Friday 28 February 2014

Bit of English

NZ Finance Minister Bill English is awesome. I love every last bit of this.
"With respect to so-called urban sprawl, I think that's a nonsense. If you're against urban sprawl and that means lower to middle income Kiwis can't buy a house and you can't build an apartment in the middle of Auckland for less than NZ$600,000, then that's too high a price to pay. And if it means driving up house prices in a way that wrecks the economy then that's too high a price to pay," he said.
"Funnily enough the people who are most worried about urban sprawl live in the middle of the city. They don't get to see it. How much time to they really spend out the end of the Western motorway or Botany? None actually. They think you should be able to walk to the countryside. Well...welcome to Gore. If you're really mad, that's where you should go. But they don't. They stay in Auckland Central," he said to laughter from the audience.
"What's actually happened is that the local authorities were keen for a denser city, but the inhabitants weren't, so they've jettisoned a fair bit of the densification aspect," he said.
"So if Auckland wants to grow now, it has to grow out because you don't want it to grow up. Now that's a fair choice, but please don't stop it from growing out as well, otherwise we'll get another few years of 15% house price growth and you get a real mess when it crashes," he said, adding the special housing areas agreed under the Housing Accord with the Auckland Council "do spread the city because the planning rules don't let you do anything else."
"We're indifferent as a government as to whether you grow up or out. But you said don't grow up, so we expect to help you grow out."
English said people making planning decisions in Auckland, Wellington and Christchurch needed to understand they were making decisions about New Zealand's largest asset class, where the decisions they make affect the whole economy, not just your neighbourhood.
"Of course there's tension there, but we are pretty determined to turn ourselves into an affordable housing market," he said.
"There's no obvious reason why little old New Zealand should be one of the most expensive housing markets in the developed world. It really puts pressure on our households. It's one of the reasons why we have interest free student loans, working for families, subsidised early childhood care and savings are low," he said.
High mortgage costs were a reason why the Government provided payments supplementing incomes costing billions, "and a lot of that is driven by planning decisions in this city."
When land use regulations are all messed up, everything else gets screwed up too.

Oz economist Leith van Onselen's right:
But while he pines for sound people on the Australian right, I wish that the New Zealand left could match the Australians. Here's Australian Council of Trade Unions economist Matt Cowgill on housing in Australia:
There's a trade-off at play here, one that can't be wished away or ignored. With a growing population, you can't restrict rising density in established suburbs, prevent sprawl on the urban fringes, and prevent housing from being unaffordable. Pick two out of the three. The urge to preserve historic neighbourhoods, the desire the conserve all the green bits around our cities, and the wish to maintain affordable housing are all noble impulses with which I sympathise. But, again, we can't have them all.
Which is pretty much the same thing that Bill English said. Sound economics, left or right, is on the same page on this stuff. Stupid land use regs hurt poor people while benefiting middle and upper class homeowners.

Here in NZ, we're stuck with the Council of Trade Unions' Helen Kelly.

Bill English, in the speech linked above, talked about selling off some of the Housing New Zealand stock of housing so that they could better match social housing to locational needs. It makes no sense to have a Housing NZ house in an expensive part of town when selling it off could fund social housing for three families instead. Here's English:
"In housing and other areas we will continue recycling taxpayer assets to free up money for reinvestment in areas where there is genuine demand," he said.
Later in the questions and answer session with the audience, he expanded on the plans.
"We actually don't need to own all those houses to help those people who need help,"he said, referring to the Government's partnership with the likes of the Salvation Army, the New Zealand Housing Foundation and IHC's Idea Services.
English said the Goverment wanted to assess a family's need for housing in an area close to jobs and schools, which was difficult to do with its existing stock of 60,000 to 70,000 houses. "You've got to stick them in a house that's empty," he said.
"That will mean growing the non-Housing Corp social sector and redeveloping the Housing Corp assets."
English said there were big tracts of Auckland such as Mt Roskill and Tamaki where "there's endless potential for supplying medium housing to the Auckland housing market if we redevelop those areas."
"But our top priority is to meet the needs of the people in the houses first, and then redevelop what we don't need in order to supply the market better, and there could be a lot of that happen."
Here's how Helen Kelly responded.
Pure partisan idiocy. Why oh Why is the NZ left so freaking dumb?

Wednesday 26 February 2014

Alcohol Healthwatch Is Making Stuff Up, Again

Here's Alcohol Healthwatch in the New Zealand Herald.
Rising economic confidence and "aggressive" marketing techniques are the driving factors behind an 8.9 million litre rise in alcohol availability last year, says one concerned health organisation.
Latest figures from Statistics New Zealand, which compared figures over the last five years, show the total volume of alcohol available in New Zealand rose to 466 million litres last year - the equivalent of 2.1 standard drinks per person aged 18 and over per day.
It represents an increase of almost 9 million litres from 2012, according to Statistics New Zealand.
The total volume of alcohol available for consumption in New Zealand did increase last year. So too did population. We usually look at per capita trends rather than total volumes.

Go to Stats NZ's Infoshare service. I cannot link directly to the data series, because StatsNZ uses session codes that won't allow it. But the series you need is ALC005AA. Copy that into the search bar that I've linked to above. Then select all years all series. This is what you get when you port it into Google Docs to get graphs.

So, what can we see here? Per capita alcohol availability dropped substantially from 1986 to 1988, levelled off, dropped substantially from 1990 through 1996 (recall that the big liberalisation came '89), then bounced around a bit with a mild rise through 2010 followed by a mild fall. The average per capita figure for those aged 15+ was 9.4 litres over the whole period, was 9.2 litres over the period since 2000, and was 9.3 litres for the period 2003-2013. The 2013 figure was 9.2 litres. Eyeballing it, we've had a slight reversion after a substantial decline in consumption, followed by a levelling-off since 2005.

The Herald's citing Alcohol Healthwatch as saying that rising economic confidence and aggressive marketing are behind a rise in alcohol availability, using "total volume of liquid containing alcohol" as the measure. The volume of pure alcohol per capita is basically flat over the last decade, but with a mild decline from 2010 to present: the period coinciding with "rising economic confidence". And if alcohol marketing has gotten more aggressive over the last year, it's had no obvious effect on consumption. If we take Rebecca Williams at her word that the marketing's gotten more aggressive, then I guess we might start worrying less about aggressive marketing.

