Wednesday 30 June 2010

Conflict Kitchen: Update

NPR covers Conflict Kitchen:
Conflict is defined as anything from armed dispute to embargos. The creators chose Iran because they knew people there — and Iranians in Pittsburgh.

Weleski says opening the restaurant added a layer of cultural diversity to the city — it's the only Iranian restaurant around. At the same time though, the Kitchen crew didn't want to alienate Pittsburghers.

"We wanted to chose a food that was sort of an everyman's food, a food that you would find on the streets of Tehran," she says. "And everyone understands a sandwich. It's something you can take with you, there’s a little girl running by right now, skipping and eating her kubidah sandwich at the same time and a lot of people have said they feel like it's a Persian hamburger."

The entire experience is meant to spark conversation. The Conflict Kitchen's colorful exterior boasts Farsi words. The sandwich comes in a wrapper covered with information and perspectives from interviews with Iranians on everything from film to nuclear power to the green movement.


In a few months, the grant-funded restaurant will switch countries — and cuisines. In September, it will serve food from Afghanistan. After that, maybe Venezuela or North Korea.
Odds they found out about the restaurant from Marginal Revolution, who found it here?

Awesome idea for a grant; I'd like to know more about who's funding it. I'd also be curious to know whether familiarity with a country's cuisine has any effect on individual views about that country - there's an obvious selection bias problem. You'd either need time series data on individuals' views along with their eating habits, or change in average views by zip code and the number of different restaurants that have opened in the zip code in the interval.

I'd suggest that a good way of testing this would be to think of some country about which most folks here in New Zealand have fairly neutral views - say, Ethiopia. Run a question in our GSS about views of Ethiopia. Then, pay people, ideally new migrant chefs from Ethiopia, to open Ethiopean restaurants in a few randomly chosen neighbourhoods. For statistical reasons I won't get into here, one of those should be somewhere along the New Brighton Mall near the pier. Don't tell anybody the restaurants are subsidized or that would contaminate the experiment. Then, see whether there have been changes in views over time that correlate with being near one of the randomly opened restaurants. The Marsden Fund has funded goofier things.

HT for the NPR story: @TheNBR, who previously reckoned blogs were parasitic on mainstream media for their stories. At least we bloggers tip our hats....

Tuesday 29 June 2010

Smoke free prisons

The only sound argument for making New Zealand prisons smoke-free is that non-smoking inmates are forced to inhale second hand smoke while in prison. While no such argument can be made about smoking in restaurants as clients can always choose a non-smoking restaurant and, if none are available, nobody forces you to go to a restaurant, no such case can be made for prisons where attendance is, well, mandatory.

I'm a non-smoker. Were I to go to prison, I'd have a slight preference for its being a smoke free environment. I'd have a much much much stronger preference for it being a rape-and-shiv free environment. I've heard very little about the latter and the occasional snicker about it being part of the sentence; I don't put much weight on the government actually being overmuch concerned about the health of non-smoking prison inmates.

Rob Hosking at The National Business Review has it right:
But the move to stub out smoking in prisons is raw politics, of course. The idea seems to be to get the government attacked by those who would stick up for prisoners’ rights, and thus make the government look tough on crims.

There is nothing like being attacked by the Howard League for Penal Reform, or some other body made up largely of criminal lawyers, to make a politician look good.

Educationally sound?

Legislation passed by the Pennsylvania Senate last week contains similar provisions, but it also features another requirement -- one that is disturbing faculty leaders nationally. The bill requires faculty members at the state's community colleges and universities to select "the least expensive, educationally sound textbooks."

While the Pennsylvania House of Representatives has yet to take up the bill, faculty groups are concerned about it because it would dictate specific choices to professors on which books to select. And while many professors say that they try to avoid expensive textbooks and to select reasonably priced works, many say that they regularly select books that are slightly more expensive than other "educationally sound" options, but that are better.
Inside Higher Ed.

Does this mean everything or nothing? The vast majority of texts are "educationally sound" in the sense that a decent professor could build a reasonable course around any of them: not that many university econ texts are error-ridden. But only a small number of texts would be "educationally sound" in meeting the needs of the particular course the prof wants to build.

If it's optimization subject to the constraint of the kind of course the prof wants to build, then the regulation is largely meaningless: only the text chosen by the prof winds up being educationally sound for that purpose. If instead course design is optimization subject to the constraint of the cheapest book being chosen, we'd wind up with a whole lot of somewhat shoddy courses being run.

We here use baby Varian for our intermediate calc-based micro because it's the best book for the kind of intermediate calc-based micro course we here want to run. Decent calc-based micro courses could be built around other books - they just wouldn't be as good as the one we've built around this text.

I'll bet that if the Senate's language winds up in the bill, it winds up being interpreted in the meaningless form rather than in the meaningful form. If some state panel decides which texts are educationally sound, there'd be revolution; if the prof decides, then the only sound book for the end sought by the prof will be the one he's already using.

Monday 28 June 2010

And sometimes the baptists find the bootleggers

Greens have learned to appeal to governments’ protectionist tendencies. Earlier this year the Nature Conservancy, an American green group, took representatives of America’s National Farmers Union and the American Farmland Trust on a trip to Brazil to see how illegal forest clearance was “hurting US businesses by flooding markets with cheap and unsustainable products”. A new report from David Gardiner & Associates, a consultancy, says the 13m hectares of mostly tropical forest that are lost annually allow the large-scale and low-cost expansion of timber, cattle and agricultural production. The report argues that policies to conserve rainforests would boost American agricultural revenue by as much as $190 billion-270 billion between 2012 and 2030.

Some companies may still take the view that decisions about buying palm oil are purely a matter of cost—a comparison of the price of oil from a sustainable source with that of buying the stuff from anywhere. But as the political pressure rises, the financial calculus changes.
From The Economist.

Hey, I was worried about palm oil before it was cool - back when European government policies seemed determined to raze the rainforests through biofuel mandates. Funny how things swing.

If you're unfamiliar with Bruce Yandle's Bootleggers & Baptist's explanation of how we wind up with highly inefficient policy, do check it out.

Saturday 26 June 2010

Public choice plumbing

Wired nicely details the difficulties James Krug has had in bringing his waterless urinal to market. You see, city codes everywhere he wanted to sell required that urinals be plumbed with a water source rather than just a drain. And the plumbers unions really really didn't like anybody who'd try to reduce their members' work.

Solution? The Universal Plumbing Code was changed to allow the waterless urinal, but only if a useless capped-off water supply were plumbed in behind the wall where the urinal sat; the standard plumbing work would then still have to be done.

Friday 25 June 2010

Police in politics

National, under urgency and supported by ACT, Labour, New Zealand First, Peter Dunne and Jim Anderton (neither of whom I count as a party these days), passed legislation allowing police officers to stand in local body elections.
This would enable all Police employees to stand in local authority elections without being placed on leave, and if elected, they would not need to vacate their employment with the New Zealand Police.
While criminal law is set by Parliament, the police also enforce local bylaws. Keeping a separation between the folks writing laws and the folks enforcing them is one of those nice lines that help to keep the words "police" and "state" from becoming a compound noun.

ACT voted with National. Greens and Maori opposed. Like in every other vote I've seen recently on civil liberties versus increased police powers. Well, Rodney, I really hope your regulatory responsibility bill winds up being worth it. Because the price is looking awfully high. Are you really really really sure that you can get the legislation through in a form that will actually constrain future governments?

Says Chester Burrows:
National MP Chester Burrows, a former police officer, is not surprised the Greens refused to support the bill. He told the House the party has not once voted for any pro-police legislation since he has been in parliament.
And that's a bad thing?

Farrar says the main problem is that the legislation was passed under urgency. But No Right Turn's take is better:
[The ban] was imposed because the police are responsible for enforcing local authority by-laws, meaning that they would be both law-maker and law-enforcer if elected. This isn't just a basic conflict of interest - a quick perusal of this blog will show that local body policies around gang patches, boy racers and ASBOs have been some of the most contentious policing and human rights issues of recent years.
Ideally, the government should can the bill. But at the least, they should not pass it under urgency, and instead send it to select committee so the issue can be thoroughly investigated (and in particular, the police and local authorities can explain how they intend to prevent conflicts of interest and abuses of power from arising). But this is National, who seem to take a perverse pride in shitting all over our constitutional procedures so they can appear "firm" and "decisive". So I expect it'll be law by the end of the week.

