poor, and envy—to conclude that government redistribution will not be very effective at helping the poor. But he suggests government redistribution is larger than the median voter would prefer because of the incentives in the democratic political process that cause people to be more charitable in their voting behavior than when considering private charitable giving done individually (Tullock 1971). Perhaps this unintended consequence of democratic decision making renders democratic government a better mechanism for helping the poor than Tullock (1997) recognized.

• When New Zealand's declining PISA scores were released, we heard a lot about how PISA scores don't matter. I rather prefer Australia Labor MP Andrew Leigh's take on Oz's declining scores.

  Forget how we’ve slid relative to other countries -- it’s enough to compare our own students with their predecessors. Year 9 students today score worse than year 8 students would have done at the turn of the century. If this was a sporting contest, we’d be running slower, dropping the ball more often, and missing more goals.
  
  The PISA tests matter because they are designed to capture the skills that young people will need in the workplace. These tests don’t measure memorisation and rote learning -- they aim to capture the essential talents that will be needed in the labour market.

• Kudos Doc Nolan!


• Phil Twyford continues to provide speeches showing he gets housing better than anyone in Parliament. I don't agree with everything in here, but it's good. And we finally now have the infrastructure financing legislation coming through - the Bill has been introduced, and they're expecting to have it done mid 2020. About three years after they came into office. New Zealand's electoral cycles are too darned short given the length of time it takes to get substantial legislation ready.

  I now want to look in a little more depth at housing and land markets, and transport.
  
  I started by saying urban planning has lacked an economic underpinning. An example of this is the use of the urban growth boundary which is a common planning tool ostensibly to stop cities growing outwards, often described pejoratively as sprawl.
  
  Sprawl is often meant as development on the fringes of a city, far from the centre. But I want to make the point that the better way to think of it is in relation to the time value of travel.
  
  If you are building homes let us say in Pukekohe in the south of Auckland, where people who work in the city centre might face a drive of 90 minutes on a bad day, that might be characterised as sprawl. But when we electrify the rail line to Pukekohe, and build an additional line on the main north-south corridor, as we are about to do, those people will have a 30 min express commuter ride into the city, is it sprawl then? I don’t think so.
  
  The most harmful effect of the urban growth boundary where there is rising demand is to create an artificial scarcity of land driving section prices up.
  
  The boundary is much loved by land bankers whose business model is to buy up rural land and sit on it until the local council shifts the boundary in response to growth pressures, changing the zoning from rural to urban, and then sell it sometimes at ten times its former value.
  
  My intention is not to vilify land bankers. Their behaviour is a rational response to bad policy.
  
  If the urban growth boundary wasn’t bad enough, restrictions on height and density, often justified as protecting the amenity of the low-rise garden suburb, ration floor space, stopping the city growing up and restricting the supply of apartments, and of course driving up prices across the market.
  
  Urban planning has too often failed to grasp that whenever rules stop people building or living in places they want to (typically close to amenity, jobs or transport interchanges) they deny people housing choices, restrict supply and drive prices up.
  
  As Ed Glaeser says, every time you place a restriction on intensification you deny a family access to the city.

• More evidence against Sachs's Millennium Villages. Small or null results on core indicators, no spillover benefits.

Afternoon Roundup

The afternoon's closing of the browser tabs brings:

• Tony Burton at The Spinoff on unemployment figures. Far fewer of those aged 15-19 are in work now than was the case prior to 2008. The jump, to my eye, coincides with Labour's abolition of the differential lower youth minimum wage. There's been of course expansion in tertiary education over the period, but the timing is consistent with the change in the youth minimum wage combined with the GFC, then levelling out to a higher steady-state youth unemployment rate. 
• The government isn't just mulling over porn filters. They're also looking at blocking access to online gambling. Another Tracey Martin initiative. 
• This older piece at the New York Times uses the Mercatus Center's tallying of regulations to look at the quantum of regulation facing apple growers in the US. It would be pretty interesting to replicate that Mercatus project in New Zealand. 
• Andrew Leigh on Australia's second convict age. Incarceration rates have been rising in Oz since the mid-1980s, with rates now again where they were around 1900 (though nowhere near incarceration rates in the US, and still below New Zealand's rates). He cites Kleiman approvingly on the importance of the swiftness and certainty of penalty over the duration of sentence. 