Let's continue. Here's more from The Herald:
However, there was concern that drinkers were moving to stronger types of alcohol as further analysis of the figures showed the percentage of beer, as a proportion of total volume available, fell from 81 per cent in 1996 to 62 per cent in 2013.
Wine rose from 16 per cent to 23 per cent, and spirits and spirit-based drinks such as RTDs rose from 3 per cent to 15 per cent in the same 17-year period.
Rebecca Williams, director of Alcohol Healthwatch, said the figures appeared to confirm fears around ready-to-drink (RTDs) beverages.
"One of the worries for us has been that the RTDs ... would be exposing those young drinkers to the spirit brands and the heavier spirits, and I think that is happening," she said.
"The spirits component has increased, wine is going up on a fairly steady basis, and the worry about the wine is that it too is actually quite a larger volume of pure alcohol [per drink], so we're seeing a shift to the heavier alcohol products."
Drinks such as wine were being marketed "aggressively" in outlets like supermarkets, as well as campaigns by drinks companies, which were competing heavily with each other, she said.
The figures could show a trend back up to peak levels in 2008.
"Seeing an increase this year, seeing the economy come back on line, all of those things to me will start to signal some concerns that we could be tracking back up again," she said, saying that "when people are feeling better [financially] they spend more on booze".
Williams is right on a couple of points. Beer has taken a declining share of total alcohol over the period since 1986, but with a very recent levelling-off. The StatsNZ series ALC016AA has the total litres of alcohol available per beverage category rather than per capita, but it's still useful for assessing relative market share across the categories. When we port it over to Google Docs, and with a bit of wrangling,* we get this:
Wine seems to have levelled off at a third of total alcohol since 2006 or so, spirits have risen markedly over the last decade, and beer's dropped. So Williams is right about that. But all of that needs to be read against the broad flatlined trend in per capita total consumption. She's painting the shift to potentially higher alcohol products as representing an increase in consumption of alcohol when per capita alcohol availability hasn't changed.

Further, is Williams suggesting that the beer companies don't market aggressively against each other? Didn't we hear a lot of outrage about aggressive beer promotion at the Rugby 7s? We can't just look at a change and blame aggressive marketing for those components that get a category increase when there's pretty similar marketing for the components that get a category decrease. My weekly supermarket flyers have more pages of wine ads than of beer ads, but there are plenty of ads for sales on slabs of beer too.

Because StatsNZ changed category definitions, we can only split out low and high alcohol spirits starting in 1995. Here's category shares from 1995 onwards:
When I look at this, I see pre-mixed, lower-alcohol spirits displacing beer rather than building demand for pure spirits. And, again, per capita consumption hasn't really grown much over the period.

Summing up, where Williams comes up with marketing- and economy-based explanations for increases in total alcohol availability and for category shifts, and worries that increased consumption of low-alcohol spirits is a gateway to harder spirits, we find instead:
  • No increase in per capita alcohol availability;
  • No plausible story explaining why marketing has been so effective for RTDs and wine and so useless for beer;
  • No plausible story explaining why improved economic conditions helped RTDs and wine but hurt beer;
  • No plausible story explaining why per capita trends in total alcohol availability show a mild decline from 2010 through 2013, the period of economic recovery, when they're using economic recovery to explain changes in total alcohol availability;
  • What looks like roughly constant market share for Beer + RTDs rather than RTDs being a gateway to proper whisky, though it's always possible that RTD drinkers will mature into spirits rather than shift to beer; either way, there's no increase in per capita availability. 
Let's then help the Herald out a bit by re-writing their first couple paragraphs for them.
The total volume of pure alcohol available per person in New Zealand remained constant this year. While there was an 8.9 million litre rise in the total quantity of alcoholic beverages available this past year, this increase is largely explained by a rising population combined with a shift away from spirits-based drinks, which have more alcohol per unit of total liquid, and towards medium-strength beer and wine, which have a lot more water with their alcohol. And, this category change mostly looks like noise given the longer-term trends.
While professional anti-alcohol advocacy groups, whose existence depends on shouting "Monster! Monster!" whenever a new alcohol stat comes out, blamed rising economic confidence and aggressive marketing for the increased total volume of alcoholic beverages, Statistics New Zealand noted that, "the volume of pure alcohol available per person aged 15 years and over (15+) was unchanged from 2012, at 9.2 litres per person." While anti-alcohol activists try to fuel the perception of crises by citing figures on the total amount of alcoholic beverage that's been available for consumption, it's best to look at statistics on per capita pure alcohol availability.
I wish that Monster-Shouting didn't sell papers.

Update: Thomas Lumley reached a similar conclusion.

* The period prior to 1995 uses the discontinued series on total wine; from 1996 onward, I use the revised total wine series. It doesn't make much difference but lets me have a longer time series.


I read the behavioural literature as a meta form of self-help. Here are some standard ways that people can screw things up; here are some heuristics they use that work on average but can yield failures when applied to the wrong domain; here are some strategies for applying the right heuristic at the right time and for avoiding applying the wrong one; here are some common spots where people need to be extra-vigilant to avoid making errors.

Gareth Morgan tweets a link to a write-up of the standard Wansink findings around food:
Sure, in field experiments, you can induce overeating by making people think that they've eaten less than they have (for example, by surreptitiously filling the bowl from below). But does that mean that they're irrational and always subject to error? Or might it mean that people eat until one of two conditions are met: satiation, or end of current portion? If the latter typically comes before the former, people stop eating at the end of the bowl. If the former tends to come before the latter, they'll leave some behind. What interest would a restaurant have in supplying you with more food than you'd really want when doing so might make you less likely to order dessert and will make you more likely to linger longer at the table?

The linked piece also takes a self-help approach to the findings: Try using smaller bowls or smaller plates; don't go for "value" deals if that isn't what you really want to eat.

