Getting tobacco costs wrong

Jason Krupp screwed up the burden tobacco imposes on the New Zealand health system. But it's not entirely his fault. A comment on my prior post finally twigged me to how he screwed up - it should have been obvious. Again, here's what Jason wrote.

According to the World Health Organisation's Economics of Tobacco Toolkit, health costs attributed to smoking account for between 6 per cent and 15 per cent of national healthcare expenditure in developed countries.

In Australia, smoking costs equated to between 2.1 per cent and 3.4 per cent of gross domestic product.

New Zealand was not featured in the report but, if the results were comparable here, it would mean Kiwi taxpayers fork out about $7 billion a year to treat smoking-related diseases.

The first figure is a WHO estimate of the burden borne by government healthcare systems. The health budget here is a bit under $14 billion. So extrapolating from that value would give you a range from $840m - $2100m. That's well in excess of prior estimates from either the Cancer Society or Des O'Dea, but it's only 3-8 times larger than those figures. And far far less than Krupp estimated. But, with Treasury's site down as much as it has been lately, the health budget might not have been readily available.

Krupp's second line is almost certainly an estimate from the Australian Collins & Lapsley report into the social costs of smoking. I have banged on, repeatedly, about how it's easy to conflate these social cost measures with costs to the government. And that's what I think Krupp's done. He took the 2.1-3.4% of GDP estimate, read it as "costs to the health system" rather than as "costs to the country, including costs borne by smokers, and likely including some double-counting as value of statistical life estimates and productivity costs overlap." And he uses that to generate the third line. GDP is around NZD$200 billion.* Multiply that by the 3.4 upper end of the "percent of GDP" figure from Oz and you get a number that, with some upwards rounding, hits $7 billion.

I really really hate "Social costs of Blah" studies. Because it's just so easy for somebody who doesn't know the term of art employed to read it as equating to costs on the taxpayer. Just like Krupp did. "Smoking costs" turned into "Kiwi taxpayers fork out ... to treat smoking-related diseases".

The social costs of social cost studies, in screwing up how the public views the distribution of the burden of various activities and consequently making folks think a paternalistic policy is really a Pigovean one, are not insubstantial.


* I wish Stats NZ would report the actual GDP figures in its quarterly updates. It's surprisingly hard to find "What is the GDP of NZ" anywhere on the Stats NZ site. You'd think it'd be in the "Top Statistics" page; nope. Just growth rates. How about on the GDP page? Lots of link there to estimates on growth rates; can't see a "This is the GDP of NZ" one. Maybe over on National Accounts for year-end? Nope. Latest quarterly update? No. Press release on that update? No.  Why do I have to go to the IMF website and divide by the exchange rate to do this, or add up quarterly numbers from the RBNZ? Stats NZ has the number buried in Tab 6.1 of an Excel sheet here (thanks, Diana, for the pointer!), but shouldn't that be up front somewhere?

Benchmarking the minimum wage increase

New Zealand's $13 minimum wage is now scheduled to go up by $0.50. The government says that's as much as they can increase it without bad employment effects, though I can't yet find any RIS or Treasury statement in Cabinet Papers assuring us of the safety of a 3.8% increase.

The Greens are mad because the CPI was up 4.6% in the year to September:

The nominal increase is 3.8% – but at the same time the Consumer Price Index increased 4.6% in the year to September 2011 and 1.8% in the year to December 2011.  So it is not “boosting incomes” at all, as Minister of Labour Kate Wilkinson claims, it is just keeping pace with inflation.

50c an hour is not going to help the people that need it most – people like the Bradley family who were profiled in the Herald this week, where dad is having to work three jobs just to feed the family. And even so, the parents are having to go without food some days just to feed the kids.

But let's not forget that the September quarter annual results include the one-off effect of the GST increase: a tax shift that was fully compensated for lower income earners through income tax cuts. So it's the December quarter annual results that form the relevant comparison. And the minimum wage increase is more than double that; there's no indication of any looming inflation on the horizon. The real minimum wage increase is pretty substantial. Real take home income is higher than the CPI would have you think, unless you're looking at December-quarter results (where the GST hit has washed out).