Anarchist materials?

NORML's put up the results of their OIA request for correspondence and documentation held by Internal Affairs regarding their NORML News magazine.

It's reasonably clear that the police were the ones seeking that the magazines be referred to the censor's office. But the notes from the meeting of Internal Affairs with some police officers 31 March 2010 are a bit odd. Here's my transcription of the relevant bit.
General cleanup
  • anarchist material
  • meth books
  • Hamilton etc.
Now I've been to Hamilton so I can't disagree much with the last line. Hamilton could use a cleanup. But what were they on about noting "anarchist materials"? Any guesses? It's at page 3 of the pdf linked above. Why would the New Zealand Police be talking with the Department of Internal Affairs about "anarchist material"?

NORML discusses the referral to the censor's office here.

Quitters, Inc. [updated]

A couple of folks have pointed me to this ROI at the New Zealand government's main tendering website. The link will almost certainly not work for you; it doesn't work for me either as I'm not registered in their system. But a friend's sent me a copy.

The Ministry of Health and the Health Research Council of New Zealand are seeking tenders, with full project costs of up to $5 million, for proposals that would reduce smoking by 50% by 2020.
Outcome: 50% reduction in the number of smokers in New Zealand by 2020
The research will inform strategies and facilitate efforts for achieving a drastic reduction in the numbers of smokers by 2020. The RTRHRP Steering Committee has identified a 50% reduction in the number of smokers in NZ by 2020 as a high-level health outcome for New Zealand. In order to achieve this outcome, the Tūranga will be required to develop evidence to support a suite of innovative mechanisms whereby large numbers of New Zealand smokers can be effectively supported to stop smoking in a relatively short period of time.
I don't apply for these sorts of things: that's why I'm not in their system. But odds are that a team consisting of some mix of Edwards, Thompson, Wilson and their various coauthors at Otago's school of public health at Wellington will get thrown another pot of money for some proposal involving a combination of tax increases, cigarette packs in plain brown wrappers with no identifying information about branding, banning of any kind of advertising, and possibly a move to make tobacco available only by prescription under doctor's supervision in the final years.

Now, if I had a million a year for five years, and if I reckoned the ends justified the means, I'm pretty sure I could come up with a proposal that would fully implement the protocols first outlined in Stephen King's short story Quitters, Inc. He claimed a 98% success rate. Now, some folks might reckon that the measures there proposed infringe on personal liberties too much. They might even wave their fingers and say nanny state. Pshaw. If we've already decided that folks can't be trusted to make their own decisions about smoking, why should we rule out more aggressive measures to force people to do what's best for them?

More seriously: the Ministry of Health, under National, will pay $5 million for proposals on how to reduce smoking prevalence by half by 2020. They're clearly seeking proposals from folks active in anti-tobacco scholarship. Would anybody who'd previously done work suggesting that third-hand smoke is a load of made up nonsense, or that the social costs of smoking are highly over-rated, ever be considered? My guess would be no. From the RFP:
A broad range of factors will need to be considered and addressed in order to achieve a significant reduction in tobacco-related harm. Therefore, a well-coordinated and adequately resourced approach is required. The purpose of this RFP is to establish a research Tūranga comprising a group of leading tobacco control researchers who will be charged with developing such an approach. The Tūranga will necessarily be multi-institutional and multi-disciplinary and will be charged with developing a cohesive, collaborative and dynamic programme of research to develop innovative strategies in reducing tobacco-related harm. Key research priorities have been identified in the New Zealand Tobacco Control Research Strategy 2009-2012 which may provide a focus for the development of this approach5. This fund is overseen by the Reducing Tobacco-related Harm Research Partnership Steering Committee with members representing the MoH, HRC, Māori, and health researchers.
Is there any way that anything worth $5 million can be produced from this?

Nanny just changed her skirt colour in 2008. Red to blue.

Update: here's the steering committee membership. But I'm sure that anybody who needs to will recuse himself when the relevant decisions are made. The grants will go to whoever is best for the job, regardless of the number of coauthorships anybody on the board might have with potential applicants. These sorts of problems are inevitable in small countries and I'm sure things wouldn't be rigged to give the grants out inappropriately in this the best of all possible worlds.

Nominal and real variables: academic edition

Writes the New York Times:
One day next month every student at Loyola Law School Los Angeles will awake to a higher grade point average.

But it’s not because they are all working harder.

The school is retroactively inflating its grades, tacking on 0.333 to every grade recorded in the last few years. The goal is to make its students look more attractive in a competitive job market.
My macro is rusty. But I'd thought that inflating the money supply to increase output only worked if it were a surprise. If it's a surprise, everyone takes an unexpected wage cut and employment goes up until folks incorporate the inflationary shock into wage settlements. But if it's entirely telegraphed in advance, folks just adjust their expectations.

While a Doomsday Device only really works if you do tell everyone about it, inflation, monetary or otherwise, only works if you don't and only until folks figure it out. So why would Loyola be telling everyone? Ah, there's a reason:
Students and faculty say they are merely trying to stay competitive with their peer schools, which have more merciful grading curves. Loyola, for example, had a mean first-year grade of 2.667; the norm for other accredited California schools is generally a 3.0 or higher.

“That put our students at an unfair disadvantage, especially if you factor in the current economic environment,” says Samuel Liu, 26, president of the school’s Student Bar Association and the leader of the grading change efforts. He also says many Loyola students are ineligible for coveted clerkships that have strict G.P.A. cutoffs.

“We just wanted to match what other schools that are comparably ranked were already doing,” he said.
So Loyola wants employers not to have unrealistic expectations about changes in cohort quality over time, but wants its students not to be at disadvantage given their {stricter standards or worse students}.

Strict GPA scholarship cutoffs are nonsense if they're not adjusted for the school's average GPA and the school's average LSAT scores: they only promote exactly this kind of grade inflation. But it would be difficult to get schools truthfully to reveal that information.

Thursday 24 June 2010

The virtues of libel

When we chronicle the struggle for literary freedom we too rarely give proper credit to the scandalous books, the salacious books, the truly outrageous books. We imagine that modern freedom was won by high-minded altruists devoted to human progress. A closer look reveals that much of the vast terrain on which literature and politics stand was in fact cleared by some dubious characters publishing books that no one, even the authors, considered respectable.

Robert Darnton has spent many years nudging us toward an understanding of this reality. Most recently he’s instructed us that 18th-century French publishing had a well-known category, libelles, which covered many books that delighted newly literate readers by undermining the authority of the monarchy and the Church.

Libelles helped create the demand for liberty. They were a major factor in the monarchy’s collapse. On shaky moral grounds, they founded French press freedom.
So writes Robert Fulford in the National Post.

It's interesting that these libelles continued to be written despite the combination of authors being subject to harsh punishment if caught AND being outside of copyright that would have helped the authors to earn pecuniary reward for their risk-taking.

Penn & Teller on nudges and fat taxes

Penn & Teller cover fat taxes and anti-obesity campaigns in exactly the language I'd be using over a beer rather than in a family-friendly blog.

[Update: Note that the embedded video below only shows up on the main site, not in the RSS feed. Apologies.]

I like how his panel accurately guesses the calorie count of fast food but underestimates the calorie count by about half when the same food is presented as having come from a non-fast food restaurant. So it's not at the fast food restaurants that folks are particularly underestimating calorie content.

The anti-fast food campaigners are pretty explicit: stigmatize fast food to shift public sentiment to favour fat taxes and zoning regulations. Tobacco was first, alcohol's there now, fast food is next up.

And, for those who've always been confused about the placement of the apostrophe in Carl's Junior, you'll have your answer.

HT: Velvet Glove, Iron Fist.

Wednesday 23 June 2010

Economic Impact Studies

This post is largely directed to any of this blog’s readers who perform economic impact analysis. Too many years ago, my Honours research paper was a study of the economic impact that the Christchurch Arts Festival had on Christchurch. The festival had asked for someone in the Department to undertake the analysis, but they weren’t prepared to pay anything, and so my supervisor Ken Henry (now Australian Secretary of the Treasury) agree to take it on as an Honours research topic.

