Quotulatiousness

November 21, 2018

Statistics Canada’s instrumentalist philosophy

Filed under: Cancon, Government, Liberty, Politics — Tags: , , , — Nicholas @ 03:00

In the Financial Post, Bruce Pardy discusses the motivation behind Statistics Canada’s recently revealed demand for the private financial records of half a million Canadians:

Recently it was revealed that Statistics Canada sought to obtain the private banking information of half a million Canadians without their knowledge or consent. Jennifer Robson, professor of political management at Carleton University, in an interview with the CBC, justified the data sweep on the grounds that governments need this information to make good policy. But don’t be concerned, she said, it is not for ideological purposes, since Statistics Canada is ideologically neutral. That made me laugh. The very idea of policy based on data reflects an instrumentalist belief that governments should solve social problems by political means. That requires an ideological confidence in the administrative state, to which the agency is a handmaiden.

Ideology is not a dirty word. An ideology is merely a worldview, a lens through which to perceive society. Political parties, by definition, each have one (and sometimes extra ones for special occasions). But it is another thing for a public agency to act independently in furtherance of its own ideology while pretending to be neutral.

Statistics Canada’s deep dive into banking records — presently on hold while federal privacy commissioner Daniel Therrien investigates its legality — appears not to have been directed by government officials but was undertaken on its own initiative. The agency’s decision is consistent with a conviction that the more personal data available to government, the better off we will be; that governments are benevolent; that private financial matters call for public policy management; and that a bigger government is a better government. A commitment to social policy, wrote Milton Friedman “involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scare resources to alternative uses.”

November 16, 2018

QotD: Defining hate speech

Filed under: Britain, Law, Liberty, Quotations — Tags: , , , , — Nicholas @ 01:00

Then, of course, there is the question of where hate-speech ends and legitimate commentary starts. It is generally easy to recognise the vilest abuse that is intended only to inflame and not to argue, just as it is easy to recognise pure pornography (I use the word ‘pure’ in its chemical, not its moral sense, of course). But often matters are much more complex than this.

For example, I recently saw the following statistic in a serious article on the internet: that Nigerian immigrants to Switzerland are seven times as likely to be convicted for a crime as Swiss citizens. Surely no one who wrote such a thing could think that it was calculated to create warm feelings in the hearts of the Swiss towards Nigerian immigrants, except those very few of Fabian mentality, who see in serial killers a cry for help (from the killers, of course, not from their victims).

The statistic – let us assume – is true. But then let us ask whether it has been corrected for the different sex and age structures of the two populations, that of the Nigerian immigrants and that of the Swiss population.

If it has not (and the article does not say), it is easily conceivable that a better, or at least different, statistic would be that Nigerian immigrants are only twice or three times as likely to be convicted for a crime as Swiss citizens. And if this were in fact the case, would the man who published the article be guilty of hate-speech, or merely of intellectual error? Is the test of hate-speech to be whether something does in fact bring a group into hatred, ridicule and contempt, or whether it is intended to do so?

It is easy to multiply examples. In this country, young Moslem men far out-fill their quota in prison, while young Hindu and Sikh far underperform where criminal conviction is concerned. Is this an interesting and important sociological fact, or an incitement to hatred, ridicule and contempt, or perhaps both?

A further problem is that of judging how sensitive people actually are or should be to perceived slights and insults. Just as the expression of hatred can be self-reinforcing, so can the sensitivity to slight and injury. The more you are protected from it, the more of it you perceive, until you end up being a psychological egg-shell. The demand for protection becomes self-reinforcing, until a state is reached in which nobody says what he means, and everybody infers what is not meant. Temperatures, or tempers, are raised, not lowered. The disgracefully pusillanimous (and incompetent) Macpherson report into the killing of Stephen Lawrence demonstrated the risks we run: it suggested that a racial incident should be defined as an incident which any witness to it believed to be racial, without there being any need for objective evidence that it was. Where a British judge can be so pusillanimously unattached to the rule of law, we can be sure that one day hate-speech will be defined as any speech that anyone finds hateful.

Theodore Dalrymple, “Hating the Truth”, Salisbury Review, 2011-06.

