TANSTAAFR

Ladies and gentlemen, the Owlbear song.

Geek cred to the first commenter explaining my cryptic title and the problem in Marcotte's song to which it alludes.

Marcotte's D&D works are up on Spotify (and here and here). Listen to them during your next campaign.

HT: my search on Spotify for the word "Owlbear". This is the only song that came up. If you need to ask why I'd have searched Spotify for Owlbears, you've not been reading me long enough.

Taking less offence - revisited

Loyal readers will recall that New Zealand's Broadcast Standards Authority decides which words are particularly offensive by surveying New Zealanders. Alas, where they once ran face-to-face surveys asking them which of a series of pretty rude terms were particularly offensive, and in which contexts, they now run it via an internet panel survey. I had no end of fun imagining Eric Cartman volunteering to run a door-to-door version of the survey.

The BSA's 2013 list came out this week. It's called "What not to swear: the acceptability of words in broadcasting, 2013". They warn that the report contains language that some would find offensive. There hasn't been great changes in acceptability since 2009; the 2009 figures showed a fairly substantial increase in tolerance of robust language as compared to 1999.

One interesting bit from their summary:

• When comparing the different demographic groups, it is evident that
  
  • Males tend to be more accepting of the words than females
  • Younger respondents tend to be more accepting than older respondents
  • Those that state they have no religion tend to be more accepting than those of religious belief
  • Those of Māori ethnicity are generally more accepting than those of other ethnicities, while Pacific peoples are less accepting
  • Those on high household incomes tend to be more accepting

I wish they'd run some regressions rather than just comparisons of means. Pacific groups tend, in New Zealand, to be lower income and more religious. Are differences between Pacific responses to swearing based on religious differences between Pacific and Maori groups, or something else?

I try to set the dial, for lecturing, to avoid terms considered offensive to a majority in the context of "people being interviewed (TV or radio)".

The very very best part of the report is Appendix I, where respondents were invited to fill in those terms that they personally found offensive. They make a point of reminding readers that the comments are copied verbatim. Words typed in range from "goodgracious" and "Doodoohead" and "OMG, Oh My God" to very creative spellings of other terms. Just go read it. And imagine what you'd have added in, had you had the chance. Please do not contribute suggestions in the comments though. We're not that kind of blog.

We remain impressed by the robustness of language frequently heard on broadcast television, after 8:30, in New Zealand.

Living Wages - Canadian economist(s) edition.

Simon Collins's Herald piece on living wages makes for interesting reading.

He opens with a story of a couple who both work shifts cleaning at a mix of buildings, some housing government-owned entities, some private. They both earn $14.10 per hour, less than the union's $18.40 living wage recommendation. He then points out the current version of Labor candidate pledges:

Grant Robertson pledged to set a timetable to pay the living wage to all government workers and contractors.

David Cunliffe promised to "roll out a living wage as a minimum for public servants and, as we can afford it, through the contractor process".

But the third contender, Shane Jones, refused to commit to the policy, and Prime Minister John Key said it would cost $2.5 billion and destroy 26,000 jobs.

If Labour puts in a $18.40 minimum wage for government workers, the featured family would likely only be getting this for their shift cleaning at a school unless the school contracts out facilities maintenance. And the school might shift to contracting out to keep costs down unless the government topped up its budget to make up the difference. If contractors also have to pay it, then the featured family does better in the short to medium term. But recall that if the potential benefits are large, so too are the incentives to shift to renting serviced facilities and so to have cleaners and other maintenance staff out from under the living wage mandate. So either it doesn't do much, or it gets circumvented. Collins also notes in passing that Ofa, one member of his featured family, is a delegate for the Service and Food Workers Union. I expect that the unions as a whole do well out of the measure, if it's extended to contractors, because it blunts the force of contracted outsourcing in keeping costs (and wages) down.

Collins then works through some of the costing estimates on living wage mandates, correctly noting that increasing the minimum wage to $18.40 would be very expensive. He then quotes me on the likely disemployment effects of an $18.40 minimum applied only to the government sector:

Those taxpayers would have less to spend, but low-paid state workers would have more. Even right-wing blogger Eric Crampton, a Canterbury University economist, wrote this week that the net effect would be minor: "Lots of people queue for jobs in the high-paying sector, but they'll take lower-paying jobs in the private sector."

I do expect that there wouldn't be much change in aggregate employment with a living wage mandate applied only to government workers and contractors because I expect that the government has close to a vertical labour demand curve for such workers and tasks.* There would be job rationing - in other words, more people wanting to work as cleaners in the public sector than there are available jobs - and the unions could extract higher dues as consequence. But Councils and Government would be likely, in the short term at least, just to pay more and make it up with increased taxes. In the medium to longer term, I still would expect a shift to government departments taking up tenancies in serviced buildings, but where the cleaning budget is a small part of the overall calculus, the effects mightn't be large.