Most importantly, it's substantial relative to generalized wage movements. The latest figures from the Labour Cost Index show salary and ordinary time wage rates were up about 2% on average from December 2010 to December 2011.* The minimum wage hike is 1.9 times as large as average year on year average salary growth.

The 2012 New Zealand Income Survey isn't due 'till June quarter (October release). But if median hourly earnings wind up being up 2% up on the June 2011 results, they'll be around $20.79. The minimum wage will then be 65% of the median. This is more than high enough to start ringing alarm bells about disemployment effects.

To summarize:

• The minimum wage increase of 3.8% is well in excess of average LCI wage growth. Describing it as miserly ignores the context of recent wage and price growth in New Zealand. 
• The minimum wage is on track to hit 65% of the median wage. This is very high. Recall that American minimum wage campaigners have been trying to get the minimum wage to half of the median wage. The current US minimum wage, $7.25/hr (federal; individual states do vary upwards), is about 38% of the median US wage. While it's plausible that changes around that level within the US have had little effect on aggregate employment figures, it is reckless to extrapolate from those findings to minimum wage rates that are, relative to median wages, far higher.

I'm going to second what Ryan Avent blogs at The Economist. Minimum wage increases are a bad policy for poverty reduction relative to wage subsidies and are an especially bad idea in periods of high unemployment and low inflation.

And yet I can't find anybody quoted in the press saying anything other than that National's here being stingy. Tracy Watkins at Fairfax finds lots of folks calling it paltry. Radio NZ quotes a united opposition saying it isn't enough and the unions whining. The Herald's Amelia Romanos follows the same narrative. Same in the Yahoo poll Seamus cited. Nobody seems to have checked whether the minimum wage increase was above, below, or about the same as growth in median wages over the last year. It's not like that number's a secret; Stats New Zealand released it the day before the minimum wage hike was announced. Big headline "Wage rate growth steady at 2.0%". But hey, who cares about the real numbers. All that matters is reporting on the political horse-race and how outraged the opposition is.

Any minimum wage increase shy of giving into the opposition's demands for a $15 minimum wage would be met with the same scorn from the media and from the opposition. If Key takes as much stick for a fifty cent increase as for a zero cent increase, the marginal cost of his doing the right thing and following the advice Treasury gave him last time around really isn't high. Shame he rarely decides to do that.

* Hit Table 3.3 at the XLS file above. Series ref LCIQ, SH41Z9 at tab 3.3 or, better, SI511-515 at tab 5.3 that counts the percentage increase of salary and ordinary time wage rates by skill level. The lowish percent increase I'm quoting here clearly isn't because of any miserliness in prior minimum wage increases as it's the same across the board in skill levels (the SI511-515 series). I'm using the LCI here rather than QES because LCI gives figures adjusted for changes in workforce composition and skill - how much an employer needs to pay in salary for a fixed quantity and quality of worker. I think this is the relevant comparison for assessing the generosity, or otherwise, of minimum wage increases; the increase doesn't affect the quality of an incoming minimum wage worker except perhaps through disemployment of the lower tail of the productivity distribution. The unadjusted LCI figure is 3.2%, still less than the "stingy" increase in the minimum wage.

Bogus polls

Web polls are worse than useless, says Thomas Lumley. Why? Anchoring bias.

Seeing the results is likely to make your beliefs less accurate, even if you know the information content is effectively zero.

It might not be immediately obvious how bogus web polls cause harm. But if anchoring bias feeds into conformity or bandwagon effects, and that cycles into voter policy demands, we can move from bogus poll to "most people think X" to "Policy should be X" to "How can you oppose X, most people agree...". I think similar mechanisms work in bogus "cost of X" studies, eroding some voters' default liberalism by convincing them that they're bearing, through the tax system, costs actually borne by those engaging in the activity.

StatsChat continues in its Sisyphean quest to beat the stupid out of journalistic use of stats in New Zealand. Check the link above for fun and game in margins of error across three web polls. Forfty percent of Kiwis know these stats are bogus; shame it isn't eighnty.

