Have you considered using prices?

Talk about an elephant in the room.

Radio New Zealand's story on unregulated informal sperm donor networks is a great chronicle of what happens when you ban payments for sperm donors, without once mentioning that the whole thing is consequence of a ban on payments for sperm donors. It's like a murder mystery where all the facts are laid out, but nobody has figured out who the obvious killer is. It really is the butler! Why hasn't anyone arrested the butler!

What do we find in this story?

• Waits at official fertility clinics of 18 months to two years (blamed in part on increased demand from single women);
• High costs at fertility clinics: $300 for an initial consultation, donor's testing costs of $1500...
• Men shunning clinics because donating at the clinic is costly to them: "The clinics, they just don't simplify the process. The donor has a life too. If I have to go through a clinic, I have to do a consultation and therapy and it takes six months to help one person. It's too much."

What don't we find in this story?

Section 13 of the Human Assisted Reproductive Technology Act 2004:

13 Commercial supply of human embryos or human gametes prohibited(1) No person may give or receive, or agree to give or receive, valuable consideration for the supply of a human embryo or human gamete.
(2) Every person commits an offence who contravenes subsection (1) and is liable on conviction to imprisonment for a term not exceeding 1 year or a fine not exceeding $100,000, or both.

If the clinics could pay the donors for the increased hassle they face in going through all of the rigamarole required for that process, supply would increase. If demand increased, clinics could up the offer price to encourage greater supply. There wouldn't be 18-month queues.

It isn't like not paying the donors saves the customers a lot of money. The clinics just get the money instead - though it is a puzzle that they haven't increased fees by even more: Simple AI is cited as (only) $1500 per cycle.

The article notes the risks in the informal sector (potential lack of disease testing, etc). Maybe, just maybe, if the clinics could pay the donor at least enough to cover the hassles they face in going to the clinic, things would change.

Previously:

• The most predictable thing ever
• Unintended consequences: Assisted reproductive technologies edition

A Wisconsin Waste

When I taught Public Choice, I liked to give my undergrads a news story for their take-home final, and just say "Discuss with reference to the theory developed in your lectures and readings."

Dan Kaufman's story in the New Yorker on Wisconsin's Foxconn mess would have been a bit late in the year to make the final, but it was final-worthy.

A snippet:

But as the public has become aware of the spiralling costs for these jobs, the Foxconn deal has become something of a political liability for Walker, particularly among voters outside of southeastern Wisconsin. Those costs include taxpayer subsidies to the company totalling more than $4.5 billion, the largest subsidy for a foreign corporation in American history. Since Wisconsin already exempts manufacturing companies from paying taxes, Foxconn, which generated a hundred and fifty-eight billion dollars in revenue last year, will receive much of this subsidy in direct cash payments from taxpayers. Depending on how many jobs are actually created, taxpayers will be paying between two hundred and twenty thousand dollars and more than a million dollars per job. According to the Legislative Fiscal Bureau, a nonpartisan agency that provides economic analysis to the Wisconsin state legislature, the earliest citizens might see a return on their Foxconn investment is in 2042.

Oh - and much of the land for the deal was stolen by the Wisconsin government under eminent domain provisions.

To make space for Foxconn’s development, which will also necessitate many miles of new roads, the Village Board has been buying properties, sometimes using the threat of eminent domain to force reluctant homeowners to sell at a price determined by the village. Several weeks before the groundbreaking, the seven-member board went further. By a 6–1 vote, the board designated the entire twenty-eight-hundred-acre area “blighted,” which will allow Mt. Pleasant to issue bonds that are exempt from both federal and state taxes, and may also grant the village a more expansive use of eminent domain to seize the property of the few remaining holdouts, a small if highly visible group, whose property-rights fight embodies a wider sense of disenchantment with the Foxconn deal.

And it looks like Wisconsin's post-Kelo move to restrict takings was a sham.