I followed the usual methods employed for these kinds of studies: I circulated questionnaires at various concert venues asking patrons to answer some questions designed to find out if they were locals or visitors, if the latter, whether they came to Christchurch because of the festival, what their festival-caused expenditures were, etc. and then threw the results into input-output tables to calculate the usual multipliers.

While I did present the results following the standard Keynesian template, my base numbers were more reasonable. I assumed that additional spending by local residents would mostly have crowded out other spending rather than savings (in effect, being true to the fixed coefficients assumption of input-output analysis), and further presented results in which it was assumed that there was no Keynesian deficiency of demand that wasn’t being addressed by monetary policy. Needless to say, the festival chose never to release the report that Ken and I wrote for them!

But even fully stripped of the Keynesian assumptions, there was still the results arising from what was called the export-base model. This was the impact on Christchurch that arose from the “export” money being brought into the city by visitors from outside whose presence here was caused by the existence of the festival. This made me uncomfortable at the time, but I never was able to fully articulate in my mind whether export-base modelling made sense or not.

I have recently had cause to think about this kind of analysis again, and I don’t feel any the wiser. Let’s say someone does an economic impact report and concludes that a particular activity generates $10m of economic activity in a region, not due to any Keynesian effect in which idle resources are brought into productive use through stimulating aggregate demand, but due to bringing expenditure into a region. What is the question to which $10m is the answer? I can see that it is probably an ordinal measure of something, so that if $10m of economic activity is a good, $20m is probably better, and if $10m is a bad, $20m probably worse. But what does $10m mean as a cardinal number? Is it a benefit that can be compared to a cost in a Kaldor-Hicks cost-benefit framework, so that, say, one could conclude that public expenditure funded of up to $10m would be justified in order to secure the activity? This can’t be right, as it ignores the opportunity cost of the resources that produced the goods and services sold for $10m.

For there to be any case for public expenditure to secure the $10m of economic impact, it seems that economic impact studies of this kind must be implicitly appealing to either some notion of a public intermediate good or second-best analysis, but it is never clear to me just what the assumed failure is in these analyses. And in any event, even with such market failures, the net benefit of the public expenditure would not be $10m.

So here are two questions for those of you who do economic impact studies. First, when you calculate a number for an economic impact, do you assume that there is any underlying market failures such that the “impact” is, in fact, a benefit. And second, what exactly is the question to which the reported dollar number of impact is the answer?

Tobacco and trade restrictions

I wrote in November:
It looks like somebody from the Prime Minister's Office in Canada is going to have to have a quiet chat with the healthists over at Health Canada. Terrence Corcoran reports that Health Canada gave the Prime Minister a nice little candy-coated landmine.

In last year's election campaign, Harper promised to crack down on flavoured tobacco products which he characterized as being marketed to children. The campaign promise was to knock out bubble gum flavoured tobacco. The legislation crafted by Health Canada wound up banning the majority of imported cigarettes, including Marlborough and Camels, most of which use some flavouring agents which are on the list of 5,000 now banned ingredients.
And today, Puddlecote says:
All that guff about fair trade and protecting the livelihoods of African farmers righteously flies out the window when it suits.
Nairobi — Tanzania's delegation to the World Trade Organisation will appeal against a proposed Bill by Canada that seeks to ban the use of ingredients in cigarette brands saying it will affect tobacco farmers globally.

The Tanzanian delegation will also raise the issue of the Canadian ban being incorporated into the draft guidelines (Art. 9 and 10) of the Framework Convention on Tobacco Control (FCTC) at the World Health Organisation.

In October 2009, Canada adopted a new law (the Cracking Down on Tobacco Marketing Aimed at Youth Act) that will effectively ban the manufacture and sale of traditional blended cigarettes - and will thereby indirectly significantly reduce imports of the burley and oriental tobacco used in such cigarettes.
'Cos we care about you Africans, really we do ... but only when you're producing bananas and coffee.
The legislation was "aimed" at flavoured tobaccos, to help protect the children. Interesting how it pans out.

Is ACT liberal?

I gave a talk a couple of weeks back for the ACT Party's Upper South Island conference. I there advanced the argument that I made on the blog back in March: namely, that ACT should guard against positioning itself as a right-wing rump to National and instead should re-emphasize social liberalism.

After many assurances from folks in attendance that ACT was indeed the Liberal party, Rodney Hide gave the counterargument: that ACT would do poorly by emphasizing social liberalism when so many disenchanted National voters are in play. The counterargument isn't a bad one as far as strategy goes. If National has pushed to center under Key, then we might expect Key to welcome a bit of brand differentiation: National for the centrist Blues, ACT for the non-moderates, and a stable coalition. That could be jeopardized if the "keep National honest" crowd voting ACT feared they could instead wind up with a Labour-ACT coalition: especially the rural anti-ETS folks that ACT may well wish to woo.

Of course, ACT's polling numbers, which continue to hover around 1%, suggest that there's not been much exodus from National to ACT; we'll see how things move as ACT's run against the emissions trading scheme continues.

But let's look at some numbers from the 2008 NZES. I ran a couple of (very rudimentary) principal component analyses on economic and social liberalism, pulling out a measure of each respondent's relative economic and social liberalism. I then split the population up into 9 quadrants: economic lefties, centrists, and liberals; social conservatives, centrists, and liberals, using a population distribution cutoff for all: 25th percentiles in either direction.

If we restrict ourselves to the 25% most economically liberal, 51% of those are centrists, 21% are right-wingers, and 28% are liberals. Now, these don't amount to a whole lot in the overall population - 4.8% and 6.3% for right wingers and liberals respectively - but it does suggest that there are more true liberals that could be courted than there are right-wingers.

Let's start by looking at where self-identified ACT voters from the NZES placed themselves, according to the  factor analysis described.

The yellow dots show the positions of ACT voters.  The red lines show twenty-fifth percentiles at the population level: 50 percent of the population lies between the two horizontal lines, with twenty five above the upper line and twenty five below the lower; similarly for the vertical lines.  The upper right quadrant shows the folks in the top twenty-fifth percentile on both economic and social liberalism: true liberals.  The bottom right quadrant shows the folks in the top twenty-fifth percentile on economic liberalism but the bottom twenty-fifth percentile on social liberalism: classic right wingers.  The NZES suffers from small sample problems with respect to ACT voters, population weighting on the other characteristics using the NZES's preferred weighting scheme slightly increases the proportion of ACT voters in the liberal quadrant.  In the weighted sample, 6% of ACT voters fell into the liberal quadrant while 7.6% fell into the right quadrant. So, as far as folks who voted ACT who also answered the 2008 NZES go, ACT isn't really a liberal party.  It attracts few classic left-wingers (top left quadrant) and no authoritarians (bottom left quadrant).  But the folks attracted in '08 were a mix of slightly-more-economically-liberal voters.

What happens if we look at a similar scatter plot for National voters, restricting ourselves to the ones who've answered "no" to the question "Would you never vote for ACT?"  Here's the result:

It looks like there are more right wing National voters who'd consider voting ACT than there are liberals in National who'd consider voting ACT, but the margin isn't huge.  Of those National voters who said they'd consider ACT, using the weighted population sample, 4.4% fall into the liberal quadrant while 6.2% are right-wingers.  But, of course, ACT can draw from more than just National.

So, now let's try it considering the sample of people who don't currently vote ACT but haven't ruled out voting ACT: 68% of the weighted population.

Let's see where those folks sit on the scatter diagram.

If we run the weighted population sample, 7.4% of these potential ACT voters sit in the liberal quadrant; 5.2% sit in the right-wing quadrant.  So there are more potential ACT voters in the liberal space than there are in the right wing space.  If we start limiting the set by restricting it to folks who rank ACT at least a 7 on a 10 point scale, though, the numbers reverse: the non-ACT voters who like ACT the most are right-wingers.  This could mean that there's more chance for ACT to convert these folks over to being ACT voters, or it could just reflect that ACT ran a fairly right-wing campaign in 2008 with David Garrett being fairly prominent.

So if ACT is chasing fleeing National voters, there may be more of them among the right wingers, but there's absolutely no evidence in the polls as yet of any exodus from National to ACT.  But there are more overall potential voters in the liberal quadrant.  There may be a few strong ACT supporters who don't yet vote ACT in the right wing, but the overall numbers there aren't better than the numbers in the liberal quadrant.

