Living Outside of the Asylum

If 100% Pure New Zealand has run its course, I'd like to suggest an alternative.

New Zealand: The Outside of the Asylum

We constantly rank at or near the top of international measures of transparency, lack of corruption, economic freedom, and personal freedoms. Every day my Twitter feed brings me new stories of how absurd the rest of the world is getting.* The US Department of Labor wants to ban farm kids from working on farms. The TSA destroys personal liberty and dignity in a vast theatrical demonstration that does less to stop terrorists than it does to enable TSA agents to mule drugs across the country. The American CFTC bans event derivatives as serving no useful purpose.

Meanwhile, in New Zealand, our Ministry of Labour worries about safety standards on quad bikes but nobody would dream of banning kids from working on their parents' farms. Our airports encourage travel, only imposing idiotic security measures when they're required as condition of flying back into the Asylum. And, iPredict provides an events derivatives market that brings us ever-closer to Arrow-Debreu worlds.**

We've been backsliding a bit since 2005 or so, and especially in Christchurch this past year, but we still retain a comparative advantage in not being utterly insane. A sane regulatory environment is what has Peter Thiel investing here. We're sanely considering disallowing software patents. Our anti-piracy legislation sanely demands that rights-holders compensate ISPs for some costs in delivering infringement notices. We sanely spend very little on national defence, knowing there's pretty much nothing we could do to deter somebody who could put up sufficient blue-water navy to get here.

Instead of having activists worried about the threat to our "100% Pure" image if a place that already markets itself on mining tourism opened another mine, we could have worries about our 100% Sane image whenever we deviated from sane policy.***

The customs inspection queue at every airport could have big signs welcoming new entrants: "Welcome to the Outside of the Asylum." It would be great.

And in the international departure lounges, we could have big signs warning people that, in the Asylum, whether their pastries will attract 20% VAT will depend on whether the pastries are supplied hot or supplied cold with ready access to a microwave. Or that, inside the Asylum, wardens may relieve you of your cash on flimsy pretext if you're stopped in a forfeiture corridor. Or that, inside the Asylum, all of your web traffic may be monitored by the wardens for the inmates' protection.

If you're reading this from inside of the Asylum, you have my sympathies. I'll head out to the beach with the kids this weekend to put up some decorations to make the Asylum a bit prettier.




* Recall Wonko the Sane:

One day, after coming across a set of detailed instructions on a set of toothpicks, John Watson, distressed and fearing for the world's sanity, built The Asylum to put it in and help it get better.

The Asylum can be described as a four-walled house turned inside out.

To elaborate: the ceiling turns outwards, the furniture and carpet rests on the coast, the door one would normally believe to lead into a house leads outwards to a lawn with benches and walking paths, an area John calls "Outside the Asylum", in which is mounted the instructions for the toothpicks to discourage going back in it.

** Just this morning, New Zealand's top political blogger started tweeting claims that both the opposition Labour leader's chief press secretary and his advisor quit. As the leader's performance hasn't been awe-inspiring, this could be early warning of a coup to come. Less than an hour later iPredict launched a contract on it and asked him to put his money where his mouth is. He has, and invites those who disagree to give him some of their money. As of 1:40 Friday afternoon, an hour after contract launch, we've had 121 trades and a price of $0.6755. I've no money in that market as I have zero information on which to trade. But I love that here, outside of the Asylum, it is dead simple for a legal market to open real money contracts demanding that pundits put their money where their mouths are. Just imagine how much more sane American talking-heads shows would be if there were real money markets where these guys could be held to account. I chalk it up to a lack of demand for sanity inside the Asylum.

*** Sane policy is neither right nor left, it just requires a commitment to acknowledging tradeoffs and setting policy consistent with desired ends. More and less redistributive systems are both eminently sane in pursuit of different goals. But there are more and less sane ways of getting there. Helping poor people by giving them money is sane. Helping poor people by giving home heating rebates to the elderly is insane, as is helping poor people by cutting the GST on fresh fruit. Do we really want to risk our 100% Sane image?

Doing it right

It's great to read a story where fan-sourced content is appreciated by the original work's author instead of stomped on. I'd seen the blog for the "Game of Thrones" cookbook after one of its bloggers visited here after I'd posted on food stores in Westeros. But I hadn't read the backstory of how they moved from blog to publication. The Wall Street Journal gives the story.

The book began as the brainchild of Chelsea Monroe-Cassel and Sariann Lehrer, two Boston twenty-something housemates who are “pretty obsessed” with the Martin books and the HBO series, Ms. Monroe-Cassel said.  Last March, the friends decided to blog about making food inspired by Mr. Martin’s books.  In May, they emailed Mr. Martin to let him know about their blog, and were stunned when he wrote back, saying he would mention the project to his publishers.

For his part, Mr. Martin was interested, because though readers over the years had suggested he write a companion cookbook to his series—detailed food descriptions run throughout the books—“I can’t cook,” Mr. Martin admitted in his forward to the cookbook.

