Eric Crampton

Dr Eric Crampton joined the New Zealand Initiative as Head of Research in August, 2014. He served as Lecturer and Senior Lecturer in Economics at the Department of Economics & Finance at the University of Canterbury from November 2003 until July 2014. The Dismal Science syndicates some of his blog posts from Offsetting Behaviour. Eric is on Twitter @ericcrampton

Rational addiction and Naloxone - The Dismal Science

Mar 12, 2018

Suppose for a moment that addicts are rational and that we’re really in a Becker-Murphy world. What happens in that world if a new technology makes it safer to consume an addictive product? If you’re overdosing on opioids, Naloxone can save your life. The easier is access to Naloxone, the less likely addicts are to die if they have an overdose. Preventing death is good. If we’re in a rational addiction framework, net effects on mortality will be lower than you might have thought though. The costs of taking up an addictive good go down, so more people will choose the addictive consumption path. The optimal quantity consumed on that path should be higher as well where the risks are somewhat abated. Addicts would have less need to build in safety margins against higher than expected potency, for example. Basically … Read More

Sweet Relief: Eric Crampton on the Sugar Tax - The Dismal Science

Mar 08, 2018

For the past several years, public health lobbyists have pretended that all opposition to sugar taxes is ideologically motivated or dishonest. They have argued that the only thing stopping the government from implementing their beneficent proposals has been the actions of nefarious interest groups. And so it is interesting to read what the Ministry of Health’s officials actually thought about sugar taxes. I requested the Ministry’s advice under OIA. They provided it. And it shows that the Ministry’s officials raised the same concerns that we did, and that NZIER did, about sugar taxes. The Ministry’s advice to Minister Coleman was consistent also with Treasury’s warnings about sugar taxes – warnings that the public health people tried to discourage Health officials from considering (see document #34). Overall, the Ministry worried that measured effects of sugar taxes on consumption were unreliable (but … Read More

Earthquake anniversaries - The Dismal Science

Feb 22, 2018

Seventh anniversary of the Christchurch earthquakes. GNS figures there’s about a 1/120 annual risk of something of similar size hitting Wellington: 0.833%. Recovery here will be much harder than in Christchurch. There are few local options for firms to relocate to while downtown is torn down and possibly rebuilt. There are few transit routes in and out. The airport could easily be out of service. The Port is only now just talking about getting floating wharf facilities that could be more quickly serviceable after an earthquake. And while there are lots of ways of getting from anywhere in Christchurch to the Hospital, or at least close enough to Hagley Park to be walked over, lots of Wellington suburbs will be cut off from the hospital. Wellington has reticulated gas. The fire service will have a very difficult time accessing some … Read More

Cannabis Cross-price Elasticities - The Dismal Science

Feb 19, 2018

It’s been a bit of an open question whether legalised marijuana would lead to more or less alcohol use.  If the two goods are complements, say if people liked drinking while consuming cannabis, then any increase in cannabis use could yield greater alcohol use. If they were substitutes and people smoked instead of drinking, alcohol use could drop. RAND surveys some of the more recent evidence.  Different studies also examine different time periods, and the laws have been changing over time. Early state laws (such as the medical cannabis legislation California passed in 1996) tend to allow broader qualifying patient conditions, legal home cultivation and less oversight of dispensaries. Differences in policies may lead to different effects on cannabis use, and possibly alcohol use. And the laws’ impact may evolve over time as the market expands or as federal … Read More

Informative advertising - The Dismal Science

Feb 09, 2018

New Zealand’s in a fun legal limbo right now on e-cigarettes. Everybody knows that the Ministry of Health is soon to be liberalising, so the de jure restrictions that prevent selling of nicotine-containing e-liquids aren’t being enforced. It’s pretty easy to get vaping liquid. In some ways, whatever regulatory regime comes out of this will be more restrictive than the current de facto status quo. But if legalisation makes it easier for providers to advertise, that could be for the good. Dhaval Dave and coauthors find that FDA restrictions on e-cigarette advertising in the United States prevented people from quitting smoking. From their abstract: Only recently introduced into the U.S. market, e-cigarettes have been aggressively promoted, and use is increasing rapidly among both adults and youths. At the heart of the regulatory debate are fundamental questions regarding whether e-cigarettes … Read More

