Will Taylor

Binge Drinking and Risky Sex among College Students

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Hot off the press from NBER, I was particularily interested in one of the main conclusions from the abstract:

Results from a rudimentary instrumental variables strategy and accounting for whether sex is immediately preceded by alcohol use suggest that binge drinking directly leads to risky sex. Some binge drinking-induced promiscuity seems to occur among students, especially males, involved in long-term relationships

I could have told you that without doing any econometrics!

Note: I have read nothing but the abstract so can’t comment on the actual econometrics carried out!

Matt Nolan

A note on delaying the ETS

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Over at Kiwiblog and at the Herald, the idea of delaying the implementation of the ETS is raised.

No matter what Aussie is doing, we shouldn’t do this.  Why?  Delaying the ETS doesn’t delay our Kyoto liability – it just means that we will have higher taxes to pay for the pollution caused in industries that produce pollution.  The point of the ETS is to:

  1. Raise the funds to pay our Kyoto liability,
  2. Set the relative price of carbon production such that it incorporates the full social costs incurred (in this case, this is because we have a liability overseas – so the truth of “global warming” is irrelevant).

So although it might upset some businesses if we don’t delay implementation (in the same way it would upset anyone if you taxed them or took a subsidy off them), we have to look at the other side as well – delaying implementation implies higher income taxes.  Lets not ignore this.

Matt Nolan

Universal healthcare and superannuation, and the cost of thinking ahead

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If doing actions that reward a future self is perceived as costly could we justify these actions.  If thinking about our wealth, human capital, or ability to live in 10 years time is inconceivable, will me over consume now?

In essence this sort of discussion is saying that we discount our future selves TOO steeply (compared to whatever the underlying presumption of a “fair discount factor” is).  Is this a fair value judgment to make in policy?  It is not one I would make, but it appears to be the basis of some overaching policies such as universal healthcare and superannuation.

In this case, we don’t need to worry about a “moral hazard problem” even though (empirically) the actions of moral hazard will appear.  Why?  Because the actors aren’t thinking about the future selves and so these “inefficient” outcomes would have occurred in the first place!  Policy helps to correct this by transfering resources to our future selves to improve outcomes relative to the REAL counterfactual (rather than the idealized one where agents choose on the basis of our subjectively fair discount rate).

I think it is important to keep this issue in mind, because it is a closet behavioural assumption behind most policy.  If we buy this value judgment, then we will believe in a larger role for government then if we didn’t.

Matt Nolan

GST and food. Why I’m against exempting the tax

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Via Dim Post, No Right Turn mentions an article from Werewolf.co.nz by Gordon Campbell.  The article supports the idea of exempting GST on food. There were a number of interesting facts, I definitely enjoyed the articles.

However, even if all the premises are correct and even given significant social justice goals, I think we have to be clear regarding why we think an exemption is the way to go – and in the end I still disagree regarding any exemption.

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Matt Nolan

Fat is normal, but it still involves choice.

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I was impressed by the title of a NZ Herald article today “Fat is normal“.  I was like, yes it is perfectly rational for an individual to put on weight, contrary to what we are often told.  I began to think that if policy wonks would treat the idea of putting on weight sensibly we could avoid weird “anti-fat” policies.

However, then inside the article I saw it was written by a nutritionist – the worst of the prescriptive disciplines in my opinion.  Furthermore, they decided to take an entirely holistic approach to weight gain, removing any individual responsibility and blame the environment.  Namely:

Professor James said that in countries such as Britain and New Zealand, the reason for many people’s obesity was a genetic predisposition in an environment which allowed it to happen with an “out-of-control” food industry and the constant use of cars

What is this.

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Matt Nolan

And a side note on addiction

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With alcohol regulation we decided to remember that it is the external cost that matters.  Now one reason private costs might matter in terms of regulation is internalities.  There is a discussion of this with regards to boozing here.

This brings me to the idea of “addiction” I discovered from this article.  What is addiction, and why are we so scared of it.  Looking at a search of TVHE, I can tell that the authors here are not scared of addiction, we view it a little differently to the black and white box often given by (say) health professionals (ht Dim Post).

For me, all addiction tells us is that the consumption of the good CHANGES the costs and/or benefits of the consumption of the good in the future.  As a result, what is important is:

  1. Information with regards to how addiction functions (and the costs and benefits of consumption) for people,
  2. Having mechanisms available so people can “pre-commit” to consumption patterns in the face of an addictive good.

When we have these two pieces of the puzzle we can figure out what tax and what institutional policies can be established to improve outcomes with regard to the consumption of this specific good.

There is NOTHING wrong with addiction per see.  If we banned things on the basis of addiction we would ban pretty much everything.

Personally I think of addiction as follows:  A good is addictive if consuming it increases the marginal benefit of consuming it in the future and/or it increases the marginal cost of NOT consuming it in the future.  The first type of addiction is unambiguously good, the second type is not – but it is internalised as long as people know about it, and people are able to deal with issues of time inconsistency.