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

Alcohol access and harms in the military - The Dismal Science

Jun 29, 2017

A large sample study of American enlisted soldiers, who turned 21 while enlisted, found large increases in alcohol consumption at the birthday but no increase in harms consequent to that consumption: no meaningful effect on suicidal tendencies, depression, tobacco use, physical fitness, psychological health, deployability, smoking, or job-related infractions. Recall too that, following Boes & Stillman, the RDD estimates around the time of the birthday would be larger than the longer term effects one might extrapolate from the RDD (the paper rightly restricts things to the neighbourhood of the birthday and doesn’t extrapolate). From their conclusion: Using data on all soldiers between 2009 and 2015, we observe a large and significant increase in drinking after the 21st birthday overall, and the increases are largest amongst those who were depressed, had a family history of mental health problems, had … Read More

Inside the asylum: food safety edition - The Dismal Science

Jun 26, 2017

Versions of cost-benefit that tally up all of the savings to a public health system from banning people doing things they like, and ignore the costs incurred by people banned from doing things they like, lead to this: We reveal today that new Ministry of Primary Industry guidelines for food outlets require your hamburger to be cooked to fried or grilled to 70C internal temperature. As any home cook can tell you (or indeed, anyone with a copy of the Edmonds Cookbook sitting handy) 70C is, to all intents and purposes, nuking it to high heaven. What is left is a hunk of dried out, grey tyre rubber. …Chefs around the country have no doubt been stewing at the new “guidelines”, but it was executive chef Dan Fraser at the historic Duke of Marlborough Hotel in Russell who put … Read More

Higher education, big big numbers - The Dismal Science

Jun 19, 2017

I don’t think we can blame the consultants for this one. Normally, big big numbers in economic impact reports are a black mark on the consultancy producing them. They don’t come with enough health warnings, and the misleading big big figures draw headlines too easily. Dave Guerin’s Ed Insider newsletter (essential reading for anybody following tertiary ed in New Zealand) covers the Universities NZ report, produced by NZIER. He writes: Universities NZ released Regional activity of universities (30 pages) on 27 Apr 2017 (UNZ media release). The report had straightforward analysis of the direct university spending and employment in their region, and the contribution to regional GDP. NZIER also estimated the indirect and induced expenditure due to universities, but placed major caveats on those figures, stating that UNZ had specifically asked for them. They … Read More

Kiwi kid outcomes - The Dismal Science

Jun 15, 2017

UNICEF’s new report has made for some damning headlines about child outcomes in New Zealand. In a few cases the critique is deserved; in a few others, it needs a bit of context. UNICEF finds that fewer New Zealand live in relative income poverty than is the OECD average, in 2014 data. It is worth remembering that there is a sharp gap between those figures as measured before- and after- housing costs. If relative income poverty is measured after taking into account the costs of housing, the proportion of children in relative income poverty rises by about a third according to Ministry of Social Development 2015 figures. Since housing costs are a more substantial problem in New Zealand than in most other countries surveyed, UNICEF may be understating the seriousness of the problem in New Zealand as they appear … Read More

Plain packaging – new regulations - The Dismal Science

Jun 15, 2017

The New Zealand government finally got around to telling the tobacco companies what the rules will be under plain packaging. Plain packaging won’t be in effect for a while yet, but it takes a while to adjust production lines – it’s good that they finally got the rules out.  Fairfax’s Rob Stock called me asking for comment on plain packaging. I told him that the government should have put its efforts into getting a regulatory framework in place to allow the sale of e-cigarettes and other nicotine delivery devices (heat-not-burn products, and Swedish snus). The effects of plain packaging in Australia haven’t been large, and a lot of smokers might be more responsive to available better alternatives than to ugly packaging. After our good long chat about the topic, Rob reported this: Eric Crampton from the New Zealand … Read More

Grow large with milk - The Dismal Science

Jun 09, 2017

A new paper out in the American Journal of Clinical Nutrition shows there’s an association between children drinking non-dairy milk, as opposed to cow’s milk, and lower heights.  It would be tempting to take these results and make a case for ending Canadian dairy supply management, but there are better reasons for ending Canadian supply management. The press release doesn’t link to the paper. Children who drink non-cow’s milk — including other animal milk and plant-based milk beverages — are shorter than children who drink cow’s milk, new research suggests. For each daily cup of non-cow’s milk they drank, children were 0.4 centimetres shorter than average for their age, according to a study published today in the American Journal of Clinical Nutrition. For each daily cup of cow’s milk they drank, children were 0.2 centimetres taller than average. Read More

For the birds – reflections on the PCE report - The Dismal Science

Jun 08, 2017

There’s an important recommendation missing from the Parliamentary Commissioner for the Environment’s list of things to help endangered birds. It hardly would work for all birds, but it is ridiculous that it is banned for those birds for which it would work. Let people farm them. Roger Beattie has demonstrated that he can successfully raise weka. There would be ample speciality markets for the birds. But DoC seems to consider him a menace rather than a saviour for those birds. He made the case well on the tag accompanying his Weka Woo hats. I did like that PCE recommended considering GE modified predators as a way of helping. They write: The nature of research is that there are no guarantees of success in the laboratory, let alone practical application in the real world. One approach may be very … Read More

Lithium laptop batteries on planes - The Dismal Science

Jun 02, 2017

Last time I flew domestically in New Zealand, I had to make sure that my spare lithium battery pack was in carry-on rather than checked. It’s safer that way because a fire from a shorted battery can be contained in the cabin but can’t be so easily contained in the hold.  Made sense. America’s looking to broaden its ban on laptops in the cabin. Rather than just affecting flights from the mid-east, where there might be somebody planning on making a laptop-bomb that could be activated from the cabin, it may extend to all flights. Pretty good trick from the bad guys’ perspective, if batteries in the hold are risky. Restricted to places with a relatively high risk of laptop bombs, maybe the ban passes cost-benefit. Applied everywhere, the tiny risk of any laptop spontaneously catching on fire adds up … Read More

Health costs and the Consumer Price Index - The Dismal Science

May 30, 2017

So Labour and National are scrapping over whether National’s increased or decreased the health budget. There’s no question that health budgets are well up since National took office, whether in per capita terms, real terms, nominal terms, or real per capita terms. Population’s up about 10% since 2008; health budgets in CPI-adjusted terms are up about 29% since 2008. So real per capital spending has to be up. But the more interesting question’s on how to adjust health costs for CPI. StatsNZ has a sub-index on health costs. And that’s shown substantial cost inflation – well above CPI in some categories. But should health spending be adjusted for that sub-index? Let’s look at what’s in it. Position in the CPI structure The health group of the New Zealand Household Expenditure Classification represented 5.09 percent of the CPI at the … Read More

Tipping in New Zealand - The Dismal Science

May 25, 2017

New Zealand has an excellent non-tipping equilibrium, but there’s been some discussion of encouraging a shift to tipping. A lot of restaurants do kinda have it, mostly (I think) as a way of securing rents from foreign tourists who don’t know better. But most of the discussion around tipping has the base economics of the thing wrong. The main point of tipping is to solve an information asymmetry problem. Suppose you own a restaurant and simply have no way of telling which of your wait staff are decent with the customers and which are terrible. In that state of the world, you pay them a low hourly wage and encourage the customers to top it up based on the quality of service. Ideally, this means that bad wait staff get no tips and exit the industry, average service gets an … Read More