Heartbreaker

The correlation between alcohol consumption and any particular disorder matters a lot less than the link between alcohol consumption and overall mortality. Anti-alcohol folks like to talk a lot about that alcohol consumption increases cancer risk (while ignoring that moderate consumption reduces stroke and heart disease); the other side downplays the cancer link while highlighting the cardiovascular benefits.

They're both real, but what matters is the net effect: the J-curve. People who drink about a standard drink per day are about 14% less likely to die than are never-drinking teetotallers,* and the benefits of moderate consumption wash out by the time you're consuming about 3-4 standard drinks per day. And the risks mount from there.

Another study is out on the cardiovascular benefits of moderate drinking. There are some oddities in there, like finding differences across different types of alcohol. Rimm & Moats' 2007 study remains the most convincing: they restrict things to a sample of healthy adults with few potential unobserved confounds and find that moderate drinkers' relative risk of chronic heart disease was 0.38. Drinkers' chances of getting chronic heart disease are less than half of abstainers' risk. They conclude:

The evidence discussed above provides substantial support for the hypothesis that moderate drinking reduces the risk of CHD. Beer, wine, and spirits all have demonstrated significant benefits. These benefits are likely mediated through strong and lasting effects of alcohol on HDL cholesterol, fibrinogen, and glycemic control. The ‘‘sick-quitter’’ hypothesis and the concern that moderate drinkers lead a healthier lifestyle may explain a small proportion of the benefit attributed to alcohol in some studies, but recent studies which have removed sick quitters, updated alcohol and covariate information on diet and lifestyle factors, and separately documented benefits of alcohol among healthy and unhealthy populations further add to the evidence that moderate alcohol consumption is causally related to a lower risk of CHD.

So it is interesting that the New Zealand Heart Foundation's Heart Age Forecast Tool doesn't ask about your alcohol consumption. If you can cut your risk of chronic heart disease by more than half by drinking moderately, shouldn't that be in the Forecast Tool? The Heart Foundation tries to downplay the effects of moderate alcohol consumption on CHD, saying that the benefits don't hold for everyone. But if most of the benefits come from drinking in middle age, and the forecast tool asks your age...

* Update: the relative mortality risk of moderate drinkers as compared to never drinkers is 0.86. So whatever your risk of dying if you're a non-drinker, moderate drinkers' risk is 86% of that.

Planning externalities

The Finance Minister's speech to the Victoria University Business and Investment Club last week was excellent. I was not in attendance, but the text is now available online.

After running through a litany of areas where the application of market signals through policy reform improved outcomes - from agriculture to energy, he turns to housing. He walks through how urban planning regulations have jacked up housing costs, delayed new construction, worsened housing price cycles, hurt economic growth, driven inequality and cost the government plenty in state housing and accommodation supplements.

So these are the reasons why the Government pays attention to the housing market and issues stemming from poor planning.

For those among you who are economists, I would go so far as to say that while the justification for planning is to deal with externalities, what has actually happened is that planning in New Zealand has become the externality.

It has become a welfare-reducing activity.

And as with other externalities, such as pollution, the Government has a role to intervene, working with councils to manage the externality.

We're starting to get analysis that shows planning’s costs.

Too often the discussion about how our cities are planned is couched in vague terms of general good. "A world-class city." "Quality urban design." "A liveable, walkable city."

Those are all desirable, achievable objectives. But we need to understand the costs of achieving them so that we can make the trade-offs transparent.

I love it when people rediscover Tullock's 1998 argument that policy itself generates external costs that are underappreciated - which was of course simply an extension of his 1962 work with Buchanan on external costs and decision-making costs in The Calculus of Consent.

And it gets better:

As we get more information about what actually happens, often we find planning doesn’t achieve what people think it is achieving.

Planners and councils have a very difficult job in planning our urban areas.

Cities are incredibly complex systems. They are the product of millions of individual choices.

The idea that a small group of people could understand what choices we're making is asking too much of them.

Not because they are in any way incapable. But because the task is overwhelming.

The Auckland Unitary Plan is 3,000 pages long.

It's trying to regulate everything from the size of bedrooms to biodiversity in the Waitakere Ranges. No one person could possibly understand all the trade-offs in that plan.

Which means many of its effects will be certainly be unintended.

Planners can’t know everything – so of course they can’t be perfect in making trade-offs on our behalf.

