Matt Nolan

Ignoring costs and misrepresentation – People’s attitude to economists

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One thing that gets to me is the fact that people from both sides of the political spectrum love to avoid costs. As economists pride themselves in discussing the opportunity cost associated with any given policy or action, we end up being attacked by both sides (Update:  Including psychologists it seems.  Dang I thought they were the one social science that understood us 🙁 )

However, the way both sides attack economists is different, equally irritating but different.

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jamesz

Protectionism: it’s instinct

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Steven Landsburg has an opinion piece in the NY Times today in which he extols the benefits of free trade and rails against the protectionists:

Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.

This strikes me as a bizarre analogy: how often does a community rally in support of local businesses when Wal-Mart or Woolworths moves in and puts the local dairy out of business? We read about such stories all the time in the newspaper and unsurprisingly so. Read more

jamesz

Of prostitutes, police and power

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Matt observes that some crimes are not worth reporting, and it is probably sub-optimal for the police to do anything about them if they are reported. The flipside of that is the cost to society of criminalising behaviour and then refusing to enforce the rules. Sudhir Venkatesh and Steven Levitt’s new paper on prostitution in Chicago finds that the power imbalance created by its criminality imposes large costs on the industry’s workers. Via Foreign Policy:

They estimate that roughly 3 percent of all tricks performed by prostitutes who aren’t working with pimps are freebies given to police to avoid arrest… leading the authors to conclude that “a prostitute is more likely to have sex with a police officer than to get officially arrested by one.”When freebies given to gang members are factored in, about one in 20 tricks go solely for protection and the “privilege” of plying their trade. When freebies given to gang members are factored in, about one in 20 tricks go solely for protection and the “privilege” of plying their trade.

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Matt Nolan

Is policing some crimes optimal?

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When someone gets robbed there are some direct costs and benefits. Firstly, the perpetrator receives the goods and or services, and may also derive some pleasure from the activity itself. Secondly the victim suffers the loss of goods and services, and is hurt by the fact they have become a victim.

If this crime is reported to the police and solved successfully then there are a number of losers. Society has to pay the police to solve the crime, the criminal loses any goods and has to pay/go to jail, and the victim loses a significant amount of time making statements etc. Most people that have a criminal case against them try to get a criminal defense lawyer, I suggest talking to Chambers Legal or the criminal lawyers Roanoke. In some cases, the time cost to the victim turns out to be greater than the benefit from having the crime solved (these are the people that regret having taken their case to the police). The folks at Liberty Bell Law criminal attorney Los Angeles CA, though, make it a point that crime is brought to books and justice delivered as quickly as possible.

In some cases, this type of outcome is quite common (eg for small traffic accidents), and the only reason people initially go to the police is because they don’t realise how large the effort and time cost will be (often as a result of mis-information). If this is the case, then everyone loses from a crime being reported and solved, implying that it would have been better if the crime was never reported.

However, this logic feels like it has something missing. Why would police be trained to under-sell the costs associated with reporting these crimes unless there was some good reason for it?

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jamesz

Return to sender

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Dwindling natural resources and increasing consumption are global problems that get plenty of airtime these days. So where do all the metals extracted and ‘consumed’ go? Well, apparently they end up in dumps in Japan:

Despite perception of Japan being short of natural resources, “urban mines” mean the country actually possesses world-leading amounts of rare metals such as gold, silver, lead and indium… in discarded items such as cars or electrical equipment. Japan’s urban mines contain about 61 percent of known natural indium reserves, 22 percent of natural silver reserves, 16 percent of natural gold reserves and 10 percent of natural lead reserves.

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jamesz

Biased impartiality in the media

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Half the internet seems to be talking about the US Presidential primaries at the moment, so Jeremy Burke’s work on media bias seems particularly pertinent. I might talk about his other papers another time but the one that’s captured my attention today addresses the myth that balanced media coverage is equivalent to fair coverage.

It is usually accepted that the media should provide unbiased coverage of events and issues. Unfortunately it is difficult for the reader to tell how biased the coverage is if they have no prior information about the issues being reported. In the absence of further information it can appear that coverage which reports both sides of a contentious issue is the least biased. In the competitive world of large media conglomerates a reputation for accurate, unbiased coverage is essential. The competition drives reporters to appear impartial by simply reporting the arguments provided on each side of a debate. Of course, providing both sides of an issue and reporting it in an unbiased fashion are not always the same thing.
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