I've also heard rumours of possible courting of the Christian right.  This would be a bad idea.  55% of those rating ACT 6 or better on the "like" scale report they never attend church while only 19% say they attend church at least monthly: pretty similar to the overall population distribution in a pretty secular country.  And I can't think of a better way of chasing away the liberals who still like ACT.

In short, a fairly cursory analysis of NZES data shows ACT voters to be more right wing than liberal but that there's somewhat greater potential for growth of the overall vote among liberals than among right wingers.

For all the protests of being a liberal party, and despite the strong liberal leanings of many in their youth wing, many of their staffers and some of their MPs, it's pretty hard for an outside observer to identify ACT as such. That they attracted a somewhat greater proportion of right wingers than liberals in 2008 says something about their actual policy positioning.  Yes, they mostly supported the medical marijuana legislation.  But by pushing hard on crime and punishment without putting much emphasis on their potentially more liberal social positions on other issues, they're cementing a position at the right wing tail of National.  Which could work out for them if social conservatives aren't much less likely to leave National than are social liberals.  I guess we'll see.

It would be a mistake for ACT to make a lot of noise about keeping options open by courting social liberals when Labour has no hope at all in 2011.  But if ACT is a principled liberal party, they wouldn't have to couch it in strategic terms. Rather, it would just be reminding folks of what their principles are supposed to be: not just in speeches at conventions but also in policy advocacy. Longer term, I still think a liberal positioning would also do them well strategically.  At least the numbers seem to suggest it wouldn't hurt them.  But it's getting late.  ACT supported the civil asset forfeiture legislation that allows police to seize property on "balance of probabilities"; ACT also supported changes to legislation allowing police to collect DNA evidence from folks under arrest rather than just convicted criminals.  And, as the Greens predicted when ACT supported the legislation, we're now hearing rumours that the police are using that power to strong-arm young Maori into giving up DNA samples: give us a sample voluntarily, or we'll arrest you.

It's hard to think of occasions where ACT has stuck its neck out a bit on civil liberties: medical marijuana is the only one that comes to mind.  And the last iteration of the 20-point plan is almost entirely on economic issues; asset forfeiture was something they campaigned on, but on the wrong side.  They also favor New York style "broken windows" policing, though the evidence that such legislation actually reduces crime rates is weak at best.  Liberal?

So, to sum up.  ACT's current voters, as found in the NZES, are more right-wing than liberal.  ACT's potential growth in voters seems stronger on the liberal side than on the right-wing side, but ACT's policy emphasis is more attractive to right-wingers than to liberals. Cementing themselves as the farther-right flavor of National isn't an implausible strategy, but the evidence thus far doesn't suggest it's working, though the ETS campaign may yet yield returns.  But it's not an overall strategy that ought to convince liberals to get out and vote for ACT.  I get the rather strong feeling that, for civil libertarians, it's always going to be "jam tomorrow": that the potential policy gains on economic issues will always be deemed more important than the compromises with National on civil liberties.  And at current margins in New Zealand, civil liberties matter more to me.

More chart porn below, for the folks into that kind of thing.

New Zealand First voters in black; Greens in green (above).  A few confused socially liberal NZ First voters, but otherwise mostly as you'd expect.

A fair few liberal non-voters.  Maori Party voters skew left on economic issues but centrist on social issues.  United Future respondents surprisingly liberal: I was expecting more in the right wing quadrant.  Pretty small sample size on those voters though.

Finally, just how close are National and Labour voters?

Tuesday 22 June 2010


From today's Christchurch Press:
A light-rail network for Christchurch will be investigated as part of a package of measures to revitalise the central city.

Public-private funding deals and putting social housing closer to the city centre and key suburban areas will also be explored if a report is adopted by the Christchurch City Council on Thursday.

The ideas came from a North American study tour last year by Mayor Bob Parker, council chief executive Tony Marryatt and strategy and planning manager Mike Theelen.

The 16-day trip included visits to San Francisco, Vancouver, Seattle and Portland and cost ratepayers about $30,000. A light-rail system was mooted by Parker late last year.

Theelen said that despite the high initial costs of rail, the cities visited said a rail network's carrying capacity and durability outweighed bus systems.
Sigh. For those who recall...
Lyle Lanley: Now I'm here to answer any questions you children may have about the monorail.

Ralph: Can it outrun The Flash?

Lanley: You bet!

(other kid): Can Superman outrun The Flash?

Lanley: Eh, sure. Why not.
(crouches at Lisa's desk)
Hello little girl. Wondering if your dolly can ride the monorail for free?

Lisa: Hardly. I'd like you to explain why we should build a mass transit system in a small town with a centralized population.

Lanley: Ha ha. Young lady, that's the most intelligent question I've ever been asked.

Lisa: Really?

Lanley: Oh, I could give you an answer, but the only ones who'd understand it would be you and me. And that includes your teacher. (Lisa giggles) Next question: you there, eating the paste!
Light rail always seemed more of an ... Ashburton idea....

As for Portland as example, see the Cascade Institute's withering analysis.

There's no way that there would be enough traffic on a Rangiora - Christchurch - Rolleston line to cover the costs. And that's the only run where it could make sense. I'd suggest reading Liberty Scott on light rail issues in NZ, but his blog's currently doing a strange auto-redirect to his RSS subscription feed if you use Chrome, so be warned.

If I voted, and if Anderton came out against this potential boondoggle while Parker supported it....

Update: Dave Guerin points me to his coverage of a shonky-looking proposal for a gondola linking Massey University to Palmerston North. See here and here, and here.


I've recently updated to have Blogger run all my RSS requests through Feedburner. You probably haven't noticed any difference. If you're reading in a reader and click through to the site, it'll route the request through Feedburner: copying the link from your RSS reader then is a bit messier than before.

If anybody's noticed any problems, let me know.

Google's Webmaster Tools previously told me my subscriber numbers, at least for folks using Google Reader - about 290 (259 via the main ATOM feed). Feedburner says it's about 380 across the different readers with a "reach" (number of visitors accessing via RSS on an average day) of 186. Since only 6% of RSS reads resulted in clicks, StatCounter understates things by about 175 daily visits: Offsetting's StatCounter numbers are about 56% of actual visits, so we'd need multiply my StatCounter figures by 1.78 to get the more accurate number of overall visits.

On the basis of the StatCounter numbers, Offsetting Behaviour was the 15th most read New Zealand blog in May, but we here seem to have a lot more RSS readers relative to StatCounter numbers as compared to other NZ blogs: Kiwiblog gets about 7,800 daily visitors with 1042 folks who subscribe via Google Reader. If his clickthrough proportions and "reach as proportion of Google Reader subscriber" proportions are like mine, we'd need to multiply his figures by 1.09 to get the more accurate figure. For well over 10 times the daily visits, he has only about three times the number of subscribers, as far as Google Reader can tell.

AntiDismal whinges endlessly about his low reader numbers. But his RSS subscriptions - around 90 according to Google Reader - are on par with HomePaddock: a top-10 NZ blog. AntiDismal's RSS multiplier would be 1.46; HomePaddock, about 1.14.

A couple of competing hypotheses, indistinguishable from current data:
  • Kiwi readers tend not to use aggregators compared to other folks, and both Paul and I have relatively high proportions of non-NZ readers
  • Kiwis use aggregators other than Google
For the bloggers who earn their coin via site ads, the RSS figures don't matter a whit unless they've put ads in their feed; if anything, it's a minus as those readers don't normally see the ads. But for the folks who do it for the approbation, which is a function of reader quality, reader numbers, and perceived influence, figuring out that your stats undercounted things by a fair bit can be a bit of a pleasant shock. I already knew that readers here are of very high quality; I'm glad to see there are more of you than I'd previously thought.

You've got to know to ask...

In my work on political ignorance, I found that, correcting for other covariates, folks without much political knowledge aren't much helped by having access to cueing groups: the social groups which might help otherwise ignorant folks in sorting out for whom to vote.  The usual story says that political ignorance doesn't much matter if there's a smart person around that you can ask for help.

But you have to know to ask.

And so both BoingBoing and Marginal Revolution today point to this:
Wheeler had walked into two Pittsburgh banks and attempted to rob them in broad daylight.  What made the case peculiar is that he made no visible attempt at disguise.  The surveillance tapes were key to his arrest.  There he is with a gun, standing in front of a teller demanding money.  Yet, when arrested, Wheeler was completely disbelieving.  “But I wore the juice,” he said.