With a penchant for taking creative projects to the extreme, Ms. Cassel-Monroe said she “organized a conspiracy” for Mr. Martin’s “A Dance with Dragons” book tour last summer, delivering baskets of pork pies, and oat and lemon cakes and organizing fellow fans to deliver similar baskets to Mr. Martin as he traveled the country.

And so they went from blogging to writing the official Game of Thrones cookbook.

There's also an unofficial Game of Thrones cookbook.

If you read TechDirt too much*, it's easy to get a bit depressed about rights-holders who seem more interested in stomping on their fans than in encouraging projects that are complementary to their product. It's great that George R.R. Martin gets it.

I'm looking forward to feasting when the book ships end-May. I wonder if David Friedman will review it.

* Today's edition of how-not-to-do-it: Hasbro, whose toys are now less likely to wind up in my shopping basket.

How Beer Created the World

From the "If it's on the Discovery Channel, it must be true" file.



They argue we moved to agriculture in order to get beer.

My biggest complaint? They forget that beer also gave us modern hypothesis testing: Student's t-distribution wasn't given its name because it's useful in undergraduate econometrics; it's the pseudonym that was used by William Sealy Gosset when he published his statistical results. Gosset was a brewer and chemist working for Guinness who needed to know how many trials he needed to run to be confident in his results. And so we have the t-distribution.

I don't put huge confidence in each and every claim, and a lot of the innovations that were pushed by brewing likely would have come anyway for other reasons; it's implausible that somebody wouldn't have figured out refrigeration even if Pilsner had never existed. But would we be so wrong to claim that people who hate beer must also hate civilisation itself?

HT: @MitchellHall

The Price of Milk, revisted

Salient, the student newspaper at the University of Victoria of Wellington,* tries to get to the bottom of popular complaints about the price of milk.** Skimming this late at night, I missed the bits about reptilian Masonic conspiracies and only caught the nonsensical economic claims - nonsensical, but not off the scale relative to typical journalistic standards. So I was doing my usual head-shaking "none of those claims really make any sense..." bit when I came to this part:

At this stage I still had more questions than answers, but only had one more name on my list: a controversial right-wing economist, Nick Crampon. He was noted for writing in support of the failed policies of the 1980s, and just this week had blogged against raising the minimum wage. Still, I presented my findings to him for comment.

“Ummm…” He said, looking confused and uncertain, “Ummm… none of those claims really make any sense…” He then proceeded to draw a number of graphs which I found hard to follow.

Mr Cheice was not impressed.

“Well, he would say that, he’s an economist, a discredited pseudo-scientist. He even once said in his blog that Roger Douglas had done some things right. Absurd. Everyone knows that the Reptilians do nothing for the common man, only for their Lodge-mates!”

That guy Nick sounds dodgy. I'd avoid him.

* Sex Robot University

** For less satirical results, see TVHE and AntiDismal

Wedding Hacker

While I cannot award a door prize for the 300,000th visitor to Offsetting, I can thank the visitor's referrer.

At The Wedding Hacker, two of my former students, who go by the monikers Mr. and Mrs. Cake, have begun chronicling their adventures in wedding optimization. They point to my old post on an alternative to wedding invitation A and B lists - assign probabilities to each guest's attendance and send out invitations such that the expected number of attendees matches venue capacity. We projected 125 expected attendees from 225 invitations; we got 124 attendees with a late cancellation due to illness. So long as you're comfortable with a bit of risk, this is much more fun than assigning friends and family to A and B lists.

Mrs. Cake provided me an excellent supply-and-demand themed cake after my Economics and Current Policy Issues course back in 2008. You can follow her adventures in baking here.

And you kids out there, remember that romance can bloom in the economics classroom.

The Price of Haircuts

Statistics New Zealand continues to prove itself the most fun stats agency in the world. Here's their infographic on the price of haircuts and the difficulties of quality-adjustment. And, here's their more detailed analysis.

I happily attend a barber (formerly of Manchester Street, now of Ferry Road) who gives me something close to the 1951 haircut for about $20. I am forbidden from attending any barber who would give me the 1981 haircut.

We'd also expect that non-traded, labour intensive goods like haircutting would outstrip the overall inflation index; productivity increases in haircutting have been smaller than those in other sectors, and the sector does have to compete for labour.

Overcome your Oxtyocin

Stephen Hickson forwards this email that made it through to our undergrad economics tutors. It's a nice little scam; hopefully, none of our tutors went for it.* Here it is:

Hello,

How are you doing today? As for me I am okay and my son is doing good. I would be more than happy if you can handle Mark very well for me because his all I have left ever since his Mother died four years ago. Payment for the lessons will be made upfront like I told you and will be by cheque. In view of this I will need you to email me the information required to send the payment as I will not like to send the payment to a wrong location.

I contacted his step Mother and she made me understood that she is not in a good financial condition to help the situation and this makes me to think of an alternative because am off-shore as a petrol chemical engineer and can not be able to make any payment arrangement directly to you. I will equally want your first meeting with my son and cousin on Second week of April for proper arrangement. Further information needed about my son will be giving to you on your first day of meeting my son and my cousin. I will advice you meet in a library because of your reasons.