And so Matt Nolan replied to Gareth:
Morgan replied,
This kind of line really bugs me; it reminds me of the kind of thing that non-economists will come out with when criticising economics. Imperfect information hardly seems to be what's driving food choices. And, perfect knowledge is hardly necessary to make precommitment viable. You just need to know that you often screw up particular kinds of choices.

Odysseus didn't need perfect information about just how lovely the Sirens' call was in order to have the sailors bind him to the mast; he just needed to know that the temptation had proved too tempting for many others. I've never played World of Warcraft, but that doesn't mean that I've erred in deciding never ever to start playing multiplayer online games. I definitely don't have perfect information about it - I've never played it! But I know that I'd find it hard to avoid spending too much time playing online games if I had the added pressure of friends wanting me to come help them on a raid. So I just don't play. Imperfect information has led me to consume what's likely too little gaming relative to an ideal: you don't need to assume perfect information to get precommitment.

Tuesday 25 February 2014

Careful out there

As if New Zealand's censorship regime weren't confusing enough, here's another fun risk for you.

Suppose that you're putting together an art installation that includes clips from age-restricted movies. The films you used were all R18, so you restrict entry to those aged 18 and up. You're all fine, right?

Well, maybe not.

The Classification Office put up a handy offence guide recently. I'd missed Section 132 before. Their plain-English interpretation reads:
"It is an offence to exhibit only part of a non-objectionable or restricted publication if that part would be objectionable in itself when taken out of context."
So if the artistic merits of a film counterbalanced the raunchy bits and that's what allowed the film to get an R18 rating instead of being deemed Objectionable, and your exhibit focused on the raunchy bits, you could be subject to penalties under Sections 123, 124, 127 or 129. But you can't tell, because you have no way of knowing whether the Office would deem the excerpts to be objectionable when taken as excepts, unless you thought to get your exhibit classified. Maybe the exhibit as a whole had sufficient artistic merit that they'd then say it's ok, maybe it wouldn't.

Also, you can put up whatever poster you like supporting some concert, subject to the risk that the Office might deem it objectionable. But if you put up a poster advertising a movie and that poster hasn't been approved, you can get a $2000 fine.

And remember too that you can get a $3000 fine for playing an age restricted video game with your child if your child is under the age limit, even if you're unaware that the game is age-restricted.

I am not a lawyer. Hopefully you won't need one. Careful out there.

One line in the sand

New Zealand's spy agency, the GCSB, "confirms they do not collect wholesale metadata on New Zealanders and, to the best of their knowledge, American counterpart the NSA does not either."

Everybody's expecting the Snowden revelations for New Zealand to be coming this year.

The GCSB has to know that there's a strong chance that, if they have been collecting metadata or if the Americans have been collecting it here, it'll be revealed in the forthcoming Snowden releases. They'd also know that, if they lied to Parliament, it would be very bad, and that if the Americans were doing it here without GSCB's knowing about it, GCSB would be seen to be incompetent or wilfully ignorant. I further expect that Kiwis wouldn't have much truck with semantic tricks on verb tenses or definitions of "wholesale". And so I must expect that they know that it isn't being done here and hasn't been done here. This makes me happy.

But I wouldn't have believed them if they weren't now operating in the shadow of Snowden. It easier to trust when there's strong chance that lying will both be detected and draw penalties.

Monday 24 February 2014


NZ's big telco, Telecom, is pushing into Internet TV; the Spark rebranding signals the change. @JamesMeager asked what I thought about it.

Setting up a streaming TV/Movie service in New Zealand has huge fixed costs relative to the size of the market. Quickflix streams within NZ for $15/month, about what Netflix + Hola! Premium costs, with a smaller range of content than Netflix but with rather a few titles that Netflix doesn't have. They supplement it with pay-per-view access to recent films. Their 2013 Annual Report lists operating costs just north of $11 million, including all the costs of their DVD-by-mail service and digital content fees, for about 100,000 customers. Telecom says they're going to spend $15 million next year buying content.

There are plenty of folks who haven't signed up to Netflix because figuring out Hola! has proved a bit too tough or because they don't want to list a US Zip Code. So there's a large potential market of people who haven't figured out Netflix. But since, at least initially, Spark's ShowMeTV service will be running through your browser rather than via a set-top box or a dedicated app in your TV, their market would be those folks happy to watch TV or movies on their laptop or tablet, and those few people who have been able to figure out how to hook their computer up to the TV but who haven't been able to figure out Hola, and those whose TVs have a decent inbuilt browser app. That's the same market Quickflix is serving (barring the DVD-by-mail part). ShowMeTV would have one strong advantage over Netflix: the technical hurdles for streaming Netflix from NZ using your TV's inbuilt browser are much higher than streaming something that isn't geoblocked.* And, they're working on an HDMI port dongle.

The Herald cites unnamed analysts saying ShowMeTV's success would depend on lining up content like Game of Thrones or Breaking Bad. I'd be surprised if they could buy the rights to that kind of content on their current budget, but I'm also not sure it would be critical: just having a great stable of on-demand shows that are better than anything currently playing on TV can worth a subscription. CEO Simon Moutter addresses this in his NBR AMA; they'll be building up content.

Paul Brislen notes a few interesting features. I'd expected that Spark's offering would be a top-up for subscribers to their broadband packages; Brislen says ShowMeTV won't be restricted to Spark broadband subscribers.

I won't be subscribing unless they're offering a better content selection than Netflix. I'm pretty price insensitive: I'd be happy paying three or four times what Netflix is charging for a substantially augmented content package. But I expect I'm not ShowMeTV's current target audience.

* I doubt you could run the Hola! plug-in using your smart TV's inbuilt browser; you'd then need to move to router-level solutions.

Thursday 20 February 2014

Trolling townies

Because I'm not from here, I didn't know about Country Calendar's excellent trolling of Kiwi townies.

They've got six clips, but I can't embed them.

I love the farmers' pulling all this off with a straight face. Remote-controlled sheep-dogs using electrodes in the brain...too much fun. Such Kiwi.

Wednesday 19 February 2014

Fact-based journalism

Richard Meadows' piece in the Fairfax papers on minimum wages and living wages should serve as exemplar of exactly how journalists should handle stories where academics weigh in.

