What is seen and what is unseen: Kitchen costs edition

Christchurch planners failed, post-quake, by not removing the restriction on secondary units in houses. Adding a few walls into a relatively undamaged house with spare rooms and turning one of those rooms into a kitchen would have been the simplest way of adding new dwellings post-quake, when insurance was hard to come by and new builds during aftershocks were ... difficult.

But rules against secondary suites have costs even outside of emergencies. Those costs are often unseen. If your family situation requires a home with secondary units in it, and those don't exist, the harms you experience are unseen by the planners.

Gary Sturgess's not knowing the house he purchased was not properly consented made visible some of these unseen costs. He bought a house with secondary suites built into it because it was important for his family to have them. Then Council told him those units were not consented and he would have to tear them out.

Palmerston North resident Gary Sturgess cannot believe how much red tape there is over a kitchen sink.

The particular sink is part of downstairs rooms at his Ruahine St home where 21-year-old granddaughter Georgia Garrett, who has Down syndrome, is learning independent living skills while under the same roof as mother Tania, aunt Jacqui and granddad Gary.

The family bought the house 2½ years ago, having chosen to live together after a difficult year when Sturgess' wife Valerie had died. 

The home had everything to enable three adults and a teenager to live together for support, while each had private space, a bathroom and somewhere to prepare a cup of tea or basic meal.

But a few months after purchase, a letter from the city council told them the two downstairs units did not have planning consent.

Sturgess was taken by surprise, and appalled by the initial estimates of the cost of putting things right.

Why?

Council head of planning services Simon Mori said the presence of a kitchen sink was used as the yardstick to decide whether a unit or sleepout was self-contained.

"The building would then have everything it needs for a person to live there."

And if kitchen sinks were installed legally, it required a building consent, which triggered a review of whether the building work also met planning rules.

The council is in the process of reviewing residential zone rules to give people more choices about building homes and make it easier to have just one dependent living unit on their property, but the changes were unlikely to go far enough to cover Georgia's sink.

In Christchurch's case, I think the real why was that rich folks in Ilam didn't want neighbours to be able to accommodate students, and Council cared more about rich west-side NIMBYs than about poor people in the east who lived in sheds. In Palmerston, I don't know.

If the house had never been built as it was, the harms of Council's policy would be unseen. Sturgess would never have bought the house and would have been forced into accommodations less well suited to their needs. Council cannot anticipate the needs of different families, much as they might like to believe they can fully anticipate such needs and issue detailed directives so that housing matches what they think needs might be.

But Sturgess bought the house. And unseen costs are now visible. The costs of removing the sink?

And it leaves Georgia with a problem about washing her dishes.

"I make sandwiches for lunch, I make my breakfast – where am I going to put my dishes?"

The choices would be to use her bathroom, or the laundry sink, or the upstairs dishwasher – nothing like the conventional habits of independent living.

These kinds of rules should change.

The Poverty of Inequality Reports

My column in last week's NBR went through the latest Oxfam report on global inequality.

Among the problems:

• Any chart showing the time series wealth of the n richest people today has a strong bias towards showing an increasing trend. Anyone who was on last year's top-n list but had a poor run drops off the list, with his decline not measured; anyone who didn't make last year's cut but did this year is pretty likely to have had good returns recently. A chart showing the time-series wealth of the 62 people who were the richest people in 2002 would have a different pattern than a chart showing the wealth in prior periods of this year's 62-richest.


• Failing to account for net debt held by people in rich countries with good prospects means that Oxfam was able to report a "number of billionaires" figure about half of what they'd otherwise have had to have reported. In their appendix, they note the problem isn't big because it doesn't take many of the richest billionaires to cover the total debt in the developed world, but the top richest billionaires are much richer than the ones that are 60th through 120th. 


