Monday , October 14 2019
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Eric Crampton

Eric Crampton



Articles by Eric Crampton

Special licences

11 days ago

Whenever a Rugby World Cup is on, Parliament has to legislate around the bureaucratic hurdles that District Licensing Committees have put in the way of issuing special licences.

Special licenses are supposed to allow bars to open at hours other than their normal licensed hours, if there’s some kind of special event on. And Parliament even noted international sporting events in the rationale for the special licences.Aimee Dartnall goes through the problems in how that works in practice:
Generally, applying for a special licence is a bureaucratic nightmare. First, applicants must contrive a special "event", and charge people to attend.Then they need to file an application at least 20 working days before the event to give the police, the medical officer of health and the licensing

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Referendums are great

13 days ago

I just love this thread about Saskatoon’s 1988 referendum on school store closing times. I’d not heard of it before; I was 12 years old in Manitoba when this would have happened.

Let me introduce you to the most confusing referendum result. It occurred in Saskatoon in 1988, held at the same time as the municipal election.
— Paul Fairie (@paulisci) September 29, 2019

It was about store openings, and there were five questions posed to voters.The first was straightforward enough:"Are you in favor of all stores being allowed to be open on Sunday? "YES 22,497
NO 35,319Simple enough — no to Sunday shopping.
— Paul Fairie (@paulisci) September 29, 2019

Question 2 is OK by itself."Are you in favor of grocery stores being open on Sunday?" YES 28,461
NO 27,485No general Sunday shopping, but

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Afternoon roundup

14 days ago

The worthies on the closing of the browser tabs:Australian water rats have figured out that the hearts and livers of poisonous cane toads are fine to eat. I would love to know how rats figured this out, and how the practice spread. 
Australia’s poisonous legislators have passed a piece of anti-terrorism legislation every 6.7 weeks since September 11, 2001. The water rats may not help in getting rid of this nuisance.
A perhaps-unintended consequence of anti-Uber activism in California making it harder for people to work as contractors: dancers at strip clubs become employees when many didn’t want to.
Merivale NIMBYs.
Another for the "I guess we just can’t have nice things" file. The Police Minister wants to allow pill testing at events; it’s an excellent harm-reduction strategy. New

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Policy bets

14 days ago

I’m a big fan of betting, but rules that stop players and coaches from betting make sense. You don’t want somebody to throw the game to make sure that their bet goes the way they’d hoped.Bernard Hickey’s morning roundup includes the following bit of news:
Prepare for policy shock – The UN-supported Principles for Responsible Investment group, which has nearly 500 fund managers looking after nearly US$90 trillion in assets, warned last week that financial markets had not priced-in the likely near-term policy response to climate change. It issued a report on a new project called ‘The Inevitable Policy Response,’ which sees a political and financial tipping point by 2025 that forces dramatic political action. That would include “bans on coal, and on internal combustion engines; an increase

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…so long as they can write the hymnbooks

17 days ago

I took Wednesday afternoon off to attend a do at my daughter’s primary school. They had their own World of Wearable Arts show.For those outside of NZ, the WoW Festival happens annually in Wellington (it used to be in Nelson) and shows of just incredible design skills. I’ve attended a few times, and it’s awesome.There’s sometimes an underlying message in the costumes, but often they’re just fun.The school went for themes for their costumes, but things varied by classroom.The first classroom had students working in pairs or trios; one or two would read off a description of the work while the other modelled it.The first classroom had:An orange, telling us to make healthy food cheaper;
A carrot, telling us to make healthy food cheaper;
A broken television, telling us that we have too much

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On the merits of perspective

23 days ago

Me, over in Stuff, with a few helpful numbers that can provide perspective. Perspective is important. If you know a few basic figures about the size of the country, the economy, and government spending, you’ll have a better nose for detecting and dismissing nonsense claims. 

I lead off with the silly claims about the volume of litter:
That extrapolation generated big big numbers – 10 billion littered cigarette butts around the country, almost 395 million litres of littered disposable nappies, and the like.Anyone with a sense of perspective would have known those numbers were fishy.The government collects just under $2 billion in tobacco excise per year, and excise on a cigarette is just under a dollar per stick, so it’s likely around 2 billion cigarettes are smoked in the country per

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Does Market Economics understand either Markets or Economics?