Successful planning requires an understanding of its own limitations.

And then we come to the meat:

The funding base for councils is increasingly people on low fixed incomes. That is a product of an ageing population.

So you can understand why councils are under pressure not to expand if they think an expanding city is going to push up rates for existing ratepayers.

Councils need clear funding models so that development worth having can occur and future homeowners and current renters who might want to buy are taken into account.

So that's a brief overview of how important it is that housing is regulated in a way that enables flexible supply, and I hope some indication of the progress we're making.

That progress is necessarily slow, because these issues are complex.

If we better understand the economics of what is happening we can make better choices about housing regulation.

And that depends on one of the most important parts of public policy, which is the institutional arrangements by which those decisions are made.

That means looking at the incentives confronting an individual sitting in a council when making a decision about whether to allow a new subdivision.

We need to understand the incentives councils are reacting to.

Next month the Productivity Commission will produce a further report on the regulation of land supply. It will be another input into further, ongoing improvements in this area.

And we are seeing new thinking on a range of issues affecting housing, including from councils.

Often politicians are accused of being focused on the short term. That’s one of the reasons this issue has never been dealt with properly in the past.

The Government is taking a long term view.

All of the things I've talked about today will take 10 to 15 years to sort out.

So it’s important that a broad group of people understand our single-biggest asset class – the most-important asset most of us will own – how is valued, how it is regulated, and how it can contribute to our general welfare.

The New Zealand Initiative's report on policy trial zones, coupled with improved council financial arrangements to strengthen incentives, will be coming out 19 October.

I hope to see you at the report launch.

The Canadian Leaders' Debate - that could have been

Here's Chris Selly summing things up:

All three leaders are now trying to establish their free trade bona fides while simultaneously trying to defend supply management the most.

— Chris Selley (@cselley) September 29, 2015

Here's what I'd have loved to have heard instead, from any party leader:

“Right now, Canadian dairy prices are much higher than they need to be. Mothers pay too much for infant formula; families pay too much for cheese. And the system as a whole doesn’t even benefit dairy farmers any longer: getting into the industry is expensive because buying quota eats up whatever benefits the system provides to farmers. But there is a better way."

"We are committed to protecting the quality of dairy products on store shelves – as we are with every food product sold in Canada. But we don’t protect food quality with 300% tariffs for vegetables, fruit, or thousands of other products that cross our borders each and every day. For that, we use food inspections. The dairy quota system isn’t necessary for protecting food quality.”

“Today, we are buying back all of the dairy quota and opening the borders. Farmers should not see their retirement savings wiped out by a policy decision from Ottawa. We are able to afford to do this because dairy prices, in a competitive world market, are low enough that we can fund the buyback with a levy on all dairy products sold in Canada while still keeping prices lower than they are now. And those levies will disappear when the bill is paid in full. Canadians will have better access to the world’s products, and Canadian agricultural producers will have better access to world markets.”

It's simple. It would work. But Canada gets the government it deserves, and it gets it good and hard.

Depressing trade talk

Canada, you make me sad.

Late last week, the Liberals said they won't support any TPP deal that makes concessions on supply management in dairy. This is no longer the party of Martha Hall Findlay, who was about the lone voice of sanity on Canadian dairy. Here's how the Liberals' ag critic is now pitching it:

“If they (the Conservatives) have opened the borders to the United States milk in here, we are not going to be supporting this deal,” Eyking said in a interview. “Our position (is) that it [supply management] should not be on the table. Period.”
“Any agreements that we worked on before as Liberals, supply management was never on the table,” Eyking added. “So, our position is, if the Americans are even pitching this, they must be talking. So who else is pitching it? New Zealand has a a glut of milk … the world has a glut of milk.
“They’re all over-producing. We’re not overproducing. They’re all over-producing and they want to dump it here.”

There are nasty Canadian dairy political realities.

Several protests have already happened in Quebec, including one in Montreal this week attended by some 1,500 farmers from Quebec, Ontario and the Maritimes.
In August, 1,000 farmers protested outside Conservative cabinet minister Maxime Bernier’s office in la Beauce. Bernier is the Minister of State for small business, tourism and agriculture. Beauce is also home to one of the highest concentration of dairy farms in Canada.
Bernier, Fast and Agriculture Minister Gerry Ritz have stated that the federal government, and TPP negotiators, will protect the ‘three pillars’ of supply management — price, import control and production management — at the negotiating table.