Collins nicely does cite the literature on that living wage mandates are very poorly targeted and that we could do rather better by increasing targeted benefits. Then he cites U Vic's Morris Altman:

Morris Altman, a renowned Canadian economist who moved to Wellington's Victoria University in 2009, argues that a living wage is "a moral imperative situated in the natural rights of individuals".

His research suggests that a wage rise can actually pay for itself by raising productivity through motivating workers to work harder and stay in their jobs, and by inducing employers to introduce new technology and train workers to work smarter.

But that is only true, he warns, if wages are raised at a rate that productivity can keep up with. "So one has to be ultra-careful about by how much one increases. If it's a radical increase, that might be too much to deal with in the short-term," he says. "You might need a bit of an adjustment period to get productivity up."

I choose to take it as a compliment that Collins seems to have assumed that I'm Kiwi.

I haven't read Morris's work on living wages. I'd disagree pretty strongly with him on moral imperatives and natural rights, but I'm pretty sure neither of us gets to trump the other on that kind of question. And I can believe that, in some cases, salary increases can be self-financing - that's the general basis underlying efficiency wage theories (which also typically generate equilibrium unemployment). But we expect that firms choosing to increase wages on this kind of basis do so because they expect the salary increase to be worth the cost. I'm a bit curious why we'd expect those results to hold where employers are forced to pay more, but I'll perhaps have to look up his book this summer.


* I do hesitate a bit here though. I remember when the University set up a sustainability framing for a change in how they handled departmental waste collection. Instead of cleaning staff going into each office every night and emptying the bin, academic staff were asked to bring their trash and recycling bins to a central waste bin on each floor and those central bins would be collected every night. Maybe you could make some kind of sustainability case for it where staff who hate the cost of shuffling off doing a trash run every night might instead produce less waste. I'm not sure I believe it. But I am pretty sure they were able to cut the costs of building cleaning because of the policy change. At a minute per room for unlocking, collection, and relocking... well, it adds up. So there's often a margin, even where we don't expect there to be one.

Parking Market Failures

Does any market failure argument justify parking minima? Many cities require that residential developments include some minimum number of off-street carparks. Can these be justified?

Well, I'm glad you asked, Agnito.

The best argument I've heard for these regulations is that on-street parking is rivalrous and non-excludable. If you have an apartment building with too few carparks, residents will park on the street or might keep flitting between a few different no-parking zones, staying one step ahead of the enforcement officers. A lot of people see paying for parking a bit like hiring other kinds of personal services: why pay for it when you can apply yourself and perhaps get it for free? And if you find the perfect parking spot, there's then a huge opportunity cost of leaving the space: people with really good parking spaces never give them up. Finding the perfect space can be a joy to be shared with others. Further, where excess congestion from everyone's free-riding on on-street parking gives incentive for the able-bodied to park in handicapped spaces (or in front of fire hydrants), disastrous consequences can ensue.

Having mandatory parking minima then avoids the free-riding on the on-street parking that could best be left for higher-turnover use. And where long-term on-street parking is discouraged only by time limits, it also encourages other socially wasteful forms of entrepreneurship.

The best response to this kind of argument is that it's massively second-best relative to the more efficient solution: price on-street parking. Do that properly and everything else sorts itself out.

Of course, in that world, Seinfeld wouldn't have been nearly as good. And where Gerry Brownlee wants to ban Auckland from using congestion charging, we might not be able to get first-best parking charges anyway.

For the record though: there is no real-world market failure sufficiently large to justify mandatory parking minimums. At least not in Auckland, best I can tell.

Coase and dorm-room noises

The University of Auckland's halls of residence warn that they might ban students from copulatory activites from 10 pm to 6 am, because of the costs their noise imposes on students in neighbouring rooms.

Ronald Coase reminds us of the reciprocal nature of externalities. Without the ban, active students impose costs on their neighbours. But by implementing the ban, the neighbours impose costs on those who would wish to undertake such activities. Which is best?

And so we have a situation identical to that which obtained in the Economics Department here at Canterbury when we moved to open-plan offices post-quake. No, we don't do that in the offices, despite the apparent productivity benefits. Rather, some of us type loudly and like talking with colleagues while others of us cannot abide noise while working. The Department is split over two buildings. In my building, we fence out the noise by adopting a "wear headphones" norm. This is fortunate both because I do take a few media calls from time to time, and because the Department's administrator is located in our building, and because I have the world's best keyboard. In the other building, they've adopted a shushing norm. I strongly prefer the norm in our building, but nothing stops people from choosing one building or the other as suits their fancy.

When I was an undergraduate in the University of Manitoba's University College dorms, I sadly was not the source of, well, any external noise cost. But rather than wish to shush others or seek to ban their fun out of envy or resentment, I played Bach's Brandenberg Concertos on infinite repeat, loudly, all night, every night. The Concertos still put me to sleep. But I was a Coasean, even though Manitoba's Economics Department didn't much emphasize Coasean approaches: I recognized that the costs to me of averting the costs of the noise were much lower than the costs I could possibly impose on everyone else from banning noisemaking.