Richard emailed me last week asking if I'd be able to give him some comments on WFF, minimum wages, and tax-free thresholds; he sent along his workings on the three scenarios. I told him I wouldn't be able to fact-check his numbers but pointed out one minor glitch when I emailed him the set of notes I posted today. I expect that Matt Nolan did the same. I'm not sure whether Tim Hazeldine emailed notes or chatted with Richard on the phone; Tim doesn't blog.

Richard's piece got the main things that we highlighted. Then, when Matt and I each put up our more extended notes, he linked to those. I'd caught one bit in Matt's discussion that I didn't think was right and noted it in his comments; he revised. A 'gotcha' style journalist might have framed this as me and Matt saying different things and arguing with each other, but it turns out that we didn't really disagree with each other. Matt just hadn't written the paragraph the way he'd intended. And anybody following the link from the Fairfax piece to our posts can check things. Matt's put in tons of useful links to the literature; I was a bit lazier and just used the tags at the bottom of the post to point to the dozens of pieces on the same issues that have showed up here.

Such an improvement on pieces that just copy or cut from academic press releases without even a hint on where to find the underlying work.

More on living wages and minimum wages

Fairfax's Richard Meadows asked me a few questions about living wages and minimum wages. Some of them made it into his excellent story, here. I agree with everything Matt Nolan said there too.

[Update: Nolan's extended comments are here. And I'm really pleased to see that Richard's linked the more extensive commentary from both of us.]

Here are the bits of mine for which he didn't have room, for those who are interested.

To what extent do childless people subsidise families under the current model?
The tax and benefit system strongly benefits lower-to-middle income individuals with children, with the cost most heavily borne by higher income individuals both with and without children, but also by poorer people without children. In addition, a substantial part of the government's non-transfer expenditures go towards the health and education of children and young adults, with the burden falling the same way.
Is the subsidisation of families considered a “good” thing for the economy as a whole?
Some subsidisation of lower income families has public good aspects. Ensuring that families have the resources to make at least some investment in their children's health and education helps reduce the chances that those children will themselves be in poverty later in life. But much of the current Working-for-Families scheme is a straight transfer to middle-income families with children. Chicago economist Aaron Director lent his name to one of the iron laws of transfer policy: Director's Law holds that transfer programmes mostly work to the benefit of the middle class. Education, 20-hours-free-ECE, WFF, zero-interest student loans: Director would say these are the sorts of policies we should expect where the middle-income median voter has children.
I would question the premise of your question though. If we think that it's good to give money to low-to-middle-income working people with kids, then WFF is good. If we think that others would benefit more, then it isn't. I can't tell you whether it's better to take money away from childless people, both rich and poor, to give to low-to-middle income people with kids. Economists can tell you a bit about the tradeoffs involved and the likely effects of the policy on different groups of people - both intended and unintended. But once we've taken proper account of these tradeoffs, then we start moving into value judgments to decide whether the policy's worthwhile.
Are there any unintended consequences or distortions caused by the status quo?
Poverty campaigners often criticise WFF for not doing enough for non-working families. I think they miss the point of WFF: it's intended as a family wage supplement for lower income working families. The distortion then isn't in that WFF helps encourage the lowest-income families, typically single mothers, to re-enter the workforce: that's the intended consequence.
The high effective marginal tax rates on middle income families under Working-for-Families strongly penalises second earners, often women, deciding to re-enter the workforce when the children get a bit older. For some, this then can become a trap: over reasonable income ranges, the combination of income taxes and Working-for-Families clawback rates mean that they don't get to keep much from an extra hour's work. Higher income families don't get the WFF transfers, but also don't face the distortions caused by these high effective marginal tax rates. This could be an unintended consequence of WFF. We should note, though, that while there appeared to be a reduction in female labour force participation rates shortly after the introduction of WFF, as best I know, there has not been a study looking at micro data that can tease out whether this was a causal relationship.
Let's imagine replacing WFF with an $18.40 minimum wage. What impact might raising the minimum wage to $18.40 have on unemployment?
An $18.40 minimum wage would be extraordinarily destructive. While the family envisioned in your scenario is the kind of family that Living Wage campaigners have used in setting their models, a substantial proportion of those earning below $18.40 are second-earners in higher-earning families or young adults starting out in the labour market. If the goal of the policy is to improve the lot of lower-income working families, this is better done through schemes like WFF than through across-the-board measures like minimum wages. While WFF may have some effect on employment rates by discouraging second-earners from working, and through the higher tax rates required to fund the transfer system, it can encourage some lower income workers into the labour market by making work more attractive than benefits. An $18.40 minimum wage would cause substantial unemployment among some of our most vulnerable cohorts. And while those who did not lose their jobs would be better off, the poor are often the consumers of the goods and services produced by the working poor, and some of the cost of the higher wage rates would be passed along to those customers.
While recent American data suggests little effect of minimum wages on overall employment, American minimum wages tend to be about 40% of the median wage. The current New Zealand minimum wage is more than 60% of the median wage, and an $18.40 minimum wage would be almost 90% of the median wage. The unemployment effects of an immediate shift to an $18.40 minimum wage would be large, rapid, difficult to reverse, and especially destructive to the lifetime work prospects of some of our most vulnerable cohorts.
On balance, is it likely to do more harm than good?
On balance, it is likely to be ridiculously and uselessly destructive. The modelling here really needs to account for the sharp rise in unemployment we'd see with a rise in the minimum wage of such a magnitude.
Would the cost of goods and services simply rise accordingly, and be passed on to consumers?
Whether workers would bear the burden through increased unemployment or reduced on-the-job benefits, customers would bear the burden through increased prices, or shareholders bear the burden through reduced returns, would vary greatly industry-to-industry. In some cases, firms and customers would absorb most of the cost increase, at least in the short term. In the long term, the biggest burden will be borne by those workers who want to work but who cannot provide services worth $18.40 an hour to any employer. They'll be out of work. And if we take the economics literature on happiness at all seriously, we will do far more harm to this cohort than we would benefit those who stay in work. Being unemployed is far worse than being paid less than one might hope for.
Would there be any positive effect on employment, consumer spending and business growth if taxes were cut universally? [imagining a scenario in which WFF is abolished and a tax-free income threshold is established in its place.]
Scrapping WFF and replacing it with a universal tax-free threshold costing the government as much would have a few effects. Most directly, we would stop providing the substantial transfer from childless families to those with children. We didn't have this transfer before WFF, so ending it isn't unimaginable or the stuff of the dark ages. We'd likely see a positive labour supply response from second-earners currently subject to very high effective marginal tax rates. I would expect stronger beneficial effects from ending the very high effective marginal tax rates under WFF affecting middle-income families than from the slight reduction in taxes paid by the poorest cohorts.
While a $10,000 tax free threshold sounds nice, it might not be as beneficial as an equivalent reduction in the tax rates affecting lower and middle-income earners. The tax-free threshold would benefit everybody, but would only reduce the tax burden of working an extra hour for those people earning under $10,000 per year. For an equivalent cost to the government, we could reduce tax rates in the lower-income bands to let workers keep more of the next dollar earned.
Could it be dangerous to remove the targeted support for families and replace it with universal cuts?
A lot of families have come to rely on WFF support. They've taken out mortgages, made employment decisions, and maybe even made decisions about family size, with WFF calculations at the back of their minds. There's a reason that Key's incoming National government didn't scrap WFF in 2008 despite having campaigned against it in 2005: it would be politically dangerous. At the same time, the longer WFF stays in place, the harder it would be ever to get rid of it: more families will become locked into choices that depend on the existence of WFF.
Further, one reasonable benefit of Working for Families is that it makes employment pay for some of our lowest income cohorts: single mothers with low skills and low wages. One alternative could be to turn Working for Families into a wage subsidy scheme targeted more directly toward those on lower incomes, whether or not they have children, while enhancing access to childcare facilities.
Could other parental subsidies (paid parental leave, childcare assistance, greater chance of accommodation supplement) provide enough support in the absence of WFF?
I think I've covered that off above, but I'll add one bit on accommodation supplements:
In the current housing market, we shouldn't really think of the accommodation supplement as something that helps poor families. Where cities make it very hard to get consent to build new housing, generous accommodation supplements mostly serve to help landlords earn more. When cities again make it easier to build new houses, then the accommodation supplement could do the job it's supposed to be doing. But for now, it's not helping the group it's intended to help.