November 4, 2018

Statistics Canada wants to become “Stasi”-tistics Canada by grabbing personal financial data

Filed under: Bureaucracy, Cancon, Government, Liberty — Tags: , , , — Nicholas @ 05:00

“Stasi” was the abbreviation for the German Democratic Republic’s State Security Service, East Germany’s successor to the Gestapo. Not only did they perform similar functions to the Gestapo, they were even more involved in spying on Germans than their Nazi predecessors had been. Wikipedia says that “the Stasi employed one secret policeman for every 166 East Germans; by comparison, the Gestapo deployed one secret policeman per 2,000 people. As ubiquitous as this was, the ratios swelled when informers were factored in: counting part-time informers, the Stasi had one agent per 6.5 people. This comparison led Nazi hunter Simon Wiesenthal to call the Stasi even more oppressive than the Gestapo.” Statistics Canada doesn’t want to get the full story on us by physically spying — that’s the RCMP’s job — but they do want to grab huge amounts of our personal financial data to “ensur[e that] government programs remain relevant and effective for Canadians”. Terence Corcoran explains why this might not be such a good idea:

When news broke earlier this year that the accounts of maybe 600,000 Canadian Facebook users had been compromised, Ottawa swung into action to shut down this alarming example of creeping surveillance capitalism. Scott Brison, then acting minister of democratic institutions, said his government had dispatched Canada’s national spy agency to make sure the privacy of Canadians had not been compromised. “Social media platforms have a responsibility to protect the privacy and personal data of citizens,” said Brison.

But when news broke last week that Statistics Canada wants to expand its inventory of data on Canadians by collecting real hard-core personal information on the banking activities of 500,000 Canadians annually, the Trudeau government was suddenly not at all concerned about privacy breaches or even the principle of privacy protection. Instead of waving a red flag over the prospect that StatCan would end up with computers full of private financial details on millions of citizens, Prime Minister Justin Trudeau brushed off privacy concerns, which he implied take a back seat to the government’s need for “high quality and timely data.” Such data, he said, are “critical to ensuring government programs remain relevant and effective for Canadians.”

Spoken like a true central planner and enthusiastic purveyor of policy-based evidence making. Nobody seems to know why StatCan wants to begin collecting personal banking information on individual Canadians, information that Canada’s bankers are rightly reluctant to provide. In the all-new era of fintech and blockchain, the great concern among regulators is how data privacy will be protected. At StatCan, the concern is: “How do we get our hands on the data?”

[…]

StatCan’s assurances on privacy protection are not all that reassuring. In a document dated October 2018 — obtained by David Akin at Global News— the chief statistician describes his agency’s “Generic Privacy Impact Assessment related to the acquisition of financial transactions information.” It is clear that the names of millions of Canadians, their bank account numbers and transactions, their bill payments and personal activities, will be collected and stored in government computers. StatCan is not merely getting useful generic data on the spending and banking habits of Canadians, it is collecting the actual spending and banking habits and names of individual Canadians.

It is one thing to collect and analyze statistics based on anonymous data. It is quite another to “require” — Arora’s word — that the banks provide “individual payments and income history.” Even though billions of bits of private, individual and personal information will be collected, StatCan says that, “Under no circumstances will the personal information obtained from financial institutions be used to perform credit, expenditure or income checks on individual Canadians.” He said none of the resulting statistical reports will include any personal data.

That’s not good enough.

October 27, 2018

QotD: The gender pay-gap

Filed under: Business, Economics, Quotations — Tags: , , , — Nicholas @ 01:00

If you mean the pay gap that exists between women, anybody with an ounce of statistical sense knows that it is insignificant when it comes to actual equivalent jobs with equivalent requirements. Once you factor in that women are statistically more likely to take time away from their careers for child rearing and factor that in, the pay difference is statistically insignificant. Unless you work in the Obama White House, because fuck you is why.

Men also tend to work more in dangerous or physically demanding jobs by choice, which also pay better. Nobody forces them to go into those fields. Men also get more STEM degrees and women get more LAS degrees. STEM pays better. Nobody is forcing these men to do math, but men and women are different. If you don’t understand why my accounting degree is more valuable that your gender studies degree, you don’t understand basic econ 101 and supply and demand. So yes, I would like fries with that.

