Risk averse schools

The government keeps enacting legislation with potential for substantial fines for getting things wrong. The government then keeps being surprised when schools take a very risk-averse attitude to compliance with those rules despite ministry assurances that, so long as they're following and documenting sound practice, they have nothing to fear.

This time it's the Vulnerable Children Act

It has traditionally been a free and convenient way to accommodate students on school trips, but new legislation could spell the end for billeting.

As schools work out the best way to approach the Vulnerable Children Act some have canned billeting altogether because of fears they could be liable if something happened to their students, while others are police-vetting every parent willing to take in billets.

Principals say billeting has become a "grey area" for schools, despite the Ministry of Social Development saying parents involved in billeting are considered volunteers, making them exempt from mandatory safety checks.

Is this required?

Sandy Pasley, president of the Secondary Principal's Association, said exactly what was required of schools around billeting was a "grey area".

If a decision was made at a ministry level that it was critical to police vet parents willing to take in students then more schools would consider paying for accommodation, making school trips cost more.

Schools were asking for more guidance over the legislation as they came to terms with it, Pasley said.

Sue Mackwell, the Ministry of Social Development's national children's director, said mandatory safety checking did not apply to volunteers, and parents billeting school children were volunteers.

Katrina Casey, head of Sector Enablement and Support at the Ministry of Education, said the ministry had developed a resource that provided an overview of police vetting requirements under the new Act, and had held workshops to help schools better understand it.

Perhaps the government should spend a bit of time figuring out why schools don't seem to trust the ministries to behave reasonably.

Anecdotally, I've also heard of schools that have started using scaffolding rather than stepladders to replace lightbulbs because of the rules around working from heights.

Meanwhile, real estate agents don't know what counts as good enough for having taken all "reasonably practicable" measures to ensure health and safety during open homes:

Some open home registers now require potential buyers to formally acknowledge they have read a list of risks and hazards, will follow the salesperson's instructions on how to avoid them, and agree to closely supervise any accompanying children.

Christchurch house hunter Mel Street has attended at least 20 open homes since March and first noticed the beefed up health and safety rules about six weeks ago.

On two occasions she was asked to sign a waiver saying she had read the list of hazards - such as tripping on a laundry step - and took responsibility for any injuries she might suffer.

"I thought it was really odd, very much treating me like a child. It felt very American, cover your back and don't sue me for anything."

If you don't know what counts as 'reasonably practicable' as it would be judged after a freak accident by somebody who might be happier to throw you under a bus than to acknowledge that low probability events happen sometimes, and where the penalties are big, you're going to go a bit over the top in proving you did enough to avoid the risk. It is not hard to blame people for thinking Worksafe is unreasonable when Worksafe assigns $40,000 fines for not wearing a helmet on a quad bike.

One of the things I loved about moving here from the States in 2003 was the absence of this kind of nonsense. If the UN doesn't want Helen Clark to run things there, can we get her back as Prime Minister? This kind of thing didn't happen on her watch.

Risky diagnoses

When you're cautious in taking sexual risks, you help both yourself and your partners. The former effect can be purely selfish optimisation. The latter could be due to other-regarding preferences in relationships where you care about the other person, or just a positive externality.

Why does this matter? Consider what happens if more HIV testing is funded. If you're behind the veil and don't know about your status or your partner's, prudence dictates some caution. If you're tested, you know your status but don't necessarily know your partner's. If you're tested and wind up being negative, then the returns to prudence are higher, as you know with certainty that you aren't already infected so you can make things worse, but you might also think that the risks you've taken so far are safer than you'd thought. And how much weight people put on the risk they impose on partners is hard to tell: if you find out you're positive, you either reduce caution if partners' utility doesn't weigh heavily, or increase caution if others' utility counts.

And so what people do on getting a test result is an empirical question.

Enter Erick Gong. He finds that ..., well, scratch that. I'll just quote from his introduction as it's rare to see this kind of clarity in academic writing. Bottom line: if you're going to fund free testing, couple it with funding for anti-retro virals so that when people find out they're positive, they do less harm to others.