I discussed this with my cohort who has accepted to issue you the payment his owing me in form of cheque. Meanwhile, the cheque he will be sending you will be ($3,000) which is a bit more than the cost for the 12 weeks ($600) Right? lessons. So please, I will appreciate your focus in rendering the service. As soon as you receive the cheque, I will like you to deduct the money that accrues to the cost of lessons, also the cost of the material needed for the tutorial service and you will assist me to send the rest balance to my cousin.

The remaining balance will cover the funds for Mark and my cousin's flight expenses down to the state and also to cover his living expenses in state. I think,I should be able to trust you with the remaining balance? I will give you the details of my cousin that you will send the balance of the money to as soon as you receive the cheque. Here are some of the details I will need for final assurance of the payment to you.

1. Full Name
2. Mailing address,
3. your direct telephone number

Once you get back to me with all the above details, the payment will be issued out immediately and it will be sent to you . Hope to hear from you as soon as you can and I am sure you will find my son as a good student.

It's a classic scam: demonstrate your trust in the recipient (by sending the cheque with what's very likely an overpayment) and expect the trust to be reciprocated (by wiring the balance back) before the recipient figures out that the cheque has bounced.

It's then a variant on the kind of scam highlighted in Paul Zak's TED talk around the 9 minute mark:

   

Being trusted gives you a little oxytocin boost, making you more likely to reciprocate. So be careful of oxytocin rushes.

Zak does interesting work; here's a summary at The Guardian. But where he talks a lot about how he likes to hug people to get (and to give!) Oxytocin boosts; I have more fun wondering whether electronics retailers could make a buck by having aerosolized Oxytocin near the spot where salespeople try to convince you of the merits of long-term warranties. 

Economists giving out hugs... Folks will think the whole profession's gone soft (mutter grumble)...

* They'd get part-marks for trying to scam the scammer: though that too is not without risk.

On the value of Wikipedia

Mark Twain tells the story of a New Zealand Professor coming to call at Yale. Whether it's true or manufactured - who knows.* But it could be true.

Yale etiquette, says Twain's correspondent, required that foreign visitors be flattered by laudatory comments about their country. But nobody at Yale knew anything about New Zealand other than that it was somewhere near Australia, perhaps connected by a bridge. The visit was very short notice, so the whole of Yale wound up spending the day trying to figure out where New Zealand was and some nice things to say about it.

According to the story, highlighted below, a reasonable part of a major academic institution shut itself down for a good part of the day trying to figure out anything about New Zealand - searching the libraries for anything relevant - while their wives kept the visitor busy and distracted.

Today, we can have a 5 minute flip through Wikipedia before the seminar speaker shows up.

Here's Twain's account of the story recounted him by another, HT: @LyndonHood.

"Last autumn I was at work one morning at home, when a card came up - the card of a stranger. Under the name was printed a line which showed that this visitor was Professor of Theological Engineering in Wellington University, New Zealand. I was troubled - troubled, I mean, by the shortness of the notice. College etiquette required that he be at once invited to dinner by some member of the Faculty - invited to dine on that day - not, put off till a subsequent day. I did not quite know what to do. College etiquette requires, in the case of a foreign guest, that the dinner-talk shall begin with complimentary references to his country, its great men, its services to civilization, its seats of learning, and things like that; and of course the host is responsible, and must either begin this talk himself or see that it is done by some one else. I was in great difficulty; and the more I searched my memory, the more my trouble grew. I found that I knew nothing about New Zealand. I thought I knew where it was, and that was all. I had an impression that it was close to Australia, or Asia, or somewhere, and that one went over to it on a bridge. This might turn out to be incorrect; and even if correct, it would not furnish matter enough for the purpose at the dinner, and I should expose my College to shame before my guest; he would see that I, a member of the Faculty of the first University in America, was wholly ignorant of his country, and he would go away and tell this, and laugh at it. The thought of it made my face burn.

[Nobody at Yale knew anything but that New Zealand was close to Australia...]

"...Lawson must give the dinner. The Faculty must be notified by telephone to prepare. We must all get to work diligently, and at the end of eight hours and a half we must come to dinner acquainted with New Zealand; at least well enough informed to appear without discredit before this native. To seem properly intelligent we should have to know about New Zealand's population, and politics, and form of government, and commerce, and taxes, and products, and ancient history, and modern history, and varieties of religion, and nature of the laws, and their codification, and amount of revenue, and whence drawn, and methods of collection, and percentage of loss, and character of climate, and - well, a lot of things like that; we must suck the maps and cyclopedias dry. And while we posted up in this way, the Faculty's wives must flock over, one after the other, in a studiedly casual way, and help my wife keep the New Zealander quiet, and not let him get out and come interfering with our studies. The scheme worked admirably; but it stopped business, stopped it entirely.

"It is in the official log-book of Yale, to be read and wondered at by future generations - the account of the Great Blank Day - the memorable Blank Day - the day wherein the wheels of culture were stopped, a Sunday silence prevailed all about, and the whole University stood still while the Faculty read-up and qualified itself to sit at meat, "without shame, in the presence of the Professor of Theological Engineering from New Zealand:

"When we assembled at the dinner we were miserably tired and worn - but we were posted. Yes, it is fair to claim that. In fact, erudition is a pale name for it. New Zealand was the only subject; and it was just beautiful to hear us ripple it out. And with such an air of unembarrassed ease, and unostentatious familiarity with detail, and trained and seasoned mastery of the subject-and oh, the grace and fluency of it!

