jamesz

Bollard on banking

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You’ll have to wait until Matt returns from sick leave to get our perspective on the latest MPS, but I do have a few questions about Alan Bollard’s comments on the banking sector:

The banks needed to weigh their responsibility to their shareholders against their responsibility to the New Zealand economy, [Bollard] said. “We think some pressure on the banks will pay dividends,” he told MPs.

Why is it that Dr Bollard thinks banks should decrease their rates on the basis of ‘social responsibility’? Is he asking private companies to act inefficiently, or is there something else going on? Is he just anxious that banks are not responding as strongly as he would like to monetary policy and trying to muscle them into line? Read more

jamesz

Swine flu pandemic

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The WHO has now declared the swine flu a global pandemic. There are 27,737 cases confirmed worldwide and the number is growing fast. However, only 141 deaths are confirmed, which gives the swine flu a mortality rate of 0.5%. Compared with the Spanish flu which killed about 10% of those infected it might be seen as a lot less severe.

However, focussing on the mortality rate would be misleading. If the swine flu were as infectious as the Spanish flu, but had a mortality rate of only 0.5%, it could still kill 6,500 New Zealanders or over 11 million people worldwide. That’s a LOT of people and really reinforces how important the spread of the disease is.

On the other hand, 18 million people die every year from poverty-related causes. Is the response to the pandemic proportionate to our response to global poverty? I guess my point is twofold: first, it’s important to put percentages and proportions in context to understand them but, secondly, once you’ve put them in proportion in throws into relief the lack of effort we put into similarly severe problems.

jamesz

It’s not about the (plus) size

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Apparently American clothing stores are cutting their plus-sized clothing lines at the moment, even as the average American woman gets larger. Why? Because the mean size isn’t the important one. There’s an excellent explanation here:

…it has to the do with the fact that the distribution of weights is skewed to the right. The costs of production result in a focus toward the modal body size, not the mean or median.

Basically, it costs more to make more sizes. The manufacturer wants to make the fewest sizes to fit the most people. Lots of people fit the small sizes. Large people span a huge range of sizes, so not many will fit each big size. Hence, it’s profit maximising to produce only the smaller sizes.

Weight distribution of American women

Weight distribution of American women

Read more

jamesz

David Bain’s guilt isn’t important

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Is David Bain guilty of murder? No. That’s what a jury of our peers said on far better information than we now have. Did he kill people? Possibly. Does it matter? No.

Our justice system is designed to acquit people when we cannot be sure of their guilt. In its design there is an implicit judgment that errors of wrongful conviction are worse than errors of incorrect acquittal. Let’s think about that judgment. If you acquit someone who committed an offence then the cost to society is only the cost of their recidivism. Given uncertainty about their guilt, the cost is P(guilty) x P(reoffend) x (damage from reoffending). If you wrongfully convicted someone then the cost is P(not guilty) x (damage from imprisonment).

Suppose P(guilt) > P(not guilty) by a little, so the person is not convicted but we think they probably did it. Given that P(reoffend) is probably ~30%, that means that the damage from re-offending would have to be a lot higher than the damage from imprisonment to make it right to imprison the person. Most murderers do not reoffend by committing another homicide so we can class that outcome as highly unlikely. Given the cost to a person of imprisonment it does not seem unreasonable to make the value judgment that we have implicitly made in the design of our justice system.

On the basis of this approach, the question of whether Bain killed his family is only a curiousity. It has little bearing on whether he should be in jail, since any normal person’s answer to that question is based on a ‘balance of probabilities’ approach. It is commendable that the jury took their responsibilities seriously and did not fall into the trap of going with their gut.

jamesz

What good is a right to life?

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William Easterly has a strong series of posts on his blog arguing that a dialogue in terms of rights doesn’t help the poor:

The only useful definition of human rights is one where a human rights crusader could identify WHOSE rights are being violated and WHO is the violator. …
Poverty does not fit this definition of rights. Who is depriving the poor of their right to an adequate income?

I don’t agree with Easterly’s definition of a right, but I do agree with him that rights are not enough to spur action. Few would disagree that, if there are rights, there is a right to life. Who violates that right when people die of starvation and malnutrition? It is hard to point to a person or institution responsible, but that doesn’t mean that the right doesn’t exist.

Wherever there is scarcity of resources there will be a problem upholding people’s rights, as defined in the Universal Declaration of Human Rights. The problem is that the existence of a right doesn’t guarantee the means or resources to exercise the right. That’s what Easterly is driving at here: if we focus on whether people are accorded rights, we lose sight of how to provide the means to allow people to exercise them. Read more

admin

Melissa Maths

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Mt. Albert by election hopeful Melissa Lee managed to fit her foot in her mouth once again, telling a group yesterday that she thinks she is “currently on $2 an hour“.

While her intention was to show that they understood the plight of those on the minimum wage, she only managed to illustrate how far removed she is from the working poor.

Her claim is not only demonstrably false, but wrong by orders of magnitude.

Assuming she was referring to a post-tax income not including any entitlements, her $131,000 salary will net her $89,370 each year, meaning to be on $2 per hour she’d need to work over 44,000 hours each year. If we accept that being a hard-working MP, Ms Lee takes no holidays or weekends, she’d still need to work 180 hours each and every day of the year in order to be paid $2 per hour.

For the record, Melissa Lee’s gross hourly wage is closer to $39 per hour (assuming 4 weeks holiday and a 70-hour working week). This is more than three times the minimum wage.

It’s not just that her maths is bad. By suggesting that her pay was less than minimum wage Melissa Lee shows herself to be profoundly out of touch with what a low paying job really looks like.

Robbie