Why do Canadian dairy farmers fight it?

“It makes me hot,” dairy farmer Ron Churchill said Friday during a farm visit. Churchill is the manager for Rocky Mountain Holsteins, which specializes in dairy genomics. “I hope it [TPP] doesn’t go through.”
If supply management is dismantled, or concessions are made, he said, it will be a “free for all” in Canada’s dairy sector.
While Churchill said his farm’s revenue come primarily from exports and sales of dairy genetics, he still milks 30 cows. His quota, he said, is worth $1 million, while his cows are some of the most expensive in the country. He recently sold a cow to a B.C. buyer for $197,000.

Emphasis added. If a trade deal threatened to wipe out a million dollar regulatory asset you owned, you'd fight it too. Just like the mafia didn't want the end of prohibition.

Canada could have avoided this. Set TPP as a reason for buying out the farmers' quota at a price matching what quota was running a couple months' prior to the deal. Put a tax on dairy product a bit shy of the quota rents embodied in current Canadian dairy products, and have it apply across the board for imported and domestic goods. Retire the tax when the bonds used to cover the dairy buy-out are paid off. Not wiping out the retirement savings of a bunch of politically attractive dairy farmers could make things a bit easier.

Meanwhile, here's how one Canadian source is characterising the negotiations:

Frictions over agriculture have been overshadowed by autos since Maui, but still bubbling below the surface.
Battered and bruised Kiwi Trade Minister Tim Groser is not at all optimistic about the prospects for success. Could we see New Zealand walk because there are no net benefits? I would normally say no – New Zealand too understands the importance of being inside the tent. But this is a no net benefits deal for New Zealand which is being asked to take on very unpopular obligations.New Zealand is between a rock and a hard place – capacity was built to benefit from Kiwi free trade with China – and it worked for a while, but even China says enough is enough from their largest dairy supplier.
New Zealand is all about dairy. It has done well by its specialization – but it is in a position much like a company which has relied on a single customer – or product. Minister Groser will dig in his heels in Atlanta – he has no choice. Groser is facing the realities of negotiating for a small market. He needs to be bought off. At the end of the day, New Zealand is in a position similar to Canada. It cannot stay outside the tent. It is not going to get what it wants, so it must hope that it wants what it gets. Disappointment seems inevitable.

I'm really pretty sure that New Zealand would be pushing for free trade in agriculture regardless of current market conditions. New Zealand supports free trade.

The piece does note a few other ag problems - American dairy is far from free, as are Japanese rice markets.

And remember how I figured that TPP access to North American markets could prove illusory?

Fonterra, an effective monopsony – enjoying a degree of buying power which could not exist under competition rules in the US, EU or Canada – has cut its payments to Kiwi dairy farmers from $8.40/kg milk solids in 2014 to a current $3.75. Fonterra is practicing its own form of supply management, holding back supply to try to increase prices. [EC note: this has increased to $4.60]
Fonterra is being criticized by its farmer members for mismanagement. NZ dairy farmers call it a failed experiment. The TPP is seen as a way to keep NZ dairy farmers from going out of business.

Fonterra is a big part of the New Zealand market, but there are alternatives and no particular regulatory barriers to anybody who thinks they can do a better job. Farmers can switch over to Synlait, or Tatua, or Westland, or small local plants like Miraka or Oceania. It's amazing that folks in a country where it is illegal to milk a cow and sell the product without a quota permit and where they get mad if you call it a cartel can claim with straight face that Fonterra's a monopsonist.

Expect more of such talk to set a public case for using antitrust action as trade barrier against New Zealand dairy product if we get a trade deal.

Quirky EQC self-insurance

Hoisted from the comments, here's some sensible comments from one of my former students, Tom Quirk, on the National Disaster Fund:

Hi Eric,

Part 1 – on the NDF and sovereign risk management
I wonder whether you’ve framed your analysis on sovereign catastrophe risk management in the wrong light. Let's start with a bastardized-but-useful adaption of your summary:

"Suppose that your wife tells you that you could save a lot on house insurance if you just paid her the premiums every month and she'd pay you if the house burned down. Seems like a good idea - keep the money in the family. She invests the premiums you pay her in getting the kitchen redone.....

[insert my bit]....

