Friday, 18 August 2017

More evidence on the J-curve

Another study out on the alcohol-health J-curve. This one uses 13 linked waves of the US National Health Interview Survey series, 1997 to 2009, to look at all-cause mortality, cancer, and cardiovascular disease (CVD) and drinking.*

Lifetime abstainers are taken as baseline, so there is no sick-quitter confound. There could be confounding if those with poor health never begin drinking, but the authors run a sensitivity test excluding those with poor medical histories.

Here's the main table. Model 2 has all the covariates; Model 1 just has demographic covariates.


What do we see here?

Former drinkers have worse characteristics than abstainers - so there's something to the sick-quitter hypothesis. But we already knew that. DiCastelnuovo & Donati showed that the J-curve isn't as deep if you exclude former drinkers.

Light (less than 3 drinks per week) and moderate (3-14 drinks per week for men, 3-7 for women) drinkers, in this study, see a reduction in all-source mortality - their relative risk is just under 0.8 where a lifetime abstainer is 1.0. All-source mortality is the only one we should really care about unless you have particular family histories that you want to factor in. But it is interesting to note that they only find increased cancer risk for heavy drinking - cancer is the one that's had most recent coverage. And note too that they find a stronger J-curve for women than for men - again, the opposite of what you might have concluded from all of the shouting about breast cancer risk.

And here's the more granular J-curve. Again, just what we'd expect.



The Herald covered the study, but neither linked to the study nor contrasted it with prior Herald stories about how a drink will make you get cancer and die.

Time covered it as well (linking to the study), and wrote:
In an accompanying editorial, researchers from the Mediterranean Neurological Institute in Italy wrote that the new findings “supported the conclusion that the J-shaped relationship between alcohol consumption and mortality risk cannot be dismissed, and should guide the formulation of public policies.”

The editorial also addresses the fact that women are sometimes advised to limit alcohol to very low levels because it’s been linked to increased breast cancer risk. While younger adults may not see substantial health benefits from moderate drinking, the editorial argues, “for most older persons, the overall benefit of light drinking, especially the reduced [cardiovascular disease] risk, clearly outweigh possible cancer risk.”
Nigel Latta was giving me heck the other day for defending the J-curve against his preferred anti-alcohol advocate, Jennie Connor. He wondered why the cancer risk isn't listed on the bottle. I'd be pretty happy for it to be - if it followed what the quote above. "For most older persons, the overall benefit of light drinking, especially the reduced cardiovascular disease risk, clearly outweigh possible cancer risk." Like he said, let's see them put that on the bottle. I suspect it would be illegal for them to do so as it's a health claim, but it's nice to think about.


* Note that the National Health Interview Survey is open data. They de-identified it, and anybody in the world can download it just by clicking the link. It is here. You cannot do that for basically any New Zealand health data. The Otago longitudinal survey is closely held by the Otago people. The Ministry of Health's Health Survey has some cross-tabs up, but you can't download the underlying data series. There are Confidentialised Unit Record Files available for the NZ Health Survey, but you have to go through a cumbersome application process to get access - and it would be near impossible for someone not based in New Zealand to get it without having a NZ-based coauthor. I love how American practice is just to de-identify things and put 'em up. I hate how New Zealand's default is "Well, maybe somebody might be able to re-identify, so we won't release anything."

Thursday, 17 August 2017

The Outside of the Asylum

For rather a while, I've argued that New Zealand is Douglas Adams's Outside of the Asylum.

In the Hitchhiker's Guide to the Galaxy, John Watson read the instructions on a packet of toothpicks, decided the world had gone mad, built a wall around his beachfront property, decorated the outside of the wall for the inmates of the asylum, changed his name to Wonko the Sane, and declared his home to be the Outside of the Asylum.

I feel like I'm walking through the door to Watson's property whenever I clear customs to come home to New Zealand. In a world going increasingly mad, New Zealand is, at worst, growing mad more slowly.

I've put together an essay drawing together some of these themes. We'll be releasing it as a fun report for the Initiative at the end of the month. But we're doing things a bit differently with this one. The good people at The Spinoff will be serialising it in five installments - one for each of the books in the inaccurately named Hitchhiker's trilogy.

And, for your listening enjoyment, you'll also be able to catch an audio version of it on Soundcloud, narrated by yours truly.

Watch for the report's first installment at The Spinoff on Saturday. The full report will be released at the end of the serialisation.

I've also set up a separate Twitter feed for this kind of thing.

I rather like the header image I threw together for the Twitter feed.