"Well, finally somebody happened to notice that the guest was looking dazed, and wasn't saying anything. So they stirred him up, of course. Then that man came out with a good, honest, eloquent compliment that made the Faculty blush. He said be was not worthy to sit in the company of men like these; that he had been silent from admiration; that he had been silent from another cause also - silent from shame - silent from ignorance! 'For,' said he, 'I, who have lived eighteen years in New Zealand and have served five in a professorship, and ought to know much about that country, perceive, now, that I know almost nothing about it. I say it with shame, that I have learned fifty times, yes, a hundred times more about New Zealand in these two hours at this table than I ever knew before in all the eighteen years put together. I was silent because I could not help myself. What I knew about taxes, and policies, and laws, and revenue, and products, and history, and all that multitude of things, was but general, and ordinary, and vague-unscientific, in a word - and it would have been insanity to expose it here to the searching glare of your amazingly accurate and all-comprehensive knowledge of those matters, gentlemen. I beg you to let me sit silent - as becomes me. But do not change the subject; I can at least follow you, in this one; whereas if you change to one which shall call out the full strength of your mighty erudition, I shall be as one lost. If you know all this about a remote little inconsequent patch like New Zealand, ah, what wouldn't you know about any other Subject!'"

Twain's account of his trip to Christchurch also merits reading.


* At least part of the story seems wrong: The university at Wellington was called Victoria University College - a college of the University of New Zealand. I'm not sure that there ever was a Wellington University. And "Theological Engineering" seems dubious. And the book is known to have a couple of fictional tales included among the non-fiction. How do I know all this? Wikipedia. Except for the dubiousness of "Theological Engineering". [Update: Dave Guerin notes it was indeed called Wellington University.]

Sick of the Swiss

When Canada decided it needed some national nemesis other than the Americans (anti-Americanism having become ridiculously overdone at the CBC), we turned to our national comedy act, The Kids in the Hall. We've been at pretend war with the Swiss ever since.

When Cabinet decided New Zealand needed a national nemesis, they should have left it to the Topp Twins. Or, if they weren't available to hate on the Finns, Flight of the Conchords are almost as good.

Instead, we got this in the House from the Hon. Gerry Brownlee. (Vid HT: The Listener, who covers more of the controversy)

Brownlee goes just a bit over the top at 3:52.

But I did enjoy Federated Farmers's Twitter response to a quip about how they have Nokia and we have sheep:

@ChrisKeall 'More money selling a Nokia than a couple of sheep’? Nokia lost €954m in Q4 and sales were down 31%. C/W stats.govt.nz/browse_for_sta…
— Federated Farmers (@FedFarmers) March 26, 2012

Oh, Finland, it's so on.

Update: I'm so sick of the Swiss.

Bad management

Managers are strong complements to workers; with bad managers, everyone's productivity goes down the toilet.

Eli Dourado reckons the cost of managerial complements makes a case for zero marginal product workers: the worker might be producing more value than he's taking home in pay, but not enough to cover the cost of the manager that lets the worker produce positive-value products. Read the whole excellent post.

And we can see this when the managerial complement goes awry. Case in point: Mexico. 

Mexico City’s Buena Vista Walmart is the first super-market I’ve ever seen paralised by a trolley-jam. It is not more busy than any other large city supermarket, and not understaffed. No: the reason it takes ten minutes to walk from one side of the store to the other every single night is because they have no baskets—only large trolleys. To my sample of Mexican Walmarts, this is unique; most Mexican Walmarts have trolleys and baskets. And so the error must have been made by the managers of that particular outlet. Of course, this is only a small example of inept management in Mexico, but it’s sadly representative—labour productivity in Mexico is about a third of that in the US. If Mexico were as well managed as the US, it would be as rich.

This all raises a few questions: why are managers in Mexico (and the developing world in general) so terrible? why are those in the US so good? and how much of the difference is able to be affected by policy?

James Savage chalks it up to Mexico's caste system, nepotism / seniorism, and an awful school system. If your first worry is about hiring somebody who won't steal from you, you'll weight connections over competence. But again, read the whole post and despair at the morass of interlocked problems that reinforce each other and make solutions difficult. Foreign firms coming in and bringing with them stronger demand for competence has to be part of the solution, but the Walmart example suggests it might take a while.

Air Canada provides a different problem. Here's Josh Gans, lamenting just how awful Air Canada is compared to what he's been used to in Australia. Where Virgin in Oz had in-flight face painting for the kids at the back of the plane - effectively in-flight child entertainment far away from the parents - Air Canada seemed determined to make sure his family of 5 were separated throughout the plane. Josh very nicely explains the obvious points about just how terrible it is for all fliers that Air Canada made it impossible for him to sit beside his kids; it would be surprising if Air Canada's gains in forcing families to book through the Air Canada system outweighed the losses they get from ruining everybody else's flight.