24 days ago

Over in our Insights newsletter, I go through a bit more of the background materials on the government’s National Policy Statement on sensitive soils. 

I OIAed the supporting cabinet paper, which MPI released after the Ombudsman’s office gave them a very helpful hurry-up. Thanks Ombudsman’s office!The rest of MPI’s materials are here.And last week, Treasury passed along their advice on this stuff (another OIA request). I expect it’ll be up on their proactive release site in due course; I’ll copy some of it below and will get it up at our website if Treasury doesn’t have it up soon [okay, here you go].Here’s the column:
LOOKING-GLASS ECONOMICS AND HIGHLY PRODUCTIVE SOILSWhen Alice tried to recite one of her lessons while down the rabbit-hole in Wonderland, she thought only a few words

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Scarcity makes climate change interesting

24 days ago

A couple weeks ago, Paul Gorman asked me what New Zealand could do about climate change in a world where there were infinite resources. 

There is no problem with climate change in a world of infinite resources. You could build kit that pulls CO2 from the atmosphere (current cost of pulling carbon out that way is about $100/tonne) and solve it that way – or we could all costlessly flip over to electric cars with enough new costless non-carbon electricity generation to make it all work.Scarcity makes it interesting because you have to think about trade-offs and getting the most value out of limited resources.I sent Paul a pretty lengthy answer; he was only able to use part of it in the story for obvious reasons. I gave it more for background, and to help me lay out my own thinking. So

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Keeping up with the state of play on vaping

27 days ago

I was looking around the other day for something like this. The Competitive Enterprise Institute has started tallying up all the reported cases of ‘vaping-related’ illness in the US.THC-vaping, and especially illicit vape cartridges, feature prominently, but there are other cases where that’s not yet pinned down.
As Dr. Konstantinos Farsalinos, a cardiologist, recently wrote, a sudden outbreak in a short period of time and in a specific geographic region (so far this appears restricted to the U.S.) when e-cigarettes have been available and widely used around the world for more than 12 years, is not indicative of disease, but rather of poisoning. That is, it is unlikely that the cause stems from well-established products, but rather from a new product, ingredient, or manufacturing practice

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Explaining the Outside of the Asylum

28 days ago

I had a chat about NZ as the Outside of the Asylum with the Heritage Foundation’s Timothy Doescher when he was in town recently.The podcast is available here.
[embedded content]
You can also catch it at Heritage’s website, where it has the links to Spotify and other versions of it. My Outside of the Asylum piece, on which the conversation was based, is here.

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Job Openings for Economists – Spotify edition

September 13, 2019

This would be a heck of a lot of fun for somebody.

We are looking for an outstanding Head of Economics to join Spotify’s Content team. Our mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their work and billions of fans the opportunity to enjoy and be inspired by it. Are you a creative thinker who can combine a strong economic toolbox with a desire to learn from others, and who knows how to execute and deliver on big ideas. You would be working across the content teams and with many other related departments, providing economics, statistical and policy support that enable evidence-based decision making to help Spotify achieve its stated goal.

What you’ll do
You will be working horizontally across the company, from

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A rubbish clean-up

September 12, 2019

That rubbish set of stats over at the Keep New Zealand Beautiful website, noted earlier this week, is now corrected.The National Litter Audit website has been purged of the bogus numbers, and the report updated.This is good.Unfortunately, in the absence of any more formal retraction or notice from them to the journalists that reported so credulously on the figures, we’re unlikely to see either any correction or any updated stories noting the figures are wrong.