Bad Beer takes - The Dismal Science

Feb 08, 2018

The Atlantic’s Derek Thompson likes craft beer. But his take on its rise in the US doesn’t make a lot of sense. And I’m surprised that Noah Smith didn’t catch the errors. Thompson argues that the complicated morass of American state-level regulations around brewing and beer distribution meant that the big brewers couldn’t take the whole field. At the end of Prohibition, lawmakers felt that smashing these vertical monopolies was critical to promoting safe drinking. After the passage of the 21st Amendment, citizens in all states voted to abolish tied houses by separating the producers, like brewers, from the retailers, like bars. This led to a “three-tier system” in which producers (tier one) sold to independent middlemen that were wholesalers or distributors (tier two), who then sold to retailers (tier three). By dividing the liquor business into three … Read More

Sugar taxes – NZIER’s advice - The Dismal Science

Feb 02, 2018

Sugar taxes just are not effective in improving health outcomes. When we surveyed the evidence for our report, The Health of the State, we found no compelling reason to think the things would work. NZIER’s report for the Ministry of Health reaches the same conclusion. First, some backstory and grousing about document release under OIA. Back in October, I requested that the Ministry of Health provide me a copy of the report it had commissioned reviewing the effects of sugar taxes. The Ministry of Health delayed my request under section 9(2)(f)(iv) “to maintain the constitutional conventions for the time being which protect the confidentiality of advice tendered by Ministers of the Crown and officials”, and under 18(d) as the report would soon be publicly available. But they never said how long ‘soon’ was. I interpreted that combination as meaning … Read More

Recipe for Disaster - The Dismal Science

Jan 25, 2018

I didn’t enjoy the Christchurch earthquakes. But at least as bad as the earthquakes were the depressing policy failures that followed. Policy moves stoked regime uncertainty and stymied recovery. When I started in at the Initiative, I’d asked Oliver if we’d be able to take on earthquake policy as part of the deal. Wellington’s earthquake-prone, and I wanted us to at least try to help make it less likely I’d have to live through another Christchurch-style policy mess if Wellington got its quake. Jason Krupp started the work for us before he moved on to the Minister of Finance’s office last year; Bryce Wilkinson and I finished things up. The report came out today. You can read it here. The biggest upshot: government needs to plan ahead for the next earthquake to avoid causing the kind of regime uncertainty … Read More

Tertiary access isn’t about tertiary fees - The Dismal Science

Jan 19, 2018

If you want to improve university enrollment rates among Maori and Pasifika kids, you should look at what’s going on earlier in the education system. Lisa Meehan, Gail Pacheco and Zoe Pushon find that ethnic gaps in school performance are the largest contributors to ethnic gaps in university enrollment rates. Those gaps matter far more than differences in socioeconomic status or parental education. They use administrative data held in the Integrated Data Infrastructure to control for meshblock-level deprivation index scores rather than school decile rankings, providing a finer grained measure of background characteristics. They also have parent’s highest degree from the 2013 Census, student ethnicity, school characteristics, migrant status, and distance to the nearest bachelor-granting institution. Table 4, copied below, provides a decomposition of the relative contributions of the different variables. So the total difference in bachelor’s level enrollment … Read More

Costly Discrimination - The Dismal Science

Jan 15, 2018

Danish kids are happy to pay to avoid having to work with someone of a different ethnicity. In this clever field experiment, Danish kids with traditionally Danish-sounding names were willing to forego expected earnings in order to avoid being paired with someone with a Muslim-sounding name – and vice-versa. It’s a great experimental design. Kids do a first round stuffing envelopes on their own, paid a piece rate. For the second round, they have to choose a day to come in, and they’ll be partnered with another kid with a joint payoff for how much the team gets done. They’re given information on what the other kid achieved in the first round. Because the framing is choice of day to come in for the task rather than choice of partner (though the day determines the partner), there’s less chance … Read More