But before you tell her to put away new the kitchen plans and to think carefully about her risk-management shortcomings, you realize that it’s you who have forgotten something important: your wife is extremely wealthy - she owns 100 houses! Each house has its own, reasonably independent, risk (most of the houses are in different neighborhoods).
Now you could put the premiums towards offsetting the specific risk on your current house, which may now seem expensive (do you really need insurance given your enlarged portfolio)? Or you could put the premiums into an account to cover losses and risks across your wife's (and your) whole portfolio, which may sensible and efficient. Or, if the kitchen is going to save you a bunch of money in the long run, and your wife's housing portfolio has been performing well, maybe you should just spend it. [finish my bit]"

My point is that we need to take a “helicopter perspective” when thinking about government risk. The government’s comprehensive balance sheet is exposed to a plethora of risks and possible shocks: potential government losses from biohazard shocks (foot and mouth), bailouts of non-bank deposit taking instructions (South Canterbury Finance), bailouts of banking institutions (hopefully not!), leaky buildings, solid energy - and the list goes on. We should factor in all of these risks when managing and financing any individual specific risk.

It would be silly to have a large build-up of assets in a bio-hazard risk fund while at the same time the government has to finance costs from bailing out South Canterbury Finance. It would be equally silly to have the NDF busting at the seams while at the same time that the government is heading to international markets to finance huge costs stemming from a serious foot and mouth epidemic. The idea is that an NDF-type fund invested in real, non-NZ government assets will ignore diversification across the government's portfolio, unnecessarily ring-fencing risks.

What you really want is a pool of assets on hand to cover the potential losses from all shocks/risks across the government’s entire portfolio. And luckily, the government has one of these - its call the fiscal anchor (net debt, or whatever you want). Would you care if the government did not have NDF if, when it came to funding the EQC’s earthquake liabilities, net debt was at 10% of GDP? (maybe you’d want some liquid cash to finance immediate expenditures and avoid f/x crisis. But taking the Canterbury earthquakes as one data point, the exchange rate and Govt debt YTM dynamics weren’t that bad post February 2011).

So when we talk about sovereign risk management we need to keep in mind that the level of net debt is probably what matters most at the end of the day. The NDF and other asset accumulating instruments are, at best, a good political instrument that encourage people to compensate government for the risk it assumes (think of the NDF as a vehicle used by the government to convince people that the EQC levy it collects doesn’t go directly to the government coffers and government expenditure). At worst, NDF type instruments constrain governments’ ability to efficiently manage risk.

We should be asking government to explain and justify whether its net debt target builds in an adequate and appropriate buffer for the risks to which it is exposed, and not whether the NDF’s asset allocation is appropriate. My personal view is that the NDF actually matters diddly-squat, even if it holds tons of real assets. This is because the government can always increase its debt in line with NDF asset growth, nullifying it the net impact of the asset accumulation, while still at the same time still achieving the net debt targets it actually cares about. The NDF holding non-tradable NZ government assets is a cleaner and more efficient way to achieve this global optimal debt level.

Now there could be a good political economy justification for the existence of a real–asset NDF. If the MoF is worried that she/he is not going to be able to constrain her/his colleagues’ expenditures in the future, then the NDF – actually quite like the NZSF - could be a good way to put the money into a safety deposit box, politically and maybe even legally out of reach of prying hands. But let’s be clear, this is not the usual financial risk management argument for having a real asset NDF.

So in summary, what’s my point? It is this: you can have an NDF, and you might actually want one for political economy purposes. But don’t kid yourself that you should have one based on vanilla principles of efficient risk management.
There are a few caveats and alternative strategies that would justly refute what I’ve said so - asset-liability matching is a good example. But I’m lazy ad will leave these for another day.
Part 2 – on the EQC

I wonder whether our views of Govt earthquake risk management may also stem from differences in our views of the EQC.

The EQC is not a private entity where the residential risk it assumes through its Act is ring-fenced, insulating the government from losses. In other countries EQC equivalents do follow a more private model. In such countries your arguments re holding appropriate real assets would have some fair bite.

But the EQC act clearly places the Minister of Finance (or maybe now the EQC Minister? - can't remember) with ultimate power concerning the EQC's finances. From purchasing reinsurance and deciding on the strategic asset allocation of the NDF to pricing the EQC's levy premium, the MoF “wears the pants” relative to the EQC's board and CEO. And because the government is guaranteeing the whole thing at the end of the day, this is exactly the way you'd want it.