Further, Bach was a general-purpose solution: it worked against sex noises, but also against the noise of drunken revelers coming home late from the campus bar. Ban all specific noises as much as you like, but there'll still be noise that happens. It's simply more efficient to encourage people who don't like distracting noises to fence it out with Bach.

I guess the point of all of this is that Auckland students should come to Canterbury instead.

Reserve prices, marginal utility, and management degrees

Sellers on trade-me set a reserve price: the minimum price at which they're willing to sell whatever they're auctioning off. In the absence of strategic play, a seller should set the reserve price at the lowest amount at which they're willing to sell the product: they should be trivially better off for having sold it than for not having sold it at that price. While they gain income that brings utility when they sell it, they forgo the flow of utility provided by continued ownership of the good.

Some things you might value at zero dollars, or negatively. That clunky thing that's taking up needed space: set a reserve price of $0 and hope somebody takes it away for free.

Let's then parse this TradeMe listing:

Replete with intermediate level Economics knowledge, this degree will help you realise that the reserve price and the marginal utility gained by the seller are worth exactly the same!

The seller is auctioning off his Bachelor of Commerce in Management, earned at the University of Canterbury.

I hope the seller means that he or she values the degree certificate at the $1 reserve price: owning the degree certificate provides its current owner with utility worth $1, and losing the certificate would make its owner $1 worse off. And so the reserve price is equal to the utility the degree certificate provides.

If the seller meant instead that he or she would gain marginal utility worth $1 by achieving the reserve bid, that can only be true if the value of owning the certificate were $0. That's plausible from the rest of the text, but hardly clear.

I've copied the whole ad below. I'm considering bidding. Then at Faculty meetings, we can truly state that at least one member of the Economics department owns a Management degree. If it ever comes up.

Original unused Bachelor of Commerce - $1 reserve! 

Major: Broken Dreams

• Current bid: $37.50
•  Reserve met 
• Closes: Thu 5 Sep, 8:59 pm
• Listing #: 632646059

Min next bid:  $Auto-bid

View full size photo

Limited edition print, this 2007 Bachelor of Commerce is barely used and in "like new" condition! Originally priced at nearly $30,000, this is now available at a fraction of the price, with only $1 dollar reserve!

Avoid the gruelling 3+ year sacrifice necessary to pull good grades and skip the rampant physical and mental diseases by buying your degree direct from Trademe. Replete with intermediate level Economics knowledge, this degree will help you realise that the reserve price and the marginal utility gained by the seller are worth exactly the same!

Revel in the accolades of your family as you become the first among them to attain advanced education, only to later avoid their sincere enquiries as to your job opportunities and general wellbeing. Marvel as employers overlook you time and time again, and let your youthful eagerness get beaten out of you with a sack of potatoes (the only food you could afford this week).

Eke out a living in the illustrious field of data entry or pick up a day job putting PostIts one-by-one on a wall - all without the guilt and shame that would exist if you actually made the mistake of getting the degree yourself. Finally, watch your fragile sense of self-worth crash like the Hindenburg; casting hopes and ambitions to the breeze, leaving you twisted, hollow and bitter.

The winning bid will receive ALL THIS and more in the original issued degree pictured above, with the one lucky individual having their name lovingly embossed in crayon over the previous owners. Don't delay, get your degree today!

Please read the questions and answers for this auction.

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• Seller is located in Christchurch City, Canterbury

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Honi Soit... revisited

The shame lies in the mind of the viewer.

The University of Sydney's student magazine, Honi Soit, this week had to gather up copies of the current issue. The front cover featured a set of pictures of, well...:

The front page of the University of Sydney rag, Honi Soit, featured a montage of graphic, unretouched vulvae - pubic hair et al - belonging to 18 students who stalk its hallowed halls.

There were black bars covering the middle of each picture, but apparently it was too translucent so the determined reader could peer through the censor's bar.

I saw a couple stories on this yesterday, mostly via @BexStevenson. And not a single one noted the delicious irony here. Recall what Honi Soit means. It comes from the Latin Norse French* phrase uttered by King Edward so long ago, or at least the story goes. Here's Hume's rendition:

A vulgar story prevails, but is not supported by any ancient authority, that at a court ball, Edward's mistress, commonly supposed to be the countess of Salisbury, dropped her garter; and the king, taking it up, observed some of the courtiers to smile, as if they thought that he had not obtained this favor merely by accident: upon which he called out, "Honi soit qui mal y pense,"—Evil to him that evil thinks; and as every incident of gallantry among those ancient warriors was magnified into a matter of great importance,[*] he instituted the order of the garter in memorial of this event, and gave these words as the motto of the order.

In this case as well, the shame lies in the eyes and mind of those taking offence at the magazine cover.

Previously: Seamus on Kapiti's logo...

Update: A few weeks ago, a reader at SciBlogs complained that Matt Nolan hadn't explained the acronym LVR in discussing Loan-to-Value Ratio regulation. Another commenter pointed out some disturbing alternative meanings of LVR, related to this post's topic.