Burn the math

I love it when Paul Krugman channels Alfred Marshall.

Here's Krugman:
I once talked to a theorist (not RBC, micro) who said that his criterion for serious economics was stuff that you can't explain to your mother. I would say that if you can't explain it to your mother, or at least to your non-economist friends, there's a good chance that you yourself don't really know what you're doing.
Math is good. Sometimes jargon is good, too. But plain language and simple intuition are important to keep you grounded.
And here's Alfred Marshall, in a letter to Bowley (or see here), explaining how his approach to mathematics evolved:
I went more and more on the rules—(1) Use mathematics as a shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you canʼt succeed in 4, burn 3. This last I did often.
Krugman is really good at the maths, and at illustrating by examples; in that, he's firmly Marshallean. I expect that Krugman, and most of modern econ, is happy using maths as an engine of inquiry as well. But if you can't translate it into English that can readily be illustrated, there's reasonable risk you've produced nonsense.

Tuesday 18 February 2014

McCullum's 300 and WASP

UC's media consultant loves cricket and so asked me if I could do something WASPish about the probability of McCullum scoring 300 runs in an innings. The resulting media release is here. (The request came before the start of play today when McCullum was already on 281, but I looked at it from the point of view of the start of his innings.) The guts of the conclusion was that you would only expect McCullum to reach 300 once every 4310 innings if he scored with his career average strike rate and dismissal rate, and that is before taking into account how unlikely it would be that the other batsmen around him would survive long enough to not leave him stranded short of the target.

This was just a bit of fun for a media release. If I was to do the job properly (unlikely, since it is not the sort of thing that results in a peer-reviewed publication), this is what I would like to do:

  1. Do a Kaplan-Meier estimate of hazard rates out of batting as a function of runs scored, rather than assume that a constant strike-rate and poisson dismissal rate apply at all times.
  2. Do a monte-carlo simulation using McCullum's Kaplan-Meier estimates and other players' dismissal rates to find a combined probability of McCullum and at least one other player surviving until McCullum had scored 300 runs.
  3. Try to estimate a joint distribution of survival rates and strike rates across games to take into account statistical dependence. 
Above all, I would love to work out a historically applied test cricket WASP in order to rank past innings not only by size, but importance in game context. What are the innings that have most changed the expected outcome of a match (2 points for a win, 1 for a draw, 0 for a loss). So many of the very high innings have been in matches that were clearly headed for a draw on a lifeless pitch, or where one team was totally dominant. The really great innings--Laxman (2001), Lara (2003?), Jessop (1902), Botham (1981) Astle (2002) if we had won--are the ones that change the course of the match. 

I don't think this one qualifies for the "future Honours projects" label. Perhaps I need a label "if we had world enough and time". 

HRC-backed? [Updated: Crampton's been trolled]

I'd interpreted New Zealand's Health Research Council's logo being all over the conference materials for the anti-sugar Fizz-2030 conference as indicating HRC support for the conference. Typically agencies exercise pretty strict control over the use of their branding and have to give permission for such uses.

In comments in my prior post, HRC Chief Exec Robin Olds corrected things, noting that while they have provided research grants to some of the people who were presenting, they were not supporting the conference. The conference's materials were up on the HRC website, but I expect that HRC mirrors a whole lot of health-related conference materials.

The HRC's logo being on the conference materials intrigued the NZ Taxpayers' Federation, though. Jordan Williams put out an OIA request. Robin Olds replied that,
"The HRC has never funded FIZZ, nor has it ever received a funding request (for research or otherwise from FIZZ. The HRC has funded research by individuals who identify themselves (on the website) as members of FIZZ. Such funding is through contracts with their host institution, for example the University of Auckland and the University of Otago."
In response to Jordan's asking what other support the Council has provided FIZZ, HRC replied "The HRC has provided no support to FIZZ."