The less sinister explanation is that Air Canada have a very poorly executed booking and flight reservation system. Someone, somewhere forgot about families and deep in the code there is no way for Air Canada to sort out the mess. My bias is on incompetent planning rather than evil attempts at price discrimination in these matters.

This is observationally equivalent to my hypothesis, formed about a decade ago and now potentially out of date: a too-large proportion of Air Canada staff actively hate the passengers.

I don't think Josh's explanation is sufficient; Air Canada could always choose to release third-party booked seat allocations more than 24 hours ahead of flights. And my "they hate the passengers" explanation is not only more plausible than that it's profit maximizing to impose potentially massive costs on full-fare paying flyers to keep price-sensitive families from using aggregators, it's also parsimonious, explaining much of the overall Air Canada experience.

Again, like James's Mexico problem, we've got a set of interlocking issues: this time around union rules, seniority, effective domestic monopolies, and government bailout backstops making for soft budget constraints. But this one seems easier to unravel. Canada could unilaterally allow cabotage on its routes instead of waiting for a bilateral agreement with the States. Let Virgin America run intra-Canada flights, drive Air Canada into bankruptcy, sell off the planes to new entrants, and start over with new management that doesn't hate passengers.

I'll continue to be very happy with Air New Zealand (regardless of changes to its AirPoints upgrades system), and even more happy with Emirates on the Trans-Tasman.

Promotional regressions

A mathematical equation for holiday happiness, or banal tautology?

Expedia hired a couple of researchers to analyze a survey about Kiwis' recent holiday experiences. It looks like they set up a regression with "how happy did your last holiday make you" on the left hand side and a bunch of stuff on the right hand side like "the weather was good", "there were plenty of activities", "it was value for money", "plenty of partying", and that "it made my neighbours envious"*. Then they put out a press release presenting the regression equation and coefficients as being the mathematical formula for holiday happiness.

And it's gotten press. Radio New Zealand called me for comment on it last night;** I told them that if I understood the method correctly, it doesn't exactly provide would-be travellers with useful advice for happier travels. Who doesn't look for good weather when on holiday? Worse, most of what's on the right hand side seems to be just alternative ways of expressing what's on the left hand side; it would be surprising to find somebody who reported having had a bad time on holiday but that it was good value for money. Value-for-money kinda has happiness as the numerator.

And there's reverse causality all over the place: are people flying more than seven hours away happier because of the more remote destination, because they're richer and can afford long-haul travel, or because people are more willing to spend more on stuff once they've travelled that distance than when they've driven out to the bach? Are couples travelling together happier because they're travelling in pairs, or because single people travelling alone tend to be unhappier people in general?

Here's the funniest part of the press release:

A group of experts including a psychologist, a mathematician and travel experts from
Expedia.co.nz set out to find just that, and have created the formula for holiday happiness.

With Kiwis taking over two million holidays a year, the formula proves there is a science that every holiday‐maker can apply to their next escape to guarantee themselves a top trip.

What are those sciency looking things? I'm pretty sure it's the following: HH is Holiday Happiness. It's a function of some constant {b}, "Good Weather" {GW}, "Plenty of Activities" {PA}, "returning home relaxed and de-stressed" {RD}, going to a Great Destination {GD}, finding Value for Money {VM}, engaging in Plenty of Partying {PP}, and inducing "Holiday Envy" {HE}. So update your vacation plans accordingly. Never mind that without units on any of the regressors, you've no clue whether the relative coefficient magnitudes signify anything, so you don't really know the tradeoffs on the happiness production frontier between "Plenty of Partying" and "Great Destination". Or that pervasive potential endogeneity problems mean you really can't use it as a guide for action.

At least Radio NZ looked for folks to comment on it - the reporter there noted having talked also with a statistician. Stuff.co.nz seems mostly to have copied the press release.

Psychologist Meredith Fuller, who worked on the equation, said people could use the factors when planning their next break.

"It's essentially taking the guesswork out of a holiday that could be an expensive disaster."

Choosing a top destination, getting value for money and lots of partying also feature highly.

The most satisfied people spent at least five nights away, took a long-haul flight to their destination, and travelled with between two and five friends. Fuller says five was the ideal number.

"There is less chance of individual conflict, more mental stimulation, and enough variety in interests to broaden our experiences."

A partner is fine, but including in-laws or family decreases the chance of holiday joy. "The worst people to go away with are your relatives," she said.

Lording it over your mates – more politely called "creating holiday envy" – also increases the prospect of a good result. About half of those surveyed used social media while away to post snaps to make friends jealous.

"It seems it's no longer a case of `wish you were here', but `I'm here and you're not'," Fuller said.

So, a lesson for the kiddies out there. Take your intro to econometrics course. You too can easily produce the mathematical formula for anything, at least as far as some of the media is concerned. All you need is r-e-g.***

And kudos to Expedia for getting press mileage on this one.

* Weird Al said it best, and without running a regression, in his ode to the world's greatest tourist destination:****

Then we went to the gift shop and stood in line
Bought a souvenir miniature ball of twine
Some window decals, and anything else they'd sell us.
And we bought a couple post cards, "Greetings from the twine ball, wish you were here!"
Won't the folks back home be jealous.

