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

Curbing alcohol advertising – where’s the evidence? - The Dismal Science

Jan 13, 2017

The usual lot want to ban alcohol advertising in sport, to protect kids. [The Science Media Centre rounded up some commentary on the research too – Sciblogs Ed] I’ll excerpt from my submission to the Ministerial Forum on Alcohol Advertising and Sponsorship of a couple of years ago; the whole thing is here. They were focused on evidence since 2010 because they took the Law Commission’s prior report as starting point, so that explains the ‘since 2010’ bits quoted below. Nelson (2010) examines whether alcohol advertising bans affected alcohol consumption in a panel of 17 OECD countries over the years 1975-2000. His modelling is careful: he begins by controlling for the underlying factors giving rise to country-level restrictions on alcohol advertising before estimating the effects of those restrictions controlling for the underlying factors that cause advertising restrictions … Read More

Great walks, water meters and NZ Super – Solvable problems - The Dismal Science

Dec 13, 2016

The world has plenty of hard unsolveable problems. It’s irritating when easy to solve problems fail to be solved, although they too may point to a broader difficult problem. Great walks Swing bridge on the Great Walk Lake Waikaremoana, New Zealand. Wikimedia / Michal Klajban. Item the first: New Zealand’s great walks are, well, great, and very popular with tourists. But they’re losing millions of dollars per year, meaning that taxpayers are shelling out to provide tourists with great walks at discount prices. And nobody wants to increase charges for locals. The solution seems obvious: charge tourists more than you charge locals, unless something really weird is going on and we’re already on the inelastic part of the tourists’ demand curve. Water conservation Water metering in Christchurch. Solved? Flickr /Steve Johnson. Item the second: Christchurch Council wants … Read More

Sugar tax: The Gibson Critique - The Dismal Science

Dec 09, 2016

Waikato’s Professor John Gibson last week delivered at Motu what has to be the most devastating critique of the empirical estimates on sugar tax effects that I’ve yet seen. Gibson’s slides are here. Minister of Health Jonathan Coleman has been holding off on sugar taxes, saying that he needed to hold on the results of a couple of forthcoming studies, one of which is Gibson’s. Julie Anne Genter and the Greens have been arguing that his opposition relies on one industry-linked report; I’m not sure how they missed Gibson’s work, as I’ve pointed Julie to it many, many, many times. Gibson’s presentation at Motu goes beyond what I’d seen him present at the Ministry of Health a few months ago, and which we cited in Jenesa’s report The Health of the State. Read More

Prime Minister English? - The Dismal Science

Dec 06, 2016

If outgoing Prime Minister John Key has any influence over the choices, and if Bill English wants the job, I expect English will succeed Key as Prime Minister and Steven Joyce will move to the Finance portfolio. More than anybody else in government, as best I’ve been able to tell, Bill English thinks in terms of incentives and institutions. He sees the long game in changing structures to get better policy outcomes. And I have only ever heard him talk about that long game in terms of policy outcomes, not politics. As Finance Minister, English’s vision was clear. He wants government spending to be effective. This isn’t bean-counting stuff, it’s about wanting that outcomes actually improve because of policy and spending decisions. And he wants the institutions to be in place to provide the incentives for that to happen. English’s … Read More

Compensating organ donors - The Dismal Science

Dec 01, 2016

It is illegal to pay organ donors for their gift. Economists can easily explain the consequences: at a price of zero, you have a big shortage. This is particularly the case for live donors, where donors face real personal costs, both in the transplant process and in recuperation. Chris Bishop’s bill, which passed Third Reading in the House yesterday, will compensate live organ donors at 100% of their lost income, and makes sure they’re not left out of pocket for costs. Here’s Chris’s speech at third reading.   Kidney transplants save the government over $120k in dialysis costs, net of the cost of the transplant and ongoing care. For a long time, we were stuck in the worst of all worlds on this one. People don’t like the idea of trade in organs and money being involved, and … Read More

Quake-prone heritage buildings: spring cleaning - The Dismal Science

Nov 25, 2016

Wellington’s quake-prone heritage-listed buildings remain scary. My column in this week’s NBR ($) suggests prioritising the risky heritage buildings, pulling the heritage listings from the scariest ones, and putting public money into the ones where the heritage amenity is really worth it.  Or, Council could just buy the buildings from their owners, fix them itself, and sell them afterwards – though they would almost certainly take a pretty big loss in doing so. The loss is the same loss they’re currently imposing on private owners via the heritage listings, but putting it on the public account never feels quite as nice for the regulators. A snippet: The most recent data say Wellington has 641 registered earthquake-prone buildings. Of those, 20 are Category 1 places listed by the Historic Places Trust and 44 more have Category 2 status. Another 62 are … Read More

Uber ignorant - The Dismal Science

Nov 25, 2016

Parliament’s transport select committee is considering how to modernise transport regulations… A lot of people who should have failed intermediate microeconomics like to make the following argument. The theory of perfect competition has perfect information as an underlying assumption Nobody has perfect information Therefore, government must regulate to protect people from bad choices because market failure. It’s wrong on a pile of grounds. First, and most importantly, the first welfare theorem gives us sufficient conditions for optimality, not necessary ones. But even leaving that aside, we need a Demsetz move into comparative institutional analysis. How do people act to overcome their information problem? Are there profitable opportunities for some entrepreneur to bridge the knowledge problem so that consumers and producers can meet up successfully? Are there heuristics that consumers use in response to information problems and how close to optimality … Read More

NZ Visas for Nobel winners? - The Dismal Science

Nov 24, 2016

Sir Clive Granger won the Nobel Prize in Economics while a visitor at the University of Canterbury’s Economics Department. He loved visiting us. And we loved having him visit us. One of my favourite Sir Clive stories, which predated my joining the Department, was of a departmental seminar where he, as usual, sat quietly at the back of the room. The visiting economist presenting didn’t know he was there. But when the seminar speaker claimed that something had Granger-caused something else, Clive piped up from the back of the room, “No it didn’t!” He considered moving to New Zealand more permanently. But he didn’t go ahead with it. Why? Our points system would have turned him down on the basis of his age. Richard Dawkins has called on New Zealand to invite eminent scientists, fed up with the US … Read More

US Election: Buckle up - The Dismal Science

Nov 10, 2016

I wrote a short piece last night for The Spinoff on last night’s election. I’ll change my views if we get refined exit poll data that tells me otherwise. But it also seems to be the conclusion others are now drawing too. I also talked about this with Mark Sainsbury this morning. It isn’t an income inequality class war thing. It’s more complicated than that, with a lot of it being the mess I’d hinted at in my summary comments on our inequality debate: the egalitarianism of respect that is sorely needed. A snippet from The Spinoff piece: I expect a lot of kiwis will be tempted to see the Trump phenomenon through an income inequality lens. While rising income inequality is a myth in New Zealand, it isn’t in America. But that easy narrative doesn’t sit well with the … Read More

Red Zone: Property rights are human rights - The Dismal Science

Nov 07, 2016

New Zealand’s Human Rights Commission says that property rights need to be protected in the Bill of Rights. I couldn’t agree more enthusiastically. The report is about what the government did to people in Christchurch’s Red Zone. The land around the Avon River was a mess after the quakes. The government decided that the simplest thing to do would be to declare the whole area unsuitable for residential use and buy out all the owners, with offers that were difficult to refuse. For some, the offers were welcome. We have friends who were very happy to be able to say goodbye to a wrecked house and move to Rolleston. For others, not so much. NZHRC’s report tells the stories of those who did not want to give up their homes. It’s compelling reading. And they make … Read More