Now that can't be entirely right, because HRC hosts FIZZ's materials on its website. Here's the conference programme, on the HRC website, link working as of 18 February. Here is a flyer advertising the conference keynote speakers, on the HRC website. Both of these have the HRC logo on them. This is why I thought that HRC was backing the conference: hosting the conference's materials on your website with your own logo on the conference's materials is a pretty strong signal of support. But, it's also possible that HRC just mirrors anything in that space and that FIZZ put the logo on without HRC's knowing about it. In that case, it's entirely possible for Olds honestly to reply that they didn't provide any support to FIZZ - he might not have known that the conference materials are mirrored on the HRC website, or he might not have interpreted hosting those materials as constituting support over and above the identical support HRC gives to other health-related conferences.

This version is supported by an email that the Taxpayers' Union reports that Robin Olds sent to the Taxpayers' Union:
“In a phone call to the conference organiser we pointed out that using our logo was inappropriate, given that [Fizz] did not seek our permission, and that some appeared to interpret the logo as the HRC endorsing the conference."
If the Taxpayers' Union is accurately reporting the email, then HRC is not supporting the conference and FIZZ was being a bit naughty in using the HRC logo.

And all of that makes this twitter exchange really interesting. [Update: I'm growing increasingly sure that @Fizz2030 is a parody account and that I have been successfully trolled. Kudos to whomever's done it. Details at the end of the post.]

I've pasted a screenshot at the bottom of the post in case anybody deletes anything. [Update: FIZZ reiterated its HRC backing in a couple other tweets.]

The Chief Exec of the HRC said they have never funded FIZZ and have provided no other support to FIZZ. FIZZ, on its Twitter account, says they have HRC/HPA/MOH backing for the FIZZ 2030 conference.

Now it's possible that FIZZ has just interpreted, for example, enthusiastic kudos from some in HRC (possible, I have no clue) as constituting HRC backing for the conference. Or maybe they've interpreted HRC's hosting of the conference materials as backing. But if it's something more than that, well, there's something interesting here. It'll be interesting to see how this plays out.

It's also odd that FIZZ's twitter rep interprets these questions as an attempt to shut down the conference. It would be pretty much impossible to stop the conference, unless they somehow managed to annoy the conference host, Auckland Uni, in the process. But even then it would be pretty rare for a conference to be canned at the last minute.

UPDATE: I no longer believe that Fizz2030 is the official Twitter account for the Fizz group's conference. In that case, there's no conflict in stories; I've just been successfully and magnificently trolled. Here's the evidence on either side:

Real: The account has 29 followers and include a bunch of folks affiliated with Fizz. @JustWaterNZ, Dr. Robyn Toomath, public health physicians, the Heart Foundation, and some media folks. Other folks on their side have been interacting with them as though they're real.

Fake: No link to their twitter account on the FIZZ website. When I scroll back through their account, I see some exchanges that are simply implausible. It's hard to tell what's parody any longer in this kind of space. Most of the tweets would be plausible either from a real account or a parody account; these have to be parody. Kudos to @JaninePaynter, whose radar seemed sharper than mine.

I'm rather sure I've been trolled. And magnificently. Excellent job, but you'll likely want to put "Parody Account" in your headers to avoid issues.

Update 2: @JaninePaynter reports she's had confirmation it's parody. Here is the list of some of @Fizz2030's followers as of 18 February, many of whom also must have reckoned that @Fizz2030 passed the Turing test (but some of whom might just follow-back by default).

I also think it's pretty funny that the trolling got caught not because of their over-the-top anti-sugar tweets, but rather because @JaninePayner's radar turned on when FIZZ tweeted "Support growing for tax on SSBs despite attacks on us by @TaxpayersUnion @EricCrampton @CarrickGraham", and mine turned on when they tweeted that their financial backing was none of anybody's business. 

Big Food

New Zealand's tell-people-what-to-eat campaigners have a busy week. 

Monday, the University of Otago at Wellington hosted a one-day session on the evils of "Big Food". Stuff covers it here; David Farrar nicely critiques things.

Here's one of the Otago presenters' policy recommendations, as noted in the Stuff piece:
Gabrielle Jenkin's advice to New Zealand's policymakers:
  • Ban advertising and marketing of unhealthy food.
  • Improve food labelling, ideally with a "traffic light" system.
  • Change planning policy so unhealthy food outlets are unable to set up near schools.
  • Outlet numbers should be restricted by population size.
  • Restrict unhealthy food in public institutions such as schools.
  • Install more public water fountains.
  • Make unhealthy food unaffordable, either by taxation or by subsidising healthy food.
  • Force "Big Food" to reduce salt, fat and sugar in products.
  • Restrict portion sizes, as New York tried with soft drink in 2013. 
Farrar uses the appropriate language in response.

Jenkin seems to particularly hate KFC:
Television shows such as The Biggest Loser, Downsize Me and Embarrassing Fat Bodies reinforced the personal responsibility message. "The message is ‘Get your big arse off the sofa', rather than ‘Stop the KFC opening across the road'."
However,some governments had stood up to Big Food. In Britain, manufacturers have been forced to reduce fat, sugar and salt, and New York's governor attempted to restrict portion sizes and introduce nutritional information in restaurants.
In New Zealand, politicians remained cowed by Big Food, she said. In deprived towns and suburbs, fast food outlets were so numerous as to be unavoidable.
"New Zealand is appalling. You're sniffing KFC wherever you go."
Maybe I'm weird, but I love the smell of KFC. It makes me so hungry every time I drive by one. I just wish there were one on campus.

And while you can totally get public choice models where interest groups are able to shift policy away from what the public wants, does it really seem like industry lobbying is the binding constraint here? KFC is delicious. Does it seem that likely that people who find KFC delicious would warmly welcome politicians who banned them from eating KFC? A median voter model seems by far the more plausible explanation of why KFC hasn't yet been banned here. John Key's National government campaigned against all the nanny state stuff. And while his government is happy to keep paying Otago and Auckland to churn out the 'ban stuff' studies and conferences, Key's not going to take on a new nanny initiative that doesn't have broad public support, unless it's a play to throw some support to ACT.