If you mean the gender gap in voting between the parties, just about every psychological study ever conducted by somebody not huffing paint understands that women tend to make decisions more emotionally and men tend to make them more logically. I see you reaching for you Sexist Card, but I said tend. This is not always the case, it is simply a trend. If you don’t like it or find that sexist, you can fuck off and die. Men and women are different. Most of us happen to like that. Some men think more emotionally (like pajama boy metrosexual hipster douchebags for example), and some women think more logically (like hot republican warrior babes), but a trend is a trend.

Larry Correia, “Run Forrest Run!”, Monster Hunter Nation, 2014-11-05.

October 26, 2018

QotD: Mis-using statistics

Filed under: Humour, Quotations — Tags: , — Nicholas @ 01:00

You’re like that crazy hobo on the subway demanding everyone justify the moon ferrets. But moon ferrets aren’t real, so why waste a bunch of time explaining that to a stinky hobo. But I’ll try, because I’m a retired accountant, and when people like you try to use stats it is like watching a monkey humping a football. So amusing, but kind of sad.

Larry Correia, “Run Forrest Run!”, Monster Hunter Nation, 2014-11-05.

October 8, 2018

Debunking state education rankings

Filed under: Bureaucracy, Education, Media, USA — Tags: , , , , — Nicholas @ 03:00

In the latest issue of Reason, Stan Liebowitz and Matthew L. Kelly explain why you should ignore those “authoritative” rankings published by U.S. News and World Report and others:

You probably think you know which states have the best and worst education systems in the country. If you regularly dip into rankings such as those published by U.S. News and World Report, you likely believe schools in the Northeast and Upper Midwest are thriving while schools in the Deep South lag. It’s an understandable conclusion to draw from those ubiquitous “Best Schools!” lists. It’s also wrong.

The general consensus on education, retold every few news cycles, is that fiscally conservative states are populated by cheapskates. In those necks of the woods, people are too ignorant to vote in favor of helping their illiterate and innumerate children. Intelligent people understand that high taxes and generous pensions for public school teachers are the recipe for an efficient and smoothly functioning education system. If skinflint voters would just lighten up, the story goes, they too could become erudite and sophisticated.

Paul Krugman rehashes this narrative regularly in his New York Times column, frequently bemoaning the country’s purportedly miserly education budgets. Increasingly, he perceives libertarian barbarians at the gates of state governments, brandishing axes for dreaded spending cuts. In April, he wrote that “we’re left with a nation in which teachers, the people we count on to prepare our children for the future, are starting to feel like members of the working poor.… One way to think about what’s currently happening in a number of states is that the anti-Obama backlash, combined with the growing tribalism of American politics, delivered a number of state governments into the hands of extreme right-wing ideologues. These ideologues really believed that they could usher in a low-tax, small-government, libertarian utopia.”

In Krugman’s view, which reflects the education establishment’s view as well, those attempting to keep the size of government in check are a danger to your child. To support this claim, education wonks and activists point to state rankings in U.S. News, Education Week, or WalletHub — outlets that grade states according to a few key measures, such as graduation rates, education spending, and test scores. When education is discussed in the news, these rankings are often cited to illustrate the havoc that restrained budget growth and right-to-work laws can wreak.

Indeed, such rankings do seem to show that the highest-quality state educational systems tend to be in big-spending states in the Northeast or Upper Midwest. These places apparently honor and respect teachers, while Southern states inexplicably abhor them. But the cheapskates in cheap states get their just deserts: Sophisticated northern jurisdictions grow ever smarter, while stingy conservative backwaters sink into ever-lower depths of ignorance. The solution is obvious: Pay up or your kids will suffer.

There’s just one problem with this narrative: Traditional rankings are riddled with methodological flaws.