These 32 hours have 20 falsifiable forecasts

Phillip Metaxas and Andrew Leigh sat through 32 hours of Australian talking-head TV.* In all that talking, they were able to find only 20 falsifiable forecasts from Australian pundits. The rest were so qualified that they were unfalsifiable.

They suggest that talk show hosts demand falsifiable predictions:

A nice start would be for Insiders host Barrie Cassidy to insist on ‘falsifiable predictions’ in his final segment, rather than the current ‘observations or predictions’ from the pundits. While such an innovation would be helpful, assessing whether a prediction has proven true or false is likely to provoke objections from the pundits involved. As Gardner (2010) notes, when predictions go awry, pundits often invoke an array of excuses to exonerate themselves. Such excuses include the ‘I was almost right’ defence, and the ‘wait and see’ defence. In our analysis, had David Marr and Lenore Taylor been incorrect about public opinion changing on the mining tax, they could easily have invoked the ‘wait and see’ option to defend themselves. 

For this reason, we advocate a Tetlock-style experiment involving Australia’s leading political pundits. Such an experiment substantially removes the ability of pundits to invoke the common defence mechanisms when their predictions go astray. An appropriate study would require our pundits to make falsifiable predictions about the political world in the future. Predictions could cover a range of topics such as the party likely to win the next federal election, the next leaders of each party, and the passage of key legislation. There would be a sufficient number of questions to ensure that lucky hits do not skew the results. We need more evidence than our analysis could provide to properly separate flukes from prescience. Furthermore, an anonymous survey like Tetlock’s would help determine whether our pundits as a group are worth the airtime they are afforded. An open survey could also give us the ability to rank our political pundits based on their predictive powers.

I'd love to see a talk show partner up with one of the betting markets to refine the opposing pundits' claims into a single falsifiable test prior to the show. Launch the contract at the start of the show, unless it's a contract that already exists, like "Who will win the next election", then have them argue about the appropriate price for the contract while the audience submits bids and asks. Let the ticker move over the course of the show, then insist that both of them put, say, $1000 on it at the conclusion of the debate if their argued price differs from the market price.

This would be really easy for things like "Who will win the next election?" or "Will Julia Gillard lead Labor into the next election?". And it isn't that much harder for combinatorials like "Labor would win more (less) seats under Gillard than under Rudd".

There would be nothing banning such things in Australia or New Zealand. There are political betting markets in both places, even if Senator Xenophon keeps trying to ban them in Oz. The constraint seems more likely to be that viewers aren't really all that interested in getting falsifiable predictions and accurate odds. Theatre and that cherished fantasies never ever be shown to be wrong - that's where it's at.


* Ok, they read transcripts.

Education isoquants

Draw a graph. On the Y axis, put "smaller classes"; on the X axis, "teacher quality". It's not hard to imagine standard isoquants in that space where you can produce a fixed amount of educational output either by having worse teachers in smaller classes or better teachers in larger classes. I know neither the slope of the isoquants nor the slope of the isocost curve that would run between them, but Andrew Leigh reckons Australia pushed itself onto a lower isoquant by shifting from larger classes with better teachers to smaller classes with worse teachers.

The other challenge is to boost the performance of Australia’s educational institutions, particularly our schools. In research with Chris Ryan, we found that Australian literacy and numeracy scores had failed to improve from 1964 to 2003.[24] Since then, Australia’s scores on the international PISA test have fallen. At the same time, the academic aptitude of new teachers – relative to their classmates – has declined.[25] One possible reason for this is that Australia chose to focus on reducing class sizes rather than attracting the best teachers. Over the past quarter-century, class sizes have been cut by about 10 percent, while teacher salaries relative to other professional salaries have also been cut by about 10 percent. [emphasis added]

New Zealand's National Party proposes moving towards the larger class - better teachers combination; they're trying to draw in better teachers with merit pay. Says Leigh:

I have a particular interest in performance pay, having given a keynote address at an economics of education conference in Munich, in which I summarised what we know about the economics and politics of merit pay.[26] From that, I concluded that anyone who says that merit pay ‘always works’ or ‘never works’ hasn’t spent enough time engaging with the literature. There are clearly merit pay models that are successful, and those that are unsuccessful. The challenge is to build the evidence base to the point where we can confidently tell the difference.