Memory in journalism

Keith Ng thoroughly documents one instance of a broader phenomenon in New Zealand journalism: very poor apparent institutional memory.

Keith notes that ACR, the Association of Community Retailers, which lobbies against regulations that impose costs on small tobacco retailers like dairies, gets PR support from Imperial Tobacco. Keith calls it astroturfing. That's possible, but I don't think it rules out that the group of represented small retailers genuinely supports the policies promoted by ACR and simply shares interests with Imperial on those issues. 

Either way, it didn't take long after Keith broke the story for the NZ media to forget that ACR enjoyed industry support. Writes Keith:

It seemed like quite a problem, the idea that so much of our news comes from groups which could be hiding all kinds of interests and agendas.

Turns out, the problem isn’t “what are they hiding?”, but “does anyone give a shit?”.

What this has shown is that even when the agenda is Big Tobacco’s, even when the connection is the second result on a Google search, even when their own organisation has reported on it, even when it’s stated plainly on their website, even then, the PR industry can get their stories printed with no scrutiny.

It’s a complete and utter rout.

You know, some of my best friends are journalists. And I like to think that they are the better ones. They always complain that they’re under pressure and under-resourced, and that this sort of shit slips through the cracks.

I’m sure it’s true, but here we are, at the point where our biggest news organisations run stories without spending 10 seconds on a Google search, or asking if something makes any goddamn sense. [Emphasis added]

If Richard Green says new laws will cost him $10k for shelves, they run it. If Richard Green says new laws will cost him $27k for shelves, they run it (RNZ newswire, 14 July 2011).

SHELVES.

How many of the facts reported in our media are this dodgy? And if there is so much that we can’t trust – and we can’t distinguish between what can and cannot be trusted – at what point should we simply give up?

You could chalk it all up to that it takes time to build up experience on a file and that erosion of profits in journalism have knocked out the senior folks who remembered what happened a year ago. But that can't be it when a 10-second Google search, or simply "asking if something makes any goddamn sense" would be enough to shoot something down. But when Radio New Zealand happily reports that each smoker costs the economy three times per capita GDP, folks aren't running the simple checks.

It has to come down to demand. If your audience take stats as infotainment, why worry too much if the stats are right? In fact, you can't afford to worry about it too much. And if the customers don't care whether the stats are right, then supply will arise to fill demand for the kinds of stats for which somebody's willing to pay (BERL on alcohol, PWC on Adult and Continuing Ed, many others in the back pages of the blog, the whole InfoGraphics problem cited by Megan McArdle...).

On bad stats, at least we have StatsChat. The University of Auckland's stats department now gives a prize for picking the week's (or month's) worst stat that's appeared in NZ press outlets. I recently nominated Radio NZ's exaggeration of the costs of smoking. Hopefully, shaming news outlets and the producers of bad stats will eventually have some effect. But it's harder to think of useful interventions that fix the kind of sloppiness Keith's citing.

Keith's interview on Radio NZ's interesting; it'll likely here be archived soon.

$139,000?

Ah, the lazy summer season, when lobby groups can sneak pretty much any kind of rubbish into Radio New Zealand's Inbox and have it be treated as news. Here's the latest:

Cigarettes rose in price on 1 January, for the third time in 21 months.

The price of a packet of 20 cigarettes is now about $14 and a pouch of loose tobacco is about $31.

The Quit Group estimates each smoker costs the economy $139,000 per year in health and other costs.

Chief executive Paula Snowden says the group returns $38 to the economy for every $1 it is funded, but has had no increase since 2007.

She expects the price increase to save the economy up to $73 million.

Let's start with what's right about the piece. I have no reason to believe that they've lied about the price of a packet of cigarettes. The rest isn't so good.

Recall that GDP per capita in New Zealand is somewhere around $45,000*. So Snowden is claiming that a smoker costs "the economy" three times per capita GDP. And recall that median income is less than per capita GDP, which also includes payments to capital. Snowden's number is three times that. It's utterly implausible.