Note that I'm not at all disputing that people enjoy vacations. I just can't really see how the survey and regressions really provide any kind of useful guide to action.

** I have no clue whether anything aired. UPDATE: here. But they left out all the "these econometrics are crap" bits. Ah well.

*** Maybe they used ordered probit. I haven't the full paper.

**** I regret, but Susan does not, that we drove within an hour of the place but I didn't realize we were anywhere near it. Had I realized, we'd have gone. Missed opportunities.

Optimal tax theory - contraception edition

Tyler points to some data on the price elasticity of demand for the Pill as contraception among college-aged American women. A price increase from $5-$10 per month to $30-$50 per month resulted in a 2 - 4 percent drop in use of the Pill. The paper says the price increase was "more than three-fold". If a 300% increase in the price of the Pill results in a 3% drop in demand, that's about the lowest price elasticity of demand I've ever seen - around 0.01.

Oh, the fun tax theory exam questions that could flow from this! Recall that the naive interpretation of Ramsey tax theory says that you want to tax more heavily those goods that are inelastic in demand: that way, deadweight costs are lower. But the more accurate interpretation of Ramsey (here too) is that you want to tax more heavily those goods that are complements to untaxed leisure in a world in which we can't tax leisure directly. Further, we have Pigovean reasons for taxing public bads and subsidizing public goods.

So, is the Pill a complement to leisure or to labour? Tyler points to some evidence from the paper's abstract:

Women who lack insurance and have sex infrequently appear to substitute toward emergency contraception; uninsured women who are frequent sex participants appear to substitute toward non-prescription forms of birth control. Additionally, we find small but significant decreases in frequency of intercourse and the number of sex partners, suggesting that some women may be substituting away from sexual behavior in general.

If intercourse is leisure rather than investment in work-related social capital, then we might have some Ramsey argument for taxing contraception. But it's not immediately clear in which direction any Pigovean argument might run. Neither is it even immediately clear in which direction any long-run Ramsey argument might run if you think through some general equilibrium arguments about sex, positional goods, and hypergamy; easy to imagine how it could go either way.

There's at least a short essay exam question in there on tax theory for anybody who's lecturing tax in public economics next year; it's a nice one where there are lots of clearly wrong answers but also many potentially right answers so long as the argument is reasonable.

Happy Valentine's Day!

Econ valentines

Justin Wolfers has been pointing to the best of the #FedValentines hashtag. This one's still my favourite:

I'd like to borrow you overnight and then hold you to maturity #FedValentines
— Alan Beattie (@alanbeattie) February 10, 2012

I have nothing to add, except for this fun tune from Jesse Irwin.

52 Week High

It's more an investment banking valentine. But excellent.

Patronage

Everyone remembers Waldstein because he chose to patronize a great composer, Beethoven, who then named a rather nice Sonata for his patron. I doubt Count Waldstein would have made Wikipedia a hundred and eighty years after his death if he hadn't chosen to sponsor Beethoven.

Where copyright is the business model, illicit copies get stomped on because some small fraction of those copies might represent displaced sales. Under a patronage model, the greater the distribution of the work, the greater the fame and approbation accruing to the sponsor.

And so we find General Motors providing free MP3 downloads of their sponsored work: OK Go's genius new song, Needing/Getting. But for some insane reason (maybe because the car isn't yet here on sale?), they're not allowing downloads in New Zealand. But that's ok. The YouTube video has to be better. Here it is.



And here's the best analysis I've yet seen on both the video and OK Go's shift from copyright to patronage: from Car & Driver Magazine.

Some rock artistes would recoil at being known as “the treadmill band,” but it doesn’t seem to bother Kulash. “Every band has songs. Not every band has videos like this,” or, indeed, a music-industry backstory like this. It involves OK Go divorcing its big transnational record label—EMI—in 2010, starting its own label, and joining the great media democratization movement on the internet.

Since the separation, OK Go has pretty much done as it pleases artistically, distributing it all free at sites such as YouTube, one of the Tahrir Squares of the music-industry revolution, while relentlessly touring and partnering with corporate sponsors to pay the bills.

Proving that Brown University doesn’t hand out degrees to just anybody, the lanky, Mick Jagger–like Kulash is a manic thinker. His speech is so flushed with philosophical abstractions and conceptual idealism that it all keeps collapsing on itself as he works to convey everything at once. To wit: “The good side from a creativity and productivity standpoint is that we don’t have to abide by any of the—not only the rules but the definition of what last century or last decade, you know, what a musician does doesn’t have to only be to make recordings, it isn’t to make a seven-inch, 45-rpm piece of plastic, you know?”

The essential point is that OK Go peddles not singles or albums but audiovisual art intended to create “joy and wonder and surprise,” as he puts it. Corporations want to be involved, and that doesn’t bother Kulash, either. “If you want to spend your day making stuff, somebody is going to have to help you pay for it.” So far, Land Rover, Samsung, and State Farm Insurance have all paid to play along. “The crazier our ideas, the more likely we are to have interest” from sponsors, says Kulash.

