Roundup: fat taxes, Japan stats and more.

These tabs may not be closed without minor comment.

First: Ni Mhurchu's study doesn't show that food taxes and subsidies are more likely to benefit Maori and low income families, it shows instead that low-income groups are more responsive to changes in prices. If health is the only thing that matters, and if you set up taxes on tasty foods that are bad for health and subsidise bad-tasting ones that are good for health, those groups will respond more to the price measures. But that hardly means "benefit". It means "effect." To move from "are affected more" to "get more benefit" requires an assumption either that poor groups put a lot of value on health relative to other things in the utility function or that we are happy to force preferences upon them. For the various problems with fat taxes and the like, see here. But do expect that an incoming Labour/Green government will hang policy on this work. You'd need to be very careful in the offsetting benefit increases / tax cuts for low-income earners if you wanted to avoid the more typical incidence effects of sin taxes.

Second: I'd posted the other day on declining marriage in Japan. Another stat in the same survey showed surprisingly high fractions of young Japanese people who claim to abhor sexual contact. WashPost today points to seemingly contrary evidence: the proportion of Japanese never-married youths aged 18-34 who claim to be virgins has held steadyish for men and declined for women since the 1980s. But the rate of marriage has dropped precipitously. So a decent proportion of those who engage in sexual activities and who once got married now don't get married. It's then entirely possible for the graph here presented to be true, and for aggregate sexlessness also to have risen. Slate has some contrary arguments.

Third: You can now invest in professional athletes early in their careers. It would be interesting if professors could similarly invest in the future earnings of their students. I've a couple who I'd consider backing, if I weren't putting everything into the Uni Superfund and into paying off the mortgage.

Thursday updates

Blogging has been light; I spent the last two days catching up with folks in Wellington and attending the National Drug Policy Summit run by the New Zealand Drug Foundation, about which I'll blog properly later. A few bits of interest in the meantime:

• Westpac notes that LVR limits can have short term effects on house price inflation, but only short-term effects.
  • Duh
  • There are sensible justifications for this kind of policy based on prudential regulation and avoiding any situations where banks take on too risky a loan portfolio and downside risk winds up being borne by the government. Justifications based on curbing house price increases don't make any sense to me, whether or not it's the RBNZ comms team or the Governor making them. In that sense, it's no damning of the policy that it only has transitory effects on house prices. But it still reinforces the NZ econ blogosphere's "it's just dumb trying to justify LVR on the basis of house prices being too high." consensus position.


• Scott Sumner praises Finance Minister Bill English. Agreed. Some credit could go to Minister English's truly excellent economics adviser as well. 


• The New Zealand Police have decided that despite GCSB's having acted illegally in the DotCom surveillance, they will not press charges because there was no intent to act illegally. But:

  Intent to break the law is not an element of the charge of illegally intercepting private communications.
  — Graeme Edgeler (@GraemeEdgeler) August 29, 2013

  The government, through the new GCSB and TICS legislation, is giving us an expansion of GCSB's scope with increased nominal oversight, but no expectation that GCSB would ever be prosecuted for doing anything that was in fact illegal. Lovely. Big slow clap here for everyone involved. Meanwhile, here's Ars Technica on some of this mess.


• The insurers here argue for something sensible, and something for which I've argued before: have EQC effectively cover a large excess in case of natural disasters, and otherwise stay out of the darned way.

So endeth the closing of the browser tabs, so closeth the day.

Update: note that Edgeler also argues that lack of intent to break the law could be a decent reason not to go ahead with prosecution in this kind of case and reminds us that criminal penalties are not the only form of accountability. That's all true; I hope that everyone who has illegally been spied upon knows that it has happened so that they can launch civil suits.

Wednesday roundup

A few worthy items in the tabs:

• Matt Nolan over at TVHE rightly points out the rather large problems with the Reserve Bank of New Zealand's justification for its restriction on highly leveraged home loans - the Loan-to-Value Ratio regulation. It's fine to argue that the LVR regulations could reduce systemic risk: that's the RBNZ's job. But it isn't the RBNZ's job to protect potential homebuyers from price fluctuations; it's awfully strange for RBNZ to suggest that they could be providing such a benefit to first-home buyers by making it too hard for them to buy houses. I could as plausibly claim that I'm making everyone better off by banning them from listening to Coldplay because they're not likely to be "cool" for much longer.*

• Fairfax polling shows that Kiwis are pretty happy with the extension of powers to be granted to our spy agency this afternoon. National's likelihood of winning the next election hasn't dropped with any of the fooferah over the last couple of months; if anything, it's slightly up. ACT's chances of winning an electorate seat are down a bit; John Banks's likelihood of being ACT leader on nomination day is down a bit; ACT's predicted vote share is unchanged. ACT might be reading the tea leaves correctly on this one: few GCSB opponents would flip to ACT were ACT to switch its vote. Without a simultaneous change in leadership, it probably wouldn't be enough to bring enough civil libertarians over to get over the 5% threshold. Their main risk is that their support of the GCSB legislation leads to the creation of a liberal party. But, even then, the downside risk for ACT is small: Key is more likely to proffer an electorate seat to ACT than to a liberal party and there's little chance a liberal party would take 5% in 2014 given organisation costs and time.