I use data from the Voluntary Counselling and Testing (VCT) Efficacy study conducted in Kenya and Tanzania, which randomly assigned people into HIV testing and followed up with them six months later (The Voluntary HIV-1 Counselling and Testing Efficacy Study Group,2000). I construct a measure of people's beliefs about their HIV status before getting tested using questions on the baseline survey. To measure risky sexual behaviour, I use biological markers that are not susceptible to self-reporting bias. Data are collected on newly contracted infections of gonorrhoea and chlamydia (henceforward known as ‘sexually transmitted infection’ or ‘STI’) that occur during the study.5 An STI only results from unprotected sex with someone who has an STI and serves as an objective measure of risky sexual behaviour. The random assignment of testing enables me to identify the effect that HIV tests have on sexual behaviour conditioned on prior beliefs of HIV infection.

My findings suggest that HIV tests have the largest effects on risky sexual behaviour when test results provide unexpected information to an individual. I find that people surprised by an HIV-positive test (i.e. those who believed they were at low risk for HIV before testing and learn they are HIV-positive) have a 10.5 percentage point increase in their likelihood of contracting an STI compared to an HIV-positive control group who had similar beliefs of HIV risk but were untested at baseline.6 I interpret this increase in contracting an STI as an indication that those surprised by an HIV-positive test increased their risky sexual behaviour – an unintended consequence of testing. I estimate that these types on average increased their number of new partners by about 2.4 over a six-month time frame. People surprised by an HIV-negative test (i.e. those who believed they were at high risk for HIV before testing and learn they are HIV-negative) have a 5 percentage point decrease in the likelihood of contracting an STI compared to an HIV-negative control group with similar beliefs of HIV risk but were untested at baseline.7 This decrease in the likelihood of contracting an STI suggests that those surprised by HIV-negative tests decrease their risky sexual behaviour. Both of these results indicate that when people make decisions about risky sexual behaviour, self-interests dominate altruistic preferences. People who discover they are HIV-positive no longer have any incentive to practice safe sex (i.e. ‘nothing to lose’), while those who learn they are HIV-negative face greater incentives to avoid risky behaviour. Finally, when HIV test results agree with a person's beliefs of HIV status, the effects of testing on STI likelihood are not statistically different from zero. This is consistent with an economic model where the behavioural responses to HIV tests are greatest when they provide unexpected information.

I use the empirical results described above and combine them with a simple epidemiological model to simulate the short-run effect of rolling out HIV testing in an urban setting. While this exercise inherently requires a set of strong assumptions, and hence the results should be interpreted with caution, it does address an important policy question. I use the distribution of beliefs of HIV risk and actual HIV status from the Demographic Health Surveys in Kenya, Mozambique and Zambia – all three countries faced with a generalised HIV epidemic. I find that in the cases of Kenya and Zambia, testing leads to declines in new infections, while testing leads to an increase in infections in Mozambique. However, when ARVs are provided at an earlier stage in the infection, testing leads to large reductions in HIV infections in all three countries. Since ARVs greatly reduce the infectivity of HIV-positive individuals, the aggressive provision of ARVs can mitigate the risks posed by HIV-positive individuals who increase their risky sexual behaviour after testing.8

The other particularly interesting bit: surprise negatives yield reductions in risk-taking.

I'd missed this when it came out in 2015. I thank Ole Rogeberg for the pointer.

Regulatory uncertainty breeds risk aversion

Combine tough potential penalties for failing to prevent accidents at workplaces with Worksafe decisions that can seem like ridiculous overkill to people who aren't Worksafe regulators and you've a recipe for some entrepreneurial activity.

Here's Radio New Zealand:

High school principals said they have been inundated with cold calls from safety firms, telling them they could go to jail without proper help.

New health and safety laws, which take effect in April, mean those with supervising roles in workplaces will have more responsibility for preventing accidents.

They also face tougher penalties of five years' jail or up to $600,000 in fines.

Worksafe's chief executive Gordon MacDonald said some consultants had been playing on anxiety about the new rules.

"It's those sorts of people that we want people to be wary of and not to rush blindly into seeking their services because they've been told that there's some dire consequence awaiting for them."

"Our position is that if people are doing the right thing now by the existing law, the changes that they need to make are probably not going to be that significant," he said.

Meanwhile, some schools are wondering whether they can continue with New Zealand's wonderful fun school playgrounds that allow a bit of risk, and others are quitting the profession:

Rotorua's John Paul College principal Patrick Walsh said it was particularly worrying that some principals were retiring early.

"When asked why they're retiring it's because of stress, burnout and concerns over increased liability for principals. Examples they cite are the changes in health and safety where they face up to $600,000 fines and five years in prison, and also concerns over a more litigious environment.

"The feedback we're getting from principals is that many deputy principals and those in middle management are not considering putting their hand up to be principal."

