Monday, 11 December 2017

The Popular Annual Myth Of December 11th

Today is December 11th, and the chances are that at some point today you've seen at least one of the many articles doing the rounds informing you that December 11th is the most fertile day on the calendar in the UK. There are articles (albeit old ones) in The Telegraph, The Daily Mail, The Guardian, and The Times being shared around Facebook, all making the claim that more babies are conceived on December 11th than any other day of the year, and that apparently this happens year on year.

Despite appearing in reputable newspapers, my initial instinct was that this story is poppycock, and that what we are seeing with this account is lazy, uncritical journalism. Save for one of those extremely rare coincidences that one expects every now and then when the law of large numbers throws up some irregular statistical patterning, the probability of the same day each year being the most fertile day of the year is vanishingly small. There are just too many variables and complex interlinking causes for such a peculiar pattern to emerge, and I could definitely smell a rat. 

So after a bit of probing, I found out that December 11th is not consistently the most fertile day on the calendar in the UK, this was simply an example of the researchers distorting the evidence. It turns out on closer inspection that they merely did a survey collating people’s birthdates and found that September 16th is the most popular within that survey period (and by slight margins). This is not the same thing as saying that year on year December 11th is the most fertile day on the calendar in the UK - the search space consisted of only a small, unrepresentative sample that would hold to no patterned regularity once broadened.

One thing of interest though
Even though it turns out that the specific date reported is untrue, it is apparently true that December is the most fertile month of the year on a consistent year by year basis, and that is something that may still be of interest to readers here. The fact that there is consistently a particular month of the year when most sexual unions occur ought to be no surprise really, particularly if there are regularities in human behaviour that could easily cause such a statistic to be true.

I can think of three reasons why December might be the most fertile month of the year:
One is that colder air helps to improve sperm quality. Actually, I didn't think of that one - it was reported after the media consulted a biologist. What the biologist didn't mention, though, is that by itself that's not compelling, because the 'colder air' factor should only narrow it down to winter months, not specifically December.
Two is that quite a few parents plan pregnancies in December so that their children’s birthdates are in September, which increases the probability that their children are among the oldest in their school year (giving those children an advantage).
Three is that early to mid December is when the country has lots of Christmas office parties and work nights out*, which might amount to an increase in sexual activity in early to mid December. 

So my best guess is that it’s a combination of the colder weather, school planning, and Christmas conjugation that gives us the statistic that December is the most fertile month on the calendar each year. 

* Note that Christmas office parties usually happen on Fridays and Saturdays, and those days are different dates each year, which increases the spread of probability away from any specific date in December.


Sunday, 10 December 2017

A Radical Way To Change Politics For The Better

I have three radical, brilliant and yet wacky ideas for how to revolutionise our political system. The first one involves ditching constituencies and drastically reducing the number of MPs with a new system of representation (your local council could fulfil any need your MP can). The widespread mediocrity of our MPs is a lot to do with the fact that they are working within a system that does not provide much of an incentive for moral probity or intelligent policy-making. 

It's only when professional people are accountable for their actions or words that we lessen the duplicity and complacency. I doubt we would have seen the MP expenses scandal nor be subjected to the regular tosh to which we have become habituated if we had upstanding MPs who feared the opprobrium (and voting power) of the electorate, and had to conduct themselves with integrity and intelligence to secure their next vote. 

The main cause of this lack of incentive is that too many MPs are in safe seats in their constituency, and party associations that choose the candidates for constituencies can ensure that those in Ministerial roles get the safest seats. My antidote to this is a whole new system that instils some kind of accountability to MPs, and ideally brings in a better and more scrupulous calibre of candidate, and a more carefully thought out voting process.

Idea 1
First we need to decimate the notion of votes attached to constituencies according to geographical borders. As a replacement, my radical proposal would be that candidates will stand to represent surnames demarcated into sections of the alphabet, not regions of the country. We could reduce the exorbitant number of MPs down to about 500 (that'll save on expenses) - and then have a system in which MP 1 represents everyone whose surname begins with Aa-Ad, MP 2 represents everyone whose surname begins with Ae-Ah, and so on. 

Under such conditions, an MP really would have to work hard to forge a good reputation and the prowess for positive influence, because the people he or she represents would be all over the country, and they would make up a body consisting of a diverse range of classes, cultures and ethnicity. MPs are much less likely to be complacent if they are required to have a positive impact on tens of thousands of people scattered across the country rather than people concentrated in a specified area of the country - they will have to think more innovatively about plans, policies, investments and strategies.

And instead of having constituents and holding surgeries, elected MPs could get involved with local issues through regional councils, primarily motivated by doing good, honest, decent work for the region. There may be occasions when conflicts of interests occur between a local person and a person he or she represents alphabetically, but I don't expect them to be too frequent. Put this system in place and I'll bet we'd see a higher standard of MPs, in a system in which Westminster attracts more candidates who want to be MPs for the right reasons.

Idea 2
In addition, my second idea adds even more intellectual and moral scrutiny to the process - because in order for MP 1 to represent everyone whose surname begins with Aa-Ad, and MP 2 to represent everyone whose surname begins with Ae-Ah, and so on, we could try to lessen party political biases and tribalism by offering category distinctions between policies and parties. In other words, rather than everyone whose surname begins with Aa-Ad voting for a party candidate, they could instead be asked to tick boxes for a large range of policies they support (after reading intelligent annotated arguments for the costs and benefits of each policy - we could make this mandatory), while being blind to the parties to which those policies belong.