Here's hoping New Zealand's implementation winds up being on the successful side. Bill Kaye-Blake notes, probably rightly, that the amount of money available as merit pay will have to be reasonably large.

Update: Note that Andrew Leigh, quoted above, is not only a top-notch economist, he's also an Australian Labor MP. It's well worth reading his whole article on merit pay.

Labor and Labour

Andrew Leigh, Australian Labor MP and top-notch economist, says the case against inequality cannot rest on Wilkinson & Pickett's "The Spirit Level": the evidence there presented is just too fragile.

One set of arguments suggests that we should care about inequality for what are called ‘instrumental reasons’. Inequality, some contend, is associated with worse outcomes in areas that society cares about, such as health, crime, savings and growth. This argument is put most strongly in The Spirit Level, by Richard Wilkinson and Kate Pickett. It is an argument that I used to believe. Indeed, I deeply want to be true, but my own research persuades me otherwise.[25]The closer you get to these asserted effects, the more fragile are the findings. If there are negative effects of inequality on those social outcomes, they must be extremely small. (There are also small positive effects. For example, my own work shows that inequality boosts growth, though the trickle-down process is slow.)

New Zealand's Labour Party seems to care more about mood affiliation than about sound evidence, at least given the number of posts over at Red Alert lauding Wilkinson and Pickett, most recently here.

There are better and worse arguments against inequality. Why does New Zealand Labour have to go for the dumb ones? The comments thread on the last link over at Red Alert, the New Zealand Labour Party Blog, has Labourites dismissing any criticism of Wilkinson and Pickett as being only ideologically driven. The Standard, the unofficial Labour Party blog, is at least as bad.

Guys, please go and read Andrew Leigh. And NZIER's Bill Kaye-Blake. Neither of these guys are ardent ideological righties, and I'd expect neither of them to shy away from endorsing Wilkinson-Pickett if they thought the argument was supported by evidence.

Leigh on Social Cost

Andrew Leigh weighs in on the Australian alcohol excise tax debates. The anti-alcohol folks have been citing the relatively recent $36 billion alcohol social cost figure; Leigh's comments follow below. But let's have first a quick look at the new cost figure.

At page 7 of the report, they invent, whole-cloth, a new requirement for internalization of intra-family effects: joint ownership of all family resources. Funny enough, I never noticed that part of Becker's Rotten Kid theorem. If Becker could generate intra-family internalization with no such assumption, it hardly seems a necessary condition for internalization of intra-family effects.

I've not gone over their cost estimates with anywhere near the detail I've taken in looking at Collins & Lapsley. Instead, I used my usual approach: find what looks to be one of the biggest cost components and see if it makes any sense. If it doesn't, that probably says something about the quality of the whole report.

And so at Table 9.13, they derive $6.4 billion in intangible harms to the quality of life of those who report knowing heavy drinkers whose drinking has harmed their quality of life. How? They get the average Quality Adjusted Life Year scores for those who report either not knowing a heavy drinker or knowing a drinker whose drinking hasn't negatively affected them, the average QALY score for those reporting knowing a drinker whose drinking has affected them "a little", and the average QALY score for those reporting that a drinker has affected them "a lot". They then monetize the difference under the assumption that knowing a heavy drinker is what's causing the differences in QALY scores.

The problem with this method is that it hopelessly confounds the effects of knowing a nasty drunk with the effects of being in the cohort of people most likely to know a nasty drunk.

Suppose, for argument's sake, that the average person who knows somebody whose heavy drinking has imposed costs on him differs from the average person who doesn't for reasons other than knowing somebody who's a nasty drunk. There are plenty of reasons to expect that such differences might exist. Off the top, I'd be willing to bet that people more likely to be adversely affected by a harmful drunk are also more likely to be unemployed, have lower education, have lower income, and so on. Yes, it's entirely a stereotype to say that these things don't happen in more privileged families - all kinds of bad outcomes happen there too. But it's the averages that matter here. And the kinds of things that give rise to having a social network more likely to include a nasty drunk also, on average, seem rather likely to give rise to other adverse outcomes independently of whether you wind up knowing a nasty drunk. But the report happily takes the whole $6.4 billion monetized difference as being due to alcohol. That's a sixth of the report's total.