I don't doubt Worksafe's assertion that they wouldn't apply the big fines or penalties except in bad cases.

But if they can't prove it to the principals affected, they're going to help kill a wonderful part of New Zealand - regardless of their intentions.

Worksafe's mythbusting article suggests schools that are behaving well needn't worry. I'm glad I'm not on our local school board because I have no clue what Worksafe might deem "reasonably practicable." And I can understand Boards who might think that having a professionally produced plan might be part of demonstrating having taken reasonably practicable steps.

The Education Ministry helpfully compiles the various school toolkits for ensuring Worksafe at School. They include Toolkit 1, Toolkit 2, Toolkit 3, Toolkit 4, Toolkit 4a, ...

CYA and drug testing

Suppose that, as a company director, you were potentially personally liable if you did not exercise due diligence in ensuring that the company was meeting its health and safety obligations.

Suppose further that one of the ways you could demonstrate that you have exercised due diligence is by making sure that you get processes in place and that they're followed.

If there's any risk from worker impairment, then putting in place drug testing policies could be one way of demonstrating your due diligence. Heck, the Department of Labour even recommends putting in drug testing clauses where there is risk.

So we shouldn't be surprised if more companies are now requiring drug testing. It's a relatively cheap way for directors to show that they're being all diligent.

Disquiet around creeping drug testing is well placed - @odtnews story shows why we should worry https://t.co/sfYXBvdzPL

— NZ Drug Foundation (@nzdrug) December 20, 2015

I don't like the equilibrium either. But if you want different outcomes, you do better in changing the underlying incentives. I don't see those changing any time soon.

The ODT quotes Kirk Hardy, Chief Exec of a company running drug tests for firms:

Mr Hardy knows full well drug testing for cannabis cannot establish whether a person was high at the time of testing.

And companies know that too, he says.

‘‘Most companies are using it for risk mitigation; not many companies are looking for impairment,'' he says.

‘‘Personal time doesn't really come into it.''

Mr Hardy says employees who work in safety-sensitive industries have no excuse for using drugs.

"Companies are using it for risk mitigation" - entirely in line with my CYA expectations.

I wonder how many of those who lobbied for getting tough on companies for health & safety issues really thought through the likely effects. This was entirely predictable.

Injury costs: mountain biking edition

I really don't like "costs to the public health system" as reason for taxing and banning stuff.

But it's always fun to look at how costs are treated when they come from activities that draw social approbation rather than tut-tutting:

Figures from the Accident Corporation Commission show that mountainbiking injuries across the region have increased from 174 in 2010 to 463 last year with a spike occurring each year. The cost associated with treating those injuries in that same time has jumped from $190,000 to $798,642.

"People do crash a lot, and I think that is an element of the sport in all honesty, but what we try to do is keep it to an absolute minimum," said Nelson Mountain Bike Club chairman Paul Jennings. He said injuries were a part of mountainbiking, as they were in many other sports, including rugby.

...

The ACC figures show that the most common injuries for mountainbikers were soft tissue injuries, lacerations, punctures or stings, fractures or dislocations and dental injuries.

The large majority of injuries were attributed to males between the ages of 35 and 44.

Where are the outraged statements by doctors complaining of the burden of dealing with 463 unnecessary presentations and the alarming near tripling of the number of accidents? The do-gooders noting the heightened risk for mid-life-crisis men irrationally obsessed with proving that they're not really old yet? The worries about kids being brought into this dangerous bike culture via so-called "beginner tracks"? The social cost studies tallying the costs of all the accidents and of the thousands spent irrationally by mountain bike enthusiasts on ever-nicer kit?

More seriously - I love the sensible attitude here. Risk is part of the adventure: mountain bikers know they take on injury risk in exchange for thrills. Would that others' risk preferences were similarly accommodated.

For fear of risk

Will Wilkinson on the stuff that encouraged my emigration to New Zealand:

Shutting down sledding hills is inspired by the same sort of simpering caution that keeps Americans shoeless in airport security lines and, closer to home, keeps parents from letting their kids walk a few blocks to school alone, despite the fact that America today is as safe as the longed-for "Leave It to Beaver" golden age.