I got this idea during the last election, after clicking on one or two of those websites that attempt to tell you which party it thinks you should vote for based on a series of policy selections you've made from behind a Rawls-type veil of ignorance, blind to the parties to which those policies belong. It’s obviously not totally blind, as it’s fairly easy to tell which policy belongs to which party in the most obvious areas - but it certainly was the case that when people did the exercise they frequently ended up being most closely aligned with parties that were not the parties for whom they would usually vote.

Being more economically right wing than most, and more socially left wing than most, when I partook in the exercise it was clear that I am further from all the mainstream parties than any of them are from each other, which means there is no obvious party for me to vote for. However, this isn't true of the average voter - in fact, rather worryingly, a poll seemed to indicate that if people voted for policies not personalities, the Green Party would have won the last election - which does rather suggest that the average voter is likely to make a real mess of things with a policy-only vote, and that democracy would not be all that safe in their hands.

Idea 3
This is where my third idea can help - because, as I talked about in this Blog post, I think the nation pays too much regard to the so-called qualities of democracy. Leaving decisions and policies that require intelligence and evidence-based analysis in the hands of largely uneducated and short-sighted populations is highly overrated. What's needed, in my view, is a voting system comprised of fewer, smarter voters - but having tweaked my system a bit, I'd now wish to incorporate my two above ideas into it.

Added to my above system of having MPs represent surnames rather than constituencies, and voters voting on policies not personalities, I'd also want the outcomes to be in the hands of far fewer, more educated voters - maybe with something resembling jury duty, where a random selection of the population (to ensure a proportional representation of sexes, ages, ethnic backgrounds, income groups, religious beliefs, political views, education, and so forth) - let's say 50 people for each letter group (at 500 groups, that's 25,000 voters) - are called to partake in a rigorous voting process involving careful, considered analytical scrutiny over a number of weeks.

So here's how it would work. The first step is to ensure that voters voting in my reduced voter election are better apprised of the facts, and of the pros and cons of all policies (the seen and the unseen). Rather than decide where your vote should go based on personalities, the 50 x 500 chosen voters get to spend a number of weeks, getting paid for their time, studying the economic, sociological and philosophical tenets of all aspects of the policies in front of them, attending lectures from speakers of both sides of the argument, partaking in group discussions and becoming involved in debates orchestrated by experts in the fields (the benefits of the outcome would more than pay for the financial costs of this, and some of the offsetting savings will occur by not having to employ polling clerks throughout the country on election day).

And then at the end of the process, after developing a much broader understanding of the costs and benefits of all policies, the individuals get to vote on those policies, and then the results are announced, with the winning 500 MPs taking their place in Parliament

You may worry that this will disenfranchise most of the other citizens that don’t get to vote – but there’s no reason to think this.  At the start of play, everyone has exactly the same chance of being selected, and everyone in the country (both those selected and those not) will be secure in the knowledge that the people who are going to represent them in Parliament will have been chosen with more rigour and a higher degree of analytical scrutiny by highly conscientious citizens in the country. That cannot be as disenfranchising as the current system in which every single person that votes knows that that vote will have the same use as if they’d stayed at home.

What I'd also predict will happen is that if politicians knew that their policies would be subjected to proper, rigorous analytical scrutiny - and that they'd have to be credible to pass intellectual muster - the policies offered would be far more carefully thought out, and more in tune with a formal economic accountability.

One would hope the politicians that made empty promises, and sold policies based only on benefits with scant regard to costs, and politicians who took advantage of the electorate from within the comfort of their safe seats, would be greatly diminished, and in many cases got rid of altogether in my proposed system. Who knows - it's even possible that higher quality politicians with properly analysed policies may end up rubbing off on a greater proportion of the electorate.

Tuesday, 5 December 2017

The Trojan Horse Of Public Goods: Beware Of Politicians Bearing Gifts

Government Minister Greg Clark, the Secretary for Business, Energy and Industrial Strategy, has unveiled a 255-page white paper explaining the party's industrial strategy for the nation. The government is promising to 'invest' in our country and increase productivity with taxpayers' money (although they never mention taxpayers' money, of course).

These are promises that should concern us - and the concern should be based on a well worn economic phenomenon that assesses whether the state should be involved in an industry at all, or whether it is doing more harm than good.

The assessment can be stated like this: if the provision of a good or service would have happened anyway by commercial demand, then it's better if private investors provide it (as I've explained before repeatedly). If the provision of a good or service would not have happened anyway by commercial demand, then it's costly to society for the state to take our money to provide it - even more so when you factor in all the crony capitalism, self-serving lobbyists and special interest groups distorting the market.

The upshot is, when all the costs and benefits are weighed up, there isn't very much that the state should be doing. Consequently, a strategy that's based on all the things the government wants to do for us is going to be one that engenders lots of inefficient use of money that we'd be much better off spending directly out of our own pockets.

One exception needs bearing in mind though - and that is the kind of product or service that is widely desirable but may not be provided by the market - or could be, but may be better provided by the state. These are what are referred to in economics as public goods.

Public goods and private goods
The state provides some public goods from which we all benefit equally, like national defence and rule of law, but it also provides private goods like health care, education and pensions which would be better run under a 'consumer pays' model. The distinction is that we more or less want the same thing when it comes to national defence, but not so when it comes to health care, education and pensions.