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Minimum wages and piece-rate work

September 12, 2019

Piece-rate payment for work can make a lot of sense when it’s easy to observe output, hard to observe effort, and effort can yield substantial differences in worker output. It’s been common in some agricultural work, especially fruit-picking.This tweet from last year somehow crossed my stream this week. Jennifer Doleac last year tweeted the job-market papers of female economists out on the job market. And this paper struck my eye:

Alexandra HillJMP: "The Minimum Wage and Productivity: A Case Study of California Strawberry Pickers”Website: https://t.co/moA0aKztz9 pic.twitter.com/13kGc244th
— Jennifer Doleac (@jenniferdoleac) October 28, 2018

Dr Hill is now Assistant Prof in Ag Econ at Colorado State – excellent.The paper shows what happens when a minimum wage sets a lower bound on wages

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Radio NZ on vaping, again

September 12, 2019

The Washington Post notes the growing consensus around just what the heck is going on with ‘vaping-related’ illness and death. Like I’d said last week, dodgy additives in THC vapes look to be the issue. You don’t have to be paying massive attention to this file to know this.

Oregon health officials said last week that a middle-aged adult who died of a severe respiratory illness in late July had used an electronic cigarette containing marijuana oil from a legal dispensary. It was the first death tied to a vaping product bought at a pot shop. Illinois and Indiana reported deaths in adults but officials have not provided information about their ages or what type of products were used.State and federal health authorities are focusing on the role of contaminants or counterfeit substances as

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The Joyful Contrarian

September 10, 2019

Reason Magazine has a wonderful tribute to Gordon Tullock by Michael Munger. The steering wheel with the spike on this blog’s masthead? That’s the Tullock Spike. 

What kind of crank wants to put bayonets in steering wheels, praises political corruption as "working out rather well," and thinks that competition can be harmful and should be discouraged? Gordon Tullock, the late George Mason University professor of law and economics, made all those arguments with a (more or less) straight face, while also helping invent the then-new discipline of sociobiology. His insights have proven to be more durable, and more sensible, than his many critics expected.To be fair, economists tend to value counterintuitive arguments, where surprising conclusions emerge from innocuous assumptions. In 2019,

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Rubbish statistics

September 10, 2019

I caught this rubbish floating around last week – new figures purporting to represent the amount of littering that goes on in New Zealand.Here’s the infographic that Keep New Zealand Beautiful put up to go with their report.

The numbers didn’t make any damned sense on the face of it. 

Headlines talked about there being ten billion littered cigarette butts around the country. But anyone with a passing familiarity with any of the relevant numbers should have been sceptical. To a first order approximation, the government collects about $2 billion per year in cigarette excise taxes, and the tax on each cigarette is about a dollar. So that’s about two billion cigarettes sold per year in total – as a rough estimate. Every one of those cigarettes would have to have been littered, for five

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Don’t hate the council, hate the game

September 9, 2019

Labour’s talked a good game around solving the housing crisis. But unless they manage to have councils see growth as being in councils’ interest, it’s all a bit hopeless. There are always margins on which councils can stymie growth, if they want to. 
I’d covered the problem in my fortnightly column over at Newsroom.
Fundamentally, the housing crisis emerged because not enough houses were being built. Not enough houses were being built because council zoning rules prevented sufficient building. This had systematic effects across the whole building industry. Because building vast new subdivisions, or substantial new dense and intensive brownfield developments, was effectively impossible, the construction sector geared up for the task it was allowed to undertake: bespoke small-scale

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Don’t get your vaping news from Radio New Zealand

September 9, 2019

There have been a lot of news reports out of the United States over the past month on people coming down suddenly with severe lung problems, with those news reports often linking the problems to vaping.

Sometimes the story would note that the vaped substance wasn’t the typical nicotine e-liquid, but rather a THC-based one. And even more rarely the story would note that the THC cartridge had been purchased from a strange street dealer, or was counterfeit.More stories started coming out noting that the problem-causing e-liquids were dodgy-as. They were often finding vitamin E in them as a thickening agent. I was seeing a lot of those stories come out last week.The media reports in the States were fodder for a lot of scaremongering. Most stories didn’t note just what was vaped. Where it

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An argument for mandatory retirement for academics of a certain age

September 8, 2019

Geoff Bertram didn’t like my column on cap and trade regimes for water. Here’s his letter in today’s Dom Post. 