Next, she expects the price increase to save the economy up to $73 million. If flipping a smoker from smoking to non-smoking saves those costs, then she's expecting about 525 people to quit. If only a fifth of costs are avoidable and the rest are sunk, the price increase results in around 2600 people quitting smoking. But the last survey numbers I'd seen have about 22% of the population aged 16-65 smoking. Again, see asterisk below, but there are about 4.5 million people in the country. Let's be conservative and say 300,000 smokers; 2,600 quit. This is all ballpark, but it suggests maybe one percent of smokers are expected to quit with the price hike. And, that's with me granting the $73 million. I'd really need to see the workings to figure out what they're doing here.

Finally, let's aggregate up for a final plausibility check. Say there are 300,000 smokers in the country. If they each cost $139k, that's about $41 billion that Paula Snowden claims smokers are costing the country. And even the ridiculously high Collins & Lapsley numbers have smoking costing all of Australia only $32 billion. And there are just a few more people in Australia than in New Zealand.

Every decent journalist should have a few of these numbers just rattling around in the back of his head to give numbers like Snowden's a rough plausibility check. It's not plausible that a smoker costs the country three times per capita GDP. That's the first bit of stink. If the implied participation elasticities are as suggested by a quick ballparking, then we'd wonder about the costs imposed on poor people who continue to smoke even if everything else is right. That's the second bit of stink that should have been queried.

But the biggest howler is that Snowden claims a 38:1 benefit to cost ratio for her organization's work.

When did they stop teaching scepticism in journalism school? Radio NZ, you've been pwned by The Quit Group. You can do better.

*Please note that I'm working off memory for a lot of these figures. No Internet at the guest house in Nelson where we've been avoiding earthquakes for the last week, so I'm burning through Vodafone Pay-As-You-Go data. Back in quakeland tomorrow.

Previously: Bogus MoH figures on smoking costs.

Update: Sarah Woods of The Quit Group advises that the $139,000 figure is the present discounted value of costs, with the estimate based on Des O'Dea's prior figure (which included a raft of costs borne by smokers that don't really count as costs to "the economy") and with ROI calculations undertaken by BERL. I'll have a look through their report. But Radio NZ has inflated The Quit Group's figure by an order of magnitude by transforming a present discounted value figure into an annual cost figure. At an 8% discount rate, the PDV of $139k is about $1.7 million. And let's remember exactly what the O'Dea report concluded about the costs smokers impose on "the economy":

Leaving aside these difficulties, it is certainly reasonable to assume that most of the additional health-care costs caused by smoking are borne by non-smokers through additional taxes (smokers do pay some share of these taxes). Also it is reasonable to assume that most of the 'lost  production' costs of premature mortality and increased morbidity are borne by smokers and their households (though there is some loss of profits also, and of tax revenue to government). A considerable amount of work would, however, be needed to get precision on these matters.

Without trying to calculate a precise estimate of 'external costs' it does seem reasonably apparent that the tax contribution of approximately $1 billion annually by smokers exceeds substantially the external costs of smoking which fall on non-smokers. If savings on pension costs from premature mortality of smokers were added as well the net fiscal contribution of smokers, to the fiscal gain of non-smokers, would be further increased. [emphasis added]

Lies and statistics

Here's the presentation I gave for reporters and others at the Christchurch Press a fortnight ago.

Lies, Damned Lies, and Statistics: Lessons for Journalists on Prezi

You'll probably need to put that on full screen for the small print to be legible.

Turnout wasn't huge, but did include reporters on the health and crime beats.

I recommended that the journalists start following StatChat. Here's hoping it all has done some good.

I'll hate you, you'll hate me, we'll both get rich

Start with a media that loves adversarialism: for anything that happens, there has to be somebody who's angry about it. If there's nobody that's angry about it for an aggrieved reaction quote, there's no story.

A firm that wants free publicity then can't do much better than to put on a promotion that will upset somebody who likes being upset. The aggrieved group complains, and there's your story. Donations flow to the aggrieved lobby group and the firm gets more media coverage than it could have hoped for otherwise.

Today's instalment: Gun City in Auckland runs a sale where one firearm in the store has a $1 price tag. You have to find which one, but if you do, the gun's yours for a dollar. Next, make sure the hoplophobes get riled up. And then instead of just paying for ad space in the Herald, you get story column inches.