Because the private goods and services that the state provides are devoid of a 'consumer pays' model, there is no measurement of consumer demand for the goods and services nor commercial value in how they are costed.

Before we get into this further, let me deviate for one moment to tell you a shocking fact connected to state provision. Once you factor in all the stealth taxes on top of the more transparent taxes, the state takes on average around 60% of our earnings in taxation. To put that into perspective, that means you have to work until roughly August 7th each year until you begin to earn money that the state doesn't somehow confiscate.

A left wing friend of mine said she thought this was good news because it shows how much we as a society are willing to show we voluntarily care for one another in the form of redistribution. As much as I love my friend, this is a strange view to have because it is just about the opposite of the truth. Tax is taken from us precisely because we otherwise would not voluntarily donate to these things (a point I illustrated before by using the example of foreign aid, and here regarding the welfare state). To explain, let me tell you a bit more about the concept of public goods in economics.

A public good is something that is referred to in economics as non-excludable and non-rivalrous, in that agents cannot be effectively excluded from it, and whereby if one person consumes the good it does make that good unavailable for others. Obvious things that do not qualify as a public good are things like a car parking space and a bunch of grapes. If Jack parks in the only available car parking space, Jill cannot also park there. If Jack buys the last bunch of grapes, Jill cannot buy them. The nice view of London’s skyline from Primrose Hill, on the other hand, is a public good because Jack can enjoy it without excluding Jill’s ability to enjoy it too.

The problem with public goods is that they have what’s referred to in economics as a free rider problem. That is, if a good is a public good it is difficult to prevent others from enjoying that good without having to pay anything towards its cost. Suppose there is an alley between two terraced houses owned by Jack and Jill in an area with a recent spate of burglaries. Jack says to Jill ‘Let’s go halves on a £500 gate to make our alley more secure'.

If Jill wants the extra security but figures that Jack will pay for the gate even if she does not pay her half, then Jill free rides on the security, and Jack foots the bill. Jack may therefore decide to not buy the gate, leaving them both with a less secure alleyway. If the situation was favourable, the government could tax the whole street and put up the gates in all the alleyways on the street. Of course if the alleyway gates are worth their cost to all the residents, then everyone on the street is better off.

But then you have to add further consideration, because in a scenario where only some people paid for alleyway gates, the people that didn’t are made more vulnerable because their unguarded alleyways are now more attractive to burglars. The same is true of burglar alarms; if numbers 1, 3 and 5 in a cul-de-sac install a burglar alarm, numbers 2, 4 and 6 that don't have burglar alarms are more likely to get burgled.

The key analysis with tax and government industrial strategy is assessing whether a good or service is like the alleyway gates, and whether everyone involved is better off by paying a tax and sharing the benefits, or better off being left to their own devices in a free market.

One obvious example of a public good that everyone benefits from is national defence: so effectively the nation is treated as a single consumer paying for this through taxation. Another example of a similar service is the police force, as is the infrastructure that provides the framework for the rule of law. There are people, such as David Friedman in his seminal Machinery of Freedom, who maintain that even things like defence, police and rule of law don't need to be provided by governments, but can be sustained instead by non-coercive market and charity-based systems. But we'll give the state the benefit of the doubt for now in terms of providing a few of these public goods, even if it is easy to envisage a time when things may be different.

When taxes are paid to provide things that the government can provide more efficiently than the market then we should support them. But that is the only condition under which a public service like defence or policing is preferable to a private service. As I reminded people in a recent blog post, public services cost about 30% more to provide the same equivalent service provided privately, therefore it is desirable that anything that can be provided by the market is done so, which doesn't leave the state that much it should be doing, because there are not many things it can provide better than the market.

Monday, 4 December 2017

Junk Food, Junk Theory

Statistics often provoke incredulity. For example, The London School of Tropical Medicine sent out a report that says the surplus (stress, that's surplus) food consumed by all the obese people in the world is enough to feed 1 billion of the world's poorest people. You don't need to be a genius to predict what many will say when they tap away on their keyboards by way of a response:

"Ah, so if the over-eaters consumed normal amounts, we could give all that food to those billion people".

Not quite. That's a bit like saying that if we gave some of Europe's rainfall to Africa, there would be less barren land in Africa. True, but not possible. The same goes with food - obese people consuming less does not mean that we could feed the billon poorest people, because what makes them hungry isn’t just lack of food, it is lack of many of the other things that may otherwise result in enough food.
All that said, it would certainly be useful if we were all more careful with our food consumption. Perhaps the most useful and practical measures we can take would be to take the lead of the supermarkets that voluntarily donate their surplus food and drink to good domestic causes - either by spending money on the food donation schemes they run, or by adding some extra items to your shopping basket that you can donate to food banks.

On a happy note to end, well done to the Co-op for being the first major retailer to voluntarily sell food on a large scale at a reduced price after its 'best before' date, in an effort to simultaneously cut its losses and reduce its food waste too. What I like most about it is that it's an entirely voluntary decision - no enforcement, no pressure from regulatory bodies - just a straightforward sensible decision that mutually benefits sellers and buyers.