Back to Andrew Leigh:

Mr Leigh, the member for Fraser in the ACT, said the consequence of introducing policies to protect people's future selves from their current selves “could actually be bigger than all the other social harms put together”.
“The one thing I'm still puzzled about and could use some assistance on is how much we should be concerned about an alcoholic's damage to their future selves” he told a national alcohol forum sponsored by the Australian Medical Association.
“If we go by standard rational economics, it isn't a social cost if I drink myself to an early death, but I think working through that rigorously, either empirically or theoretically, is useful.”

If we go by standard, rational economics, it isn't a social cost if someone drinks himself to death. Exactly right. Costs to the drinker are internal, not external.

Leigh's also right that setting policy to control internalities - costs individuals may impose on their future selves - could have very broad consequence. Glen Whitman outlined some of the problems here.

Leigh continues:

Mr Leigh, considered a rising talent in Labor ranks and who was representing the government's viewpoint at the conference, said he was frustrated there was not enough evidence to show whether a volumetric tax would work in cutting problem drinking.
And he said a volumetric tax on wine would have social equity consequences because it would hit low income earners the hardest.

This is a problem both for considering changes in the tax mix in Oz, and for discussions of minimum pricing regimes elsewhere. It isn't just the folks looking to get drunk as cheaply as possible who go for lower cost alcoholic beverages; plenty of poorer moderate drinkers go for cask wines too. Any gains from reducing the harms imposed by the drunks would need to be weighed against the consumer surplus losses accruing to moderate drinkers. Both of these need be evaluated at the margin; estimates of total costs aren't entirely helpful with that.

Measuring media bias in Oz

Andrew Leigh and Josh Gans versus Andrew Norton on measuring media slant in Australia.

Leigh and Gans bring Groseclose and Milyo's method to Oz, but use public intellectuals rather than think tanks due to the paucity of the latter. Recall that the original Groseclose and Milyo method didn't benchmark to partisanship but rather to ideology: the US has ADA scores for representatives, so each representative is rank-ordered from liberal to conservative and an imputed ideological score is then given to each think tank. Robustness checks in Leigh and Gans include expert coding of front-page newspaper articles, both political and overall, and coding of newspaper editorials.

Norton says the ranking of intellectuals lacks face validity: that their left-right positions don't correspond to casual observation; moreover, public intellectuals tend to be ideological rather than party partisan so the method may not work.

I certainly don't know enough about Australian public intellectuals to know whether there's a lack of face validity in Leigh and Gans's ordering, nor do I know whether the public intellectuals tend to be party hacks or ideological hacks. But I'm pretty sure that Groseclose and Milyo were able to drop negative or reverse mentions from their analysis (things like a National MP saying, "Even Brian Easton agrees with X", for example) while Leigh and Gans weren't able to given their initial dataset. On first thought, so long as both sides tend to do this with equal frequency, it might just add noise to their estimates rather than much bias. On the other hand, I can imagine those reverse mentions happening a lot more for the tails of the distribution, which would greatly narrow the measured range of public intellectuals' opinions and could lead to a centrist-bias in the results. Leigh and Gans say that folks don't much cite public intellectuals for the purpose of bashing them (a truly negative mention), but I can imagine a fair number of the "Even prominent Labour supporter X agrees..." mentions. In the end, their robustness checks mostly give them the same answers: most papers are largely centrist in Australia - so I'm less worried.

One thing that they can't control for over their period is whether slight evidence of slant in favour of the Coalition government reflected incumbency bias or pro-Coalition sentiment. Presumably they'll be able to test for that in a replication after the next election.

Cool that Leigh and Gans have taken this on. I've told my classes that a New Zealand replication of Groseclose and Milyo is likely impossible given:

1. Party line voting makes ADA scores impossible, so we can't benchmark against median voter ideology.
2. A paucity of think tanks makes the mapping impossible.

Folks could argue that media concentration in New Zealand makes it tougher, but even if Fairfax owns a lot of outlets, partisan or ideological market segmentation could well be profit-maximizing, so I tended not to worry so much about that one.

Measuring partisan slant rather than ideological slant seems possible using Gans and Leigh's method. Congrats guys.