A Father's Day promotion at an Auckland gun shop offering a "mystery firearm" for $1 to the first person to spot it on the racks has been labelled sick, sad and irresponsible.

But the man behind the bargain stands by his offer and says the dad who gets the gun will be "God blessed".

As part of its annual Father's Day sale Gun City in Mt Roskill is offering a special deal to one lucky punter on Saturday. If they spot the gun with the $1 price tag - it's theirs to buy, providing they have a current Firearms Licence.

But anti-gun lobbyists say the promotion may send the wrong message to the public.

Professor Kevin Clements, director of the National Centre for Peace and Conflict Studies at Otago University, said there were already "more than enough guns" in New Zealand.

"I think that it is a very sick and sad promotion for Father's Day," he said.

"New Zealand already has 230,000 licensed firearms owners and over a million weapons. The assumption that a father needs or wants a new gun for Father's Day sends all the wrong messages to children and partners.

The marginal risk posed by another gun owned by an already-licensed owner can't be high.

The antis stir up their base and presumably generate donations; the store gets free publicity. A wonderful symbiosis.

I suppose what I need to do is send Doug Sellman a copy of my stuff with Matt and Brad on alcohol social costs so he can get angry about it and generate press for both of us and more donations for his charitable-tax-status lobby group. Then we could go and have a beer afterwards and laugh about it. Like professional wrestlers after a match. Except the audience is kinda in on it with professional wrestling. And I'm not sure Sellman would either want a beer or have one with me.

Academia's not so different either. Citations get counted, not weighed, so a good professional adversarialism (I trash your papers, you trash mine) can make both parties better off.

HT: Ed.co.nz, who also has been running a short series on the likely cuts to come at U Canterbury (yikes!!!). I'm hoping I've got an immunity idol on that one. My work on alcohol is being featured in the next issue of the University's monthly magazine, The Chronicle. And, I've also been asked to give one of the University's public lectures, formerly known as UC In the City (when there was a city in which to deliver the lecture) but now to be the Spring Lecture Series (on campus), yet to be scheduled for October or November. It would be perverse for them to then fire me. Or at least it makes me happy to think so.

Blaming the Press

Jay Rosen very nicely lays out the problem. Journalism has shifted entirely from discussion of the relative merits of policies and their likely effects to the horse-race. All attention goes to how policies might play with the electorate. He blames the "cult of savviness": readers are invited to be insiders, along with the journalists, in trying to guess political party strategies and tactics, and whether those will be effective.

I'm with Rosen on the problem. But his while his solution may be elegant for those who wish to eschew the horse-race and focus on the issues, those folks already can get the analysis they want. There are, believe it or not, more serious news outlets that do provide analysis of the issues. And blogs help too, if you know what to look for. Where do I go if I want reasonable analysis of NZ policy issues? I'd start with the National Business Review. The Christchurch Press's Mainlander section on Saturdays is surprisingly meaty. And, just ignore the ones that go for sensationalism.

The real problem is that relative demand for thick policy analysis is much much smaller than for the horse-race. If politics is mostly about group-affiliation and status-seeking, people will care more about whether their team is likely to do well than about the effects of policy. And there's really not much that can be done about that. It's like complaining that Firefly gets cancelled after a season while we're into I have no clue which season of Big Brother. There are places folks who want decent TV can go - HBO for starters. The rest is pablum. Complaining that most TV producers make pablum while ignoring that most viewers really really like pablum kinda misses the point. The bigger problem is that while I can exempt myself from trash TV by just changing channel, I can't exempt myself from trash policy.

Sports and science journalism

Thomas Lumley's fed up with lazy reporting in the sciences:

if a press release or a wire service story told you that the Wallabies had a new training regimen that would improve their game without making them fitter, faster, tougher in the scrum, more accurate with kicking, or better at putting in the elbow, you’d ask questions. We’d like to see science journalism eventually get up to the standard of sports journalism.