September 8, 2018

A key statistic in the debate over gun violence in Toronto … turns out to be an invention

Filed under: Cancon, Law, Media, Politics — Tags: , , , , — Nicholas @ 03:00

Matt Gurney on an important claim in the controversy about guns and crime in Toronto — that will probably not get anything like as much coverage because it doesn’t support the prohibitionists’ narrative:

Earlier this summer — a summer that has seen Toronto wracked by gun violence — a report came out that suggested lawful Canadian gun owners were to blame for at least some of the violence. The article was originally published by the Canadian Press, and was widely republished elsewhere, including at the CBC, the National Post, a dozen local newspapers, CTV News, and, yes, here at Global News. Since then, it has been widely cited in other news stories covering the issue, including in The Toronto Star and The Globe and Mail. The report was everywhere.

Here’s the problem. Newly released stats show clearly that it was wrong.

The article was based around an interview with a Toronto Police Services detective, Rob Di Danieli. Det. Di Danieli told the Canadian Press that Canadians who were lawfully licensed to purchase and possess firearms were increasingly a public safety issue. “They go get their licence for the purpose of becoming a firearms trafficker,” Di Danieli told the CP. “A lot of people are so ready to blame the big bad Americans, but we had our own little problem here.”

The CP article hangs on this revelation from the detective. It notes, in various places, “The number of guns obtained legally in Canada but are then sold to people who use them for criminal purposes has surged dramatically in recent years compared to firearms smuggled from the United States, Toronto police say,” and, “In recent years [investigators say they] have noticed a stark shift in where guns used to commit crimes are coming from,” and, “Legal Canadian gun owners are selling their weapons illegally, Di Danieli said, noting that police have seen more than 40 such cases in recent years.”

[…]

At the time the CP story first ran, there were no publicly available stats to support (or contradict) what di Danieli had told them. But now, those numbers are publicly available, thanks to Dennis R. Young, an Alberta-based researcher who filed a Freedom of Information request with the Toronto police and published their reply on his website. And these stats tell a very different story.

August 7, 2018

Grasping at straws to virtue signal

Filed under: Economics, Environment, Government, USA — Tags: , , , — Nicholas @ 03:00

Richard Morrison points out just how banning plastic straws will not do anything meaningful to save the environment, but will definitely have a negative impact on consumers:

Of all the consumer products one might have expected to become a flashpoint for political controversy, the humble plastic drinking straw is an unlikely contender. Leap into the headlines it has, though, with communities like Seattle and San Francisco recently enacting bans on disposable straws. The city council of Santa Barbara, California, initially voted for a ban that would have punished restaurant workers with up to six months of jail time for giving out a disposable plastic straw, but city officials agreed to revisit the ordinance when it appeared to also ban the sale of straws at supermarkets.

[…] the case against the plastic straw is exceedingly weak. There aren’t as many plastic straws thrown away as claimed, and only a tiny portion of U.S. straws end up anywhere near the oceans — the vast majority of municipal solid waste in this country ends up either buried in landfills, recycled, or burned up in incinerators, far from any congested sea turtles.

The vast majority of plastic waste in oceans actually comes not from advanced countries like the U.S. but from countries like China and Indonesia that consume a large volume of plastic products but lack our modern waste collection infrastructure. Much of their plastic waste ends up washed into major river systems that empty into the oceans. A study published last year in the journal Environment Science & Technology by three German researchers found that 90 percent of the plastic debris found in the world’s oceans is dumped there by just ten of the world’s rivers — none of which are in the Western Hemisphere, much less the United States.

Beside the fact that U.S. consumers are contributing very little to the ostensible problem is the other side of the equation: the benefits of the straws themselves. I suspect many Americans who were initially receptive to the idea of a ban were genuinely surprised to learn that disposable drinking straws are very important to people with certain disabilities. British disability rights activist Penny Pepper recently commented in the Guardian about how she depends on plastic straws — and other single-use, disposable products like baby wipes — writing “I don’t have the luxury of a plastic-free life.” The durability, convenience, cleanliness, low price, and resistance to heat of disposable plastic straws make them irreplaceable to people with many different physical limitations.

Vancouver, as any Canadian would have guessed, was the first Canadian city to pick up on this particular variant of virtue signalling.