Apologies for light posting of late. I have a long queue of many things I've wanted to blog about, but a few reports have stood in the way. 

Wednesday, 16 August 2017

Trailblazing to the Outside of the Asylum

Last year's documentary on New Zealand, hosted by Johan Norberg, is now available online. It's a great story, featuring the likes of Roger Beattie. We don't know how lucky we are in New Zealand.



Here's Dan Mitchell on New Zealand, and the documentary.

Full disclosure: the Initiative helped out a bit in putting the documentary makers in touch with some of their interviewees and providing a bit of background detail. I show up briefly towards the end.

As America gets ever-crazier, remember to check back on that list I told you to make back in 2013.
A couple of months ago, when Alex Tabarrok complained of his son's school being turned into a police camp, I noted some of the differences between American schools and the ones here, concluding:
You can choose to live like this too. Sure, New Zealand is getting worse, and it's definitely worse than some parts of the US if marijuana freedom is an important part of your bundle of liberties. But NZ is starting from a much better spot than the US, and it seems to be getting worse slowerthan other places.

Things aren't bad enough to leave yet? Fine. Freedom's a value, but so too are other things like distance from family and wealth differentials and access to Ethiopean restaurants. But write down today some bright-line rules that you think should trigger your future exit; it's easy to acclimatize to gradual changes for the worse.
If you really want to live free, write down your list of things that would actually be sufficient to trigger your emigration, then think about the places you might go that offer the best deal on the bundle of freedoms that matters most to you.

If you're instead happy getting consumption benefits from ranting about the deterioration of freedom in America, or from imagining that you'll be able to change things there, carry on.
Have any of the "Yeah, I'd emigrate if any of these bad things happened" things on your list happened yet?

Friday, 4 August 2017

There are no answers only tradeoffs

Fundamentally all welfare systems have to answer one basic question: is it better to target a lot of funding to those in most need, or to provide universal benefits at a far lower level of support?

Both options suck, they just suck differently.

Targeting systems are intrusive. They invade privacy. They create distortions in people's choices. But it is the only way of making sure that those in the most need have access to the most resources. If you want to make sure that kids with a single destitute parent receive a lot of support, you have to make sure that the parent is destitute. If there are other sources of financial support for that kid, and you want the next dollar of government money to go to the kid in the worst circumstances, then you need to know whether about it. Otherwise that next dollar goes to the wrong kid.

The system has perverse outcomes. It breaks families apart by financially penalising parents for living together. It encourages lying to the extent that lying is a successful strategy and isn't caught and punished. Where lying is a successful strategy and isn't punished, the targeting system morphs into the universal system, except with everybody lying about their circumstances and substantial financial penalties for truth-telling.

The universal system sucks too. It is impossible to provide every family with the support the government would like to provide to the worst off family: if it gave that much to everybody, the budget would blow out. Here's a quick ball-parking for you. The government takes in about $80 billion a year in revenue. There are about 4.7 million people in New Zealand. Suppose you decided to put every person in NZ on the equivalent of NZ Super, with no monitoring of living arrangements, so $900 per fortnight or $780 per fortnight net of tax for those with no other income. That's $95 billion. The net costs would be less than that because people on higher income would face a higher tax rate on that payment, but come on. There will also be plenty of people with complex needs receiving benefits in excess of NZ Super who would be hurt even by this arrangement.

It is strictly impossible to make a universal payment that is generous enough to help those in the worst circumstances without bankrupting the country. And the second you start layering a targeted welfare scheme on top of a universal scheme, you bring back all of the incentives to lie. Maybe the incentives aren't quite as strong, but they're still there, and there'll still be special pleading for those caught lying that is every bit as compelling as that which we currently hear.

So, which system sucks least? They're both awful. The current system ties a lot of cost around the receipt of benefit, and especially around receipt of more generous levels of benefit. All the monitoring I talked about. And high effective marginal tax rates because of earnings clawbacks. But it is able to deliver focused and targeted assistance to those in most need.

Shifting to a more universal scheme means everybody faces higher effective marginal tax rates, and only partially mitigates the incentives to lie about your circumstances - unless you go to a fully universal system and bankrupt the place (or have the universal payment at a very low level and get turfed from office on the first John Campbell special on kids in households with complex needs seeing a massive cut in benefits).

I prefer the current system, combined with the emphasis under the investment approach in trying to find ways of getting people out of dire circumstances. And that requires actual policing and punishment of those who lie about their circumstances to draw money intended for kids in greater need.