• Most of the movement in the wealth of the bottom 50% shown on their big headline chart is just fluctuations of the US dollar relative to others. I doubt that a very poor person in Sub-Saharan Africa notices or cares much about the US dollar exchange rate. The world's wealthiest, by contrast, will have globally diversified portfolios and far less subject to US dollar currency risk. Tell me the green line below isn't just tracking the US TWI. And note that the Credit Suisse report warns that the changes in wealth are strongly influenced by exchange rates.

It's also worth noting that the Credit Suisse report has 453,000 Kiwis in the world's top 1% by wealth. Just owning your own home in Auckland will get you pretty close to the line. And about half of all kiwis are in the world's top 10% by wealth. If you want to hate on the top 10%, or the top 1%, you might want to look in the mirror.

An ungated version of the column is now up here. You should subscribe to the NBR.

Shortages and rationing: marriage edition

During times of shortage and crisis, everyone hates a price-gouger. And sensitive types argue for rationing and sharing rather than allocation by prices. Sure, prices might be more efficient, but they could induce social disruption. Allocating suddenly scarce resources by ability to pay confers rents on owners of the suddenly scarce resource. And the merits of allocation by price are smaller if supply constraints mean that you can't draw new supply into the market.

And so we come to Eritrea's man shortage. Let's take all the reporting here at face value - I've not verified any of it, and it could all be wrong. But it's interesting.

In what could pass as an ‘April Fool’s Day’ prank, activists have posted a memo on Facebook allegedly from the Eritrean government asking men to marry at least two wives due to an acute shortage of men occasioned by causalities during the civil war with Ethiopia.

A copy of a scanned decision of the Grand Mufti surfaced on the social media site on Thursday last week and showed the State of Eritrea calling for all men in the country to marry at least two wives and the government assuring that it will pay for the marriage ceremonies and houses.

The document, which could not be independently verified, says any man or woman who oppose the decision “will face a life sentence”. A Standard report showed that activists had translated the memo — written in Arabic — to:

“Based on the law of God in polygamy, and given the circumstances in which the country is experiencing in terms of men shortage, the Eritrean department of Religious Affairs has decided on the following: “First that every man shall marry at least two women and the man who refuses to do so shall be subjected to life imprisonment with hard labour. “The woman who tries to prevent her husband from marrying another wife shall be punished to life imprisonment.”

More than 150,000 Eritrean soldiers were killed during the secession war from Ethiopia between 1998 and 2000. At the time Eritrea had about four million people.

Ok. The recent war means they have a shortage of men relative to women. So consider the marriage market.

When there are more men than women, the women who are richest - who have the bundle of characteristics most valued by relatively scarce men in the Eritrean marriage market - will be able to afford husbands. And the poorest women will go without.

The law here forbids rich women, where rich means possessing the scarce resource, from hoarding husbands. Instead, the government's requiring that sharing be an option.

Isn't this a form of anti-gouging, pro-sharing legislation that, in other contexts, is usually lauded? It prevents scarce single men from exercising market power because already married men are forced into the market and compelled to be suppliers. It ensures that poorer women have access to the scarce resource, at the potential expense of richer women who are hoarding the scarce resource. And, presumably, the government will rescind the compulsion when the shortage has eased - otherwise they could run into the opposite problem.

Now, I'm a fan of the price system and am sceptical of anti-gouging arguments. And so I don't like the government compulsion here - as I don't like other anti-gouging legislation. Allowing sharing can be a reasonable solution where it's otherwise banned; we could well expect it to emerge naturally in some contexts. But compelling it makes me nervous - in this as in other markets.

Postscript: If you haven't read Marina Adshade's take on polygamy in her excellent Dollars and Sex, you should. Perhaps a future edition will consider the equilibrium where both polygamy and polyandry are allowed. She expects polygamy would result in a cohort of single men. But if women could also take on multiple husbands, that does not necessarily follow.

Teacher turnover and student performance

The District of Columbia fires teachers from its public schools if they prove ineffective, as measured by their IMPACT evaluation system.