The heuristic I use to think about the EQC is that it is really just an acknowledgement that in the wake of a disaster the government would not be able to turn down a bailout of badly damaged and uninsured residential property (and that without the EQC buffer, for a number of commercial and behavioral reasons, levels of domestic catastrophe insurance penetration would likely be much lower). Instead of simply dealing with this problem after the fact – and its likely to be a much bigger problem after the fact - the EQC lets the government collect some money and compensate itself in advance.

Part 3 - some thoughts on the government’s procurement of reinsurance

If you assume the government is the final funder of the EQC, all but the most tail-risk target reinsurance will be relatively expensive. From a value-for-money perspective NZ citizens should be wary of huge reinsurance premiums.
Reinsurance layers/tranches are generally priced based on the expected value of losses (with adjustment for risk preferences and tail risk, operating costs, market conditions, returns/costs of capital, etc). As a result, lower layers with low excesses will be highly priced, and higher layers with large excesses will be priced relatively lower. (The price metric used is the “rate-on-line”, the premium costs as a per cent of the total risk transferred).

Should the government pay high rates-on-line for relatively to get coverage at a low excess level? I think this would be silly: the government has a deep and diversified portfolio; it has buffers and financing flexibility. Paying NZD 100million+ per year to cover the EQC risk (or other earthquake risks) at a low excesses (less than a good few NZD billion) is crazy.

The government can also likely finance losses at low excesses at a far lower rates than reinsurers, especially over the long run. Self-insurance would seem to me to be the first option government should examine in its risk management, especially given its risk profile, likely risk preferences, funding costs, revenue stream variability, etc. Governments can take a long-term time horizon that reinsurance business models simply cannot match; I imagine that Government financing costs across the entire yield curve will be lower than even the gargantuan reinsurers.

If the government can buy reinsurance attaching at a level high up the EQC loss distribution, it might make sense as a “tail-risk” management strategy. But, eeeekkk, I’d need to see some pretty good CBA to justify it. You’d need a strong argument as to why we’re not better putting the financing into building a bigger buffer in the net debt anchor.

It’s hard to be scientific around what appropriate reinsurance purchases might look like without doing the modelling or analysis. But I’d say - very unscientifically, and given NZ’s current debt levels - a reinsurance program attaching at over NZD 6-7 billion and going up from there might be worth considering. At least in a huge earthquake this might make a difference to our financial position. But how many years of forgone accumulated premiums, and consistent and building self-insurance, is this risk transfer worth? We’d need some modelling that I’m not sure has been done.

I do accept, however, that reinsurers may have some cost advantage compared to government; for one example, they can achieve cross-country diversification that governments cannot achieve. But I’m just not sure that these advantages outweigh the government’s self-insurance capacity and inherent diversification. It’s an empirical question for someone smarter than me to answer.

I agree with much of this as far as it goes, but think of the incentives then created.

Every homeowner taking out house insurance is forced to take on EQC insurance as well. In small events, all's well - the government's self insurance for the excess prior to reinsurance kicking in covers things without imposing noticeable burden on public finances. And the same holds if it is reinsurance all the way up.

Large events like the Canterbury quake, or a future Wellington one, strain government finances appreciably. There is no actual NDF on which to draw, as it all comes out of government borrowing. Under Tom's proposal, there might not be reinsurance on which to draw either; in the Canterbury quake, the government was on the hook for anything above the reinsurance draw.

EQC behaved, after the February earthquake, as though its purpose were to minimise costs to the Crown rather than to make good on its contracted commitments to policy holders. It is difficult otherwise to make sense of the numerous claims where EQC believed the house was well under-cap but the private insurers called it a complete rebuild.

And as good as the proposal from the Crown has been to increase the EQC cap to reduce the coordination failures between private insurers and EQC, that also makes it less likely that you'll be able to trigger assessment from your private insurer where you might get a fair shake.

Flag election data: Electoral Commission bleg

I wonder whether the Electoral Commission will keep and publish the data on vote preference orderings in the preferential flag ballot. There are 120 potential permutations on the 5 orderings, but ...rather more where there's ballot drop-off. Still, it shouldn't be unmanageable.