Thursday, 30 November 2017

Britain, Trade Histories & The EU

A reader emailed to ask about Britain's historical relationship with free trade and Europe, and whether the current uncertainty surrounding Brexit makes things precarious for us. Here's my reply:

There was little free trade in Britain until it was taken up consciously as national policy around about the mid 19th century. Previously, tariffs were sometimes sky high, as in the case of the French against British wool products, British tariffs against Indian cotton cloth, etc.

But also there was no mass immigration because welfare was only available locally to select inhabitants. The nearest thing we came to it, except very recently, was the French Huguenots in the early 1700s fleeing persecution. As expected, Londoners kicked up a stink and a special Act had to be passed allowing them to stay. Excise taxes at border posts, as before, could be very high.

Of course, Europe then was far different to now - it amounted to lots of principalities with border posts. Germany had a score of them and Italy a dozen until late in the 19th century - so any merchants travelling down the Rhine had to repeatedly pay excises at border posts. Only a few cities in Europe, such as Antwerp and Hamburg were freer.

It was only when Ricardo's arguments about free trade started to become more widely appreciated that cities became freer. David Ricardo would often be heard in the House of Commons in the early part of the 19th century extolling the virtues of removing tariffs, but the most the UK responded with was Imperial Preference - whereby, free trade was freer with its colonies but not with other nations.

Then two world wars interrupted the free flowing migration of widespread trade, and as well as mass murder on an unprecedented scale, socialistic tyrannies were spread across lots of Europe via the Russian, German and Italian dictatorships. Consequently, many of the resultant post-war government interventionist policies that followed the world wars set precedents for the economically stultifying State meddling that we've become so used to in the past six decades.

Once upon a time, the idea that Europe would need a bunch of unelected socialist bureaucrats for its nations to enjoy the free movement of people, goods, services and capital in a "single market" would have been ludicrous - but alas, that is what we have with the current EU from which we've just promised to distance ourselves.

During the next sixty years or so, Britain became more diverse in its trade agreements with the rest of the world, and although there have been some serious peaks and troughs, generally we have been going in the right direction. This has been the beauty of a freer market unbound by over-regulation and special preference blocs. If it’s beneficial for Britain to trade with France for wine, Germany for BMWs, China for steel, Kenya for coffee and Brazil for bananas, then that’s what will (should) happen.

All any country wants in terms of trade is to import goods in which foreign exporters have the comparative advantage, and export goods in which they have the comparative advantage – and within that process find the nations that have the most attractive comparative advantage. The Netherlands may have a comparative advantage over us in terms of fuels and metals, but if there is an even greater comparative advantage by having a fuel and metals trade deficit with the United States and Japan then that option is preferable.

So trading with anyone with whom a mutually beneficial transaction occurs is the desired result. Apart from a few exceptions regarding meeting quality standards, the idea of even having to talk of 'having access to a market' by going through doors in a politically constructed labyrinth is preposterous.

One shouldn't forget that, ostensibly, the post-World War 20th century was unprecedented, and the nations that came together to co-operate in the reparation job deserve a lot of credit. We live in the most peaceable Europe we’ve ever seen, and no doubt attitudes to union and unity have helped. The problem is, I think it has gone way too far, and there are interferences in our freedoms, and in prices too, which go way beyond the desire to secure peaceful co-existence.

The European Union has effectively put up a de facto wall around its bloc to protect its own European agents from more competitive prices outside the EU, which makes it more difficult for poorer African, Asian and South American traders to compete. If the EU opened its barriers to free trade with, say, Africa on farming, and stopped subsidising its own farmers, as one example, it would be the first big step towards the revival of the developing nations' agricultural industries.

Rather like our own NHS on a smaller scale, the EU is the world’s best living example of the limit of economies of scale, where once an institution becomes too fattened up you get dis-economies of scale**, where scores of extra management are added to the workforce, along with such increased bureaucracy and self-preservation that lack of communication and inadequate understanding from the top to the bottom, and sideways too, means there are more problems than solutions. I think history will show that our coming out was a good thing for us, and a catalyst for good in Europe too as other nations will follow suit.

Then of course there is another charge to level against big bureaucracies - it's what's called the Ringelmann effect, which is the tendency for individual members of a group to become increasingly less productive as the size of their group increases. A good example is in a tug of war event, where you'll usually find there is an inverse relationship between how many of you there are pulling your team's side of the rope, and the magnitude of each agent's individual contribution to the total effort.

Another example, when you're in a crowd and the speaker enters the stage and says good morning, there is usually a murmured response. When he says "come on you can do better than that", the reciprocation is much louder. The volume of the words you utter will be less loud than if you were asked to respond on your own.

This phenomenon of increased group size resulting in lower individual effort or productivity is also known in psychology as social loafing. Large institutions like the EU, the civil service, and local authorities are going to be replete with social loafing, particularly when you factor in Parkinson's law and the Allen curve, which is even more reason why we're better off out of it.

Wednesday, 29 November 2017

It's Time For A Post-Racial World

It’s time that humanity moved forward with its understanding of how humans define one another. Here’s some practical advice - it certainly works for me. Ditch the term ‘race’ when trying to define individuals according to their skin colour or nationality. The word ‘race’ has too many negative connotations and associative misunderstandings about what humans are and how they treat one another - it's time to wise up!

It’s far better to use the word ‘race’ in terms of our being the human race, although personally I prefer to say the human species. Either way, race or species refers to us humans as a collective, and with that, all the shared genetics, behaviours, evolutionary legacies, hopes, dreams, fears, insecurities and curiosities that bring about a kind of oneness implicit in our species.