At last a New Zealand Government takes a couple of meaningful steps towards water regulation.Right on cue, the New Zealand Initiative’s Dr Eric Crampton rushes into print (Sept 6) attacking the new policy because (i) he has a better idea – cap and trade, and (ii) some dairy farmers who have irresponsibly over-expanded might go broke (and so should be bailed out by the rest of us).
Right on cue. Hmm.Our work on cap-and-trade was added to our 2017-2020 research agenda in 2016. The first report, on cap-and-trade in water abstraction, came out in May. My article extending it to nutrient trading came out in Policy Quarterly last month. All of that was well in advance of the

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Dining out as cultural trade

September 4, 2019

Joel Waldfogel combines TripAdvisor data with gravity models of trade to figure out which cuisines reign supreme.
Perceptions of Anglo-American dominance in movie and music trade motivate restrictions on cultural trade. Yet, the market for another cultural good, food at restaurants, is roughly ten times larger than the markets for music and film. Using TripAdvisor data on restaurant cuisines, along with Euromonitor data on overall and fast-food expenditure, this paper calculates implicit trade patterns in global cuisines for 52 destination countries. We obtain four results. First, the pattern of cuisine trade resembles the “gravity” patterns in physically traded products. Second, after accounting gravity factors, the most popular cuisines are Italian, Japanese, Chinese, Indian, and

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GDP isn’t just adding up all the nice things

September 4, 2019

People keep wanting GDP to be something it isn’t.The only thing that GDP is is a measure of the final value of goods and services that trade in markets. That’s it.There are all kinds of good things that are not in GDP.High among those good things is the value of household production that does not trade in markets.This is standard fodder in principles and intermediate-level coursework. If you have a two-parent household, with one working outside the home for wages and the other working inside the home, then the value of in-home production does not count toward GDP. If the one parent starts paying the other one, then GDP goes up – even though absolutely nothing has changed.If I make a sandwich at home, the value that I add to the ingredients by my labour is not counted toward GDP. If I sell

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NZIER Economics Award – and an implicit critique?

September 3, 2019

Last night, Motu’s John McDermott was named as this year’s recipient of the NZIER Economics Award. 

My former colleague Les Oxley read out the citation, which I copy below:

Dr John McDermott has been the foremost macro-economist in New Zealand policy circles for at least the past decade. He was Chief Economist and Assistant Governor at the Reserve Bank of New Zealand from 2007 to 2019. Over this period, John has been a beacon in ensuring that economic rigour is brought to bear on policy formulation. He showed similar qualities in his prior roles in the private sector (the National Bank of New Zealand) and at the IMF.John began his senior role at the Reserve Bank of New Zealand just prior to the onset of the Global Financial Crisis. It is difficult at times such as this to draw on

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Refreshing water and valuing the priceless

September 3, 2019

The latest issue of Policy Quarterly covers freshwater management. My article in there makes the case for cap-and-trade systems for both freshwater abstraction and for nutrient/effluent management.Here’s the abstract:
The most promising way of reducing water use and nutrient load in overburdened catchments builds on the same kind of policy New Zealand is developing to reduce greenhouse gas emissions: cap-and-trade systems that operate at the water catchment level. Because cap-and-trade approaches are more cost-effective than other regulatory approaches, they allow us to do more good at less cost than other alternatives. Developments in smart-market technology and geospatial mapping allow for smart-market solutions that overcome barriers to success in existing trading arrangements. And, if

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Doughnuts

September 2, 2019

Arthur Grimes goes through some of the problems in Kate Raworth’s doughnut framework in a podcast with her over at Newsroom. 

I remember a review of some other book, ages back, that went along the lines of "what’s true in it isn’t new, and what’s new in it isn’t true."Michael Cameron over at Waikato Uni reaches a similar conclusion.
This book is partly a critique of current economic thinking, and partly some of Raworth’s ideas on a new model for economics. Any critique of economics hits the zeitgeist right between the eyes, and so this book got a lot of press when it was released in 2017 (e.g. see here), and again in New Zealand earlier this year when Kate Raworth visited the Treasury.However, I found the book to be quite unbalanced and full of lazy writing. Raworth is a great fan of

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Afternoon Roundup

September 2, 2019

The afternoon’s closing of the browser tabs brings:Tony Burton at The Spinoff on unemployment figures. Far fewer of those aged 15-19 are in work now than was the case prior to 2008. The jump, to my eye, coincides with Labour’s abolition of the differential lower youth minimum wage. There’s been of course expansion in tertiary education over the period, but the timing is consistent with the change in the youth minimum wage combined with the GFC, then levelling out to a higher steady-state youth unemployment rate. 
The government isn’t just mulling over porn filters. They’re also looking at blocking access to online gambling. Another Tracey Martin initiative. 
This older piece at the New York Times uses the Mercatus Center’s tallying of regulations to look at the quantum of regulation

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Road to tolling

September 1, 2019

Well, this one’s disappointing. 

