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Archive August 2012

Alcohol purchase age Eric Crampton Aug 29

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I caught a fun call from Christchurch Press reporter Joelle Dally yesterday afternoon. She noted that Doug Sellman disputed my figures and that Sellman claimed I was running a political campaign on the issue.

Here are the stats I sent back to the reporter by email after a fire alarm on her side of the call cut the interview short. I must have gotten her email address wrong as none of them showed up in today’s story. Anyway, here’s what I’d sent:

Here are some of the stats to which I’d point. I’m sure that Professor Sellman would find reason to find a crisis in youth drinking in them, but I’ve a harder time seeing it.

First, I’ll point to the figures from The Social Report that showed no increase in “potentially hazardous drinking” in the 15-24 age cohort from 1996/1997 to 2006/2007. Doug would be right that it could be the case that drinking within the “potentially hazardous” range could have changed, either becoming more or less intense, without showing any change in the proportion in that cohort. But it would seem odd if there were one cohort that were just getting worse and worse, without any changes in the proportion of people in that cohort. The Social Report also shows that there were some demographic shifts within the cohort of “potentially hazardous” drinkers: compared to 1996/1997, relatively more youths in that cohort are of European/Other background compared to Maori and Pacific.

Second, I’ll point to ALAC’s Youth Drinking Monitor. In 1998, before the purchase age change, about 25% of youths aged 14-18 were non-drinkers. That dropped to 14% shortly after the law change (2000).

But, if we look at more recent figures we find (Table 18) that 88% of 12-14 year olds are non-drinkers, 46% of 15-17 year olds are non-drinkers, and 11% of those aged 18-24 are non-drinkers.

Unfortunately, the age groupings make those a bit hard to compare. But look at those numbers and judge for yourself whether it seems plausible that we’ve had big increases in youth (age <18) access to alcohol since legalization.

The same pair of reports have 31% of youths 14-18 drinking heavily in 1998 (reported 5+ drinks at last occasion) and 30% of those aged 12-24 binge drinking now (4% of those 12-14, 27% of those 15-17, and 44% of those 18-24). Again, youth binge drinking is a problem. But it’s harder to say that it’s a problem that’s worse now than it was prior to the change in the purchase age; the proportions seem pretty similar.

There should be a very strong burden of proof on those who would impose large costs on all kids aged 18-19 who drink responsibly – the gains of potential reductions in bad behaviour have to outweigh the costs we impose on those who aren’t causing problems. Again, this can’t rule out that maybe each and every one of those binge drinkers have gone from 5 drinks to 50 (or from 25 to 5).

And, as I’m sure Doug Sellman will have made insinuations about it anyway, I have done work for the Australian alcohol industry contrasting the methods used in estimating the social costs of alcohol with methods used in standard economic analysis. This work was conducted through a consultancy grant handled through the University of Canterbury’s Research Office and subject to strict conditions around ethical conduct in research and around academic independence. Indeed, the University sent out press releases last year celebrating some of my work in this area; it’s hardly been secret.

I have one other statement of pecuniary interest to make. If a split drinking age goes through, I’m going to make money on iPredict; if we go to either 18 or 20, I’m going to lose a lot. I’m a supporter of “Keep it 18″, but I expect the split verdict to obtain unless they change the standing orders on how the vote proceeds.

Joelle didn’t include those stats but did include a note from Sellman that the Law Commission had considered all this and still thought that there were problems in youth drinking. Look carefully at the Law Commission’s review around youth drinking. Leave aside for now the general stuff about that it’s bad that kids drink and look to how they treat evidence around the change in the alcohol purchase age in 1999. The Law Commission correctly notes that there was an increase in youth drinking in the year subsequent to the law change. But they don’t say much about more recent trends.

At paragraph 16.15 they cite these bits of evidence on changes:

  • The year following the law change had an increase in ED presentations by drunk kids
    • But if you look at the reports I’m citing above, you find a blip upwards in bad stuff immediately following the law change, which subsequently reversed back to the status quo ex ante. So it wouldn’t surprise me if there were an increase in ED presentations in the year subsequent. But if that has followed the same trend as youth binge drinking, it will have reversed.
  • There was an increase in youth drink driving related problems subsequent to the purchase age change.
  • “Our officers report bad stuff” reports from the police
  • Evidence of increased binge drinking by kids through 2000 or 2002
    • nothing about how that trend subsequently reversed back to status quo ex ante.
The rest of the LC’s evidence on this question is around how bad youth drinking is in general, not about changes due to the purchase age. And while there’s really good evidence from the United States that increasing the drinking age to 21 did a whole lot of good in reducing drink driving by kids, New Zealand seems to have achieved that goal with changes in the drink driving limit for kids.

This paper analyzes the impact of increases in the minimum drinking age on the prevalence of alcohol and marijuana use among high school seniors. The empirical analysis is based on a large sample of students from 43 states over the years 1980 - 1989. We find that increases in the legal minimum drinking age did slightly reduce the prevalence of alcohol consumption. We also find, however, that increased legal minimum drinking ages had the unintended consequence of slightly increasing the prevalence of marijuana consumption. Estimates from a structural model suggest that this unintended consequence is attributable to standard substitution e ffects.