After that, we have a breakdown of different types of human, where race used to mean anything from skin colour, to facial features, to wherever on the planet someone comes from. Needless to say, there is a word that adequately covers a breakdown of the human species in terms of belonging to a social group that has a common national or cultural tradition - and that word is ‘ethnicity’, which includes one’s heritage, and 'nationality' which includes the status of belonging to a particular nation.

People from Germany or Canada or Ethiopia have a different nationality, ethnicity and heritage, but they are all part of the same human race. That’s why, when a child is born from a German father and an Ethiopian mother, they are dual heritage, not mixed race.

Skin colour is also nothing to do with race. Skin colour is to do with a number of genetic factors, which is linked to ethnicity too - but at a genetic level, melanin is the primary determiner of skin colour. If the human race is the only viable definition of race, and if skin colour is genetically determined, then racial discrimination on the basis of skin colour is a foolish, short-sighted misnomer.

I mentioned genetics, and genetics is another way that the human race can be broken down into categories. There are relatively very few differences in the number of genes between organisms. The human genome has 3 billion nucleotides but only somewhere between 20,000-25,0000 genes. A gene is a rather arbitrary designation anyway - it simply means a series of nucleotides that code a protein. Most evolutionary changes are the result of gene duplications, inversions and translocations.

The pretexts that people have used (and sadly still use) to determine a basis of racial discrimination are both arbitrary and ill-conceived. Their definitions bear no relation to similarity or diversity in the genetic populations. For example, generally speaking, there is more genetic diversity between a man in Nigeria and a man in Kenya than there is between a man in Nigeria and a man in Belgium, Holland or Spain.

This is because humans originated in Africa, and there have been longer execution times for mutations to have occurred in Africa than in the shorter time that humans have migrated to Europe. The longer the time for mutations, the greater the genetic diversity - so perceived genetic similarity as a basis for racial discrimination is also absurd, and always has been.

So, let's recap: skin colour is down to genes; ethnicity and heritage is where in the world you come from and the culture(s) with which you identify, and the only way that race should have any meaning is in recognising that human beings are one species, and that what makes us different is miniscule compared with all the things that make us remarkably similar.

Now we have got all that straight, let's all use the appropriate language to help move towards a post-racial world, where our place of birth, our skin colour, our nationality, culture and heritage, and our genetic features are not tools for contention and division - and where someone can get engaged to someone else of a different heritage and no one thinks even the slightest thing of it.  

EDIT TO ADD: There have been a few people (although far in the minority) unhappy with me that I am triviallising 'race' as a valid genetic subspecies description.

Indeed, yes, I am, because even a sketchy understanding of genetics will tell you that race does not easily conform to a genetic subspecies description. If genetics is the way one wants to frame this, then 'race' as a synonym for subspecies is very unsound genetically. A genetic basis for demarcating race is nothing like as pronounced as you may think. Genetic variations among populations that are spuriously called different races are much smaller than is often imagined, and this will continue to narrow more and more as we move forward as a species and become even more globally diversified.

As I hinted in the Blog, the genetic differences between a person from Nigeria and a person from Sweden are frequently fewer on average than the genetic differences between many sets of people who onlookers might say are from the same race based on all kinds of loose descriptive terms. Genetics demonstrates that what you might call race blend seamlessly together through all sorts of genotypic variations - the change is a continuum.  

There is relatively very limited genetic variation in the human species in terms of what people habitually call race with regard to genetic markers. The odds are the genetic difference between you and an equatorial African is not greater than the genetic difference between you and your next door neighbour who you may well call the same race.

Evolution has played a long percentage game in shaping us over hundreds of thousands of years, and compared to all the ways humans are similar, nothing about human beings in any area you'd care to mention is genotypically, phenotypically or psychologically distinct enough to warrant more than a tenuous acknowledgement of fairly trivial differences. Further, most of what humans define as races are a hotchpotch of localities, not even terribly distinct ones. The vast majority of this diversity reflects individual genotypical uniqueness far more than it does the race definition.

Degrees of genetic differentiation are primarily about containing some unique alleles or sometimes different frequencies of alleles. What is actually required is a level of genetic differentiation that is well above the degree of genetic differences that actually exist among what people who observe local populations call a 'race'.

The next time someone tries to tell you that race is an established definition for subdivisions of the human species, ask them the following: using the criterion of genetic differentiation alone, what sufficient delineation would you posit as satisfactory to define a race within the human species? It is very unlikely you'll get an answer, and if you do, it won't be an empirically satisfactory genetically distinctive subdivision of homo sapiens, as there is also no classification of DNA sample that is amenable to a straightforwardly defined racial population or racial phenotype.

And finally, even if we're super-generous to the point of choosing to ignore all of the above, it is still the case that nationality, ancestry, ethnicity, heritage and skin colour perfectly well cover the definitions required, and do so better than the more ambiguous, and sometimes totally incorrect, term race.

Put it this way. If I asked a random selection of people to name an instance when race is used without there being a less ambiguous alternative, people would struggle. On the other hand, if I asked a random selection of people to name cases where race was used to describe something that is better defined by another term, no one would have any trouble naming an example.

This is what I think is going to start to change in the coming decades. Language is always evolving, and many of the terms that get modified are done so because their original appearance came at a time when humans understood a lot less about these things. And this in a world that is becoming ever more connected and genetically diverse.