How does it work? Here's Adnot et al in a new NBER working paper:

DCPS [District of Columbia Public Schools] began evaluating teachers under IMPACT, a new performance-assessment and incentive system, during the 2009-10 school year. The design of IMPACT appears consistent with virtually all of the emerging best-practice principles. First, all teachers are evaluated on a multi-faceted measure of teacher performance (e.g., clearly described standards, the use of multiple teacher observations made by different observers and the use of student outcomes). Second, these evaluations are linked to high-powered incentives that include the potential dismissal of low-performing teachers and very large financial incentives for high-performers. Third, in addition to the feedback associated with the evaluations, teachers are provided with various supports, including instructional coaching to assist in improving their teaching practice.

It isn't just based on standardised test scores. Rather, it combines outcome measures with other evaluations of teacher performance for a better overall picture: students with poor absolute outcomes could still be doing far better than expected given their backgrounds.

Results?

The departure of poorly performing teachers improved teaching quality (the average replacement was of higher quality than the departing teacher). It also improved student achievement by a fifth of a standard deviation in maths, and 0.14 standard deviation in reading.

And, the benefits are concentrated in the poorest schools:

Forty percent of teacher turnover in high-poverty schools is among low-performing teachers (Figure 3). Our estimates indicate that there are consistently large gains from the exit of low-performing teachers in high-poverty schools. In math, teacher quality improves by 1.3 standard deviations and student achievement by 20 percent of a standard deviation; in reading these figures are 1 standard deviation of teacher quality and 14 percent of standard deviation of student achievement. In DCPS, virtually all low-performing teacher turnover is concentrated in high-poverty schools: on average, 1 percent of students in low-poverty schools experience low-performing teacher turnover.¹⁵

In the D.C. data, there was a lot of turnover of poor teachers in schools serving poorer communities. There was less of it in richer communities - somehow, those communities seem to have had smaller proportions of poor-quality teachers to start with.

Marijuana selection

You're going to mess up any estimate of the negative effects of using marijuana if you do not control for that the kids who try marijuana differ systematically from the ones who do not try marijuana.

If, as you might expect, trying drugs earlier correlates with things like novelty-seeking, higher risk tolerance, and perhaps less conscientiousness, and if you don't have particularly good ex ante measures of those things, you're going to confound the effects of early marijuana use with the effects of being the kind of person likely to try marijuana early.

Three years ago, Ole Rogeberg critiqued the Dunedin Longitudinal Data people for having inadequately controlled for these kinds of selection effects. Dunedin's response was not particularly good. I'd noted it here. There are big problems when researchers use secret data.

Ole's critique was published here; Dunedin (Moffitt, Poulton et al) replied here; Ole's rejoinder is here. 

It seems those selection problems are large indeed.

Now, in the first study of its kind, scientists have analyzed long-term marijuana use in teens, comparing IQ changes in twin siblings who either used or abstained from marijuana for 10 years. After taking environmental factors into account, the scientists found no measurable link between marijuana use and lower IQ.

“This is a very well-conducted study … and a welcome addition to the literature,” says Valerie Curran, a psychopharmacologist at the University College London. She and her colleagues reached “broadly the same conclusions” in a separate, nontwin study of more than 2000 British teenagers, published earlier this month in the Journal of Psychopharmacology, she says. But, warning that the study has important limitations, George Patton, a psychiatric epidemiologist at the University of Melbourne in Australia, adds that it in no way proves that marijuana—particularly heavy, or chronic use —is safe for teenagers.