August 5, 2018

Poverty

Filed under: Economics, USA — Tags: , , , — Nicholas @ 03:00

Walter Williams on how most American can and do avoid falling into poverty:

Poverty is no mystery, and it’s easily avoidable. The poverty line that the Census Bureau used in 2016 for a single person was an income of $12,486 that year. For a two-person household, it was $16,072, and for a four-person household, it was $24,755. To beat those poverty thresholds is fairly simple. Here’s the road map: Complete high school; get a job, any kind of a job; get married before having children; and be a law-abiding citizen.

How about some numbers? A single person taking a minimum wage job would earn an annual income of $15,080. A married couple would earn $30,160. By the way, according to the Bureau of Labor Statistics, less than 4 percent of hourly workers in 2016 were paid the minimum wage. That means that over 96 percent of workers earned more than the minimum wage. Not surprising is the fact that among both black and white married couples, the poverty rate is in the single digits. Most poverty is in female-headed households.

Socialist Sen. Bernie Sanders’ presidential campaign garnered considerable appeal from millennials. These young people see socialism as superior to free market capitalism. Capitalism doesn’t do well in popularity polls, despite the fact that it has eliminated many of mankind’s worst problems, such as pestilence and gross hunger and poverty. One of the reasons is that capitalism is always evaluated against the nonexistent, non-realizable utopias of socialism or communism. Any earthly system, when compared with a utopia, will not fare well. Indeed, socialism sounds good but, when practiced, leads to disaster. Those disasters have been experienced in countries such as the USSR, China, most African nations and, most recently, Venezuela. When these disasters are pointed out, the excuse is inadequacies of socialist leaders rather than socialism itself. For the ordinary person, free market capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires.

A quirk of the US statistics is that the poverty rate is measured without taking into account any of the various welfare measures that other countries would include (for example, the EITC, Section 8 housing vouchers, Medicaid, or SNAP (food stamps)). So the people whose relative income is raised above the poverty threshhold are still counted as being below it. This results in a much higher number for people living below the poverty line than actually exist. See for example, here or here.

August 2, 2018

QotD: Economic complexity

Filed under: Economics, Quotations — Tags: , , — Nicholas @ 01:00

“Progressives” mistake as “science” their habit of lumping countless idiosyncratic individuals and things, each always in an ever-changing set of deeply nuanced circumstances, into catch-all categories (such as “consumers,” “labor,” “government,” “the environment,” “the health-care sector,” “the money supply,” “the unemployment rate,” “the capital stock,” and “imports”) and then theorizing about how these big blobs of people and things interact with each other, and how these interactions can be “improved” by an apolitical, loving, intelligent, ever-diligent scientific guiding hand. That professors and their graduate students can assemble data on each of these big blobs of people and things, can write intricate equations describing mathematically how the professors and their graduate students imagine these blobs interacting with each other, and use the gathered data and sophisticated software to “test” the equation-ladened “models” seems oh-so-objective and truly scientific.

Yet most such exercises are b.s. Far too many of these exercises, when done by economists, are done in utter disregard of the meaningful, if impossible to observe from afar, differences that separate from each other each of the individuals and things that comprise each constructed blob. Far too many of these exercise are done by people whose impressive, deep, and vast knowledge of econometric techniques does not begin to compensate for their innocence of price theory, of history, and of formal and informal institutions.

Correctly taught and understood, economics reveals that reality is vastly more complex than the economically untutored mind realizes. Yet this message of complexity is unwelcome by those who want to rule and command. The reason is that to understand the reality of reality’s complexities is to understand that ruling and commanding – the actions of the “man of system” – can only worsen most individuals’ lives. Ruling and commanding of the sort that “men – and women – of system” itch to do can only disrupt for the worse, and not improve for the better, the spontaneous forces of society.

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-09-20.

July 17, 2018

Juul threat

Filed under: Health, Technology, USA — Tags: , , , , , — Nicholas @ 05:00

John Tierney on the good news/bad news in the most recent smoking statistics in the United States:

Tobacco-company stocks have plunged this year — along with cigarette sales — because of a wonderful trend: the percentage of people smoking has fallen to a historic low. For the first time, the smoking rate in America has dropped below 15 percent for adults and 8 percent for high school students. But instead of celebrating this trend, public-health activists are working hard to reverse it.