As an American (and Iowan!) I find this sort of flinching risk-aversion profoundly embarrassing. We might like to locate the blame for things like sledding bans somewhere out there in the unruly tort system (and indeed Messrs Ramseyer and Rasmusen do), but we must face the possibility that the blame also lies within. Perhaps it's better to be safe than sorry, but one wonders whether we won't become sorry to have made such a fetish of staying safe. In much the same way that dominant firms, jealous of market share, tend to become over-cautious and lose their edge, America the weak-kneed hegemon risks losing the can-do, risk-taking, innovative pioneer spirit that made it the world's dominant economic and military power. Is it worth devoting so much zeal to protecting America's young minds from brain damage if the finest among them wind up too conservative to seek anything but a sure paycheck? If Americans need something to fear, it should be that by continuing to inspire this surfeit of heedfulness in generation after generation, America risks heading downhill, and not in the fun way.

Please let's make sure that New Zealand stays out of this particular asylum. What it's done to America isn't pretty.

The Asylum creeps in: health and safety edition

A reader emails me that the revised health and safety regime, which brings criminal penalties for company directors, will also apply to voluntary organisations. He writes:

I know you write periodically about crazy laws and being inside the asylum. As you might know, I'm a scout leader. A volunteer. One of things that I have enjoyed in scouting is the ability to let children and youth take risks. You know, tackle bullrush, climbing trees, crossing rivers, hiking, making and playing with gun powder, making their own bows and arrows (one shot an arrow clean through a window without breaking it :) ) and so on.

They keep making changes to health and safety laws which potentially undermine the ability to do this. The first was throwing in volunteers in the Health and Safety in Employment Act back several years ago. That added to our paperwork and probably did restrict some activities at the margin (but not hugely), which was a pain at the margin but that seemed to be all. But they are currently making a couple of other changes which increases costs to volunteer organisations and I'd predict the benefits are negative once they take into account lost consumer surplus from eventual changes and reductions in volunteer activities. You can find one mentioned at 
http://www.stuff.co.nz/manawatu-standard/news/63962701/New-safety-reforms-threaten-volunteers  

and another at
 http://www.scoop.co.nz/stories/BU1412/S00202/new-sentencing-act-exposes-businesses-and-individuals.htm 

They might not have any impact, but.....! Since volunteer organisations fall under the jurisdiction of the health and safety in employment act you can see why the sentencing act changes are a potential problem for them. It also seems to me to undermine the no-fault basis of the ACC scheme. I think ACC has some problems, but the no-fault provision is incredibly useful in not having to worry about frivolous lawsuits to extract payments to avoid the costs of the suits going to court, which then result in noticeable restrictions on people's activities, such as children playing where there is any tiny risk of an injury!

The link to the Manawatu Standard article has since died; I don't know whether they pulled it because the government has issued a very recent clarification, or if some other error has occurred. Can anybody confirm how the changes to legislation will be affecting volunteer organisations?

I also found a press release from an insurance company warning outfits to get liability insurance because ACC no longer shields against lawsuit:

Ms Cross says that under the previous legislation even the most serious accidents would rarely result in reparation awards over $100,000, “but with this new law, the figures are likely to be significantly higher.”

Ms Cross says that businesses should seek advice from their broker whether their statutory liability policy has the required level of cover, as this amendment will have potential impact when there is a breach of the Health and Safety legislation.

She pointed out that companies would not be able to insure themselves against any penalties but could get insurance that would cover reparation and legal costs.

Ms Cross says she will be working closely with her clients at Crombie Lockwood to prepare for this law change.

“At this stage it is still a bit unclear how the courts are going to use this new tool, but you wouldn’t want your company to be the guinea pig.”

I'd thought that the basic deal with ACC was that we gave up our right to sue in exchange for a mandatory kinda-ok-but-really-kinda-not insurance programme, with the whole thing making sense because U.S.-style tort excesses are worse. I suppose that potential damages are here limited: if the most that a party can be liable for is 20% of the total ACC claim, and if ACC doesn't really pay that much, then potential liability stays below that in the States.

Connecting dots

If the government makes company directors personally liable for criminal charges if they've not exercised sufficient due diligence around employee health and safety risk, should we act all surprised when companies start deciding that a lot of things are too risky?

Earlier this year, MBIE sent around the draft guidelines. It's not law yet, but it's coming. Here's one precis:

Having already released a Guideline document for Directors on managing health and safety risks [Good Governance Practices Guideline for Managing Health and Safety Risks ] the government has now released an Exposure Draft for the proposed new legislation, expected to replace the Health and Safety in Employment Act 1992 sometime in 2014.  The Exposure Draft contains a raft of wide-ranging reforms.  However, the purpose of this article is narrow; to look at the new Directors’ obligations under the proposed legislation. 