* Je ne sais quoi est arrive ce matin quand j'ai ecrit ceci. Toute la phrase est francais; je ne suis pas familier avec le mot 'Honi', mais le restant est francais. Pardonnez moi!

Policy synergies

Last week, I suggested that any government worried about productivity and health costs of things might wish to encourage that there be more sex. It seems to be good for earnings. 

Today, Tim Wilson at The IPA points me to an Australian public health advocate's wish that sitting for more than two hours consecutively be banned. Professor Jonathan Shaw there is worried about diabetes risk. Sitting for extended periods may increase diabetes risk:

"We need changes to occupational health and safety regulations so it is not allowed for people to sit for two hours at a time without a break," he said.

"I think everything should be on the table - taxation levers, town planning, even the layout of office spaces needs to be reconsidered to tackle the growing personal and community impact of chronic disease," he says.

Perhaps we could combine both findings. Instead of banning sitting or taking these kinds of hard paternalistic lines, we could perhaps imagine encouragement of discreet workplace venues that might...

Ok, I'm just going to end with the </reductio> tag and leave it at that. But if someone successfully combines the two in an interesting defense in employment court, I'd love a pointer to the judicial decision in the comments.

The Social Costs of Abstinence

Suppose that the correlation between one's sex life and earnings were actually causal, and worked from sex to income rather than the other way round. What correlation? This one:

Having an active sex life may make you happier, healthier and wealthier.
A new study reveals that people who had sex four or more times a week earned more money than their counterparts who weren't as lucky.
"People need to love and be loved (sexually and non-sexually) by others. In the absence of these elements, many people become susceptible to loneliness, social anxiety, and depression that could affect their working life," study author Nick Drydakis, an economics lecturer at Angila Ruskin University in Cambridge, England, said to CBSNews.com by email.
The discussion paper was published in July by the Institute for the Study of Labor,an economic research institution, in Germany.
Drydakis said he was interested in the topic because of previous studies linking sexual activity with extroversion traits (including being sociable, outgoing and energetic) and good health. In addition, good health has been linked to higher wages. A 2009 Brazilian study also showed a connection between higher wages and a more active sex life.

We can imagine some causal mechanisms that could run from sex to income. Happier people could be more productive at work. Or the cardiovascular benefits could yield better health and then consequently greater productivity. The authors do use a two-stage estimation procedure to try to isolate causality: they try to instrument for sexual activity, so it's at least more plausibly causal than much of what goes on in the public health literature.

If we follow the standard line in public health of assuming correlations are causal and in the "right" direction, and of ascribing as social all things private, we have to then worry about the social costs of abstinence. Those having too little sex earn less and so must be less productive. Those productivity costs reduce output and reduce tax revenue. And if it's working through a health channel, they also impose costs on the public health system.

The policy consequences are left as an exercise for the reader. But note that if you're recommending subsidies, you might need to offset the STD costs on the public health system via complementary regulations around health testing and public disclosure of who has what. This may seem like a violation of privacy, but can we really make rational decisions without perfect information?

[The should-be-obvious caveat: entire post subsumed within a "reductio" tag.]

Remembering Mel Smith

This is not the usual fare for Offsetting, but I cannot let the passing of Mel Smith go without paying homage to Not the Nine-O'Clock News' finest moment. (If the embedding doesn't work on, the link is here.)

Depraved economics

The University of Canterbury's truly excellent Economics & Finance Student Society has a semi-regular column in the University's student newspaper, Canta. For their themed issue on "depravity", Canta asked for a column on economics and depravity. EFSoc punted it to me; here's the column.

They edited out a couple of my favourite parts in the print edition, but the online version has the whole thing. A teaser:

In 1997’s “The Devil’s Advocate”, Al Pacino’s version of the Devil, John Milton, explained why economists really are best placed to understand depravity. Well, he didn’t exactly mean to. But when Pacino explained to Keanu Reeves just why Reeves ought to be taking the Devil’s side, a lot of economists would have been pretty sympathetic. At least I was cheering for Pacino when he explained:

“I cared about what he [mankind] wanted and I never judged him. Why? Because I never rejected him. In spite of all his imperfections, I’m a fan of man! I’m a humanist. Maybe the last humanist.”

Like Pacino’s Devil, economists take people as they are. We try to understand their decisions as they’re influenced by the costs and benefits they’d receive from various actions rather than trying to moralise about what they should or shouldn’t do. It’s part of the methodological foundation of our discipline: another Milton, this time Milton Friedman, insisted that we take individuals' preferences as given and explain changes in behaviour by looking to changes in prices and incomes. The standard guideline in welfare economics, the branch of economics that tries to explain whether we’re in a generally happy place, is the even-older Pareto criterion: something is good if it makes at least one person better off while hurting nobody else.