• Now an older one, but my tabs stay open for a while. The Australian Christian Democrats have highlighted the inequality in incomes between same-sex and opposite-sex couples and promise to stop the oppression of "Mum and Dad taxpayers". Fitzroyalty points out the shoddiness of their numbers (language NSFW), but it's not implausible that same-sex couples would earn more on average than opposite-sex couples: they'd be likely to have both partners working if homosexual couples are less likely to have a child. I'm not sure quite how the Christian Democrats would equalise household incomes on this margin ... maybe banning gay couples from having children, giving more tax benefits to couples with children, then waving their hands about childless heterosexual couples? Another for the "which inequalities matter?" file.

* I don't know when Coldplay peaked. I make it a rule not to listen to any bands whose name are just two random words stuck together. Cold + play, Nickle + back, Silver + chair. Maybe I'm missing some good stuff, but it's a heuristic that's served me well on average. My Spotify starred items are here. No Coldplay, Nickleback, or Silverchair.

Monday roundup

I love that the NZ economics blogosphere is now large enough that I can now simply outsource parts of my thinking to others. Today's worthies:

Donal explains the changes to broadband pricing regulation over at Economics NZ. First some background: mobile call pricing has come down substantially consequent to a new competitor's entry. Next, some background on the current broadband regulatory structure and how prices are set for regulated access to Chorus's infrastructure. Donal promises more to come.

Bill Kaye-Blake notes historical pamphlets worrying about the indolence of the peasantry were they ever to accumulate too many resources, and draws the logical extension to current "cost of alcohol" kinds of studies calling it a cost to the state if one chooses inebriated leisure over labour. Work is a bad and leisure is a good!

James Zucollo notes that Netflix doesn't believe your star ratings. Instead it recommends films based on what you actually watch. Expressive preferences differ from revealed preference. That's why economists trust the latter over the former whenever available, and are skeptical about surveys even when revealed preference measures aren't available.

Finally, Shamubeel Eaqub blogs at TVHE on National's policy in support of first-home buyers. Recall that RBNZ is initiating LVR regulations to prevent banks from taking on too many highly leveraged mortgages; they think that banks' asset sheets take on too much housing price risk. This will necessarily fall hardest on first-home buyers who cannot use the proceeds of the sale of their first home as deposit towards their next home. The National Party's proposed plan lets Kiwisaver participants use more of their dedicated retirement savings towards their first home. While this will push up housing prices where housing supply is pretty inelastic, it shouldn't heighten any of the risks that RBNZ is worried about under LVR: it's still a real deposit, and so it's less likely that banks wind up in the negative on foreclosing. The part that's a problem is instead the expansion of the Welcome home Loans Scheme, under which the government apparently underwrites loans for home buyers, who have to come up with only a 10% deposit. I can't see how this part doesn't cut against RBNZ's LVR policy except inasmuch as it's somewhat limited in total coverage: the Fairfax story says they're expanding from 850 loans per year to 2500. 

Morning roundup

A compilation of bits from 'round the traps.

First, NZ:

• Nolan over at TVHE has been on a roll lately. I particularly endorse his critique of the Labour/Green manufacturing inquiry and his critique of Key's trying to push RBNZ beyond its mandate and capacity. Both of these have saved my having to add anything. 
• Brennan McDonald chalks the Labour/Green manufacturing policy up to rent-seeking: the parties wanting Ministerial rents and playing to public biases to get it, and manufacturers running normal rent-seeking. I'd amend slightly: if voters are better at detecting dissembling than at understanding economic policy, then we'd expect MPs to share their base's biases. 

Everywhere else:

• Mark White on the dangers of Nudge policies.
• Jessica Irvine reports on 43 recommendations from the former head of the Oz Productivity Commission for boosting Australian productivity. 
• Note that NZ is well ahead of Oz on numbers 1, 2, 3, 5 (though Labour wants to re-implement it), 7 (although the taxi camera regs and dispatching rules here work to similar effect), 8, 9, 11, 19, 21, 22 (barring RONS), 23, 24, 27 (though Labour/Green would reverse), 30 (if we believe that the RIS is more than a tick-box), 34-35 are underway, 36 (though Labour/Green would reverse), 37, 42, and 43. I'm not sure we're worse than Oz on the others. Stupid tyranny of distance and inefficiency of scale. 
• Chris Bertram on the dangers of the surveillance state.
• The Church of Rationality walks us through the econometrics of bicycle helmet mandates. As is often the case, the standard for statistical evidence in med journals, the BMJ included, is pretty bad. If you're testing for the effects of cycle helmet laws, you probably shouldn't correct for cycling-related injuries. 
• Alex at Marginal Revolution on the Oocyte Cartel.