What is changing?

The new Health and Safety at Work Act will impose an active duty on those in a governance role to proactively manage workplace health and safety.  Under the present legislation, the Directors of a company can only be held liable for a breach of the Act where they have participated in, contributed to, or acquiesced in their company’s failure.  The new laws will impose a due diligence role on Directors with regard to health and safety. 

...

What happens if an Officer doesn’t meet the obligations?

An Officer of a PCBU can be convicted of a failure to meet the due diligence requirements whether or not the PCBU has also been convicted of an offence.  However, if an Officer hasn’t met his or her specific duty, chances are pretty good that the PCBU itself has also fallen down somewhere along the line.  Consequently, a Director of a business could be facing liability in respect of his or her Officers’ duties, as well as the business facing liability as a PCBU in relation to the same event.

There are three tiers of liability under the proposed legislation:

	Reckless conduct (where a duty-holder engages in conduct that exposes any individual to a risk of death or serious injury or illness, and is reckless as to that risk):	Failing to comply with duties and exposing individual to risk of death or serious illness or injury:	Failing to comply with any duty (including the due diligence requirements for Officers):
Individual but not a PCBU or Officer	Up to $300,000 fine and/or up to 5 years’ imprisonment	Up to $150,000 fine	Up to $50,000 fine
Individual who is a PCBU or Officer	Up to $600,000 fine and/or up to 5 years’ imprisonment	Up to $300,000 fine	Up to $100,000 fine
Body Corporate	Up to $3m fine	Up to $1.5m fine	Up to $500,000 fine

Is it any surprise that Solid Energy reckons that Pike River still isn't safe enough to enter?

Kevin Hague is likely right to point to personal liability as a potential issue; I wouldn't follow him in characterising this as putting commercial interests ahead of grieving families though.

It is heroic to require corporate directors to assume heavy personal liability including up to five years' imprisonment if their due diligence on entry risk wasn't 100% up to spec, under a new incoming legal liability regime with great uncertainty about potential application.

One wonders what other risky, but efficient, actions might be deterred under the new regime.

Free-range experiments

New Zealand schools are pretty free-range relative to America: no security guards, playground equipment that would have been banned in America a decade ago, pot-luck community lunches without freaking out about allergies or health inspection of parents' kitchens.

Maybe they're not free-range enough.

Ripping up the playground rulebook is having incredible effects on children at an Auckland school.

Chaos may reign at Swanson Primary School with children climbing trees, riding skateboards and playing bullrush during playtime, but surprisingly the students don't cause bedlam, the principal says.

The school is actually seeing a drop in bullying, serious injuries and vandalism, while concentration levels in class are increasing.

Principal Bruce McLachlan rid the school of playtime rules as part of a successful university experiment.

"We want kids to be safe and to look after them, but we end up wrapping them in cotton wool when in fact they should be able to fall over."

Letting children test themselves on a scooter during playtime could make them more aware of the dangers when getting behind the wheel of a car in high school, he said.

"When you look at our playground it looks chaotic. From an adult's perspective, it looks like kids might get hurt, but they don't."

If you don't know what bullrush is, think of a tackle version of red-rover. Here's a video from the experiment's initiation last year.

And it gets results:

Swanson School signed up to the study by AUT and Otago University just over two years ago, with the aim of encouraging active play.

However, the school took the experiment a step further by abandoning the rules completely, much to the horror of some teachers at the time, he said.

When the university study wrapped up at the end of last year the school and researchers were amazed by the results.

Mudslides, skateboarding, bullrush and tree climbing kept the children so occupied the school no longer needed a timeout area or as many teachers on patrol.

Instead of a playground, children used their imagination to play in a "loose parts pit" which contained junk such as wood, tyres and an old fire hose.

I hope this rolls out more broadly. I would love LOVE to see this as an RCT and watch the effects on child obesity. If you ban everything except sitting down, you'll get fat kids.

I can't wait to read the final write-up.

Currency risk

Radio New Zealand reports international student visa numbers are down; they blame the high dollar.

The real cost of tertiary education in New Zealand can vary substantially with exchange rates. There isn't much that any University can do about levels, but we could perhaps be doing more to reduce uncertainty.

Who is better placed to mitigate the risk of currency fluctuations: a family sending their kid abroad for study, or large enterprises with budgets in the hundreds of millions and with finance departments?