He points the finger at journos who gulped down the claim that an hour of TV watching costs 22 minutes of life expectancy [which I'd critiqued here]. And, because his stats-fu is better than mine (and probably because he read the studies a bit more closely than I did), he notes:

The journal, in its blog, says that the real story was about sedentary lifestyles vs exercise.  They are shocked — shocked — to find that there might be sensational news coverage of the article. However, they do note:“The blast of news coverage also suggests that creative research angles on behavioral health impacts are useful in grabbing the public imagination.” Indeed.

The really strange thing about the paper, though, is the 22 minutes of life lost per hour of TV.  Looking at the confidence intervals shows that there is huge uncertainty (the range is from 20 seconds to 45 minutes), but it still doesn’t really make sense.  Some of this is just correlation vs causation — in reality, not everyone who spends the evening in front of the TV would spend the time jogging, or even playing golf, if their Sky subscription were cut off.   The other component is the model used for years-of-life lost.  The researchers didn’t actually do anything with individual participant data from the AusDiab study. They took the results of a previous analysis (which didn’t get nearly as much coverage) and added in the assumption that the effect of TV weakened with age.  Under that assumption, the effect must be a lot larger for younger people than it appears, and since younger people have more minutes of life to lose, that increases the average cost of TV.  The assumption was described  by the authors as if it was a universal fact, and it’s true that several important risk factors follow this pattern — one reason is that there are more things to die of at older ages, which applies here, but another is that, eg, low blood pressure in older people happens for bad reasons as well as good, and that doesn’t apply here.  In any case the attenuation assumption is doing a lot of the work, and it is only weakly connected to any actual data.

I'm very pleased that there's somebody else out there who cares about this stuff. It's really a bit pointless though. Papers exist to sell eyeballs to advertisers. Most of those eyeballs are in front of squishy grey stuff that doesn't care a whole lot about scientific accuracy but rather about group affiliation and sensationalism. The real problem is on the demand side. We get the journalism we deserve. Just like we get the politics we deserve.

This Hour costs 22 minutes

Another result I don't believe:

The amount of TV viewed in Australia in 2008 reduced life expectancy at birth by 1.8 years (95% uncertainty interval (UI): 8.4 days to 3.7 years) for men and 1.5 years (95% UI: 6.8 days to 3.1 years) for women. Compared with persons who watch no TV, those who spend a lifetime average of 6 h/day watching TV can expect to live 4.8 years (95% UI: 11 days to 10.4 years) less. On average, every single hour of TV viewed after the age of 25 reduces the viewer's life expectancy by 21.8 (95% UI: 0.3–44.7) min. This study is limited by the low precision with which the relationship between TV viewing time and mortality is currently known.

If people who watch six hours of daily television differ from other folks on margins other than TV-viewing, results here just might be overstated.

The paper just extrapolates to some actuarial tables the results of a prior article in Circulation. A couple things there to note:

• There are no significant reported effects, after correcting for some health-related behaviours, for those watching less than four hours of television per day. And, saying that an hour costs 22 minutes is a bit nuts when the reference category is folks watching 2 hours of TV per day or less. Maybe there are effects for the "more than 6 hours per day" group. But that's hardly the same as saying that an hour of TV costs the moderate viewer 22 minutes.
• The all-cause mortality relative risk even for folks in the >4 hour per day group has a confidence interval running from 1.04-2.05 after adjusting for those health behaviours that could be observed. That's almost touching the 1.0 mark; when the CI spans 1.0, results are insignificant. I wonder what would happen to those CIs on adjusting for more health behaviours.

HT: Alex Robson, who points to this journalistic account...

Bad stats

Bad journalistic use of stats has been a recurring theme here on Offsetting. Apparently folks in the Stats department up at Auckland are annoyed too. They've started a contest.

Each week, we would like to invite readers of Stats Chat to submit nominations for ourStat of the Week competition and be in with the chance to win an iTunes voucher.

Here’s how it works:

• Anyone may add a comment on this post to nominate their Stat of the Week candidate before midday Friday August 12 2011.
• Statistics can be bad, exemplary or fascinating.
• The statistic must be in the NZ media during the period of August 6-12 2011 inclusive.
• Quote the statistic, when and where it was published and tell us why it should be our Stat of the Week.

