jamesz

Feminists’ work not yet done

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Men still have it easy the world over, enjoying more leisure time than women. So says an OECD study reported in The Economist.

The chart shows how many minutes of extra leisure time men have over women per day. It would be interesting to know how much of this extra time women resent. Do women choose to work more because their preferences systematically differ from men’s? Clearly they choose, in some sense, to work more hours than men do, but what motivates that and are women unhappy about it? If women want to work more hours then who are we to stop them?

I struggle with that question: if women prefer to work more and do household chores because of their upbringing then encouraging them to share the workload may not be welfare increasing. Yet it certainly furthers the right of women to be considered as equals in society. One might say that this trade-off depends on how much we value the right to be treated equally, but a rights-based approach seems inconsistent with a utilitarian framework. Can someone more knowledgable on moral philosophy help me out here?

goonix

In defence of the New Zealand wholesale electricity market

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Recently the New Zealand electricity sector has been taking a bit of a hammering. According to a Commerce Commission sanctioned report, consumers have been overcharged by $4.3b over a six year period (how’s that for a headline!). More specifically, the report concluded each of the four big generators – Meridian, Contact, Genesis and Mighty River – has been exercising the power the market’s design gives them to command unjustifiably high prices, at least during years when inflows to the hydro lakes are low as they were in 2001, 2003 and 2006.

New Zealand has two markets in electricity – the wholesale market and the retail market. The wholesale market is where generators sell their production to retailers (often the seller and purchaser are one and the same). These prices vary significantly depending on the conditions of that particular period (for example, how dry Southern Lakes are or whether a generation unit is out service). That’s why, as a consumer. it’s clever to be informed with details like Business Energy costs.

The second market is the retail market, where retailers sell electricity to consumers. Prices here are typically very stable, with consumers seldom exposed to the vast variation that takes place period-on-period in the wholesale market.

In the long-run, the prices in the wholesale market feed through to the retail market. In other words, if a generator/retailer found themselves short of generation and thus had to buy excess generation on the wholesale spot market at relatively high rates, they would eventually pass through these additional costs to their consumers in the retail market.

The report is essentially saying that generator/retailers were able to use their dominance in the wholesale market to push up prices during periods of constrained supply, which consumers then ultimately had to pay for in the retail market.

The report also says that pricing in the wholesale electricity market is, in the absence of dry periods, typically competitive. A very important point made in the report is that no market is ‘textbook’ perfectly competitive and this is certainly the case in electricity, given its unique characteristics (in particular the need for supply to continuously meet demand).

Indeed, I would say that the wholesale electricity market is working almost exactly as intended. Pricing is commonly competitive except at times of tight supply, when generators are able to reap higher rewards that incentivise continued investment in generation (which is extremely expensive) so that ever-growing demand can be met into the future. And the Commerce Commission determined that the generators’ actions were a “lawful and rational exploitation of the opportunities the market gave them”. I doubt you’d be able to make nearly as impressive a headline out of that though…

Matt Nolan

Cruelty to pigs, willingness to pay, and intrinsic animal rights

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Brad Taylor has an interesting post discussing how New Zealand pig farmers are using the issue of stall vs non-stall pigs as a way to increase protectionism in the New Zealand pork industry.

Now if all that matters is how humans value the issue then Brad is right – the efficient solution requires no regulation.

Why? If people value pigs not being hurt, they will be willing to pay to eat non-stall pigs. If all overseas pigs are stall pigs (as the farmers are saying) then this creates an opportunity for NZ farmers to differentiate and tap into this market. If people aren’t willing to pay sufficiently enough more, then there is no market for it.

As a result, as long as all that matters is how humans value and the choice of conditions is observable there is no need for “protection against overseas pork”.

However, we may instead believe that animals have some intrinsic right not to be tortured. As pigs don’t actually have a choice in the matter we may require regulations if we want their rights to be valued.

In this case, a tax on stall pig meat that captures the value of the pigs suffering WOULD be the solution – as there is a clear externality on pigs that cannot be solved through Coase bargaining.

As a result the key question we have to ask is, what intrinsic right to the lack of torture do pigs have?  If we can define that then a mixture of clear labeling and a tax on pork from stall pigs could be the solution.

Will Taylor

Portugal: Lessons on Drugs and Statisitics

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The Liberal Conspiracy has interesting article on the drug decriminalisation in Portugal. Two highlights for me.

The opening paragraph:

The right predicted Bad Things: Drug use would explode, tourists would travel from far and wide to get high on the streets of Lisbon, law and order would collapse, and people would start riding around in modified cars and fighting in Thunderdomes

This just made me laugh:)

Now what made me cringe was the stats from a Cato paper looking at Portugal:

Prevalence rates for the 15–24 age group have increased only very slightly, whereas the rates for the critical 15–19 age group—critical because such a substantial number of young citizens begin drug usage during these years—have actually decreased in absolute terms since decriminalization along with increase in the establishment of residential drug rehab in CA so that the drug users can be treated before they get addicted too much.

Perhaps most strikingly, while prevalence rates for the period from 1999 to 2005, for the 16–18 age group, increased somewhat for cannabis (9.4 to 15.1 percent) and for drugs generally (12.3 to 17.7 percent), the prevalence rate decreased during that same period for heroin (2.5 to 1.8 percent), the substance that Portuguese drug officials believed was far and away the most socially destructive.

If you feel confused after reading that paragraph don’t worry. The Liberal Conspiracy’s description of this passage hit the  spot for me:

What the above basically demonstrates is that if you cherry-pick the right start years and end years for an age-group, you can get almost any result you want

Lies, damned lies and statistics….

Nigel Pinkerton

Judith Tizzard down but not out?

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I saw this in the Herald today and it got me thinking:

If Ms Lee wins the byelection, the next person on National’s list, Cam Calder, will enter Parliament.

Correct me if I’m wrong, but electorate seats aren’t supposed to change the total number of seats a party gets (unless you win more than your party vote like the Maori party did). Labour avoided the “Vote Twyford, get Tizard” dilemma when Phil Tyford stepped aside. But the fact that the Greens will split Labours vote and give the fresh face of Melissa Lea a chance raises an interesting possibility.

If Melissa Lea wins the seat then her title will change from list MP to MP for Mt Albert, but National won’t get any extra seats in parliament. This will leave a vacant seat that Labour will have to fill by taking the next person on their list.

So is it “vote Lea get Tizzard” after all?

Update: Seems that if National wins they do get another seat – so a byelection can change the proportionality of parliament. Seems weird!

jamesz

Alcohol and addiction: part II

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We posted recently criticising the method in which the Law Commission has decided to approach its revamp of alcohol regulation. In the comments there was some vociferous criticism of the BERL report on which the Law Commissions relied for its estimates of the harm of alcohol usage. We were also lucky enough to have a personal reply from the author of the report, explaining why BERL did things the way that they did. I thought this would be a good time to clear up any confusion about where I stand on the issue. Read more