It would be really interesting to check whether there were major or minor cycles that went unrevealed, whether there was a Condorcet winner, whether the Condorcet winner was picked by the preference elimination routine, and whether different run-off options would have yielded different winners. Recall that a Condorcet winner would be the flag that beats each and every other flag in a head-to-head vote. If one exists (and it isn't necessary that one does exist), it is desirable that a selection mechanism select it. If there isn't one, all choices are kinda arbitrary anyway so no particular reason to prefer STV and top-of-order elimination over voting by veto or other mechanisms, but no particular reason to prefer the others either.

I've sent a note in to the Electoral Commission via their website asking that they keep the data and publish it. We'll see.

While we're at it, though, it does seem ... ridiculous ... that we'd be collecting all the preference data and then running an elimination routine without first checking for a Condorcet winner. STV doesn't necessarily pick the Condorcet winner, if there is one. It took me all of five minutes to come up with a preference ordering that failed to reveal one. Shouldn't that be the first stage check before running the preference ballot? The preference data needed for running STV is all you need to check for a Condorcet winner. The algorithm for checking wouldn't be all that hard.

Since we seem to be running all kinds of process changes under extreme urgency anyway, why not have one more process change and ask the Electoral Commission to start by looking for a Condorcet winner?

Manipulating an STV vote

Ok, so the Internets are all a-twitter about how strategic voters should behave in the coming flag vote, and whether it's possible to vote strategically.

Recall that there are now 5 options: 3 with ferns, monkey-butt, and the red peak thing. Let's denote these A, B, and C for the ferns; M and R for Monkey-butt and Red-peak, respectively.

Suppose there are five different basic types of voters. This is just a constructed example; I have no clue what the actual preference distributions are. But suppose that red-peak is the second choice of a lot of fern-lovers who have strong preference for their most-preferred fern as compared to the others. And that one of the ferns - nobody much likes that fern. You all know which one.

And so:

10 voters	7 voters	5 voters	3 voters	4 voters
A	B	M	R	M
R	R	R	B	R
B	A	B	C	C
M	M	C	M	A
C	C	A	A	B

Everyone votes for most preferred candidate.  If no majority, the one with the fewest first-choice votes is dropped and the second choice moves up for those voters. And so on until there is a majority.

• C has no first-place votes and is dropped in the first round. 
• Then, R is dropped because it has only 3 first-place votes.
• Then, M is dropped because it has only 9 first-place votes (to 10/10 for A&B)
• Then, B wins 15 to 14 in the final round.

Suppose that the four monkey-butt supporters in the last column don't like this. Their least preferred option wins. What happens if they lie and say that they prefer red-peak to monkey-butt?

10 voters	7 voters	5 voters	3 voters	4 voters
A	B	M	R	M R
R	R	R	B	R M
B	A	B	C	C
M	M	C	M	A
C	C	A	A	B

And the sequence:

• C is dropped in the first round.
• M is dropped in the second round, having only 5 first-place votes.
• B is dropped in the third round, with only 7 votes.
• R wins in the fourth round, 19 to 10 against A.

By lying about their preference ordering, 4 of 29 voters flipped the outcome from their last choice to their second choice. If you think this isn't fair or somehow bad, they've also made sure that the Condorcet Winner actually won:

• R>A 19:10
• R>B 22:7
• R>C (unanimous)
• R>M 20:9

If they hadn't lied, B would have won: an outcome that 22/29 people would not have liked. So are they so bad?

Again, this is just a trivial constructed example. It is not easy in the real world to tell what actual preference orderings are. And knowing what they are is important for figuring out strategy. At the same time, since no one vote will ever change the outcome of an election, neither will any one strategic vote.

But, in general, if you think that fern-supporters are divided across ferns, and that a non-fern option might be a strong second choice, you might want to list that second choice as your first choice if you fear winding up with a fern you don't like. Similarly, if you're a big fern-supporter and you're scared that splitting your first choice options across the field will let somebody else sneak up the middle, well, maybe go with the fern you think most others like best.

This isn't something unique to STV - all systems are manipulable (other than dictatorship). That's the Gibbard-Satterthwaithe theorem. It may take more information to run properly than is feasible in a lot of cases, but it's possible. 

Perhaps a better bottom line: voting is irrational if you think you're going to change the outcome; it's even more irrational to put a ton of thought into strategy where you're not likely to change the outcome. Do you run complicated strategies when picking lotto numbers?