A first step in mitigating that risk would be exchange-rate-sensitive international student fees. We could offer tuition packages allowing international students a few ways of offloading currency risk:

• Pre-paying multiyear tuition to lock in current exchange rates, with guaranteed refund in home-currency dollars if the student drops out [the University then forward contracts or buys options to limit its exposure, enjoys earning interest on the pre-paid fees];
• Tuition guarantees: for an up-front fee, guarantee that the per-course tuition fee as measured in the student's home-currency will not vary upwards by more than some amount. Set the up-front fee so that it's enough to buy options to lay off the risk. So long as the University can buy those option contracts more cheaply and with fewer hassles than can a student, this should be a worthwhile proposition;
• Exchange rate insurance: the University sells to incoming students contracts that give them a cash bonus if their home currency drops by a set amount. Tuition is maybe a third to a half of an international student's total cost of study. If the home currency tanks or the NZD jumps, living here gets a whole lot more expensive. Universities can use the up-front fees to buy option contracts on foreign currency that would let them pay out the students in case of dramatic currency fluctuation. Again, so long as large institutions have cheaper access to these kinds of contracts, this should work.

As best I'm aware, no university in New Zealand offers these kinds of currency deals; I've never heard of their being offered in other countries either. The odds that I'm missing something big and important seem larger than that it's just the usual non-profit inertia - it's unlikely that everybody would be missing this trick if it really were a twenty dollar bill on the sidewalk. Then again, as Tyler Cowen put it:

I work in what is perhaps the most competitive and successful sector in the most competitive and successful economy of all time.

And yet what I see around me is a total, total mess.  And I believe my school to be considerably above average in terms of how well it is run.

If somebody can tell me what I'm missing, I'd appreciate it. 

Another option that could help, and as suggested previously, the government could guarantee that international students completing a degree at one of our better tertiary institutions would be given permanent residence on degree completion, subject to the usual criminal background and health checks. The path from student visa to work visa and residence is pretty easy, but it adds uncertainty for students who don't know that it's likely to work out. Making the default be permanent residence on completion unless you screw something up badly, rather than having to go back home unless you get everything right, could make the degree more attractive even when the dollar is higher for a longer period. Added benefit: foreign students currently cross-subsidise domestic students. Increasing the ratio of foreign to domestic students would effectively increase tertiary funding without it having to hit the government's books.

Update: Luis suggests some reasons:

@ericcrampton Management costs per student? Risk of screwing uphedging (e.g. ft.com/cms/s/0/adc3b9…)? Ratio private/gov funded students?

— Luis A. Apiolaza (@zentree) March 12, 2013

Management costs per student shouldn't be that high - when the student purchases the contract, you buy the option contracts, then forget about it until you need to execute. Risks of screwing it up are large though if universities are incompetent at this kind of thing. The link Luis provides points to the temptation to overmanage and earn on the hedge rather than just keep it as insurance. I doubt that any university's portfolio of international students includes enough home-government funded students to make the packages not worth offering, but it could be true in some places.

Group One Carcinogens!

I love how newspapers always catch the really scary carcinogens in the Group 1 list for comparison purposes. Turns out diesel exhaust is a Group 1 carcinogen.

Here's the Toronto Star:

The decision is a result of a week-long meeting of independent experts who assessed the latest scientific evidence on the cancer-causing potential of diesel and gasoline exhausts.
It puts diesel fumes in the same risk category as noxious substances such as asbestos, arsenic, mustard gas, alcohol and tobacco.

Otago Daily Times:

The decision puts diesel fumes in the same risk category as a number of other noxious substances including asbestos, arsenic, mustard gas, alcohol and tobacco.

Our public broadcaster, OneNews:

Diesel engine exhaust fumes cause cancer in humans and belong in the same potentially deadly category as asbestos, arsenic and mustard gas, World Health Organisation (WHO) experts say.
...The decision puts diesel fumes in the same risk category as a number of other noxious substances including asbestos, arsenic, mustard gas, alcohol and tobacco.

3News:

Reclassifying diesel exhaust as carcinogenic puts it into the same category as other known hazards such as asbestos, alcohol and ultraviolet radiation.

But, 3News also helps put things in perspective:

"It's on the same order of magnitude as passive smoking," said Kurt Straif, director of the IARC department that evaluates cancer risks.