I wasn't at the BigFood shindig, but here are some reports from their twitter hashtag.

The big anti-sugar conference is coming up at Auckland Uni on Wednesday and Thursday. I expect that the news and talk radio will be intolerable for much of the week.

Otago used to own the "ban stuff" niche; now, Auckland and Otago seem to be competing with each other to see which can be the most vocal advocates of banning stuff. Rents predict entry I suppose.

Monday 17 February 2014

Uber opposition

I'd expected that the Taxicab Federation wouldn't like Uber.

In last week's Herald, they protested that Uber would need to become an Approved Taxi Organisation. [HT: EdBlog]
NZTA [NZ Transport Agency] spokesman Andy Knackstedt said there were many requirements that must be met for establishing a company as an 'Approved Taxi Organisation' such as clearly displaying fares and driver identification, using a tested fare meter and having an in-vehicle security camera system installed.
"If Uber did not establish themselves as an ATO, they would rely on existing ATOs and their drivers integrating or using their system," Knackstedt said.
University of Canterbury senior lecturer in economics and transport commentator, Eric Crampton said Uber may be able to side-step taxi industry regulations by hiring drivers with a P endorsed drivers' license and using unmarked vehicles to operate as a 'private hire service'.
"Current cabbies could flip to Uber in their own cars, retired cabbies who still have the P endorsement could start up again, and others willing to sit the test could come into the market," Crampton said in his blog.
The New Zealand Taxi Federation has voiced safety concerns about the growth of app-based taxi booking systems becoming available around the country.
Other transport apps to launch in New Zealand recently are Zoomy, in use by taxi organisations, and Cab Chooze, along with other apps developed for taxi companies.
In a letter to the NZTA, Taxi Federation executive director Tim Reddish called for the apps to be shut down until the companies prove their drivers are properly licensed and operating under the control of approved ATO's.
"In our view any app-based taxi service delivery system must also ensure that customers are protected from unlicensed drivers and untested as fit for purpose vehicles," Reddish said.
Again, I am not a lawyer. But it looks to me like Uber could run under existing private hire service regulations. I expect that the Taxi Federation will do their best to block it.

If I were the Taxi Federation, I'd be claiming that an app-based immediate hire is a lot more like flagging down a cab than it is like an advance booking; if I were Uber, I'd say it's rather more like calling a bunch of car companies to see who'll give the best rate. I think the latter's the more accurate description and that the private hire regs could then apply, but again, I'm not a lawyer. If running as a private hire service under Section 6 hits the 'too hard' basket, Uber could still come in as an app booking system for more standard cabs, but we'd lose much of Uber's benefit: the ability to surge supply into the market with higher fares during periods of anticipated high demand. It's harder to bring part-timers into the market when they'd need to be running a signed, metered, and camera-equipped car.

And a big thank-you to Daniel Lynch at the Herald for doing this properly. He quoted from the blog while linking to it to provide context for those wanting the additional context. Nice job!

Friday 14 February 2014

These are the people in my neighbourhood

Neighbours around the block frustrated with EQC spray-painted their cement fence back in October.
It reads:
"Too dangerous to work on. But safe enough to live in. Look at my roof. Be aware! This is a finished EQC Repair. Can't sell it. Too dangerous to live in."
The Christchurch Star explains what's happened.
This house was repaired six months ago by a Fletcher EQR contractor - a plumbing company.
The plumbing company told Mr Walkinshaw it was out of its expertise to fix the roof - and it was too dangerous to try.
The Walkinshaw family is now stuck on an Earthquake Commission and Fletcher EQR merry-go-round to get the roof and other repairs fixed. 
EQC says the roof damage was pre-existing; the Walkinshaws have an engineering report from 6 December 2010 (post-September, pre-February) with no evidence of cracked beams. EQC told the Star they hadn't received the engineering report; Walkinshaw tells the Star that he'd never heard that from EQC. A typical EQC SNAFU. Meanwhile, the family's worried that the roof will fall in on their kid's bedroom.

The full Star report is here, or go to their website and find the issue of 12 February 2014.

For those who've forgotten: The Earthquake Commission (EQC) is the government-run insurance scheme handling natural disasters. Anyone buying insurance on a house pays a levy for EQC coverage. In the event of natural disasters, EQC handles land remediation around the house and the first $100,000 (plus GST) in damages to the house. If you have minor damage to your house, EQC is your first port of call. If you have damage in excess of $100,000, you'll have to deal with both EQC and your private insurer.

The general principle of the scheme is good. Absent compulsory natural disaster coverage as part of your homeowner's insurance, a lot of people would be sorely tempted to simply bet on that the government would bail everybody out in the event of a natural disaster. With EQC, anybody with private home insurance, which is pretty much compulsory for anybody wanting to get a mortgage, has coverage for natural disasters. It's then way easier for the government, post-disaster, to refuse to bail out those who didn't buy insurance. Alas, the execution's been rather disappointing in the Canterbury quakes.

Our own frustrating but still happier situation? When last we reported in, we thought repairs would be coming soon. Alas, we're still waiting for EQC to approve our builder's quotes. Fortunately, our house is safe and liveable while we wait. We had an AMI Premier Home Insurance policy which specified that repairs must be undertaken to an "as new" standard. Since we have less than $100k total damage, EQC is handling the claim on our house. EQC won't sign off on the builder's quotes, as best I can tell, because our builder won't come down to Fletcher's rates.

Fletcher's is the project management company that the government is using as first port of call for earthquake repairs under EQC; we opted out and chose a builder specialising in older character homes. We heard too many horror stories in Fletcher's managed projects: shoddy workmanship, repeat repairs, and poor project management where one set of subcontractors gets the job half-finished and the next set aren't booked in until months later.  Read the comments thread here, for example. EQC seems to be trying to force the opt-out contractors down to rates inconsistent with the quality of job specified in homeowners' insurance contracts. There's talk of a class action suit on it.

Our private insurer had a look at the out-of-scope damage* and will be sending us a quote for fixing the paths and driveway; we're waiting on their specialist engineer to come look at the pool.