I stand by that there is not sufficient evidential base for imposing large costs on those moderate drinkers aged 18-20.

Capitalist conspiracies? Eric Crampton Aug 27

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Bill Kaye-Blake at Groping Towards Bethlehem builds on Thomas Lumley’s post on conspiracy theories and their correlation with beliefs about economics. Bill writes:

A conspiracy theory is all about (a) power and (b) ‘truth’. The theory explains that someone with power wants to control the situation. They want to keep us from knowing what’s really going on, or destroy a challenger, or consolidate their power. That is, there is a motivation for the conspiracy; otherwise, why bother going to the trouble? Whether you are talking about ‘Paul is dead’, the international banking cabal, the assassinations of Marilyn Monroe and Vince Foster, Area 51, or WTC7, the key motivation is power.

Against this power, the conspiracy theory wields the truth. The believer sees specific patterns and congruences that are arcane but visible to those who ‘know’. This truth does two things. It holds out the possibility of an alternative world: if only the truth were widely acknowledged, then existing power relationships would be reversed. It is, if you wish, the dream of Carnival. Secondly, it provides an explanation for why the world isn’t as it should naturally be. The conspiracy is preventing the world from achieving its rightful equilibrium. If only people had understood the real meaning in Abbey Road, we would not have had Wings.

I agree with Lumley that if a person tends to believe conspiracy theories, they would tend to believe economic theories that suggest powerful people are preventing the market from operating properly. Since they already think that the world is not as it should be, then those beliefs would spill over into the economic sphere.

But two further things come to mind. First, what are their other economic beliefs? In the US, at least, they have quite a list of potential beliefs/theories from which to choose. How common are these? There’s some distance between thinking that the government has put too many regulations on businesses and consumers because politics gets in the way of sane economic policy, and thinking that Bernanke is the Rothschilds’ lapdog.

The second thing is more of a worry. How do other people, those who don’t believe the conspiracy theories, see free-market economic? The mixed economy model — some public, some private — has been extraordinarily successful, compared to the alternatives. That’s not to say it doesn’t have its problems. But in terms of widespread prosperity, heath, and welfare, it sure beats feudalism, various forms of totalitarianism, hunting and gathering — pretty much everything else. A key element of the mixed economy is voluntary transactions based on market prices, or, y’know, free market economics. What do most people think about price-setting and willingness to pay? And how does that spill into thoughts about labour markets, asset sales, and property prices?

Do they believe that supply and demand forces affect prices and quantities (subject, of course, to all the usual caveats)? Do they think that people respond sensibly to incentives? What do they think about allocation of scarce resources?

Maybe we shouldn’t be so worried about the economic opinions of a few conspiracy theorists; maybe it’s the economics of the majority that we should be studying.

I’ll point Bill to Bryan Caplan’s work on what Americans believe about economics and to my own work on New Zealand data.

We are still working out a few back-end issues at The Dismal Science. The intention, in the longer term, is that this feed will simply syndicate a selection of content from our constituent blogs. Thus far it doesn’t look like there is any simple way of doing it except by having each author push posts through; I would prefer to be able to schedule things from the feeds and, where appropriate, draw in posts from the back archives of the constituent blogs to precede the new posts for important context. But, currently, pulling in back archive posts would have them run under my author line rather than under their proper attribution.

Do bear with us as we work through our teething pains.

The Dismal Science Eric Crampton Aug 24

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Thomas Carlyle called economics the “Dismal Science”, in contrast to what he termed the “Gay Sciences” of poetry and literature. The Dismal Science feed at SciBlogs brings top commentary from the New Zealand economics blogosphere to those more familiar with the Bench Sciences. Curated by the University of Canterbury’s Eric Crampton, who blogs at Offsetting Behaviour, the feed picks posts from our country’s top economics blogs, including Anti-Dismal (Paul Walker), Fair Play and Forward Passes (Sam Richardson), Groping Towards Bethlehem (Bill Kaye-Blake), Offsetting Behaviour (Eric Crampton and Seamus Hogan) and The Visible Hand in Economics (Matt Nolan, James Zucollo and co-bloggers).

The Masthead at The Dismal Science borrows Fleeman Jenkin’s illustration of barter as a rather beautiful dance, with lines of exchange among individuals.

Although people sometimes think that economics is just about money or business, it is much broader. Economics analyses individual choice under conditions of scarcity and how those individual choices aggregate into social outcomes – the dance Jenkin illustrates. Posts at The Dismal Science will reflect that rather broad domain of analysis.

We wear Carlyle’s epithet proudly: Carlyle deemed economics Dismal because of John Stuart Mill’s opposition to slavery. Economics insists on an approach based in methodological individualism – that individuals are the fundamental unit of analysis, that their individual subjective valuations as revealed by their choices forms the basis of economic notions of welfare, and that all individuals’ welfare get to count. The economic approach is antithetical to Carlyle’s insistence on a hierarchy of men where, by his assumption rather than revealed by their choice, one group are made better off by being enslaved.

Welcome all!

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