Apparently, he was under the deeply misguided impression that rubbing one’s face with lemon juice rendered it invisible to video cameras.


As Dunning read through the article, a thought washed over him, an epiphany. If Wheeler was too stupid to be a bank robber, perhaps he was also too stupid to know that he was too stupid to be a bank robber — that is, his stupidity protected him from an awareness of his own stupidity.

Dunning wondered whether it was possible to measure one’s self-assessed level of competence against something a little more objective — say, actual competence. Within weeks, he and his graduate student, Justin Kruger, had organized a program of research. Their paper, “Unskilled and Unaware of It: How Difficulties of Recognizing One’s Own Incompetence Lead to Inflated Self-assessments,” was published in 1999.[3]

Dunning and Kruger argued in their paper, “When people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it. Instead, like Mr. Wheeler, they are left with the erroneous impression they are doing just fine.”

It became known as the Dunning-Kruger Effect — our incompetence masks our ability to recognize our incompetence.
At least in bank robberies, you get pretty quick feedback that your "lemon juice makes me invisible" strategy isn't really viable. Shame there isn't such feedback in voting.

Monday 21 June 2010

Malleability of Memory: Update

I'd last week posted a rather nice piece by Saletan talking about the ease with which false memories can be implanted if accompanied by a doctored picture. He noted that the Chinese seemed to be trying this to adjust folks' recollections of Tiananmen.

And here's the variant used during the Cultural Revolution, thanks to Robert Fulford:
Mao advocated making the past serve the present, which meant rewriting the past to improve his image. Where Stalin elevated his own role with doctored photographs, Mao relied on falsified paintings.

Two pictures discussed in Art in Turmoil make the point. Liu Shaoqi and the Anyuan Coal Miners depicted Liu, who was considered a potential successor to Mao, leading a 1922 miners’ strike that in legend began the overthrow of capitalism. Liu apparently made the mistake of criticizing his master and in 1967 a government-backed magazine, Art Storm, devoted much of its first issue to denouncing Liu’s portraits. Art Storm said that 172,077 poster-size copies of the Anyuan painting had been published. The original was demolished and another painting appeared, Chairman Mao Goes to Anyuan, showing that it was young Mao who led the miners.
Note also how celebrity tobacco use seems to be falling through the memory hole. How long until nobody ever smoked, or until they start taking the cigars from the Churchill pictures and adding them into the Hitler pictures?

Sunday 20 June 2010

Down the Drain?

I've not been paying a lot of attention to the Auckland mayoral race; I've consequently not been trading in those markets save for a very low price punt ($0.007/share) on Jenny Shipley perhaps throwing her hat in the race.

No Minister says Len Brown's campaign for mayor is "down the drain":
 After what must be described as two weeks of the worst possible PR imaginable, Len Brown's campaign for the Auckland Mayoralty has surely fallen apart. His soft-liberal support has abrubtly collapsed in the face of his disturbed public antics and his council credit card spend.

Strange kind of collapse, that one.  Wonder if anybody at No Minister's trading on this one.

Corporate nannies

Nick Smith worries about the growing use of on the job drug testing by corporates.
Recreational cannabis use is rife in New Zealand.

There are, according to Auckland University's Alcohol and Public Health Research Unit, about 1.5 million pot smokers in this country, about 18 per cent of people aged 15-45.

More than half the adult population have inhaled at one time or another.

Illegality aside, it is uncontroversial to assert that what people do in their own home and in their own time is their business, not that of the Government or their employer.

So, corporate examination of people's personal lives by drug testing represents, at the very least, a gross invasion of privacy.

There is also an issue of fairness.

Cannabis stays in the system for up to 30 days and a positive urine test does not mean an employee is under the influence; it means that at some point in the last month they have consumed an illegal drug.


Nobody is arguing in favour of smoking on the job but workplace drug testing is being extended way beyond its initial, although dubious, safety justification.

If it were the Government rather than private companies implementing such policy there would be a public outcry at nanny state intrusion.

Perhaps this can be seen as another example of outsourcing government functions to the private sector.

Welcome to the new corporate nanny state.
When we chatted about it earlier, I asked Nick why an employer would ever test employees where it didn't make a difference for job performance and where it does annoy the employees. In short, Becker's discrimination model applies: companies compete for workers, and companies with an irrational fear of employees who are not less productive but who smoke marijuana on their own time will wind up having to pay more to attract staff. On the job drug testing is a disamenity in the overall pay packet requiring compensation.

I generally start from a model where I expect all employers to be completely selfish jerks and then work out why they’d give employees anything: from decent coffee machines to air conditioning in the office. They’re competing with other employers over a total compensation bundle, and if some amenities can be provided at cost lower than their monetary value to employees, then they’ll be provided with a lower monetary salary package. If some other disamenities, like mandatory overtime or working odd shifts or having to take drug tests, increase employer revenue by more than the monetized value of the disutility they impose on workers, then they’ll also provide those disamenities and higher wages. If we had monopsonistic employers with lots of power, then they’d have lots of scope for providing even inefficient disamenities, but that doesn’t characterize most of the workplaces out there. So I could buy inefficient employee drug testing in the “company town” in days of yore, but they don’t much exist anymore and mobility is cheap.

So why then would companies put in place drug tests where the workers' performance isn't likely to be an issue? Can we build a model generating inefficient workplace drug testing - testing where the value to the employer in improved productivity is less than the disutility to workers either of lifestyle changes or privacy violations?

There are a couple of ways. First, if customers put high value on that the product is delivered by a firm with drug testing, then it will be done regardless of whether drug use has any effect on workplace productivity. I don’t buy that story because I think it requires implausibly large customer willingness to pay for something that doesn't have any real effect on product quality. Second, you could maybe build a Glenn Loury statistical discrimination story leading to self-reinforcing equilibria where drug users underinvest in human capital because they expect workplace discrimination (and so drug users are in fact less productive, but only because of the inefficient self-reinforcing equilibrium), but I don’t particularly buy that one either.

Nick's finished piece has a better answer: union regs.
Madison Recruitment's Justin Pipe confirms the trend, saying increasing numbers of professionals are being asked to submit to drug and alcohol testing as part of companies' overall risk management policy.

Usually, Pipe says, it is firms that already have identified ''safety sensitive'' areas, such as operating heavy machinery or onerous driving requirements, that institute such intrusive policy.

On the basis that it is unfair to single out only one employee group, these businesses demand that all workers submit to regular drug and alcohol tests, he says.

Hays' Jason Walker disagrees, noting that such practices are still largely confined to the construction and roading sectors but, he says, testing in these areas are on the rise.

Greg Lloyd, Engineering, Printing and Manufacturing Union general counsel, sides with Pipe. His members, irrespective of the nature of their work, are being asked to provide urine samples for testing.

The EPMU took unsuccessful court action against Air New Zealand over testing of pilots and, Lloyd says, the airline now extends its policy to all members.
If pilot testing is efficient, and sufficiently so that the benefits of it outweigh the costs of imposing testing on all workers given a union constraint of an all-or-nothing regime, then I have a hard time blaming the company for pursuing testing. I can find fault with the union, but I have a hard time finding fault with the firm. If pilot testing is only efficient because of the tort regime, then blame should go to the tort regime.

I just have a hard time seeing why a firm in a competitive labour market would implement an inefficient employment practice. Some might do it by error of course.

And, I would be annoyed if the University here started imposing mandatory drug tests. I don't use anything that would upset them, but I'd still reckon it an intrusion eroding about 5% of the value of my overall pay bundle.

Any better models out there that would generate firms implementing mandatory employee drug tests when those tests are in fact inefficient?

Saturday 19 June 2010

Sentence of the day: Arts edition

It would surely be much more sensible for Gross and for like-minded critics to admit that most culture funding inevitably pays for crap—that the arts world is, in fact, a colossal pyramid of crap, inherently necessary to provide the nurturing and elevating environment from which a few items of permanent value might spring.
Colby Cosh, on Canadian government support for the arts.

I Love Robot 1-X!

David Eagleman's lecture on neuroscience and law is fascinating. But I can't help but thinking about Bender's upgrade to be compatible with Robot 1-X.