Because people differ in how they get their jollies, it’s tough for an economist, as an economist, to equate depraved with bad unless we define depraved in a very particular way: you’re doing something depraved and bad when you get joy from hurting others without their consent. Where the old Sunday School teachers talked about putting a thorn in Baby Jesus’s heart when you sin, I worry instead about putting thorns in Baby Pareto’s heart when you hurt someone else without their consent. And I’ll define hurt pretty broadly too: when you prevent two people from doing something that they enjoy and that doesn’t harm anyone else, because you disapprove of what they’re doing, that’s depraved. It has hurt them, without their consent, for your enjoyment. Getting joy from preventing the voluntary interactions of others is more properly considered depraved than whatever people get up to, consensually, behind closed doors.

So, if activities others consider depraved make you happy, and you’re not hurting anybody else at the same time, then the world’s a better place when you’re able to satisfy whatever freaky urges you have. Baby Pareto says so.

I then point to some of the empirics on sex, love, and economics. For my sins, I also owe Canta a follow-up column on the economics of self-control for the next issue.

Update: Enjoy! Slightly NSFW, Pacino's brilliant speech.

Innovation is unpredictable

Peter Jackson's showing the world that New Zealand is a great stand-in for Middle Earth didn't just boost the local film industry and tourism, it also gave us a new building material.

I'm several months late to this party: the Financial Times caught this one back in February. Peter Jackson needed a lightweight version of chainmail for his actors and extras. His art director, Kayne Horsham, came up with a new silver-coated plastic mesh. And now it's Kaynemaile, available commercially for myriad purposes.

Though fragile and time-consuming to make (by hand), it was lightweight and gave a realistic glint. Mr Jackson opted to use it, though actors had to carry glue and tape for repairs between shots.

After Lord of the Rings, Mr Horsham experimented with the mail as fashion apparel but he was unable to manufacture in bulk, and the weak joins on each ring were a problem. “I realised that if you could mould the mesh, making it stronger, then it would open it up to all sorts of applications,” Mr Horsham says.

Using free internet software he modelled a way of injection moulding the plastic directly into a strong, seamless mesh. “Each one of those links takes the weight of a single person,” says Mr Horsham, who realised that this strength, combined with its eye-catching reflections, made Kaynemaile better-suited for architectural design and security features.
In 2007, after investment from local angel investors Movac, Kaynemaile automated production at its Wellington factory and made its first sale in Shanghai. It now makes curtains, lightshades, security screens and balustrade panels with the patented mesh. Not forgetting his roots, however, Mr Horsham also supplied chain mail to The Hobbit. But New Zealand accounts for only 15 per cent of business. Customers include ANZ Bank, Hard Rock Cafe and Trump Towers.

When it's used on the outside of buildings as shades or screens, they call it "Building Armour".

And Wellington's now using it for outdoor chandeliers.

Saint Steven

If Steve Landsburg is right about the process for becoming a Saint, I think we ought to launch a campaign for Saint Steven. Here's Landsburg's summary:

So if I have this right, it is now the official position of the Catholic church that:

1. The late Pope John Paul II has the ongoing power to cure brain aneurysms.
2. As far as we know, he has chosen to employ this power exactly once. (He also once cured a case of Parkinson’s.)
3. While hundreds of thousands of others have suffered and/or died from brain aneurysms, John Paul has not been moved to intervene.
4. The one victim he troubled himself to save was selected not because she was particularly deserving or particularly valuable to society, but because she chose the right guy to pray to — sort of like having to suck up to the teacher to get a good grade.
5. All of this makes John Paul II particularly fit for veneration.

For God’s sake (you should pardon the expression), if you’re looking to make the case that John Paul II was capable of performing (or at least catalyzing) genuine miracles, isn’t the defeat of Soviet Communism good enough? That right there makes him a saint in my book — though if I ever come to believe that he cancure aneurysms and has been holding out on us, I might have to retract my endorsement.

So, here's the campaign for Saint Steven.

1. Any of you who have any kind of illness at all pray to Steven Landsburg for intervention. 
2. If you do not receive divine Landsburgean intervention, don't tell me about it. 
3. If you do receive divine Landsburgean intervention, please leave a record of such in the comments. Preferably with a link to a doctor's note saying that your recovery was unexpected and pretty remarkable. This should happen in maybe 1% of cases. 
4. We submit the documented evidence of the successes, while ignoring the failures. Ta-dah! Saint Steven.

Economics has its Gods; why couldn't it also have Saints? 

Convincing

Tyler asks, "What is the most ridiculous thing someone has ever tried to convince you of?"

It's rather more fun to ask, "What is the most ridiculous thing of which you've ever tried to convince someone?"*

Back in high school, I convinced a few folks in our chemistry class that Mount Rushmore had been carved by lightning and wind erosion. Sure, the sculptor did the fine details. But the old Indian name for it was "Mountain of Four Faces" for a reason, and that's why the sculptor picked that mountain for the monument.

Good times.

* Not ending sentences with prepositions also is fun.

Efficient etiquette

Rules of etiquette often seem designed to be inefficient. The point of the European "tines down" fork rule seems to be to hobble the eater, as I'd suggested a while back:

Etiquette rules, like the downward fork tines rule, that deliberately hobble the person making the display have a signalling value: it's the peacock's tail. Folks who've been able to spend hundreds of hours practicing how to eat in a deliberately hobbled fashion are then able to demonstrate finesse in that form of eating. Everyone else at the table will recognize them as being from the leisured class, whose parents either had sufficient servants to spend time drilling that technique into the children, or who invested that time in lieu of other pursuits in early adulthood. Either way, you're demonstrating that you've had time and leisure to spare.