Ideas such as figuring out how to make music with a car.

The original concept for “Needing/Getting” grew out of a 2010 video for the song, “This Too Shall Pass.” In it, the so-called Rube Goldberg video, the band sings off a soundtrack while dominoes topple, balls and tires roll, umbrellas fly, TVs smash, and paint splatters in one continuous 3-minute 54-second take, all of which was underwritten by State Farm (look closely for the logos).

Some of the most innovative music is currently being made well outside of the traditional copyright funding model. Industry sponsorship is making content more creative.

Watch the video and hit the link above to see how they did it. Ridiculously fun.

Overheard anecdote of dubious provenance

While the three year old clambered over an old privately owned tank at a classic car event a while back, I overheard the tank's owner telling another attendee about the minor paperwork hassles he faced in importing the tank.* The Defence folks had some objection to his importing the tank because, were he to go on a rampage with it, they had nothing that could stop it. The armour was too thick for .50 cal rounds to get through, and all the .50 cal rounds are stored up on the North Island anyway. So he had to sign a waiver saying he wouldn't go on a rampage or try to start a revolution.

I don't know whether the story was true;** I don't even know that it was really the tank's owner. But I love that I live in a place where it could be true. Instead of a place where the local sheriffs have tanks.

I also like that the privately-owned aircraft on display biannually at Warbirds over Wanaka could probably take out the government's Air Force if they decided that they needed to.***

Americans who claim pacifism but who live in a state that extracts large quantities of money from them to blow up people overseas or to send police tanks and bad actors after the suspected kingpin of a cockfighting ring (see link above) perhaps ought to reconsider the strength of their convictions or emigrate.

* Please don't ask me what kind of tank it was. It was green, had a big gun, had tracks, and definitely wasn't a personnel carrier. A door opened at the back where the kids climbed in to go play. I think there was a hatch on the top too.

** It can't be completely true as the army does have some anti-tank weapons. It just doesn't have any tanks.  We do have some armoured tractors. And this is as it should be. If you want to see a tank in New Zealand, go to a museum. Or, go and hire a private one and go for a drive.

*** I am definitely not denigrating the important work done by the Air Force in maritime safety and in Search & Rescue. New Zealand can't afford an Air Force that could protect us against any plausible external threat, so doesn't bother to try. We have equipment necessary for the jobs that need here to be done: search & rescue and maritime patrol. Important jobs both. But neither of which require ridiculously expensive modern fighter aircraft. The best response to a tournament game that you can't win is not to play.

Earworm: Sherlock vs Final Fantasy IV

The BBC's Sherlock is great. But it's been bugging me since I first watched it. Now I know why.

Sherlock main theme:



Final Fantasy IV Main Theme:


I can't be the first person to have noticed this. I hope this helps solve other folks' earworm problems. Update 9 January 2014: I replaced the original embed of the FF4 theme with a new one as YouTube had since pulled the original.

The Kiwi Conspiracy

It's common knowledge that Canada controls the US through manipulation of its cultural elites.

But how many know that New Zealand really controls Canada?

First, remember that New Zealand's reforms of the 80s helped provide the policy impetus for the excellent Liberal reforms of the 1990s that brought fiscal sanity under Paul Martin (finance minister) and paved the way for Canada to pass the United States in economic freedom despite the less-than-stellar Paul Martin (Prime Minister) and Stephen Harper regimes.

Next, recognize that Canada's Frontier Centre for Public Policy, run by Peter Holle, pulls a lot of policy strings* behind the scenes. Peter has a house up on New Zealand's North Island. And, he regularly employs Kiwis. When David Seymour left his position as policy analyst for Frontier to run for ACT, the Kiwi Conspiracy was a man short. And so they drafted the excellent Peter McCaffrey.

Best of luck in the Great White North! Rather a shame that New Zealand hasn't a think tank environment that can help keep folks like Peter around, but we can celebrate Canada's gain.

* Ok, I might be overstating things somewhat.

Occupy occupied

The #OWS settlement in Christchurch's Hagley Park has shifted from being an encampment of a few local protesters and a lot of international backpackers (from reports I'd seen back in October) to now mostly consisting of, well, I'll let them tell you:

PROTEST GROUP Occupy Christchurch has dwindled to only two genuine members and has been overtaken by ‘‘a whole lot of bludgers’’, a protester says.

The occupier, who wanted to remain anonymous for fear of retribution, said most of the people now occupying the Hagley Park village were unsavoury elements who usually stayed at the City Mission and simply wanted access to the free food and bedding.

He said they had criminal and drug-using backgrounds and their presence had scared off most of the genuine Occupy protesters.

The two remaining occupiers wanted to oust the ‘‘free-loaders’’.

‘‘There’s a whole lot of people who . . . don’t even know the background,’’ he said.

‘‘We will ask them to leave and if they don’t we will ask the police for help if necessary, because they are too rough for us to handle.’’

City Missioner Michael Gorman said he was not aware of it happening as he was out of the city, but the complaint could not be simply that the people did not meet the ideal protester image.