I’m used to hearing that we can’t have road tolling on important routes because there aren’t alternatives for commuters. I think that’s nuts, but the argument goes that there has to be alternative transport paths to address equity issues for those who cannot afford the tolls. It’s nuts because we allow pricing everywhere else, and try to solve equity issues through income redistribution. The toll can shift driving by time of day even if there aren’t alternative routes.But let’s take it as given.Here’s the argument against having tolling on the coming Transmission Gully alternative to State Highway 1:
Transport Agency Director Emma Speight said an assessment showed a toll would likely see more drivers avoid the road in favour of the current coastal State

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Tracy Martin’s Porn Filter

August 30, 2019

My column over at Newsroom this week ($) (ungated) went through some of the likely problems if the government goes ahead with Tracy Martin’s mad scheme for a national pornography filter.A couple of years ago, I wrote a short report making the case that New Zealand is the world’s last sane place. Or, at least, if it’s going mad, it’s going mad more slowly than the rest of the world.

Perhaps I was too hasty.

Internal Affairs Minister Tracy Martin this week told Newshub about the government’s plans for protecting children from online pornography. Newshub reported that the government is looking to the United Kingdom as example, and that nothing is yet ruled out.

Some things should be ruled out. Let’s have a look at what has been going on in the United Kingdom, and why it is a bad idea to

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Drinking Freedom

August 30, 2019

I plug Ben Powell and Bob Lawson’s latest book in my column in this week’s Insights newsletter:

Drinking freedom
The very best part of grad school was the drinking. Well, not so much the drinking. Too often, the beer was stuff that would make an Export Gold taste like Export Gold had taste. It was the arguing about economics, over beer, until close to sunrise, with other people who cared deeply about ideas. That was heaven – despite the bad beer.Professor Ben Powell was a year behind me in grad school at George Mason University, and a fantastic drinking companion. But Ben was, and is, a lot smarter than I am. He persuaded people to cover the costs of an interesting book project with the creator of the Economic Freedom of the World indices, Professor Robert Lawson.The project’s genius is

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I can’t believe we’re still talking about the dumb BERL number

August 26, 2019

Sunday night, TV3 started in on what looks to be a series on the evils of alcohol. 

The Ministry of Health says harm from alcohol is now costing New Zealand more than $7 billion every year. In fact, every Kiwi pays $1635 a year fixing up the problems from alcohol.Investigations Reporter Michael Morrah visited the frontlines with Auckland Police in the first part of his ‘Because it Matters’ series.
The Ministry of Health might have been one of the co-commissioners of the BERL report, but it’s not a Ministry of Health figure.Last year, BERL updated their 2009 figure on the social costs of alcohol. I critiqued it over at Newsroom (ungated); while BERL then did not reply to my requests for the workings underlying the figure, it looked like an inflation and population update of their 2009

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Skegg

August 25, 2019

A rather one-sided piece over at the ODT points me to a new short book from the Otago Public Health shop. 

Let’s take these in turn.The ODT piece has Bruce Munro gush over Otago public health’s David Skegg and Skegg’s latest book, published by Bridget Williams (of course). The basic thrust of the piece is that noble public health academics have been trying for policies that they know will reduce all the harms from alcohol, and smoking, and sugar, and that only the nefarious actions of shadowy interests group stand in the way. Munro hits all the usual tropes – the purported $7.8b social costs of alcohol, the power of the liquor companies, Katherine Rich, Dirty Politics, and me.
Yet, despite health researchers calling for a tax on sugary drinks to slow the epidemic, New Zealand

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