They’ve renewed their campaign against the vaping industry and singled out Juul Labs, the maker of an e-cigarette so effective at weaning smokers from their habit that Wall Street analysts are calling it an existential threat to tobacco companies. In just a few years, Juul has taken over more than half the e-cigarette market thanks to its innovative device, which uses replaceable snap-on pods containing a novel liquid called nicotine salt. Because the Juul’s aerosol vapor delivers nicotine more quickly than other vaping devices, it feels more like a tobacco cigarette, so it appeals to smokers who want nicotine’s benefits (of which there are many) without the toxins and carcinogens in tobacco smoke.

It clearly seems to be the most effective technology ever developed for getting smokers to quit, and there’s no question that it’s far safer than tobacco cigarettes. But activists are so determined to prohibit any use of nicotine that they’re calling Juul a “massive public-health disaster” and have persuaded journalists, Democratic politicians, and federal officials to combat the “Juuling epidemic” among teenagers.

The press has been scaring the public with tales of high schools filled with nicotine fiends desperately puffing on Juuls, but the latest federal survey, released last month, tells a different story. The vaping rate last year among high-school students, a little less than 12 percent, was actually four percentage points lower than in 2015, when Juul was a new product with miniscule sales. As Juul sales soared over the next two years, the number of high-school vapers declined by more than a quarter, and the number of middle-school vapers declined by more than a third — hardly the signs of an epidemic.

Measuring Inflation

Filed under: Economics — Tags: , , — Nicholas @ 02:00

Marginal Revolution University
Published on 10 Jan 2017

Inflation is common in a modern economy. Shifts in supply and demand for goods and services cause prices to change accordingly. When the average level of prices rises, that’s inflation. It means that you’ll need more money to purchase the same stuff.

Inflation in the United States can be measured using the Bureau of Labor Statistics’ Consumer Price Index (CPI) – a weighted average of the price increases. We can calculate the inflation rate by the percentage change in the CPI over a given period of time.

How much do prices actually change? Well, using FRED, we can see that, over the past thirty-three years, prices have more than doubled. That may seem like a lot. However, wages have also risen, on average, by more than prices during that time period. Inflation doesn’t necessarily mean that we’re worse off.

The inflation rate in the United States has averaged at about 2.5% per year since 1980, which is fairly low and indicative of a stable economy. Prices may be increasing, but the changes are small. Wages have time to catch up. You can be confident that the $5 in your pocket isn’t going to be worth drastically less in a year.

Let’s take a look at a different scenario — one that’s playing in Venezuela right now. As the country faces an economic crisis, inflation is skyrocketing. Rates reached 180% in 2015 and have continued to rise since. 5 bolívar in your pocket could be worth less even by the end of the day.

But Venezuela still doesn’t compare to the hyperinflation that Zimbabwe experienced in the 2000s, reaching dizzying rates of billions of a percent per month. (See MRU’s previous video for more!)

While some inflation is perfectly normal, high rates of inflation make it difficult for consumers to use a nation’s currency. If the value is changing a lot by the week, day, or even minute, people don’t want to hold onto or accept the currency for goods and services — leading to a full blown currency crisis.

Up next, we’ll take a deeper dive into what causes inflation and its consequences.

July 11, 2018

QotD: Measuring consumer surplus

Filed under: Economics, Quotations — Tags: , , , — Nicholas @ 01:00

Consumer surplus is one of those things which is really, really, difficult to measure. This paper is one of the few that’s able to give us a hard number. But what it is is, really, “how much I would have been willing to pay but didn’t have to?” Say that we’re out and you’re thirsty and I’m not very. You suggest we have a Coke. You’re really interested in this, you’d pay $2 for one, I’m, well, meh, I’d only pay $1 for one. Obviously, the Coke seller (no, not the coke one, that’s different) doesn’t know this so he charges us the same price – $1 each. I’ve gained no consumer surplus I paid a buck for something I value at a buck, you gain $1 of surplus because you would have paid $2 but only paid that buck.

In one manner the consumer surplus is a result of mass manufacturing and marketing. We’re pumping out millions of whatever it is, we’ve got to have a “market price” and some people will value it, whatever it is, at more than that. That greater valuation is that consumer surplus. Without a producer knowing what your individual demand curve is they cannot charge you the full value you ascribe to it.