Sunday, 26 November 2017

Ask The Philosophical Muser: On Washing Up and Cycle Helmets

Here's my latest Q&A column - if you have any questions for me, you can message me on Facebook, or email them here

Q) My husband and I both work full time, and take it in turns to cook the evening meal. He thinks it is better if the one who cooks also washes up, giving each of us one night off from the kitchen out of every two. I would prefer a system where one cooks and the other washes up. Who is right?

A) You both have points in your favour. Your case makes the best out of utility but the worst out of efficiency, whereas his does the opposite. After cooking dinner, the cook has diminishing utility which makes washing up harder for him or her than for the other, which is an argument in favouring of a system where one cooks and the other washes up. But preparing and cooking dinner involves externalities in the form of making mess, so a system whereby the cook also washes up incentivises him or her to make as little mess along the way as possible. In an ideal scenario, your system if preferable, as long as you both signal your care for the other one by making as little mess as possible along the way. Failing that, get a dishwasher!

Q) Dear Philosophical Muser, What is the overall effect of cycling helmets on accident and emergency units in the hospital?

A) Dear Reader, I've no idea, but I could hazard a guess. While cycle helmets greatly reduce what would otherwise be minor injuries, they also convert some accidents from fatal to near-fatal or serious injury - meaning, if that is the principal concern of your enquiry, they are likely to place an extra strain on the NHS. 

The other thing to consider is that even in absolute terms they may not benefit the cyclist, particularly if drivers are more likely to drive less cautiously around a cyclist with a helmet on. Equally, it may also be the case that people who ride with cycle helmets on are, on average, safer and more conscientious riders than those that do not. Or it may be true that cyclist with helmets on feel safer and therefore ride less safely. All these have to be factored in to the analysis.

EDIT TO ADD: There is a debate going on at the moment as the government is considering whether to make it mandatory for riders to wear a cycle helmet. Alas, both those for the proposal and those against it are basing all their arguments only on what they perceive is the least risky and statistically safer - they are giving almost no thought to the most important factor: the freedom of individuals to decide how they wish to ride - with or without a cycle helmet.

It is not the state's job to try to govern in loco parentis, whether that's on the matter of cycle helmets, alcohol, cigarettes, fatty foods, or whatever. There are costs and benefits to all things, and it is the job of the individual to decide how they weigh up those costs and benefits with regard to their own utility.

Some prefer to cycle without a helmet, saving on the cost of the helmet, increasing their awareness of what's going on around them, and knowing that they will cycle more cautiously without a helmet on, and drivers around them will likely to the same. Some, on the other hand, prefer to buy the helmet because the costs of having a helmet are less to them than the benefits. Both those decisions are absolutely fine, which is why the state should not a pass a law that makes wearing cycle helmets compulsory.


Thursday, 23 November 2017

There's No Such Thing As A Free Lunch - Or Is There?

An idea that's absolutely central to economics is the idea that 'There is no such thing as a free lunch'. One of the aims of this maxim is to warn overly-idealist people that when something is offered for free, it almost always means that someone else has to pick up the cost. A good example is the foolishness behind some people's wish for there to be 'free' university education - they seem wilfully oblivious to the fact that the cost of a 'free' education must be picked up somewhere.

Strictly speaking, judging by the letter, the long-standing 'There is no such thing as a free lunch' maxim applies broadly throughout economics. Even on those rare occasions when you can acquire something that's totally free to you and of no cost to the provider, there is almost always an opportunity cost somewhere, even if it's simply something else you didn't do whilst enjoying your freebie.

While all that's true, it is possible to identify something in the economy that could aptly be classified as a free lunch - it occurs every time there is consumer surplus and producer surplus - that is, when there is a personal gain beyond the cost of something. When you would buy a cinema ticket for a cost of £10 but the gross benefit to you is £15 worth of pleasure, the £5 of consumer surplus is the free lunch in the equation* (the same applies the other way round with the provider's producer surplus).

(*If you want to quibble, the opportunity cost of not enjoying alternative consumer surpluses instead of the cinema trip's consumer surplus can be factored into the equation, but there's no real need to do so, particularly if one makes the assumption that usually activities with the most consumer surplus are the ones we'd most frequently choose anyway).

The economic growth and increased prosperity we enjoy in society is made up of billions of these free lunches. They are where value is created, and all of those consumer surpluses and producer surpluses from which we benefit - they are the things in the economy that could pass a free lunches.

Monday, 20 November 2017

Two Different Ways To Charge For The Same Experience

When I was a young boy my parents used to take me to Great Yarmouth pleasure beach about once a year. For several years I remember that we used to have to pay a fee at the entrance gate and then all rides would be free to go on as many ties as we wanted. Then after a few years the policy changed. From now on, entrance is free but every ride costs a fee, paid for by exchanging cash for tokens.

When the pleasure beach changed payment policy my father was unhappy - he preferred the old 'pay once at the door' system because he felt it was better value for money. In one sense he was right - a one off fee that enables you to keep going on ride after ride until you are ready to collapse is certainly squeezing every drop of value out of the entrance fee. But in another sense, and perhaps the most important sense - the sense of value - the new charging system was better.