After all of our home repairs are finally completed, I will be shopping around for a new home insurance company. I will also be asking whether I can pay extra to have actual real coverage for under-cap damage in any EQC event. I can't avoid paying premiums for EQC's near-fraudulent-but-still-mandatory insurance coverage, but I hope that I'm able to buy actual real insurance that will pay out in the case of an adverse event. Many of us in Christchurch thought we were paying for insurance contracts with a $5,000 deductible; where EQC won't honour the terms of your contract, the effective deducible is rather higher than that.

For those Wellington readers in positions to change things: These messes will happen to you and to people you care about when Wellington gets its quake if you don't fix EQC. EQC shouldn't be involved in house assessment for a major event: they just can't scale up to do it properly. Homeowners should only have to deal with their private insurers. The insurer would then bill EQC for repairs up to the EQC-covered amount. Couple it with audits to make sure the insurer isn't just providing $100k home-improvement gifts to its policy-holders. This will be more expensive than the current system, so increase the EQC levies and risk-adjust them.

I wonder whatever happened to the promised review of the Earthquake Commission Act. The 2009 Review of EQC's Catastrophic Response Capability also had suggestions worth looking over, although that document seems to have disappeared from EQC's site (still available at the Wayback Machine).

Update: In response to my emailed query, Treasury tells me that the Government is still working on the review, that things have been complex, and there is no new target date for the release of the public discussion document.

* EQC covers damage to your house and buildings; paths, driveways, swimming pools, and fences are out of EQC scope and are handled directly by your insurer.


Thursday 13 February 2014

Migration beats activism

I agree with everything in Bryan Caplan's post. If you have the option to move away from an oppressive place, moving makes far more sense than trying to change the system. You're doing pointless harm to your family by staying.

Now imagine that you live in a place that, while pretty prosperous, has a whole lot of things you find oppressive. You spend a lot of time complaining about those things. Your sons stand a non-trivial chance of someday being drafted into the army or some kind of national service. While you don't find the laws against using drugs to be personally binding, there's the lowish probability risk of being subject to an erroneous no-knock armed police raid if the cops get something wrong. Cops kill people very often in these raids; at best, they just terrify your children. If you drive near the country's borders, the internal security police might stop you and demand your papers. There's the low but real risk that the cops will just decide to seize whatever cash you have with youThe schools are guarded like a prison camps. You like betting on odd claims; the local police in your county have a history of showing up at the front door of people who make bets and shooting them - this happened to a dentist just a few miles from your own house. And the police could use selections from your anarchist writings to ex post justify just about anything they decided to do, if you get the unlucky lotto ticket. If your kids screw up a bit when they're older or are even suspected of having done so (again, low but non-zero chance), the system's really pretty horrible. If one of your children messes up and sells drugs even once from your house (very very unlikely, but not impossible), the government can make you homeless.

While you're able to live most of the time unimpeded by this stuff in a bubble of like-minded friends, the random-draw risks are a bit worrying. You could kinda model it as living in a nice place, but with a small risk that you and your family will be the ones selected for some horrible annual ritual sacrifice. You never attend the annual sacrificial ritual despite its broad popularity; you instead do what you can to try and stop the ritual. Maybe you have more protection against being selected for the annual sacrifice ritual than do most folks because you're not really in the typically preyed-upon cohort, but that risk is still there. You pay your taxes, knowing that that money is taken to fund the annual sacrificial ritual.

Yes, the case for migrating out of really terrible third world places is definitely much much stronger than the case for moving out of Fairfax County. But still...


Wednesday 12 February 2014

Outlaw prostitutes

It's worth remembering where the word "outlaw" comes from. An outlaw was someone who was outside of the protection of the law. That wasn't always a happy place to be. Recall that even the Catholic Church of late 13th Century England didn't fare well when outside the law's protection.

When prostitution is outlawed, prostitutes are largely outside the law's protection. Going to the police to report on their customers' offences means turning themselves in at the same time. And so customers come to expect that they can abuse prostitutes, and prostitutes then need pimps to provide protection instead.

New Zealand legalised prostitution a decade ago. It can take a while for local norms to change, but they are changing. The gangs that controlled prostitution prior to legalisation can now be sued; prostitutes know that they have the law's protection.

Christchurch has had an influx of migrant labour for the rebuild. And a lot of these construction workers haven't figured out that prostitutes here have just a bit more power than they might have back home.
Christchurch sex workers say they are being mistreated by migrant workers unfamiliar with New Zealand's prostitution laws.
Prostitutes' Collective regional co-ordinator Anna Reed said street workers had reported incidents of people from "other cultures" treating them rudely, trying to get more for less, being abusive or stealing money afterwards - "assuming that they wouldn't go to the police or tell anyone because they're just ‘common prostitutes'," she said.
"This is in the mindset of some people from some cultures, which we will not name," she said. "It's not that they are flocking but we're certainly noticing them in our stats."
So what's being done about it?
Community and Public Health (CPH) has produced a "man-friendly" pamphlet which outlines New Zealand prostitution laws and where to access health services and advice.
The pamphlet has been distributed to backpackers, accommodation providers, businesses who may be employing migrant or itinerant workers and has a free condom attached.
Medical Officer of Health Alistair Humphrey said the pamphlet was not just about informing migrant workers, but also the wider public about the new locations of health services.
Legalisation hasn't gotten rid of all of the problems. Some workers simply prefer streetwork to being in brothels. And streetwork can cause local nuisance.
CPH is located in Manchester St, where there had also been patch conflict between prostitutes, tension between prostitutes and residents, and "so-called minders" using dogs as weapons. Those matters also needed addressing, Humphrey said.
Licences for street workers - much like those required for busking - could be an option, he said.
If the licences came with a small fee, the Christchurch City Council could hire security guards to monitor the area.
"It would be good for the agencies to think about how this whole industry is kept safe for everyone," he said.
I've read of reasonably serious problems of nuisance and trespass affecting residents, though there's no particular evidence that that's worse than prior to legalisation. There seems no particular reason that street-based sex work shouldn't be subject to whatever regulation generally applies to other street-based vendors.