The first quoted link goes to a paper that doesn't seem yet available. The second one controls for a broad array of ex ante characteristics and finds no effect of cannabis use. From its abstract:

A series of nested linear regressions was employed, adjusted hierarchically by pre-exposure ability and potential confounds (e.g. cigarette and alcohol use, childhood mental-health symptoms and behavioural problems), to test the relationships between cumulative cannabis use and IQ at the age of 15 and educational performance at the age of 16. After full adjustment, those who had used cannabis ⩾50 times did not differ from never-users on either IQ or educational performance. Adjusting for group differences in cigarette smoking dramatically attenuated the associations between cannabis use and both outcomes, and further analyses demonstrated robust associations between cigarette use and educational outcomes, even with cannabis users excluded. These findings suggest that adolescent cannabis use is not associated with IQ or educational performance once adjustment is made for potential confounds, in particular adolescent cigarette use. Modest cannabis use in teenagers may have less cognitive impact than epidemiological surveys of older cohorts have previously suggested.

And I wouldn't take smoking there as causal either. It's rather more likely a marker for other unobserved risk-preferences that correlate with the outcome variable and with drug use.

Remember this when somebody uses "Won't somebody think of the children" as first response against considering drug legalisation in New Zealand.

There's a decent write-up here.

Netflix zones

A few points on the threatened Netflix crackdown on geounblocking:

1. Whether Netflix turns a blind eye to geounblockers is a matter for them to discuss with the content producers selling them the licenses for different regions. It is totally fine for Netflix to check whether its users are breaking the terms of their licenses and to decide whether to enforce those terms. It would be not fine for the government to force them to do so, as it's just parallel importation. But this isn't that.
2. In deciding whether to go hard, Netflix will have to weigh:
1. The costs imposed on legitimate users who travel and whose family activity will look a lot like geounblocking - you're on business in the UK; family's home in the US;
2. The losses from those who, like me, would unsubscribe from Netflix entirely if restricted to the content available to NZ subscribers;
3. Its position with its rights-holders;
4. Whether it is actually possible to hit VPN users and how far they really want to go: threatening account cancellation for those whose primary viewing country doesn't match the credit card might be effective for a lot of users who'd have a tough time sourcing US-based cards.
3. On the customer side, those who VPN might need to be a bit more careful and stick with one country's content for a while until we see what they're actually doing. No more flitting over to the UK for more episodes of The Thick of It, then back to the US for other stuff.
4. On the NZ government's side, they might consider whether New Zealand's doing something particularly stupid in requiring that streaming providers get NZ classification labels for streaming video. Netflix has a ton of long-tail content. The fixed costs of getting NZ labels for each title could well be unduly shortening that tail.

The Censor's Office made a big deal of that they can classify things quickly and under urgency to meet international schedules. But look at this:

Working in close cooperation with the Film and Video Labelling Body and Netflix, the Office processed these submissions from Netflix rapidly. The submitter was organised, all material was able to be viewed and they provided clear information about their commercial priorities. The total regulatory cost for Netflix of establishing themselves as a fully compliant, responsible provider of on demand video to New Zealanders was less than $150,000. 

Ok. Netflix is $10/month for the basic package in New Zealand. A customer generates $120/year in revenue. So Netflix needed over a thousand customers just to cover the regulatory compliance costs of getting the NZ-specific labels. And Netflix, here, has about a third of the tv shows as are available in the US and about a third of the movies. I don't know how much of that is rights issues, and how much of it is costs of getting labels on oddball long-tail content. The OFLC cites classification costs of $1124.40 per title. So, for anything that isn't already NZ-rated, Netflix would have to expect that the title would draw in ten more NZ annual subscriptions to recoup that cost.

Note further that this will hit smaller NZ operators like QuickFlix or Lightbox even harder: they then either lag Netflix in content, or front-foot the regulatory costs per title over (presumably) smaller subscriber bases with others then able to coat-tail.

Wouldn't it make more sense to require that streaming content providers provide the country-of-origin's rating for content, and a link to an equivalences table for those who want to know what different countries' classifications mean? The OFLC even provides one, right here. Instead of on-demand streamers having to sort out classifications for each title in New Zealand, they'd just need a couple links on the homepage. And remember: those who want more stringent censorship can always get it by subscribing to Family First's new service.