The Christchurch Press and NZ Herald give the same summary as 3News. But the Herald gave a scarier assessment in a second article:

The exhaust from diesel was added to the World Health Organisation's list of most carcinogenic substances yesterday. It ranks alongside arsenic, asbestos, formaldehyde, mustard gas and plutonium as a major health hazard.

Plutonium! That's really scary! Way scarier than passive smoking!

So, what else is in Group One? Here's the Cancer Society. Lots of scary stuff like plutonium. But also a few other things that are a bit less worrying. As I wrote back in 2009 when Doug Sellman was putting alcohol up against plutonium and Gamma Radiation and Mustard Gas:

But here are some other known carcinogens that could have been listed alongside alcohol instead and would have been perhaps a bit less scary: ciclosporin (used to prevent organ rejection after transplant), estrogen-based oral contraceptives and menopausal therapy, risky sex (Hepatitis B & C, HPV, HIV), the sun, mineral oils, salted fish, wood dust, painting, boot and shoe manufacture and repair.

I call a win for the news outlets that quoted the IARC specialist that diesel exhaust is about as bad as second hand smoke. It's a heck of a better way of putting risks in perspective than pointing to freaking plutonium. I call place for those that gave a range of risks that included UV radiation - people have a handle on the riskiness of the sun. And a great big loss to anybody reckoning plutonium comparisons helped enlighten their readers. It would have been helpful if the Science Media Centre had put up the quote from Straif that helps readers contextualize things.

I still don't get how import restrictions on older vehicles, including both petrol and diesel, make more sense than better smog checks on older cars. I sit behind an awful lot of very horrible smelly mid 90s Toyota LandCruisers in Christchurch. Old vans are terrible too. Banning the import of 2004 models seems a pretty roundabout way of getting those stinkers off the roads.

VSL at the bottom tail of the distribution

Economists measure the value of a statistical life by looking at the compensation required to induce somebody to take a known risk of death. American estimates typically range around $7 million.

Radio New Zealand reports that some Kiwis are risking death stealing copper from live power lines for sale on the scrap metal market.

Copper has been stolen from live power lines in Whangarei six times in the last fortnight and Northpower says the thieves are risking their lives.

Network manager Graham Dawson says the thieves might get only $5 - $10 for the metal from a scrap dealer - yet they are putting their own and the lives of others at risk.

I'd be curious if Northpower has any estimates on the fatality risk accruing to those stealing copper in this way. All we'd really need are numbers on reported thefts and mortality events. It's easy to Google up cases of people dying doing this; it's also easy to find some less than appealing pictures of the results, so be warned.

Would you expect a 50/50 chance of dying if you did this 20 times? 100 times? The current NZ VSL measure used by MoT is $3.67m*. If the average copper heist from power lines yields $100**, then a thief who values his own life at the MoT estimated VSL expects a risk of death of 1/36,700. That seems very low. I've not been able to find any stats on number of thefts, or on aggregate deaths, but this story has 4 deaths in the first half of 2010 in the Appalachian region; I can't believe that there were close to 150,000 incidents of theft of copper from power lines over that six month period. It's rather more plausible that the risk is much higher and that individual VSL values are more heterogeneous than the average figure used for policy purposes.

It's worth keeping in mind strong heterogeneity in individual willingness to accept risk when thinking about regulations around safety.

* It's a measure derived from surveys of what people would be willing to pay for a roading improvement that would save on average one life, not from individual real-world choices over risks. We might expect a NZ estimate based on risk preferences to give a number somewhere around $5m if we work backwards from US figures and apply estimates of the elasticity of VSL with respect to income.

** Assuming that Northpower is lowballing the scrap prices to try to deter thefts. Scrap copper pays about $7/kg; even if stolen copper trades at a discount, would a copper theft really yield only a kilo or two?

Dog days of summer... this time with data

Two nice bits of data came of the last round of dog panic.

Here's ACC:

There were 3,435 dog attacks reported to 72 New Zealand councils in 2001/2. From 1989 to 2001, there were 3119 hospitalizations and one fatality due to dog bites. In the year ending 2003, ACC received 8,677 claims for dog bites requiring medical attention. [1]

A recent New Zealand study of adults who made claims to ACC for dog bites found that 26 per cent of the bites occurred in a public place and 21 per cent occurred at home, with the remainder divided between other types of private property. [2] In this study, only 11.6 per cent of dogs were loose and unsupervised in a public place, although other studies have found higher levels than this. Territory defence was the most common reason for a dog to bite, followed by accidental bites due to pain or fear. Pure-bred dogs were responsible for 40 per cent of bites, mixed breeds for 27 per cent and the remainder unknown. The top fi ve pure-bred categories were German Shepherds (8%), Pit Bull Terriers (7%), Rottweillers (6%), Jack Russell Terriers (4%) and Labrador Retrievers (3%).