Kim reached out to her political representatives, including her congressman, Speaker of the House Paul Ryan. “His response was: this is not a federal issue,” Kim said. “And that I should reach out to my state representatives.” That surprised her. In 2005, Ryan co-sponsored the Private Property Rights Protection Act, which was written in reaction to the Supreme Court’s decision in Kelo v. City of New London. That ruling allowed New London, Connecticut, to use eminent domain to take several homes for an economic-development project. “When someone works years to secure a home or establish a successful family store or restaurant, only to be forced by the government to give it up so a corporation can redevelop the land, that’s wrong,” Ryan said in a statement supporting the measure. The bill passed the House, 376–38, but failed in the Senate. (Ryan also attended Foxconn’s groundbreaking ceremony in Mt. Pleasant.)

The same year, Wisconsin passed its own law in response to Kelo, co-sponsored by Leah Vukmir, now the Republican U.S. Senate nominee. It outlawed the use of eminent domain to seize a property for use by a private corporation, with one exception: if the property was “blighted.” Kim believes the state law was written in such a way as to protect a new home like hers—it defined blighted property as one that is “detrimental to the public health, safety, or welfare.” However, the Village Board has relied on a different statute, one that applies the designation for property that, among other things, “impairs or arrests the sound growth of the community.”

New Zealand needs to be very careful in giving Councils expanded powers for takings with urban development authorities. We need not follow America into that asylum.

For Kim Mahoney, the issue reinforced her determination to keep fighting. She pointed to the Creuziger’s Land of Giants Pumpkin Farm, the last big holdout. The four-hundred-acre property has been in the Creuziger family for ninety-two years, but the family was ordered to vacate on October 8th. (After the Cruezigers challenged the move in court, the village withdrew the order, saying it won’t need the land for another year.) “If they’re allowed to do this, they can do this to anybody at any time,” Kim said. “Wisconsin’s eminent-domain laws and private-property-rights laws are meaningless. All they have to do is rezone it and call it blighted.” On my last visit with the Mahoneys, the big Caterpillar machines were working closer to their house than usual, and the noise was louder. Jim and I were standing outside in his driveway. A brilliant orange-red sunset lit up the horizon, but it was hard to escape the sound. “It used to be so quiet here,” Jim said.

Rational voting?

Andrew Gelman argues it could be rational to vote. Sure, you're only trivially likely to change the outcome. But if you do change the outcome, the outcome is changed for lots of people. Add up the benefits across that broad set, specify that people are at least somewhat altruistic, and all's good, right?

He could be right in the current election cycle. I expect there is substantial value in the GOP being punished hard in each and every place it can be, all the way down to the vote on city dog-catcher. That outfit has to understand that reputation matters, and that failing to constrain Trump has more cost than benefit. It should be made to understand that backing a demagogue brings electoral death. It needs to be more scared of supporting Trump than of not supporting Trump. The party needs to be turned off and on again.

But the argument does require that the voter places himself or herself in an epistemically privileged position. You only change the outcome if you make or break a tie. You only make or break a tie if half of the voters in your district think you're providing a public bad with your vote rather than a public good.

Why do you think that your half of the electorate's the right one and the other half's wrong? Shouldn't you be updating, at least a bit, based on that half the electorate disagrees with you? Maybe you're the one who's done all the sums and has gotten things right, and the other side is full of idiots who'd wreck the country. But maybe there's a marginal voter on the other side who's your mirror image and thinks the same of you.

There's probably somebody reading this now who thinks my second paragraph is complete rubbish and that there's a lot of value in stopping particular Democrats from being elected. And that person could be right!

So I don't think this makes for a generalised "Yes, it's rational to vote" argument. It could be combined with a Jason Brennan "If you're going to vote, you have a duty to vote well", so that it's rational to vote if you have really good reason to think you're better informed than other voters. Feel lucky?

