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

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

Mandatory labelling – again - The Dismal Science

Apr 24, 2017

Twitter suggests there’s a pretty common fallacy out there that needs a bit more thorough treatment. Here’s how it looks: Free markets require informed choices Therefore the government should compel companies to label their products about things that I happen to care about. Otherwise how can people make informed choices? Why is this an error? There’s an infinite array of things that could show up in (2) as basis for labelling because different people care about different aspects of products. In the absence of mandatory labelling, consumer demand combined with labelling costs ultimately drive what gets put on a label. Consider country of origin labelling. Some suppliers specialise in a pure NZ product – and proudly say so on the label. Others will shift supply depending on what’s going on in different markets: some disease outbreak might hit pork from … Read More

Hypothesis testing: open data edition - The Dismal Science

Apr 18, 2017

Credit: Saturday Morning Breakfast Cereal. The graph looked plausible. It didn’t really fit my experience, but it didn’t seem implausible either. So I took a 5 minute jaunt over to Berkeley’s SDA engine, which draws on US GSS data. First I ran a basic regression of happiness on age, age squared, with a high score in wordsum (a vocabulary test) as my nerd interaction term. Berkeley lets you run the regression right in the website. I’m not sure I’ve got this one right – can’t guarantee that I properly excluded where they used a code for missing data.     Then I downloaded the data to plot things a bit more nicely in Excel, because you can generate custom data extracts on the fly. I’d not done that before; learning how to do it took 5 minutes … Read More

Water pricing and bottling plants - The Dismal Science

Mar 27, 2017

And here we go for another edition of “Because you’ve misspecified the problem, your proposed solution might make things worse.” The past couple of weeks have had renewed anger about water bottling plants. If you buy land with water drawing rights attached to it, you don’t get charged for drawing that water. The value of the water is baked into the selling price of the land. And so whoever owns the land with the drawing rights gets to appropriate any unexpected increase in the value of water drawing rights, and anybody buying land at market with those rights would, expectationally, only wind up earning a normal rate of return on that investment. So far so good. But when people buy land to irrigate paddocks, run cows, milk the cows, dry the water out of the milk, and export the milk … Read More