In irony watch: I also subscribe to UK's NowTV, a Sky subsidiary, via geounblocking.

Chris Keall's piece at NBR is worth reading, as is the Stuff piece on whether the crackdown is feasible.

Drinking culture

Anne Fox last year released a report on drinking culture in Australia and New Zealand. She's an anthropologist who'd previously looked at drinking behaviour; Lion commissioned her to have a look at New Zealand and Australia. I'd covered her report here. You can hear her chat on RNZ's Sunday programme from last year here.

Fox talked about how drinking culture mediates the effects of alcohol consumption. Alcohol is disinhibitory but the particular things that are disinhibited seem strongly culturally mediated. She gives the example of that social norms around public urination change in the drunken state as compared to sober, but not norms around public defecation. And so we see a lot more of the former than the latter.

For a more recent and worse example, consider the differences in drunken comportment in German culture, and that of some recent migrants to Germany. Why do some drunken crowds of young men think that sexual assault is fine, and other drunken crowds really really don't?

Fox's paper drew a fair bit of media critique last week on the back of an article in Addiction by Nicki Jackson and Kypros Kypri. Among the things they didn't like:

• The study didn't have ethics committee approval.
• But ethics committee approval wouldn't really here have been an issue: they had focus groups convened by market research companies, and Fox is a consultant, not an academic. Further, while Jackson & Kypri note that ethical approval boards vet proposals for methodological quality, the vast majority of research undertaken even at universities will have no such prior vetting: you don't need to go to a review board if you're just running regressions on established data, for example. 
• Fox downplays links between alcohol and violence, ignoring studies showing correlations between alcohol and violence across "a broad range of cultural contexts."
• But their source doesn't really show that. Rossow looks at alcohol and homicide across 14 European countries, broadly grouped as southern Europe, central Europe, and northern Europe. Before reading for their results, I tried to guess what Fox would have predicted. She noted that Anglo-Saxon cultures take drinking as bacchanal, where more of the rules are suspended where southern European ones have drinking more successfully integrated into life and where rules aren't suspended. So, following Fox's thesis, I'd expect the weakest links in Southern Europe.
• What does Rossow find? The weakest links are in Southern Europe. And Rossow's conclusion talks about the differences in drinking culture between the Nordic countries, where drinking to intoxication is more common, and Southern Europe, where drinking is just a general part of dinner. Rossow writes: "Furthermore, there also seem to be cultural differences in drinking context, particularly drinking with meals, when comparing northern and southern European countries, which may add to the potential of alcohol consumption leading to violent behaviour." 
• It is ... strange ... to cite Rossow in an anti-Fox piece. I'd have thought Rossow's findings entirely consistent with Fox's thesis. Note that I'm not endorsing Rossow's method here: it's a pooled cross-section that only has alcohol sales and a constant on the right hand side: surely a host of omitted variables affect both homicide and alcohol consumption. But if you're going to cite it...
• Kypri goes on about limitation of trading hours in Newcastle and how that reduced harms; nothing about how 24-hour licensing in Manchester (UK) only affected the times of harms, not the quantity of harms. I don't know about the police procedure changes that he and Fox are arguing about, but I do note that Newcastle's downtown and waterfront have substantially gentrified - I would have expected things there to have cleaned up regardless of licensing times. 
• They critique her recommending of education strategies for minors and parents, noting that education programmes have been pretty ineffective. 
• Again, this is a bit odd. Fox spends a lot of time talking about how existing programmes are generally pretty terrible and how they could be improved. I suppose it could be impossible for any of them to work, but the critique remains strange. 
• While recommending increases in the alcohol purchase age as "evidence-based", they ignore the work by Boes and Stillman showing that the NZ change in the alcohol purchase age had no effect on harms. I wonder if the public health side will ever notice that piece. 

I'd be a bit surprised if Fox didn't come out swinging here.