Previously:

• No it can't!
• Economist irrationality

Disruptive classmates

You can do great work on education in New Zealand's Integrated Data Infrastructure. It lets you link kids to their parents and families, so full family background from parents' education to criminal records can be used as explanatory variables.

But you can't do this. From Scott Carrell, Mark Hoekstra and Elira Kuka in the November AER: The Long-Run Effects of Disruptive Peers.

A large and growing literature has documented the importance of peer effects in education. However, there is relatively little evidence on the long-run educational and labor market consequences of childhood peers. We examine this question by linking administrative data on elementary school students to subsequent test scores, college attendance and completion, and earnings. To distinguish the effect of peers from confounding factors, we exploit the population variation in the proportion of children from families linked to domestic violence, who have been shown to disrupt contemporaneous behavior and learning. Results show that exposure to a disruptive peer in classes of 25 during elementary school reduces earnings at age 24 to 28 by 3 percent. We estimate that differential exposure to children linked to domestic violence explains 5 percent of the rich-poor earnings gap in our data, and that each year of exposure to a disruptive peer reduces the present discounted value of classmates' future earnings by $80,000.

The IDI can tell you which school a kid attends, but cannot tell you which classroom that child is in. You can neither link children to their teachers nor to their classmates because that information isn't held in central government's administrative data. So the best you could do is get the school's proportion of kids with relevant CYF notifications or family policing records.

It's a bit of a shame - I wonder whether much of what parents seek in higher decile schools isn't educational quality, but avoiding disruptive peers.

Grades

There's an old joke that profs aren't paid to teach, they're paid to grade. Teaching is a joy. Grading is a nightmare. 

Back at Canterbury, I taught relatively small classes and so didn't get assistance with the grading. But you had to get it done and get the grades back to the kids so that, if they were seriously getting things wrong, they had time to chat with you about it before the finals - or at least have feedback .

Auckland University of Technology's union members are doing a disservice to those students. 

AUT students are frustrated they're having to sit final exams without knowing whether they've passed previous assignments as staff on a marking strike withhold their grades.

More than 750 Tertiary Education Union (TEU) members at the university are refusing to release students' marks unless AUT agrees to raise their salaries by three per cent and pay the lowest paid staff the Living Wage – $20.55 an hour – to more adequately reflect the "time, energy and skill that staff put into their jobs".

Students said it was unfair they had been left in the lurch by the strike and that being kept in the dark about their academic progress was making the exam period more stressful.

The worst part of this isn't anything here mentioned.

Yeah, kids will have a bit of a harder time figuring out how to optimise their studying efforts across classes - but I've never been all that convinced that knowing precisely how many points they need on the exam to pass the course really is all that helpful.

The worst part is that they could be studying from saved versions of their assignments without knowing whether those assignments are right or not.

A student in his final year of AUT's bachelor of computer and information sciences said he and his classmates were yet to receive marks for any of their assignments – one of which was submitted more than a month ago – for one paper due to the strike.

He and his classmates sat their final exam, worth 50 per cent of their total grade, on Tuesday.

The AUT Student Association has come out against the tactic, but could be doing a bit more for future students. If this had happened while I was a student, I'd have wanted a list of lecturers who'd pulled this stunt so I could avoid their courses. I wonder if the Student Association has considered doing that.

And I wonder what the university will do with grade appeals of the form "I screwed up this question on the final exam because I had no feedback on the assignment covering this section and so no opportunity to correct my error. I would have passed the exam had I had that feedback."

Electric trains

In 2016, Kiwirail decided shift to an all-diesel fleet. At the time, it made some pretty compelling arguments for the change:

• Running an electric bit in the middle of a diesel network meant shifting everything from one set of engines to another set of engines;
• Running two sets of maintenance yards is expensive;
• Shifting to an all-electric North Island system would cost at least a billion dollars for the trunk lines and would still need diesels on the feeder lines that didn't have the electric infrastructure, so you'd still have all of the engine-switching problems. And the Wellington power system is different from the Auckland system in ways that matter for setting this stuff up;
• The overall costing of diesel engines over the operational life was 20-30% lower than the cost of electric engines;
• Rail emissions are only 1% of all transport emissions, and transport is 17% of overall emissions. 
• So - things that make rail less attractive as compared to trucks can wind up doing more harm than good (my point rather than theirs)

This week, Labour decided that Kiwirail should keep its electric railway-within-a-railway, keep switching engines mid-course, and refurbish its old electric engines. Because climate change. A Massey prof said they should have gone further and electrified the whole system. 