Here's why. What my father didn't realise is that there's an important difference between the marginal price of something and the average price. In the fairground, the average price is the fee divided by the number of rides, whereas the marginal price is the price of each additional ride. Once you've paid at the door, the marginal price of extra rides over and above your perceived optimum number is negligible. Paying at the gate and going on just a few rides is a very expensive and inefficient way of going to the fairground - but paying once and being blind to the costs of each extra ride is also bad, because you may end up going on more rides than you want to just to get your money's worth.

This is exactly what its like in 'eat all you can' buffets (still my second most read Blog post) or drink all you can for £20 in a bar - customers very often try to maximise the value of their cost by eating and drinking as much as possible - way beyond what they would ideally consume. You don't need me to tell you that when goods and services are priced in relation to what is consumed (per ride, per meal or per drink) people don't consume so irresponsibly.

Businesses are looking to find the maximum that everyone will pay, translating that to highest charges at the gate or on a per ride basis, and turning that into producer surplus. Of course the Great Yarmouth pleasure beach cannot charge everyone the most they will pay because every customer is different.

But what they can do is average it out; whereby, if customers who would be willing to pay a high price are the ones whose frequency of rides is the highest, then charging on a per ride basis is rather like charging a high entrance price on the gate for those who will pay it, and a slightly lower price for those who will not (although this has to be offset against the fact that charges on a per-ride basis may engender queues that disincentivise some from paying, whereas a pay at the entrance fee won't have this problem).
If you're super-attentive to the pros and cons of these two methods of charging, and can understand this from the perspective of the consumer, you can probably see why a lot of public sector market signals are off whack. For example, with strategies such as aligning public sector pay with inflation, using taxes to fund services that are not naturally public goods, regulations and price fixes that impede free trade, and just about anything that fails to optimise the clear information signals for whether there is commercial demand, you are dealing with a menu of inefficiencies and value-losses.  

For more on these different types of pricing - very apt too, given that Black Friday is imminent - see my blog post here.

Tuesday, 14 November 2017

Power Law Inequalities & Geniuses

In response to my recent Blog post on inequality, a friend brought up power laws and asked about their relationship with inequality. This is very apt at a time when we've just been subjected to a sub-standard piece of propaganda from the BBC called The Super Rich & Us - a recent programme presented by someone who doesn't understand much about economics, interviewing other people (some of whom were economists) who also don't understand much about economics. With a better understanding of the subject, they wouldn't have spent the best part of two hours utterly confused about most of the matters regarding inequality, power laws, living standards, supply and demand and consumption.

The relationship between power laws and inequality is largely built on society's revealed preferences, but there's a little more to it than that. Power laws do lead to concentrations of wealth falling in a small proportion of the population's hands. But they are nothing much to worry about: they are to be expected because in a free market where goods and services are freely exchanged for money, the rate of consumption always exceeds the rate of service for an individual.

In other words, there are more ways for Jack to procure goods and services from other providers than there are ways for Jack to provide goods and services to others. Whether you're a lawyer, a taxi driver or a circus clown, you earn money providing a particular skill to your customers.

But the money you spend (at Tesco, on Amazon, at the hairdresser’s, at the garage, etc) goes in multiple directions. Lots of people want food, books, a haircut, fuel, etc, so concentrations of wealth fall in the hands of large-scale providers, who are a small proportion of society, relative to the number of consumers.

(By the way, point of technicality, even consumers are providers in that their consumption provides producer surplus for other providers, but that’s not central to the point being made).

So you can hopefully see why power laws exist, and also how wealth can be concentrated in a few hands very quickly. To give you a much simpler illustration than something as complex as UK society; suppose 20 people are put on an otherwise uninhabited island with treacherous weather conditions. They have to stay on the island for one year, and each inhabitant is given 15 tokens a day with which to buy food from a delivery helicopter that lands every day at noon. What they don’t spend on food, they keep, and at the end of the year whatever tokens they have saved can be exchanged for £3 per token.

During their stay it emerges that there is an expert in building safe, warm tent sheltering from the natural plants. For a fee of 350 tokens per person, payable over the next 50 weeks, all 19 of the other inhabitants can have a tent built for them, thereby enjoying warm, dry and safe nights of sleep for their island duration. At the end of the year our tent building expert will have seen a significant concentration of wealth in his hands, at the expense of the other 19 islanders, but they will have enjoyed a year’s worth of tent-related benefits.

That’s a very simple illustration of a much wider phenomenon that is going on across society, where innovators, writers, musicians and hugely successful business owners are the beneficiaries of these power law transfers. Nobody would have any difficulty seeing a just power law inequality in my island scenario - but yet when the situations apply to real business goings on in society, preferences, they don't seem to get it. To the extent that most inequality is the result of an aggregation of society's revealed preferences - inequality is one of the most democratic of all human phenomena.  

But if you take society as a collection of individuals, you’ll find another important trend that plays out in power laws: there should be a continual natural trend towards progression and improvement. Here's what I mean.

Humans are generally working (either together cooperatively or independently) to make their own lives better, and despite exceptions, this engenders an inclination towards making the world a better place, whether it’s through all the benefits of trade, innovations with which we are continually seeking to improve products, technology and new designs, or lest we forget, the numerous formal institutions that (with mixed results, but generally more pros than cons) make laws and implement regulations that are thought to make society a better place to live.

Because the nature of trade and work constantly involves tweaks, improvements and innovations here and there, and further multiplied both across society and in a fairly linear fashion across time, we have a situation where (despite obvious peaks and troughs and chaotic anomalies and degrees of randomness in the system – world wars, financial crashes, tsunamis, etc) there is a fairly inevitable (or at least high probability) and stable trend of human progression built into the system.