Of course, they try as hard as they can to do so. This is what brands and product differentiation are all about. VW and car brands for example – there’re SUV models built on roughly the same platform in the Skoda, VW, Audi and Bentley ranges. Oh yes, they’re different cars alright. But perhaps not $300,000 different, which is the price gap between the top and bottom there. Some of this (but please note, only some of this) is because there are people who will pay a fortune to swank around in a Bentley and there are many more who will not, thinking a Skoda is just fine (I do a little work for the company and the new Skoda SUV is indeed very fine but then I would say that, wouldn’t I?). That’s product differentiation.

Another example is what used to happen in old fashioned English pubs – in the public bar and the saloon. The latter had carpets and comfy chairs, the former very definitely not. Beer was 10% more expensive if you wanted the comfy chair experience – very simple and remarkably successful product differentiation. Being able to charge different prices to different groups for much the same thing. Or as it often used to work out, different prices to the same person on different occasions. Dates were in the saloon bar….

Tim Worstall, “Freakonomics’ Steven Levitt On How Inefficient Uber Really Is”, Forbes, 2016-09-20.

June 30, 2018

Enriching the public in ways that do not show up in the GDP calculations

Filed under: Business, Economics, Media, Technology — Tags: , , , , — Nicholas @ 05:00

Tim Worstall looks at the calls to regulate the big tech firms and points out that we already get a very good deal on “free stuff” that isn’t reflected in standard economic statistics:

It won’t have escaped your attention that rather large numbers of people are calling for the regulation of the tech companies. The Amazon, Google, Facebook (Apple and Microsoft often added, just because they’re large) nexus have lots of power over markets and thus therefore – well, therefore something. My own prejudice here is that certain people just cannot look at centres of power and or money without insisting that they, the complainers, should be the ones exercising that power and determining the disposition of that money. Thus much of the drive for “democratic” regulation of the economy more generally, the self proclaimed democrats being the ones who would end up with the power. The advantage of this analysis being that it does describe reality, the same people do end up making the same arguments about different companies over time. Mere prominence brings the demand for control.

The economist on this subject is Jean Tirole. His Nobel was for exploring this very subject, tech companies and the two sided market. Google, for example, sells the search engine to us and us to the advertisers. The tech here is different, obviously, but the underlying economics is the same as that of the free newspaper.

Tirole’s a new book out and there are a number of interesting points to be had from it:

    Yes, on the whole consumers tend to get a good deal, because we use wonderful services — like Google’s search engine, Gmail, YouTube, and Waze — for free. To be certain, we are not paid for the valuable data we provide to the platforms, as for example Eric Posner and Glen Weyl remind us in their recent book Radical Markets. But on the whole, our living standards have substantially improved thanks to the digital revolution.

From which we can extract a few points. We’re richer, we really are. Substantially richer and yet in a manner that normal economic statistics entirely fail to capture. As Hal Varian has pointed out, GDP doesn’t deal well with free. Near all of those benefits of the digital revolution are coming to us for free and so aren’t recorded in that GDP. So, we’re richer yet the numbers say we’re not. In that is much of the explanation of slow economic growth these days, even of slow real wage growth. We’re just not counting what is happening to our living standards.

But we can and should go further than that. If the above is true then we’re very much less unequal than we’re recording. Stuff that’s free is, obviously enough, distributed rather more evenly among the population than extant monetary incomes. You, me and Bill Gates all have access to exactly the same amount of Facebook at the same price. We’re entirely equal in that sense. Bill’s actually poorer concerning search engines, stuck for emotional reasons with Bing as he is while we get to use Google or DuckDuckGo. Our standard measures of inequality are wrong both because of the undermeasurement of new wealth and also the extremely equitable pattern of the distribution of that new wealth.

June 21, 2018

QotD: Statistics

Filed under: Economics, Humour, Quotations — Tags: — Nicholas @ 01:00

If the devil is in the details, and if the details can be hidden from view by lumping them all into various aggregate statistics, then among the biggest fans of the uncritical use of aggregate statistics will be the devil.

Don Boudreaux, “Devilish”, Café Hayek, 2016-08-29.

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