About a half-hour in, he starts talking about neuro-based aversion techniques to train folks to dislike smoking, or to improve criminals' impulse control problems. I favour this kind of thing where it's a voluntary self-constraint mechanism. But it's not hard to imagine a healthist line that drug users shouldn't be put in prison but should rather be forced to undergo brain modification. I'm somewhat comforted by Eagleman's noting that none of these techniques work on people who don't want to change. But only somewhat.

Friday 18 June 2010

Censor's Office

I'd previously noted that the Police referred NORML News to the Censor's Office. NORML has received some of the background documents by OIA request. From their press release:
A request by NORML under the Official Information Act has revealed police had a secret meeting with Internal Affairs departmental heads, and asked them to try to get marijuana law reform magazine Norml News completely banned.

Three issues of Norml News were referred to the censors on 7 May (no decision has been made yet) after massive raids on indoor gardening stores across the country, code named Operation Lime.

The documents reveal Police hope to have Norml News completely banned, as well as High Times and Cannabis Culture magazines.

Police had previously denied being involved with sending the publication to the censors, and a spokesperson for the Censorship unit told media at the time that there was nothing to suggest the request for a ban had come from the police. The Secretary of Internal Affairs said he was just "seeking guidance".

Suspecting there was more to it, NORML News editor Chris Fowlie wrote to the Secretary of Internal Affairs under the Official Information Act, requesting any documents he held on the magazine.

The documents arrived today and reveal two police officers arranged a meeting with Internal Affairs department heads on 31 May 2010 "during which the existence of several publications dealing with the cultivation of cannabis and other illegal activity was discussed."

The names of the police officers have been withheld because apparently making the information available would "be likely to prejudice the maintenance of the law."

Police provided to Internal Affairs a property sheet that provides a strong link to the Operation Lime raids.

Police also asked the Secretary of Internal Affairs to pursue a Serial Publication Order - which would mean all existing and future copies of the magazine would be prohibited - for Norml News, High Times and Cannabis Culture magazines.

In a letter to his subordinates at the Censorship Office, dated 3 May 2010, Jon Peacock on behalf of the Secretary of Internal Affairs requests a ban of not only the three issues submitted, but also requests "consideration is given to issuing a serial publication order on the publication."

A serial publication order would mean all existing issues would be banned and the magazine would be prohibited from publishing any more issues.

"We are outraged at this blatant political interference in our campaign for sensible drug laws," said editor Chris Fowlie. "Police are lying to the media and misleading the public. They should admit they are behind this censorship, rather than hiding behind the faceless grey suits of Wellington."

"If the police succeed in banning Norml News, this could criminalise thousands of people who have an old copy somewhere," said Mr Fowlie. "We have printed more than one million copies which all found happy homes and a recall would be impossible."
The decision is now out. The three examined issues are to be treated as R18. At least the Censor's Office is more sensible than the New Zealand Police. From the decision:
Norml News is produced for mature readers with a specific interest in cannabis culture and cannabis law reform issues and is well-known for consistently advocating the legalisation of cannabis in New Zealand. It has social and political merit as a forum for these views and as a source of information about local and international developments. The issues under review contain some material designed to assist growers and users, and the Winter 2009 issue has a feature interview that contains some instruction (albeit limited) on how to produce the Class B drug hashish. However, the most significant influence on the dominant effect that the magazines will have on their intended adult audience is their editorial content, made up largely of reports and articles that inform readers about the political, legal, historical and cultural contexts of the current cannabis law reform debate. As vehicles for the expression of political views in favour of cannabis law reform, the magazines have a legitimate purpose. These three issues cannot fairly be said to promote or encourage criminal activity to an extent that their availability to New Zealand adults is likely to be injurious.

The magazines do not deliberately pitch their appeal to a young readership. They are obviously intended for mature readers who are already familiar with cannabis: they "speak to the converted". Nevertheless, magazines dealing with this subject matter are capable of attracting the interest of young persons. Adults must be presumed to know which behaviours the law criminalises and must take responsibility for the consequences of their actions. Not only does this presumption generally not apply to persons under the age of 18 years, but such persons may not have the maturity of judgement to appreciate that the magazines' support for currently criminal behaviour is in the context of law reform advocacy. The magazines are therefore likely to injure the public good if they are made available to people under the age of 18 years, who may read them as encouraging experimentation with criminal behaviour. This decision is consistent with the classification of publications advocating cannabis law reform since the Film and Literature Board of Review’s 1998 High Times decision.7

Section 14 of the NZBR Act requires that any classification should impinge on the freedom of expression no more than is necessary to make it unlikely that the publication’s restricted availability would injure the public good. Given the considerations above, a ban is neither reasonable nor demonstrably justified. However, there is a likelihood of injury to the public good if the publication were to be made available to children and young persons. Restricting the availability of the three issues of Norml News to adults limits the rights of some New Zealanders to access reading material of their choice, but the restriction allows adults access to information and opinion that contributes to the ongoing debate over the legalisation of cannabis. In this instance, the limitation represents the minimum interference with the freedom of expression that is consistent with preventing injury to the public good.
The Department of Internal Affairs has requested that consideration be given to issuing a serial publication order on Norml News magazine. However, publications such as this magazine position themselves at the borderline of acceptable content with instructional or promotional articles such as the "Bubbleman" interview. Consequently, each issue requires separate consideration.
So presumably the folks at NORML will avoid articles like the cited on one preferred methods of hashish production so that future issues won't be R18 if referred to the Censor's Office.

Junky cost benefit studies: Canadian edition

William Watson fisks a dodgy cost-benefit study purporting to show the benefits of large-scale solar panel power in Canada:
do you think the federal government and Ontario should build a $2.4-billion state-of-the-art photovoltaic solar cell manufacturing plant and hand over the keys, free of charge, to a national champion producer in that industry? Does that sound maybe a little implausible? Not if you believe the cost-benefit analysis presented recently in the journal Energy Policy by two researchers in Queen’s University’s Department of Mechanical and Materials Engineering.

In fairness, the cost-benefit analysis they used is typical of lots of cost-benefit analysis in this area, i.e., a little junky. What are the benefits? They don’t actually calculate the all-in social benefits and costs, which are often hard to estimate but are what should really determine the decision. Instead, they calculate the “government return,” the cash return the government makes on its $2.4-billion investment. What form does the return take? Income taxes, corporate taxes, sales taxes and health and environmental costs saved because the solar cells the plant produces replace polluting coal-fired electrical plants. When the Queen’s researchers estimate all these future flows of income to the government it ends up their present value at plausible interest rates exceeds the $2.4-billion investment.
Watson then goes through the usual laundry list of dodgy practices:
  • Lowballing project costs
  • Not counting deadweight costs of taxation used to support the project
  • Conflating the benefits of switching from coal to solar with the benefits of building solar in Ontario when panels could be imported at lower cost
  • Counting taxes on employee wages against a counterfactual that those employees would never have otherwise ever been employed
Dodgy nonsense all over.

A good cost benefit analysis is pretty powerful. I'm starting to wonder though whether the whole cost benefit analysis industry would pass cost benefit analysis, given that the majority of studies are dodgy nonsense designed to come up with a politically appropriate number.

Zespri [updated]

If any of you Kiwis can explain to me slowly why it should be that Zespri gets to maintain a government-mandated monopoly on kiwifruit export to places other than Australia, when we've sensibly gotten rid of all of our other export boards, I'd be keen to hear it.

Carefully note why kiwifruit is somehow different from other agricultural products that lost export monopoly twenty years ago or more.

From the National Business Review:
A privately owned rival, Turners and Growers, recently launched a legal challenge to Zespri because it wants to be able to export its own red and gold cultivars, and an early green fruit it has licensed, without putting them though the development trials and assessments like the Zespri fruit.

Zespri argues that New Zealand should only export the best and most commercially successful cultivars, but T&G is trying to break the Zespri monopoly on sales outside Australasia because it says that if it controls the plant variety right for a cultivar, it should be allowed to export that fruit in competition with the rest of the NZ-grown crop.