‘ ‘ If they are from the City Mission, as long as they are not breaking the law, they’ve got as much right to be there as anyone else does,’’ he said.

‘‘If they are breaking the law, police should be notified . . . It sounds like the solution lies in their hands.’’

Gorman's right.

Christchurch seems to be following international experience, with 99 percenters (or two guys, whatever) figuring out that they have to devise mechanisms to sort the deserving (themselves) from the undeserving (homeless) poor in handing out free food and kit. I hope they take the right lesson from all this.

Perhaps the Camp's composition will change with the advertised Ninja gig by Amanda Palmer next week. At least for the duration of the show.

---

‘Criminal’ element take over park site
By CATE BROUGHTON
Christchurch Mail
18 Jan 2012
PROTEST GROUP Occupy Christchurch has dwindled to only two genuine members and has been overtaken by ‘‘a whole lot of bludgers’’, a protester says. The occupier, who wanted to remain anonymous for fear of retribution, said most of the people now...read more...

Tech Tags: Christchurch Mail newspaper FRONT PAGE

Dangers of trusting Wikipedia

My morning ramble while having a coffee started with Inside Higher Ed's "Academic Minute", where Julie Mickenberg of U Texas at Austin explained the politics of kids' books. During the McCarthy era, some authors found refuge in children's lit.

My research in children's literature has focused on books written by individuals wishing to challenge the status quo. In Learning from the Left, I examined the ways in which children's literature served as a vehicle for radicals in the United States during the McCarthy period, as other avenues of expression were closed off, and as children's literature, a field largely controlled by women and aimed at children, was ignored, overlooked, or presumed safe. In fact, many of the most popular and critically acclaimed books of the 1940s and 1950s were written or illustrated by Communists or communist sympathizers, from Harold and the Purple Crayon to Danny and the Dinosaur to many little Golden Books.

Danny and the Dinosaur?! Not Danny and the Dinosaur! Had I unwittingly introduced Ira to ... Communism? So I went to Wikipedia to see what it had to say about that book. What I found shocked and horrified. But it doesn't at all correspond with my memory of the book. Although I would consider buying a copy that matched the description:

Plot

"One day Danny went to the museum," is the first sentence of this book. In the museum, Danny sees other things, but is almost immediately drawn to the dinosaur section and is delighted to find a living dinosaur. Both agree to play with each other, and Danny rides out of the museum on the dinosaur's neck.

Danny and his dinosaur buddy embark on an adventure-filled day, including...

• the dinosaur confusing a building for a larger building.
• attending a baseball game in his mind.
• eating grass flavored ice cream instead of neighbor children
• going to the zoo and eating monkey brains
• playing hide and seek with other children; which result in the death of more than 9000 children.

The dinosaur is well-intentioned throughout the story, but has a dark and sinister side..for he helps a lady cross the street only to eat her for lunch. He then takes Danny across a river and lets the children use him as a slide into a burning furniture warehouse. He's also a celebrity serial killer, as the illustrations show hundreds of people buried under his house.

Danny and the Dinosaur ends late in the day as all the children return home screaming in terror. Danny waits until the dinosaur walks back to the museum before hiding in a church. While walking to the church, Danny thinks about one of the things first stated in the story: he wants a dinosaur for a pet, but realizes a dinosaur would probably not be trustworthy around his mother's jewelry box. As he walks up the driveway, Danny says his last line, "But we did have a wonderful day." Which is of course code for "Please kill me, it hurts, it hurts."

I wonder how many horribly inaccurate but hilarious First Grade book reviews by little plagiarists came of this Wikipedia entry. Go and check it out before the Wikipedia blackout starts. Screenshot below.

Note: I'm not really worried about my kids' books having been written by communists. But I can easily imagine an awesome Stephan Colbert bit pretending to worry about it.

Update: Here's the edit at Wikipedia that perhaps introduced the inaccuracies.

Hubris

If I told you that I'm prepared to sacrifice long-held positions on things like privatizing the police force, legalizing all drugs, and moving copyright down to a 10-year window to negotiate a National Freedom Strategy with the government, you'd rightly wonder if I were some kind of lunatic. Perhaps a lunatic for seriously considering those positions, but more likely a lunatic for thinking that the government might be happy to see me, the weirdo academic, back down from these positions if only they'd negotiate some compromise strategy with me.

Run the Nash Bargaining calculus when one player has no threat point.  Heck, my three year old has a better bargaining position when he insists that he doesn't want to have a nap than I'd have on insisting that the government enter into negotiations with me on a National Freedom Strategy. At least the three year old has a threat point.

And so the news this morning on Radio New Zealand was mildly amusing:

Professor Jim Mann from Otago University says while diabetes management is a national health target, there is no overarching programme to battle its cause - obesity.

He says one of the reasons for that is the short-term mentality of politicians.

"Doing something about reducing the risk of obesity and its consequences is not something that anybody is going to see in a single electoral cycle."

Professor Mann says he would be willing to sacrifice long-held positions on things like taxes on unhealthy food and social marketing, to negotiate a national obesity strategy with the government.

How many divisions does Professor Mann have?