All of this seems insane. If we care about climate change, as we should, the best way of dealing with it is by working through the ETS. If the costs of diesel went up because the carbon charge in the diesel went up enough, maybe switching to an all-electric fleet would make sense. But if it didn't, then the government playing at political football with a State-Owned Enterprise means we're paying over-the-odds in mitigating carbon emissions. 

Does it really seem likely that the government can do the most good in mitigating emissions by pouring this kind of cash into the electrification of the rail system rather than by buying up NZU on the ETS and retiring the credits?

Update: A reader runs a few back-of-the-envelope numbers on this, copied below. It gives a rough measure of the costs of abating carbon emissions by electrifying rail. Add some appropriate confidence intervals around it, but it's at least an order of magnitude more expensive than current carbon prices - you could abate emissions by about ten times as much by putting comparable resource into buying and retiring NZU in the ETS.

Here goes.

NZ Gross emissions: 78,700,000
Transport share of gross: 17.3%
Rail share of transport: 1%

Rail emissions then on the order of 136,151 tonne per annum.

Cost of diesel conversion: $1 billion, minimum
At 6% discount rate, annualised cost: $60,000,000
Cost per tonne emission reduction: $518/tonne.

(assumes 15% fossil fuel based electricity generation, but also assumes complete rail carbon abatement but for that 15% - which won't happen because the feeder lines still have to be diesel). 

Birthright citizenship

President Trump's proposed end to birthright citizenship not only goes against the 14th Amendment, it also targets the wrong group.

Kids born in America and raised there are going to be American. Work by Cato shows that migrants to America share Americans' values; the children of migrants look a lot like everyone else.

But there is a group of people made American citizens at birth who shouldn't be. If they want citizenship, they should at least be forced to apply for it when they turn 18 and demonstrate an actual commitment to America.

I'm talking about the children born to those least patriotic and least loyal of Americans - those Americans who have fled to live abroad. Like all migrants, they wind up sharing the values of the country where they live. Their children will be born in foreign places, will not be raised with American values, and yet are American. America insists that those children are American - they do not have the option not to be.

Leave America to join Isis, have kids there, and raise them to share decidedly un-American values? Those kids get an American passport whether they want one or not. Flee to Canada in protest against Trump and raise the kids you have there to hate the American flag? Those America-hating Canadian kids are American. Run to North Korea because you love communism, have kids there, and raise them to follow the juche philosophy? Those kids are American too and can come back on an American passport any time they like, without the permission of anyone. [Update: without the permission of anyone in America anyway! Getting the actual passport could prove difficult.]

You wouldn't want to completely cut those kids' ties to America. It's not their fault their parents are traitors. But you should check that those kids don't actually hate America before considering them citizens. Right now, they're American whether they want to be or not. They can show up and collect American welfare, any time they want.

The 14th Amendment says that "all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." Somehow, Congress has expanded that to include all persons born outside of the United States if one of their parents, no matter how disloyal, is American.

Kids born abroad to American parents who have been resident abroad for a while and aren't just on holiday somewhere else - they shouldn't be American by birthright. They should be eligible for a very easy path to citizenship, on application, when they turn 18, or if their parents move back to America with them. Otherwise, it seems nuts to consider them American. Fixing this is consistent with the 14th Amendment and should be supported by everyone who thinks that citizenship requires at least some kind of commitment to your country. It devalues American citizenship to so liberally throw it around.