Zespri chief executive Lain Jager said the decisions were vitally important steps in the continuing development of the New Zealand kiwifruit industry, and part of its medium- and long-term strategy to progressively and sustainably grow sendings from this country "while taking care not to cannibalise existing sales and prices."
It's previously been suggested that Zespri provides overall quality control for the New Zealand brand, ensuring a price premium for high quality product. But surely that same premium could be achieved by building the Zespri brand rather than just the New Zealand brand. Otherwise, we could have Fisher & Paykell argue for an export monopoly on dishwashers on basis that allowing lower quality dishwasher exports would erode the New Zealand brand of high quality machines. Or Montana could have argued for a monopoly on wine exports on similar basis 20 years ago. So if you're going to hang an explanation on branding, it has to be one that doesn't apply to every other industry.

Ok, go.

Update: NBR reports National's happy to keep the export monopoly so long as growers want it. In Canada, growers who didn't want the marketing board were subject to intimidation by the marketing board. I certainly hope that's not the case here.

Thursday 17 June 2010

Markets in Everything: Rent a white guy edition

From The Atlantic comes a strange tale from China:
NOT LONG AGO I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”


After a brief introduction, “Director” Ernie delivered his speech before the hundred or so people in attendance. He boasted about the company’s long list of international clients and emphasized how happy we were to be working on such an important project. When the speech was over, confetti blasted over the stage, fireworks popped above the dusty field beside us, and Ernie posed for a photo with the mayor.

For the next few days, we sat in the office swatting flies and reading magazines, purportedly high-level employees of a U.S. company that, I later discovered, didn’t really exist. We were so important, in fact, that two of the guys were hired to stay for eight months (to be fair, they actually then received quality-control training).

“Lots happening,” Ken told me. “We need people for a week every month. It’ll be better next time, too. We’ll have new offices.” He paused before adding: “Bring a computer. You can watch movies all day.”
Due diligence always matters. In China, doubly so.

HT: @Jaisn

Christchurch Mayoral race

The Press noted iPredict's prices on the Christchurch Mayoral race this morning.
Jim Anderton will easily win the Christchurch mayoralty, says an online trading stockmarket that has a history of picking the winners of political contests.

Trading on the Wellington-based iPredict website yesterday gave the Wigram MP an 84 per cent chance of winning the October election, with Mayor Bob Parker given just a 15 per cent chance of winning a second term.

The first poll of the election season this week also gave Anderton a strong lead.

Formed about two years ago, iPredict has correctly predicted other events of political and sporting significance.

Anderton said the poll "reflects the mood of the city", but he did not approve of any online "gambling website".

Parker said there were bound to be lots of polls and websites on the mayoralty race.

He was standing because he and the council had set out a positive blueprint for the city and he wanted to continue "being a part of that".

Canterbury University senior economics lecturer Eric Frampton, who sits on the iPredict advisory board, said the Christchurch mayoralty contest had attracted plenty of trading.

He believed more money would be placed on the race over the next 3 1/2 months.

Parker's online fortunes had plummeted in recent months, said Frampton, who has placed money on him winning a second term.

Early this year, Parker was given a 54 per cent winning chance on the site.

"Parker started to drop after Anderton confirmed he was running and he fell further after this week's poll came out," Frampton said.

"I thought the [ministerial] credit-card expense controversy would have hit him [Anderton], but it didn't."
A couple of friendly corrections. iPredict has never run contracts on anything of "sporting" significance: we're prohibited from doing so by the regulation authorizing our running as an exempt futures exchange. And, of course, the Frampton thing. Of the two usual typos, I prefer Clapton to Frampton.

Now, trading. Bob Parker's currently sitting around 16 cents; Anderton at 83.5 cents. Parker's price is shockingly low for an incumbent mayor who hasn't had any particularly huge scandals. But there have been lots of dribs and drabs: what was seen as a bailout of David Henderson's real estate venture, secrecy around the price paid to attract the Ellerslie Flower Show, and his push for the building of a music conservatory for the University downtown in a parking lot at the Arts Centre. This last one attracted a fair bit of opposition, but it seemed a really vocal small minority. Dick Fife at the Dux DeLux was really mad about it, and the usual historical preservation groups were mad, but the outrage seemed pretty much contained to the small group.

But then that poll came out. An internet panel poll rather than a proper phone survey, but it showed pretty strong disapproval ratings for Parker. I'd think it would be Parker's disapproval ratings that spiked the price down more than Anderton's absolute polling numbers as the poll was conducted prior to revelations about Anderton's use of Ministerial credit cards: it was voter absolute dissatisfaction with Parker that I'd reckon drove the price down.

I think that the Parker price overshot fundamentals. I've picked up a few more Parker and would pick up even more if I weren't worried about gathering up rather too large an overall position. I also think the sum of bids across the two contracts ought be a bit less than a dollar as other contenders can still enter the field: the two contracts don't span the possible space.

Is there really less than a 20% chance that the incumbent, who hasn't been completely terrible, wins against Jim Anderton? Really?

Of GE and GE

Over at Dread Times, Nandor Tanczos makes a general equilibrium argument against Lincoln University's development of a genetically engineered form of clover that reduces bovine methane emissions. After giving lukewarm support for the rather mild form of GE used in this case - switching on a gene in the plant that has it produce less methane in the cow's digestive tract - Nandor then worries:
AgResearch's solution to methane emissions run the risk, like the cats in the Dr Seuss story, of creating even bigger problems than what we started with. Just as importantly, though, it falls prey to the problem of reductionist thinking that is a significant cause of the ecological crisis we are in and I don't just mean climate change.

By attempting to fix methane emissions by genetically engineering pasture AgResearch is likely to exacerbate the many other environmental problems associated with dairy farming in this country.

The unwillingness to accept any limits to dairy expansion has become a national psychosis and has already led to a government sponsored coup against Environment Canterbury.

It is time to accept that the best all round solution to the problem of unsustainable dairy farming is to de-intensify, and even better, to go organic.
So, without the modified clover, dairy would be more subject to constraint under the emissions trading scheme, reducing both greenhouse gas output and other byproducts of dairying; with the modified clover, we get the reduced greenhouse gas emission but we don't get the reduction in other byproducts. We wind up with more dairying as compared to the world without the modified clover and more of the associated problems.

Sure, the theory of the second best shows that improvements on one margin if we're away from efficiency don't necessarily move us towards overall efficiency. But wouldn't the more appropriate remedy be market-based water pricing and an effluent tax to handle the remaining problems? Unless it's the "intensity" that's the real thing giving offense.

Public Address also comments here.

Wednesday 16 June 2010

Excess excess costs of smoking

Remember that $1.9 billion dollar smoking cost figure that started floating around a few months ago?

I've just received by OIA the documentation on it (linked to below). Here's how I think it works. If I understand the number correctly, it's nonsense.

Somebody at MoH stratified their health data (NHI and resident 2007-8) by gender, income, age, ethnic group and smoking status. They then found that smokers had higher health costs, adjusting for each of the control variables. Add up those excess costs and you get $1.9 billion.

Now, why is this nonsense?

Suppose a 50 year old smoker costs more than a 50 year old non-smoker, correcting for everything else, and a 70 year old smoker costs more than a 70 year old non-smoker. But there are many fewer smokers around in the 70 and up group than there are non-smokers.

Let's take a simple example with completely made-up numbers. Suppose that all non-smokers live for three periods: young, middle and old. At age young, they cost the health system $200 each. At age middle, they cost the health system $500. At age old, they cost the health system $2000. All smokers live through periods young and middle but have only a 20% chance of reaching age old because, well, cigarettes kill people. At age young, smokers cost the health system $250 each. At age middle, they cost the health system $1000 each. At age old, they cost $4000. If we take a snapshot in any year, we'll see 1000 young, half of whom are smokers; 1000 middle, half of whom are smokers; 600 old, 100 of whom are smokers.

Let's now add up the excess costs of smoking, as best I understand the MoH method. We have 500 young smokers, each adding excess costs of $50: $25,000. We have 500 middle smokers, each adding excess costs of $500: $250,000. We have 100 elderly smokers, each with excess costs of $2000: $200,000. Total excess costs of smoking: $475,000.

But we have 400 smokers who fail to reach age old and consequently fail to impose any costs on the health system. If they had only the health costs of non-smokers, they would have cost the health system $800,000. The total lifetime health costs of the non-smokers is $2700; the total lifetime health costs of the smokers, on average, is $2050.