Next Monday at midday we’ll announce the winner of this week’s Stat of the Week competition, and start a new one.

The fine print:

• Judging will be conducted by the blog moderator in liaison with staff at the Department of Statistics, The University of Auckland.
• The judges’ decision will be final.
• The judges can decide not to award a prize if they do not believe a suitable statistic has been posted in the preceeding week.
• Only the first nomination of any individual example of a statistic used in the NZ media will qualify for the competition.
• Employees (other than student employees) of the Statistics department at the University of Auckland are not eligible to win.
• The person posting the winning entry will receive a $20 iTunes voucher.
• The blog moderator will contact the winner via their notified email address and advise the details of the $20 iTunes voucher to that same email address.
• The competition will commence Monday 8 August 2011 and continue until cancellation is notified on the blog.

I suppose I just have to watch to see if anybody cites one of my favourite bogus stats so I can submit it!

HT: Ed Directions; Peter McCaffrey

I report, you decide

Ok. In the comments, tell me whether the Otago Daily Times editorial staff are:

1. Lazy and don't check their figures: they just copied from the NZ Herald editorial (noted here) and couldn't be bothered to check anything. Seriously, check the Herald piece; they totally lifted the Herald's argument.
2. Idiots
3. Deliberately trying to mislead their readers

My vote's for the first. But I'm curious what others think. The more often they do this, the more inclined I am towards the third. From today's editorial:

Those who argue anti-smoking legislation goes too far do so on grounds it intervenes in rational personal choice, even when that choice is for an addictive drug. The difficulty with this argument is a right of personal liberty ceases to be that when it affects the rights of others. It has been well demonstrated passive smoking can be harmful to individuals forced to inhale the smoke exhaled by others.
The case for liberty is on less solid ground, too, when the cost of smoking to the public purse, estimated to be $1.7 billion a year, is considered.

Again, the $1.7 billion figure comes from Des O'Dea's study of the costs of smoking. The $1.7 billion figure includes a whole pile of costs that smokers impose upon themselves and only about $350 million that smokers cost others via the health system. And again, quoting from Des's study:

...it does seem reasonably apparent that the tax contribution of approximately $1 billion annually by smokers exceeds substantially the external costs of smoking which fall on non-smokers. If savings on pension costs from premature mortality of smokers were added as well the net fiscal contribution of smokers, to the fiscal gain of non-smokers, would be further increased. 

If the Herald and ODT repeat a lie often enough, it becomes a public truth.

Overstating tobacco costs

Remember how I've been banging on about how cost studies get used dishonestly to push illiberal policy? Here's the NZ Herald (HT: @CJSBishop):

Smokers may complain that they are being victimised, but their arguments about personal liberty founder on a fundamental point of principle: you don't have the right to hurt yourself if you are hurting other people in the process.

Three Act MPs voted against the law requiring products to be kept out of sight, because they supported "rational personal choice". But is it rational to avail yourself of a product which inescapably harms the user when used as directed? Certainly not, when that harm becomes a drain on the public health system and society as a whole.

The tangible economic costs of smoking - in health care and loss of production because of illness or early death - are of the order of $1.7 billion a year, almost twice what is collected in tax.

Anyone claiming the right to set fire to that sort of public money needs to come up with an argument more cogent than personal liberty.

To their credit, Maori MPs are driving this. Associate Health Minister Tariana Turia introduced the latest bill and Hone Harawira, when a Maori Party MP, forced a select committee inquiry into the tobacco industry.

I'd like to thank the Herald for making my argument for me.

IF smokers actually cost the health system substantially more than they contribute to the health system via tobacco excise taxes and to the fisc in general by drawing lower overall superannuation payments (due to premature mortality), there could be a case for increasing tobacco excise taxes. We'd need to do some analysis to make sure things held at the margin, but there'd likely be a good case for increasing taxes.

Here the Herald is citing not the MoH's bogus figure on the health costs of figure (fisked here). Rather, it's Des O'Dea's commissioned report for ASH and SFC. Here's the bit from the O'Dea study that the Herald didn't cite:

Leaving aside these difficulties, it is certainly reasonable to assume that most of the additional health-care costs caused by smoking are borne by non-smokers through additional taxes (smokers do pay some share of these taxes). Also it is reasonable to assume that most of the 'lost  production' costs of premature mortality and increased morbidity are borne by smokers and their households (though there is some loss of profits also, and of tax revenue to government). A considerable amount of work would, however, be needed to get precision on these matters.

