Discussion Tuesday
Similar to last week:
People in society care about absolute differences in income not relative differences. As a result, in a growing society income inequality measures understate this concern.
Archive for year: 2014
Football referees aren’t just wrong, they’re biased
Football penalties are often controversial and the first couple of days of the World Cup have already provided one dubious decision. Luckily for the referee’s personal safety it favoured the hosts, Brazil. But, according to Randal Olson’s fascinating analysis of penalty decisions, there may be more than luck involved:
70.6% of all penalty kicks were awarded to the Home team.
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Similarly, if the Away team received the first penalty kick, then the Home team received the second penalty kick 92.5% of the time — an incredible display of referee bias.
Check out the whole post for all the details and a bunch more stats!
Rates and property values: it’s the relativity that matters
I have a very minor quibble with today’s article in the herald titled “Higher rates the flipside of soaring house prices“.
The crux of the article is this redacted quote
If you live in Auckland and neighbouring houses have sold for unheard-of prices in the past two months, you can expect your home’s official value to shoot up.
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The flipside? The new values will be taken into account when setting new rates next year.
While I’m not privy to the precise detail of how rates are calculated (nor do I want to be!), my understanding is that the council sets a fixed amount they want to raise via rates, and then allocates that across houses via relative values.
Because the pot is fixed as such, if all house values increase by the same amount, we would expect the share of rates that each house pays to stay the same (this is where I expect someone with an intricate knowledge of rates calculations to jump in and correct me…).
Therefore it is only if your property value increases by more than other properties, we would expect your share of rates to increase. So if you own a house in an area that has rapidly gentrified since rates were last set (Guessing places like Onehunga, New Lynn etc…), then the share of rates you pay will probably increase, since your property value has likely increased by more than the city wide average.
The first sentence of the article I have quoted is probably getting at this, but I just thought it was worth making it explicit that the general increase in house prices in Auckland doesn’t necessarily mean you are going to pay more rates.
Hiding value judgments behind economic rhetoric: The case of obesity
Note: Renamed this from “Discussion Thursday” as I ended up inadvertently writing a post rather than a comment …
Sorry, a bit busy to do real posts. Also wanted to get a discussion going on this excellent quote from Eric Crampton about using sugar taxes to pay for the “health care externality” from obesity/sugar consumption:
What happens then if we find that it’s those healthy exercise people who cost the system more, on the whole, because they live longer (costing the superfund) and consume health services over a longer period?
Be careful wanting to tax all the fiscal externalities. You might not like where it leads.
Let me throw up a quick first comment here 😉
QOTD: John Roemer on Equality of Opportunity
Unrelated note: I am not around too much atm, so as you may have noticed I am not replying to comments at the moment. I intend to catch up on the comments I missed later in the week, so please still comment. Things are a tad busy is all 😉
From the start of his book “Equality of Opportunity” comes the following quote from John Roemer. Note that the two poles, non-discrimination and leveling the playing field, are described earlier in the book. Also, equality of opportunity isn’t necessarily the only principle of distributive justice. However, taking these as given we have:
Among citizens of any advanced democracy, we find individuals who hold a spectrum of views with respect to what is required for equal opportunity, from the nondiscrimination view at one pole to pervasive social provision to correct for all manner of disadvantage at the other.
Common to all these views, however, is the precept that the equal-opportunity principle, at some point, holds the individual accountable for the achievement of the advantage in question, whether that advantage be a level of educational achievement, health, employment status, income, or the economist’s utility or welfare.
Thus there is, in the notion of equality of opportunity, a “before” and an “after”: before the competition starts opportunities must be equalized, by social intervention if need be, but after it begins, individuals are on their own. The different views of equality of opportunity can be categorized according to where they place the starting gate which separates “before” from “after”.
Discussion Tuesday
Let’s do some inequality stuff.
The wealthier a society is, the less (relative) income inequality it should be willing to accept