Here's the underlying survey data, though note that this is just on adult survey respondents; folks seem most outraged about attacks on kids.

As pit bull terriers are pretty uncommon and labs are very common, the conditional risk presented by pit bulls is pretty high, although that could easily be due to that scary people who like to abuse dogs and to intimidate people choose that breed; if that breed were banned, scary people would likely converge on another breed pretty quickly. Note also that a reasonable proportion of mixed breed attacks will likely involve Staffie-crosses.

If less than 12% of dog attacks involved dogs running loose, where ownership would be most difficult to pin down under a liability regime, that increases the likely feasibility of a strict liability plus insurance regime over alternatives.

More data: the Department of Internal Affairs's Dog Safety and Control Report:

Looking at dogs by breed and considering only those with more than 500 in the NDD, the highest rate of dangerous dog classifications are for the pure-bred American Pitbull Terrier with 1.9% of 3,469 classified as dangerous. Next are the cross-bred American Pitbull Terrier (1.4% of 3,258) and the Dogue de Bordeaux (1.2% of 599 dogs). All the remaining 126 breeds with 500 or more dogs in the NDD have a dangerous rate less than 1%.

In terms of actual numbers, the American Pit Bull Terrier pure-bred has the largest number (67) of dangerous dogs in the NDD, followed by the Staffordshire Bull Terrier (48), the American Pit Bull Terrier cross (46), the Labrador Retriever (43) and the German Shepherd (42). Some 352 breeds did not have any dogs classified as dangerous.

This all makes me more confident in my current heuristic: upweight the chances that a dog and its owner are dangerous if the dog is a Pit Bull. That gives no argument for banning Pit Bulls, as scary owners would shift into other dogs - a determined psycho could turn a German Shepherd into a scary attack dog fairly easily.

And in response to a couple of comments on a prior post: the point of a strict liability regime isn't to ensure compensation to those bitten. It's to ensure that an actuarily fair premium is assessed on owners who are compelled to buy liability insurance as part of dog ownership so that owners who pose too great a risk are priced out of the market. But as liability insurance isn't even mandatory for car ownership, I'm less than optimistic about the chances for it in dog ownership.

HT on all of this: Wayne Heerdegen, who spent a bit of time at Treasury working on dog policy.

Motorcycles

Patri Friedman will think less of you if you drive a motorbike: they're just too risky. He cites stats of fatality rates twenty times those of automobiles, corrected for miles driven.

But those numbers don't correct for agent type. What he really needs, and what I don't think exists, is data on relative fatality rates for risk-averse drivers in both types of vehicles. I'm sure motorcycles are still riskier, but twenty-times riskier, correcting for agent type?

Specify that there's an underlying distribution of risk-aversion running from highly risk averse to highly risk/thrill seeking. And, suppose agents sort across vehicle class by underlying risk aversion. So the most risk-averse agents buy a Volvo, the median agent buys a Toyota, and the most risk-preferring agent buys a motorbike. If we then find that motorcycles have higher fatality rates than cars, I don't know what portion of the difference comes from agent heterogeneity and how much comes from motorcycles being more dangerous.

How could you tell? Well, one way would be to check the proportion of motorcycle riders with health insurance as compared to car drivers. David Hemenway's propitious selection story suggests that risk preference is correlated across different types of behaviour, so adverse selection stories in insurance are overstated: he finds that motorcycle riders in accidents without helmets are more likely to be uninsured than those who wore helmets. In other words, folks who like risk take more risks. So, get some measure of risk preference derived from health insurance status (or life insurance, or credit rating, etc), use it in probit estimation for the likelihood of being in accident, then adjust the motorcycle stats for underlying agent type. It would be a big job, and I'm not going to do it, but it would be a cool paper for somebody who had ready access to the data.

So, to the extent that Patri is right to cast aspersions on motorcycle riders, it's because it might be an efficient signal of underlying agent type. But Patri, if you already have all kinds of other signals about somebody's underlying type, perhaps don't downgrade an otherwise risk-averse person quite as much as you otherwise would: it's highly unlikely that they're facing a 20X average risk.