It's nice to see an eloquent defence of my "tines up" alternative, and mocking of the tines-down types. Via @bkdrinkwater, here's Slate:

We’ve bastardized Euro-manners to make them still more convenient. Many Europeans stubbornly deploy their forks tines down—either as a spear, or, if the food isn’t stab-able, as a surface on which to awkwardly pile or smoosh food (awkward piling is particularly English—“How many peas can dance on the back of a fork?” asks Kate Fox, in Watching the English). But the pragmatic Americans who’ve abandoned the cut-and-switch almost always use the fork tines-up—i.e., as an efficient shovel—whenever it’s convenient to do so.

This hybrid style of eating is how Anna Post herself eats. But America’s lurch toward such modified Continental-style eating has been worryingly uneven. Nearly everyone I spoke with associated cutting-and-switching with older Americans and Midwesterners, and no-switching with younger and coastal diners.

Another culture war is just what we don’t need—especially one in which we’re all waving sharp implements, and both sides are open to plausible charges of unedifying Europhilia. Perhaps the best way to avoid open warfare is to formalize many Americans’ simplified take on Continental style (no fork-switching, but tines pointing any damn way you please) as itself an American creation—an efficient, relaxed blending of old and new worlds.

The "cut-and-switch" is the practice of switching the fork into the dominant hand after cutting; it's generally considered gauche by the Europeans and high-class Europhile Americans. Proper etiquette has the fork remaining in the left hand after cutting. But the Slate piece notes that the cut-and-switch is less efficient than the European standard of keeping the fork in the left hand.

This may be a problem for my "table etiquette is the peacock's tail" theory - especially if America switches entirely to "tines up, no-switching" - almost the most efficient form of food delivery. But note the almost: try bringing a spork along with you to a fancy restaurant. Drinkwater might call you a savage!

Scientist exchange rates

Tyler Cowen pointed to a site highlighting all the currency notes featuring the pictures of scientists and mathematicians.

I was interested in the implied scientist exchange rates. If an Euler is worth 10 Swiss Francs and a Rutherford is worth 100 New Zealand Dollars, and a Swiss Franc is $1.38 NZ, is a Rutherford really worth 7.23 Eulers? I hardly think so. Rutherford was great, but if we're having some fantasy league of most-important-scientists-and-mathematicians, I'd trade a half-dozen Rutherfords to get a single Euler. Euler is then here underpriced.

Fun Twitter comments on same, though note that I had the exchange rate wrong on Twitter first time round.

@EricCrampton I'm more sad that the Schrodinger note isn't both legal and illegal tender.
— Daniel McAuliffe (@DanielTJMcA) June 24, 2013

I also liked this one:

@DanielTJMcA @EricCrampton Einstein's appropriate, though-if my (limited) knowledge of econ is right, its value is relative to velocity
— Nate Gunby (@NRGunby) June 24, 2013

Definition of high-powered money: it's what happens as the velocity of the Einstein note approaches c!

Social Costs and HPV

I've seen the light.*

Here's the New York Times on recent findings about HPV.

In the 1980s, only a small number of throat cancers were linked to HPV infection. Historically, patients who developed the disease were in their 70s and were heavy smokers and drinkers.

Now, about 70 percent of all throat cancers are caused by HPV, up from roughly 15 percent three decades ago. Patients are now more frequently middle-aged husbands and fathers who are economically well off, nonsmokers and not particularly heavy drinkers. Men are three times more likely to be diagnosed than women with HPV-related throat cancer.

In short, 70% of throat cancer is caused by HPV transmitted during oral sex. And we know that when private actions impose costs on others through the public health system, there's a prima facie case for government intervention.

Let's run the drill. What are the social costs of risky sex? And why haven't we taxed it yet?

First, any risky act undertaken with imperfect knowledge about possible consequences cannot, by assumption, yield any benefit for the person bearing the risk. It's all market failure. We will consequently assume that hazardous oral sex of this sort is not pleasurable for anyone involved, so there are no offsetting benefits that must be counted when we go about regulating and taxing. Recall that sex addiction is very real and that there is no known safe level of sex; every sex addict began with a single sex act. There's no possible reason that anybody could be engaging in risky sex other than irrationality or addiction, given that we've assumed that there's zero benefit from doing it. Why else would somebody do something that has zero benefit?