Those defending lying for higher benefits should work out the fiscal implications of moving to the system they implicitly prefer. You can agree with every critique of the current system's perverse incentives and unintended consequences - I do! But you've gotta think through the alternatives, because they just suck differently - and arguably suck more.

Friday, 28 July 2017

Overseas Companies

A little known feature of New Zealand's overseas investment regime: New Zealand companies are covered by it if enough of their shares are bought by foreigners.

Here's Calida Smylie at the National Business Review:
Several major listed companies are counted as overseas persons, even though they have no single dominant overseas owner, including Fletcher Building and Air New Zealand.

Agri-business operations are particularly affected by the OIO’s restrictions on land use by foreign people or companies, because once they reach the 25% threshold they must apply to the OIO when renewing or taking on any new leases or buying land.
Other countries chase foreign investment; New Zealand is so enthusiastic about driving it away that it even counts New Zealand companies that wind up with a broad-enough set of owners. I wonder whether this discourages companies from listing publicly.

Wednesday, 26 July 2017

Don't be a player hater

A column from me in the Local Government Business Forum's newsletter:

Rapper Ice-T isn’t a conventional source of policy advice. But he was right about one big thing: don’t hate the player, hate the game.

Local government too often makes it hard for business to get things done. And as far as much of central government is concerned, local government can barely be trusted to get the mayor’s shoes tied, never mind run anything else.

Relations between central and local government have been strained for a while. Local government often makes decisions that are hardly in the national interest. Auckland’s housing crisis stems from decades of planning and consenting decisions made by local councils that stymied growth. The consequences matter for the whole country, from macroeconomic monetary policy to dismal productivity statistics.

And, from central government’s perspective, local government too often comes cap-in-hand for funding that should be covered by rates.

But look to the incentives facing local councils: the game.

Don’t hate da playa

A council that facilitates growth, runs superb consenting processes, and lays out infrastructure for new development may see little reward for its efforts. Rates from new ratepayers will largely be eaten up by the costs of new infrastructure. And the council budget process makes the remaining contributions of those new ratepayers a bit harder to see: councils decide what to spend, then divvy it up across their ratings base.

Outcomes are then not particularly surprising. If councils bear most of the costs of growth, and central government sees most of the revenue boost when councils facilitate growth, the game will automatically lead to conflict.

But it gets worse. Central government mandates often require local councils to bear costs, without an accompanying revenue stream. This blurs lines of accountability for councils: poorly performing councils can blame central government for its cost impositions – and be at least partially right. And strong performers can be punished when voters see rates increases for which their council really is not to blame. 

You can find the whole thing here (pdf). Note that it was written about a month ago, so doesn't capture the effects of this weekend's announced infrastructure funding changes. I covered similar housing themes on Nights last night with Bryan Crump.

Thursday, 20 July 2017

Get on with it: housing edition

Superu says that land use restrictions contribute to 56% of the cost of a house in Auckland.

They don't provide their background workings, so I can't verify the numbers. But if they're close to right, this is a pretty strong indictment of the last decade of government. National has had almost a decade to fix this mess. Sure, they'll blame their coalition partners for not letting them change the RMA, but they had chances to do it before National lost Northland.

And there are plenty of non-RMA things they could have done too. Councils use the flexibility within the RMA to set restrictive district plans because it's generally in their financial interest to do so. Central government could change that without touching the RMA. Councils hitting their debt limits can't finance the infrastructure needed for long-term growth, even if that infrastructure easily passes normal cost-benefit assessment.

Things this government has failed to do to encourage housing affordability, and it has been almost a decade now:

  • RMA reform;
  • Enabling municipal utility districts to impose special levies in new developments to finance infrastructure: it's how tons of new development in Texas gets financed, and how they maintain housing affordability. You can do it through that kind of MUD structure; you can do it with other structures that finance infrastructure through targeted levies that are kept separate from Council's balance sheets;
  • Punting the GST from new construction back to Councils to help them defray infrastructure costs;
  • Abolish rural-urban boundaries;
  • Tie Council ability to set restrictive urban plans to existing measures of housing affordability. Stuff like "You can set whatever district plans you like, but if the median house price is more than five times the median household income, we will automatically ratchet up the allowed density across the whole city, abolish heritage preservation districts that mostly work as ways for old rich people to keep away the kinds of people they don't like, and abolish urban growth boundaries. Have fun."
Lots of stuff government could have done, and should have done earlier. Lots of stuff government still can do. Get on with it already.