So we found by the MoH method (as best I understand it) that smokers impose massive costs on the health system: $475,000. But if we instead take a life cycle approach, we find instead that smokers save the health system a tidy $325,000.

My numbers are entirely made up, but I don't think I've been particularly aggressive in my assumptions. Young smokers don't cost the health system a whole lot more than non-smokers: smoking has large cumulative effects, but it takes a while to cumulate. But I still have them costing 1.25 times what non-smokers cost. At middle and old age, I have them imposing double the cost of non-smokers. But because smokers die earlier, and because even non-smoking old folks cost the health system a lot of money, they wound up saving the health system money. Some non-crazy numbers wound up reversing the fiscal effects of smokers on the health system if we consider a life-cycle rather than a snapshot "excess cost" approach. Careful readers will of course note that this is basically an application of the Simpson's Paradox: even if each cohort of smokers costs more than each cohort of non-smokers, because fewer smokers show up in the more expensive older cohort, the average cost of smokers winds up being lower than the average cost of non-smokers.

I'd be mildly surprised if a proper re-doing of the MoH figures found a reversal of the Vote.Health fiscal effects: I doubt mortality is quite as bad as I've put it above. But I wouldn't be at all surprised if fixing only this bit shaved a billion dollars off their figures. Again, if I'm understanding this correctly, counting the health care costs of a smoker dying at 63 of lung cancer against the health care costs of a non-smoker at 63, but taking no account of that that smoker then doesn't go on to impose other health care costs while dying of congestive heart failure at age 76, essentially assumes that the smoker could have gone on living forever without health care costs absent the smoking. But everybody dies of something, and lots of those somethings are pretty costly.

A few other rather important considerations:
  • They've stratified their sample by a few covariates, but if smoking correlates with other risk-taking behaviours, then smoking costs may well be conflated with other risk-taking costs.
  • In considering only Vote.Health, they've left aside that smokers, by dying early, cost the superannuation system a whole lot less as well: they pay into the system but draw far less from the system.
  • We also need to account for that cigarette excise taxes are paid upfront while health care costs are far in the future. We can kinda view the young smoker as paying an annuity to the government to cover excess health costs 30 or 40 years in the future. Even if we find that that smoker paid in exactly as much as he later cost the health system, the time value of money means that the fiscal costs to the government are strongly negative.

I've put up the OIA document at Scribd. It's less than transparent about the full method used, but the above gives my best understanding of what they've done. I've also emailed the MoH contact listed as responsible; he's checking with the stats folks to see whether my interpretation of things is right. I'd be pretty surprised if the stats guy who came up with the number in the first place had any intention that it get out without a whole lot of further work; I'd also be surprised if the more zealous folks who really wanted big numbers over on the tobacco control side of MoH cared much about having a sound number or whether the number had gone through a proper quality assurance process. They needed a big number to help push the huge increase in tobacco excise taxes: the clean up work can always come later.

Shame on whoever at MoH let this politically convenient number out without proper quality assurance. And shame on everyone who repeated the number without thinking for a moment just how MoH managed to add well over a billion dollars to the prior estimate.

Update: Recall of course that even the anti-tobacco lobby's numbers show that smokers' excise tax payments far exceed the costs to the health system.

Marriage prohibitions

No Right Turn argues for the adoption of his marriage equality bill, which would have New Zealand follow Iceland in allowing not just civil union but also gay marriage. My first preference is of course to get the state entirely out of the business of sanctifying unions, but if it's going to be in that business, I'm with NRT.

In his proposed bill, though, I found a surprising bit: Schedule 2, Forbidden Marriages. But it follows entirely from the current legislation. Here's the full current list of forbidden marriages:
1. A man may not marry his
(1) Grandmother:
(2) Grandfather's wife:
(3) Wife's grandmother:
(4) Father's sister:
(5) Mother's sister:
(6) Mother:
(7) Stepmother:
(8) Wife's mother:
(9) Daughter:
(10) Wife's daughter:
(11) Sons' wife:
(12) Sister:
(13) Son's daughter:
(14) Daughter's daughter
(15) Son's son's wife:
(16) Daughter's son's wife:
(17) Wife's son's daughter:
(18) Wife's daughter's daughter:
(19) Brother's daughter:
(20) Sister's daughter.

2 A woman may not marry her
(1) Grandfather:
(2) Grandmother's husband:
(3) Husband's grandfather:
(4) Father's brother:
(5) Mother's brother:
(6) Father:
(7) Stepfather:
(8) Husband's father:
(9) Son:
(10) Husband's son:
(11) Daughter's husband:
(12) Brother:
(13) Son's son:
(14) Daughter's son:
(15) Son's daughter's husband:
(16) Daughter's daughter's husband:
(17) Husband's son's son:
(18) Husband's daughter's son:
(19) Brother's son:
(20) Sister's son.
There's some clarification later on noting that wherever husband or wife is used, the prohibition extends also to civil union partners.

Now, some of these prohibitions will be in place because of heightened risk of foetal abnormalities when parents are close relations. But, we don't forbid marriage of those who are both carriers of the gene for other abnormalities: otherwise, we'd require carriers of the sickle-cell gene to check whether their partner were also a carrier. Moreover, none of the genetic arguments would continue to hold for same-sex unions.

And, a whole lot of the forbidden marriages seem entirely odd: you're forbidden from marrying your wife's mother. Now, I don't find that a binding constraint [nor do I now or have I ever found any of these to be binding constraints]. But it still seems really odd.

The best argument for some of these prohibitions would be the threat of undue power: a sicko raising a child to be his future wife. But the regs do seem rather overbroad for that. You're a single adult, your rich grandfather marries a nice young lady before dying a year later. You're forbidden from marrying her: she was your grandfather's wife.

I can imagine an argument that a bright line rule is efficient in that relatively few legitimate unions (by legitimate, I mean consenting adults) would be prevented while the costs of checking for undue power may be high; but surely an alternate rule of the form "forbidden if either party is under the age of 21" would achieve the same purpose. Is there any sense to the list of prohibitions beyond "some of these could be yucky"?

Shouldn't NRT be going a bit further in his recommended changes?

Red Dawn remake

Yes, the opening bars of the Red Dawn main theme still give me shivers. I can't be the only one who, when seeing the movie back in the mid 80s around age 12, had moderately detailed plans of to where one ought bug out with the quad bike and hunting rifles should the time come.

The LA Times reports a remake has been filmed but that MGM has run into financing problems.
If we could wave a magic wand and do just one thing that would bring true happiness to the right-wing blogosphere, what would it be? Make sure Nancy Pelosi got tossed out as speaker of the House after the Democrats lose big in the November elections? Guarantee that the next Sean Penn movie would be a big bomb? Ensure that President Obama would be brutally skewered by Jon Stewart every night, just as he was Tuesday night?

Right now, if we could measure things on our trusty conservative ecstasy meter (which has just emerged from the repair shop after bursting into flames after Elton John performed at Rush Limbaugh's wedding), I'd say that the winner would be the news that Hollywood is about to release a remake of "Red Dawn," the 1984 John Milius Cold War fantasy-thriller about a courageous scrum of young patriots who fend off a Soviet invasion of America. The original film has long been a cult favorite among conservatives, who rarely find any movies to call their own coming off the liberal Hollywood assembly line.

So all across the conservative blogosphere, the word is out that -- miraculously -- Hollywood has made a $75-million movie about kicking Commie ass, with the Commies this time being of the Chinese variety.
I hate to be the bearer of bad tidings, but I have grim news: "Red Dawn" isn't coming Nov. 24, as the conservative blogs have all promised. In fact, no one knows when the movie will ever be released. Although it sounds like yet another liberal Hollywood conspiracy, the movie (which was filmed in Detroit last year) is suffering from a far bigger problem: It was made by MGM, and MGM has run out of money. The troubled studio managed to make several movies recently, one that was already released ("Hot Tub Time Machine"), one that is being released next year by Sony ("The Zookeeper") and one, "Red Dawn," that is in the can but may stay there for quite a while, at least until someone buys MGM or provides the kind of big investment needed to market and distribute new films.
China? Can we even call them communist anymore? And what would motivate the invasion: are they foreclosing subsequent to an American debt default? If so, for whom ought we be cheering?

Some movies are best left in the can. Red Dawn was perfect for its time, but that time has thankfully passed.