jamesz

Get out and shout about it

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Another study where the main question is whether you believe in their identification strategy.

Abstract:

Can protests cause political change, or are they merely symptoms of underlying shifts in policy preferences? We address this question by studying the Tea Party movement in the United States, which rose to prominence through coordinated rallies across the country on Tax Day, April 15, 2009. We exploit variation in rainfall on the day of these rallies as an exogenous source of variation in attendance. We show that good weather at this initial, coordinating event had significant consequences for the subsequent local strength of the movement, increased public support for Tea Party positions, and led to more Republican votes in the 2010 midterm elections. Policymaking was also affected, as incumbents responded to large protests in their district by voting more conservatively in Congress. Our estimates suggest significant multiplier effects: an additional protester increased the number of Republican votes by a factor well above one. Together our results show that protests can build political movements that ultimately affect policymaking, and that these effects arise from influencing political views rather than solely through the revelation of existing political preferences.

jamesz

The economist and the politician

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There has been a small kerfuffle over the appearance of Jonathan Portes, Director of NIESR, at the Treasury Select Committee. Portes was there to discuss NIESR’s latest economic forecasts and encountered unexpectedly aggressive questioning about his political beliefs from one of the Members. Jesse Norman claimed Portes’ statement that the Government’s austerity plans had ‘failed’ relied upon his personal politics. Portes responded that, while his opinions might be politically relevant, they were purely positive economics.

Norman has now clarified on his blog (HT) that he is specifically saying that reaching a conclusion about a policy’s ‘failure’ requires a normative judgment. Regular readers of TVHE will know that we entirely support Mr Norman’s view that policy judgements require normative statements. Given that a normative statement doesn’t have a right or wrong answer, it must at least be influenced by the same set of personal beliefs as a political view. Hence, it may be that knowing somebody’s personal, political view is helpful for interpreting some of their policy judgements. However, there is a spectrum of normative judgements from those that would be agreed with by only people who share one’s specific political views to those that would be agreeable to experts of all political stripes.

In this case it is clear that Portes statement about ‘failure’ referred to two things: the results of a NIESR modelling exercise, and a belief that the UK’s current economic predicament is due to a demand shortage. His conclusions about each require value judgements, but not the sort that would usually generate a political division among serious macroeconomists—which isn’t to say they’re not divided! Norman, despite his protestations, was not seeking to engage in a discussion about whether the specific value judgements were likely to be politically motivated. Rather, he sought to discredit Portes view of gilt rates by casting aspersions upon his independence.

It is episodes such as these that discourage experts from contributing to the policy debate, even when they have much to contribute. That is a great shame. As Antonio Fatas says

…some of what we do as academics is not useful enough for policy makers, and in these circumstances is better to be honest and stay out of the debate. But …one can find answers to those questions after careful thinking and a lot of data analysis.
…
policy makers need to choose a number, not a range. [Academics] can be criticized on their assumptions or calculations but not on their willingness to advance the knowledge on an issue of great policy relevance. If any, they should be praised as academics who want to go beyond writing great papers to make those papers useful for policy makers or society at large.

jamesz

Annals of improbable statistics: public choice edition

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A bit late, but this case study is too good to pass up! The local Wellington newspaper reported that:

Wellington City Council’s strategy and policy committee this morning agreed to a joint plan by Positively Wellington Tourism, Grow Wellington and the council to implement the council’s new ”Destination Wellington” programme. … The proposal agreed to today will see the city’s tourism agency work to tell the ”Wellington story” [which] should return $50 for each $1 of council investment

If someone called you up offering a 5000% return on investment you might be a bit suspicious. Indeed, some councillors were:

Helene Ritchie arguing that… ”This is a significant amount of ratepayers’ money … We don’t know what we are going to achieve and how we are going to measure it, and we need to do that first.”

Unfortunately, she didn’t prevail:

…other councillors argued that… would just be putting up more red tape when they should be getting on with it.

Now, I don’t know the details of Grow Wellington’s plans, and they may well be excellent. For all I know, their only fault may be incredibly poor economic impact analysis. However, the council’s rationale for approving funding appears to be summed up by the final quote in the article:

You have to have a plan and that’s what people want to see – they want to see that we’re doing something.

This is why public choice theory exists!

jamesz

Have election turnouts been falling?