And we also know that oral sex is like a gateway drug: I'm sure that the Dunedin Longitudinal Survey people could really easily show that teenagers engaging in oral sex were more likely to go on to try other sex acts at younger ages and with more partners than those who showed more restraint. I bet they're also more likely to try marijuana.**

So what then are the costs? Well, let's apply sex attributable fractions to a whole host of disorders. 70% of throat cancers are due to HPV, which is by definition a consequence of undertaking a risky sex act. And there's all the other STD costs. Add up all the treatment costs, add up all the costs of premature mortality, double-count the costs of productivity losses, add in some estimates of intangible costs falling on friends and families of those suffering. Then add in all of the costs that men and women incur in finding partners for engaging in sexual activity: all the costs of attractive clothing, the opportunity costs of time spent trying to attract a partner, the direct costs of buying drinks for a potential partner, subscription fees at dating websites... it's all pure loss because dangerous sex has no offsetting benefit by our assumption at page 173 in the appendix to the report. Pretty clearly, the social costs of oral sex exceed the excise tax revenues. And that by itself of evidence of market failure.***

So why haven't we taxed oral sex? Well, it would be almost impossible to enforce. In a perfect world, the panopticon would see and tax all. But we're not there. Instead, we have only imperfect regulatory instruments. What should we then do?

For starters, we need studies by the University of Otago's School of Public Health demonstrating how not only movies and television glorify oral sex, but also how social media affects things. Doesn't Durex have a Twitter account? It's also worth noting the timing on the HPV rise here. I blame Desperate Housewives:

Bree: Excuse me. Did you lose something?
Orson: No. I just thought... for you.
Bree: Oh, um. I don't do that.
Orson: Why not?
Bree: I'm a republican.
Orson: I'm a libertarian. I believe in minimizing the role of the state and maximizing individual rights.
Bree: But Orson?!
Orson: Trust me. I know what I'm doing.

Is it any surprise that the libertarians would be the ones again to blame? 

Otago could also recruit a dozen people via Facebook and interview them about whether drinking makes them more likely to consider oral sex. If it does, then anti-alcohol and anti-oral-sex policies could be complementary. And if people are more likely to smoke after sex, then that also increases the benefits of anti-sex policies. We also need to think about how alcohol advertising also promotes sex: Woodstock commercials could lead young men to have sex with their friends' mothers. It's so obvious that we need a trifecta of policies to simultaneously address alcohol, tobacco and oral sex because of their costs to the public health system. Actually, that misses one: I'm pretty sure that this all somehow makes fat taxes even more important, I just haven't figured out how yet. But I'm sure that Otago's public health people will figure it out.

Now a couple of people on Twitter last night, likely secretly in the pockets of Big Sex, suggested that all of this might be misguided. There's a vaccine for HPV that removes the HPV-risk of oral sex while maintaining the supposed benefits. But, that's cheating. Just like it is cheating to use e-cigarettes to get a nicotine hit while avoiding lung cancer. If we cannot use e-cigarettes as part of anti-smoking policy, we can't use the HPV vaccine a way of avoiding the social costs of oral sex. Deep down, it's the sin that's the problem. If people could enjoy sinful hedons without consequence, where would we be? We have to teach them to avoid the sin, not to mitigate sin's consequence.



* No I haven't. Everything in this post, except for **** below, is simply applying consistently the methods used in the bogus shonky cost of illness studies used to justify alcohol and tobacco regulation.

** And if Ole Rogeborg wants to claim that they haven't proven causality and that much of it is due to underlying type, remember that because Dunedin refuses to share their data with anybody, we just have to take Dunedin at their word even if Ole has some fancy simulations.

*** Especially as there is no excise tax that here applies. Note that we shouldn't count GST revenues from professional transactions of this sort as offsetting things because the money would be spent on other GST-applicable transactions in the alternative.****

**** This is about the only part that isn't tongue-in-cheek. GST really wouldn't and shouldn't count in this case. Everything else here is rubbish.

Shirking air traffic controllers

It sure sounds like it would improve safety. Everybody knows that being an air traffic controller can be pretty stressful. All those planes up there, have to keep them from bumping into each other. So it just makes sense that you'd want to provide stress leave for those controllers who are obviously suffering, right? What could go wrong?

Doug Allen, currently visiting at Canterbury's Economics department as Erskine Fellow, points me to this classic 1982 piece in the American Economic Review.

The Federal Employees' Compensation Act (FECA), which provides income insurance for government workers injured or disabled on the job, changed in 1974. Employees with at least one dependent would receive 75% of their base salary as tax-free compensation if out on leave. Because air traffic controllers earned a lot, their net take-home pay was higher if they were out on disability. On-the-job stress is pretty hard to disprove.

FECA amendments in 1974 let employees submit evidence from their private clinical psychologists as evidence of disability; prior to that, the government selected the doctor. And, unlike things like "leg cut off" where most doctors would agree, it's harder to verify whether any doctor's diagnosis of stress is all that valid. So Staten and Umbeck predicted that we'd see the most action post-FECA change in claims for non-verifiable things like stress.

They also note that OWCP examiners, who check the veracity of claims, were told to check for specific indicators of on-the-job stress. Deterioration in job performance over time counts. And everybody's monitoring air traffic controller performance all the time, making sure that planes don't get too close together.