Without trying to calculate a precise estimate of 'external costs' it does seem reasonably apparent that the tax contribution of approximately $1 billion annually by smokers exceeds substantially the external costs of smoking which fall on non-smokers. If savings on pension costs from premature mortality of smokers were added as well the net fiscal contribution of smokers, to the fiscal gain of non-smokers, would be further increased. [emphasis added]

To reiterate our point, however, our argument for continuing, and increasing, high taxation of smoking is not based on an 'externality' argument. It is based on the argument that the total costs of smoking are high, and that taxation is an effective means of reducing these total costs. By far the largest component of these total costs, however it is valued, is the 'health loss' experienced by smokers themselves – their lost years of life and diminished quality of life. (p.46)

Read that again: even without counting savings to the pension system, smokers cover their costs about three times over. Des O'Dea is dead honest in his work here: he's not trying to sell private costs as being social. ASH wanted a number that included private costs; he gave them one. And, he honestly said that the case for increased taxation is to reduce the costs that smokers impose on themselves. That's an honest paternalism.

Unfortunately, once these figures get out into the wild, they're interpreted as costs smokers impose on others. Here are the components of O'Dea's $1.7 billion figure (Table B.1, p.44); you judge for yourself whether the Herald's right to call these costs on the public:

• Reduced production from mortality: $570m (I call private)
• Reduced production from morbidity: $280m (I call private)
• Resources diverted for tobacco consumption: $650m (I call batsh*t insane to consider this public: it's what smokers spend on their cigarettes net of excise taxes)
• Resources required to treat induced diseases and other consequences: $350m (public external transfer cost. This is the real cost to the health system)
• Smoking-induced fires: $15m (largely private, barely worth arguing about as such a small part of the overall figure)

So more than a third of the $1.685 billion is smokers' spending on cigarettes and only $350m are real external costs through the health system.

I wish that the Herald's editorial writers were just a bit more careful in how they present these things.

Yet another causality fail

Think about couples where spousal abuse is common. Would you expect that partners in those dysfunctional dyads might just be a bit different from other folks, on average? Perhaps more impulsive and higher rate of time preference? Would it be surprising then to find on survey data that abusive spouses also exhibit other behaviours consistent with impulsiveness?

The Press happily takes the correlation as causal:

Binge-drinking couples are twice as likely to be involved in physical aggression towards each other, University of Otago research has found.

Professor Jennie Connor of the department of preventive and social medicine in Dunedin said it was the first time the link between partner aggression and drinking has been studied in New Zealand.

Researchers studied all forms of physical aggression, as violence in partnerships commonly escalated from less severe aggression, she said.

The study found if one or both partners had a pattern of heavy drinking episodes - or binge drinking - then physical aggression was more common.

...

They were also more likely to report that their partner had been drinking when physically aggressive towards them and this situation was associated with the highest levels of severity, anger and fear.

"Making changes to the price, availability and promotion of alcohol to reduce the amount of heavy drinking across the whole population will be a good start to reducing the frequency and severity of physical aggression in New Zealand homes,'' Connor said.

The full paper's here. And there's absolutely nothing in the study design that allows for causal inference. The correlation that winks more suggestively at causation is that spouses experiencing violence report that such instances are more frequent when the partner has been drinking heavily. And it's likely that some of these reports will involve violence that would not otherwise have taken place. But other instances of violence could easily be shifts in when the incident takes place: a displacement effect rather than newly induced violence.

Professor Connor's press release suggests policy changes:

“Making changes to the price, availability and promotion of alcohol to reduce the amount of heavy drinking across the whole population will be a good start to reducing the frequency and severity of physical aggression in New Zealand homes.”

It would be nice if she had any evidence of the elasticity of heavy drinking with respect to these policy instruments (hint: for price, it's very low).

HT: ed.co.nz