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After appallingly poor turnouts in recent local elections in the UK The Guardian has a post implying that election turnouts have been falling over time. The key figure is this:

They also have a chart showing that smaller, less nationally important elections get a far lower turnout. Given that their time series data combines all election types, I was curious about how the time series broke down by category.

The first thing to note is that local elections (with lower average turnout) are far more prevalent in recent years, at least in The Guardian’s data. That immediately means that the overall trend will show a decline in turnout, even if turnout within categories hasn’t declined. Read more

jamesz

More on slippery slopes and nudges

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In a follow up post about nudges and shoves Eric recommends a piece by David Friedman on slippery slopes that argues:

An optional charge where the default choice is to pay it is the sort of thing Sunstein and Thaler propose, a nudge in the direction of doing what those responsible believe, possibly correctly, that most of those nudged would want to do if they took the time to think about it. But the people constructing the choice architecture know what result they want to get, they believe they are doing good and so not constrained by what they themselves would consider proper principles of morality and honesty in a commercial context, so it is very easy to make the “wrong” choice more and more difficult and obscure until what is optional in theory becomes mandatory in practice.

Essentially, the argument is that once you start meddling with people’s choices it’s very hard to avoid imposing your own views of the world. The idea behind nudges is that you help people to make the best choice from their own perspective, not yours, but that’s very hard to do in practice.

As far as it goes, that sounds very sensible and Friedman is probably right that people trying to nudge others are likely to stray in paternalistic territory. However, what the argument is missing is a plausible counterfactual. The choice architects will still need to frame people’s choices in some way. If they use nudges as their guiding principle then they will attempt to frame the choice to maximise the expected benefit to the person making the choice. As Friedman cautions, the architect may not be very good at divining the preferences of others and may end up being more paternalistic than they intended. But the alternative is not that the choice disappears, or that it is not framed in some way. The alternative must be some other guiding principle for framing the choice.

One possibility is randomisation, but there are many instances in which that will result in terrible choices for most people becoming the default. It seems hard to justify that position. A more likely alternative is that the framer will use their own preferences to guide the framing of the choice. The outcome is likely to be rather paternalistic and not at all to Friedman’s liking! It’s all very well to suggest imperfections in the mechanism for framing choices but imperfection doesn’t mean it’s not the best of the bunch.

jamesz

Slippery slopes are dangerous places

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Apparently New York is banning large soft drink cup sizes to reduce sugar consumption and obesity. Eric has used this as a launchpad for a slippery slope argument attacking libertarian paternalism (LP). The original idea of Sunstein and Thaler was that you could design choices to minimise the likelihood of bad decisions without restricting choice. Every time people make a choice the person providing the choice gets to frame it. The premise is that, if they can do that in a way that helps people to make a good decision, then they should.

A ban on large soft drink cups would clearly not be a ‘nudge’ in the sense that Thaler and Sunstein mean it. It would restrict the choice set of diners so it’s purely paternalistic. That’s probably why Eric has pivoted to attacking the idea of nudges as being too easy for politicians to misinterpret:

For all the protests that “nudge” was supposed to have strong opt-out provisions, it was awfully predictable that it wouldn’t turn out that way in practice. I don’t know how much time Thaler spent working to ensure choice was preserved in his proposed choice-preserving architecture, but he did spend a bit of time telling libertarians that this sort of thing couldn’t happen.

This argument against LP is silly for a number of reasons.

  1. First, as Eric acknowledges, the proposed regulation doesn’t fall within the set of mechanisms described by Sunstein and Thaler. The ban isn’t within the ambit of LP.
  2. Secondly, products have been banned for health reasons since long before LP existed. Even if the ban can be described as LP, it would have happened anyway.
  3. Thirdly, misuse of a concept by others is a cost that needs to be balanced against the benefits of the concept when used appropriately. Even if LP is responsible for the ban, it may still be a helpful idea for motivating regulation

Thaler and Sunstein have pointed to many instances in which better choice architecture would result in welfare increases. Even if they can be held responsible for bans such as this — which I find a stretch — the concept could still be beneficial in sum. I’m reminded of the way many economic concepts are misapplied to justify investment in stadiums, limits on alcohol sales, or restrictions in foreign investment. I don’t hear many complaints from economists that the whole idea of economics is a slippery slope to terrible policy and I don’t see how LP is different: it’s a useful idea that can help shape great policy. Unfortunately, there will always be a few people who misuse it to further their own ends. That doesn’t make it a bad idea.