So what happens? After the rule change, a bunch of air traffic controllers figure out that they can earn more by demonstrating on-the-job stress, choose times of the day when it's safest to breach minimum separation between aircraft so there aren't actual collisions, and encourage planes to get just close enough to each other to trigger their near mid-air collision sensors. Controllers with more experience have much stronger incentive to do it, as the compensation is based on the employee's salary, and there's a reasonably steep salary progression. Before the law change, inexperienced staff and those with more than 10 years' service (actual burnout) reported the most 'system errors' (violation of separation rules). After the law change, those with 5-10 years' service started experiencing the most system errors.

They conclude:

The steady increase in controller compensation awards and retirements during the 1970's has been cited recently as evidence of stress in the occupation. However, it seems clear that this is in large part a product of making compensation and retirement less costly to obtain. Concern has also been expressed over the relation between job pressures placed on controllers and aviation safety. If one is willing to take reported System Errors as a measure of workforce efficiency, it is clear that measured efficiency deteriorated following the FECA amendments, but not because of traffic increases or equipment failures. We have argued that in attempting to formalize the criteria for adjudicating controller psychological claims, OWCP created an incentive for controllers to demonstrate deteriorating performance. 

We have attempted in this paper to constrain theory of shirking behavior to generate refutable propositions. The methods described in the paper can be employed in the investigation of any type of contract. However, the nature of the FECA provisions and the air traffic control profession provided the elements essential for demonstrating the effectiveness of this approach. That we chose air traffic controllers in particular is, of course, no reflection on the integrity of the profession. The maximization postulate upon which micro theory relies leaves no profession exempt from marginal responses to gains from shirking. We offer this study as a demonstration that economics as a behavioral science can provide useful insights into behavioral patterns likely to result from incentives to shirk.

In later work, they show that air traffic controllers became a lot more likely to do this kind of thing after finding a doctor who's willing to certify stuff as being stress-related.

Regulations should always pay some heed to that people respond to incentives.

The Price Elasticity of Belief: Beavers are Fish edition

I am so using this when I lecture on the price elasticity of beliefs in my public choice class next semester.

Suppose that you're trying to convert to your religion a bunch of people who eat a lot of beaver meat. And suppose that you want to ban them from eating meat on Fridays in Lent. And suppose that they don't want to give up beaver during Lent. What do you do?

In addition to disease, the European settlers also brought Catholicism with them, and successfully converted a large proportion of the indigenous population. And the native Americans and Canadians loved their beaver meat.

So in the 17th century, the Bishop of Quebec approached his superiors in the Church and asked whether his flock would be permitted to eat beaver meat on Fridays during Lent, despite the fact that meat-eating was forbidden. Since the semi-aquatic rodent was a skilled swimmer, the Church declared that the beaver was a fish. Being a fish, beaver barbeques were permitted throughout Lent. Problem solved!

The Church, by the way, also classified another semi-aquatic rodent, the capybara, as a fish for dietary purposes. The critter, the largest rodent in the world, is commonly eaten during Lent in Venezuela. “It’s delicious,” one restaurant owner told the New York Sun in 2005. “I know it’s a rat, but it tastes really good.”

Chalk this one up on the supply-side in the market for irrational beliefs.

Alcohol wage puzzles: Churchill-Stalin edition

There's a longstanding alcohol wage puzzle: drinkers earn more than non-drinkers even after correcting for a bunch of stuff. Chris Auld found that moderate drinkers earn 10% more than non-drinkers and that heavy drinkers earn 12% more than non-drinkers; plenty of other studies have found similar effects.

One not-unreasonable explanation is that drinking together builds trust among co-workers, making them jointly more productive (and higher paid) despite the occasional productivity-reducing hangover.*

Radio New Zealand provides a nice bit of anecdotal evidence.

Josef Stalin and Winston Churchill had an all-night drinking session in Moscow that lasted until 3am during World War II.

Relations between the Russian and British leaders were stiff until Churchill arranged a late-night banquet in August 1942 with Stalin, according to files held by Britain's National Archives.

The event was recorded by Foreign Office permanent under-secretary Sir Alexander Cadogan.

The mood was "merry as a marriage-bell," he added, though Churchill was complaining of a "slight headache" when Cadogan came to find him at 1am.

The two men did not engage in much military talk during the meeting, which went on until 3am.

The evening was dubbed a success by Cadogan, as the two men got on.

"Certainly Winston was impressed, and I think the feeling was reciprocated," he wrote in a letter.

"We broke up soon after 3(am), giving me just time to get back to the hotel, pack, and leave for the aerodrome at 4.15(am)."

The BBC reports the letter was among almost 600 government files dating from World War II and the early years of the Cold War, released by the National Archives.

Do all-nighters really end at 3am?

I wonder whether the anti-alcohol activists of 1942 would have bemoaned the wartime losses caused by Churchill's slight hangover the next day while ignoring that getting on well with the Soviets was rather more important.

* Note that Google Insights for Search provides reasonable evidence that hangovers are concentrated on the weekend. I mean, look at this and tell me that the folks who take average weekly hangovers as a measure of productivity losses aren't just a bit mischievous.