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

Splitters and lumpers

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After reading this quote from Darwin, Matt asks whether there are too few lumpers in economics:

“It is good,” opined Charles Darwin in an 1857 letter to the botanist J. D. Hooker, “to have hair-splitters and lumpers.” He was talking about how best to classify varieties of flora; being Darwin, he managed to establish an enduring intellectual distinction in a parenthetical aside. A century and a half later, his observation still holds. Splitters, focusing on difference, make sense of the world by dividing it into many small categories. Lumpers, focusing on likeness, sort it into a few big groups.

The distinction seems to relate very closely to McCloskey’s idea of economic rhetoric, where narratives of events are interpreted through the lens of a particular metaphor. The splitters are the people who explore the details of the narrative, trying to understand the minutiae of a situation. The lumpers follow in their tracks, surveying the assembled work of the splitters and constructing new metaphors that draw together seemingly disparate strands of work. Often, the work of the lumpers is considered the true genius but, as Darwin observed, they are complementary and neither could exhibit their talent without the other. Read more

jamesz

How lazy are public sector workers?

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Stuff has the data:

Figures from the State Services Commission show government employees took an average of 7.6 sick days in 2012.

No official figures are kept for private sector sick leave, but an Employers and Manufacturers Association survey suggests the average could be as low as 3.7 days a year.
…
The discrepancy of nearly four days between public and private sector workers could be explained by a more relaxed public “workplace culture”, [Association employment services manager David Lowe said] said.

“There is an impression that the workplace culture in the public sector might not be as focused as in the private sector.”

So there is no comprehensive data on the private sector, which means that the numbers may well be incomparable, depending on the composition of the sample and nature of the survey. Even if we believe the difference is significant, there could be lots of reasons for it. It may be that public sector jobs are more dangerous, or just more stressful, which causes more sick days. It may be that the intense restructuring and job losses in the public sector have caused people to become disengaged with their organisation and take more sick days. It could be that private sector employees are paid more and public sector employees are compensated slightly with the perk of more lenient treatment of sick days.

There are plenty more reasons for the possible difference, but there’s no way that we can discern anything about the laziness of public sector workers from these numbers alone. Not without a healthy shot of prejudice, anyway.

Matt Nolan

Time to build state houses?

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Labour has an interesting proposal to build state houses.  I know some other economists who have a more intimate knowledge of the building industry, and they tend to agree with the concept.  From what I can tell the justification is:

  1. The credit market for builders/developers/housing is dysfunctional at present and there is no direct solution.
  2. This is especially the case for the area of the market that state houses would fill.
  3. For social reasons the government wants to carry a certain stock of housing, and this has been run down below the level they desire.

Given the last factor, building state houses may be preferable to say having the RBNZ give direct lines of credit at “functional market” interest rates to builders/developers.

Now, I was wondering if there are people out there with a bit more data and information on this – and whether they can throw down things in the comments.  Such a direct intervention requires a hefty amount of evidence, and while I’m sure that the policy is being put out on well considered grounds I would also like the opportunity to look over this.

Matt Nolan

A hole in construction employment … really?

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A big deal was made during the release of the Household Labour Force Survey (HLFS) of the decline in construction employment.  According to the HLFS, employees in the construction industry (including the self-employed) fell 4.0% from a year earlier in the September quarter – even as New Zealand’s second biggest city was supposed to be being rebuilt!

What was ignored was that this isn’t the only figure that discusses employment by industry.  A couple of days earlier the Quarterly Employment Survey (QES) was released.  This survey suggested that the number of staff hired by construction firms (excluding the self-employed) rose 5.7% while the hours being paid for in the industry climbed 9.2%!

Source:  Infoshare from Stats NZ

So what do we believe?  That is tough, lets go through some ideas.

  1. The HLFS includes self-employment, the QES doesn’t.
  2. We know that the HLFS isn’t picking up a number of self-employed workers shifting down to Christchurch, neither does the QES.
  3. The QES does capture employed, but not self-employed workers who have just shifted down the Christchurch, the HLFS may miss them (this may be one of the factors behind the lower response rate for example).
  4. The QES occurs in a specific week in the middle of the quarter – if the quarter itself was materially different (in a non-seasonal way) this could explain some variation.
  5. The QES only takes a sample of “economically significant” firms.
  6. Firms and households may classify industries in a different way – making the “construction” sectors incomparable.

See more comparisons here.

The key point is, the HLFS told us that the labour market is very weak.  But it is not clear that construction is weak – in fact the acceleration in economically significant firms hiring and utilising workers suggests the opposite.