And it's this trend that's another catalyst for generating inequality - the fact that nature is not very democratic (looks, size, shape, talents, intelligence, sensory apparatus, opportunity and background), and therefore it is expected that there won't be equal outcomes. There is a notable difference in all of these human qualities in each of us, as their attainment depends on undemocratic things like fortune and pursuit, as well as hard work, skill and application.

Consequently, then, inequality has a lot do with the fact that humans are tenaciously trying to improve themselves, and the fact that progression is in our blood - it is not just an inevitable part of our journey, it is an exhibition of how influential and advancing our species can be - particularly when you factor that into this observation about human beings.

Wednesday, 8 November 2017

Here's Someone Who Should Know Better!

Having once read Daniel Kahneman's very good book "Thinking, Fast and Slow", and being no stranger to Thomas Nagel (you know Thomas Nagel, the writer of the hugely famous "What Is It Like To Be a Bat?" essay), I was interested to stumble on Nagel's review of the book here.

It's generally a good review, but what struck me from Nagel's review is the bit where he gets on to economics, and in that section makes the audacious claim that a 10% chance of $1,000 is better than a 50% chance of $150. This is a basic GCSE-type error Nagel is making, because one of the quintessential tenets of economics is that we don't get to say what other people value, we let their own decisions provide the signals.

Mathematically it's certainly true that the value of such choices is possible outcomes x probabilities, and economics doesn't disagree with that. But there are no grounds in economics for claiming that a 10% chance of $1,000 is better than a 50% chance of $150, because 'better' depends entirely on the individual's trade off of expected value when measured against the risk.

If Betty is pretty well off and has no disposable income issues she might well prefer a 10% chance of $1,000, in the knowledge that she can treat herself to something nice if she wins, but not worry at all if she doesn't. On the other hand, Joan, who is struggling to pay her food bill this month would be well advised to go for the 50% chance of $150 rather than just 10% chance of $1,000, as the higher probability of $150 is of much more immediate value to her. This is basic stuff, and Nagel should know better.

What Nagel is missing, so it would appear, is that in economics rational expectations theory is not the same as expected utility theory - even though he is talking about them in the same breath. Expected utility deals with already extant probabilities, whereas rational expectations are about decisions and outcomes where interaction generates probabilities and explains why they are so.

The above decision regarding the money is not about expected utility, it is about a forecast of value measured against risk. For that reason, it would not be at all unnatural for two different people to be faced with the same probabilistic circumstances, yet perfectly rationally opt for different risks, based on the immediacy of their need.

Sunday, 5 November 2017

Extending The Corbynomics Sham To 16 Year Old Voters Will Harm Them, Not Help Them

Talk about being subtle: the left wing parties, led by Labour, treated 16 years olds as electoral chattel by pushing for them to have a vote in order to improve the number of seats their party has in the House of Commons (people of that age tend to vote for more left wing parties).

Unsurprisingly, as it would disadvantage their own political standing, the Tories filibustered the debate, meaning that there was no time for a Parliament vote on whether to lower the voting age to 16.

It was a squalidly transparent claim of Labour to want to 'empower' young people - no one was falling for it. But this does bring to bear another important factor in how young people embracing left wing economics and the promise of free sweets are going to one day pick up the bill for all the fiscal irresponsibility they demanded in their youth - nicely illustrated in one of the most iconic (and multifariously applicable) images of our generation:
The young people who are trusting Jeremy Corbyn's ludicrous magic money forest economic policies do not seem to realise that the government must raise taxes in the future on the very people they are trying to help now. It's a bit like buying your son a games console on his 14th birthday but then telling him he only gets to play on it if he pays for it on his 21st birthday. At no point along the way can this boy think of the games console as a free gift.
At the moment Corbyn wants to defer increases in taxation (for anyone earning up to £80,000 pa) by borrowing. The economics behind what I'm now going to tell you is more complex than my simple illustration, but not in any way that alters the efficacy of the generalised arithmetic. Suppose Corbyn wants to tax you £100 to help wipe out student debt. Here are some possible scenarios (figures rounded for simplicity):
Scenario 1: Corbyn taxes you a £100, which you remove from your £1000 savings account, leaving £900. A year from now, your bank account has grown (at 10% interest - again for simplicity) to £990.
Scenario 2: Instead of taxing you, Corbyn borrows the £100. This leaves £1000 in your savings account, which grows to £1100 a year from now. At that point, Corbyn taxes you £110, leaving £990 in your bank account.
Scenario 3: Corbyn taxes you £100, reducing your bank account to £990. Then he lends you the £100 back at 10% interest, raising your bank balance to £1000, which grows to £1100 a year from now. At that point Corbyn demands repayment of his loan, so you fork over £110, leaving £990 in your bank account.
Note that despite some complex tweaking of the knobs to adjust for real values over a lenthier execution time, all three scenarios bear out on the taxpayer no differently - the only major factor at play is the time that it is recouped. In other words, Helen the student who wants all her free sweets now is going to pay for them later in life anyway in ways that will esacape her naked eye.
The government is merely a representative agent of the taxpayers, and politicians are a bit like magpies - they steal from the shiny objects of enterprise to line their nests (magpies don't really do that - but it's part of popular mythology) - in that any good things that politicians can do for citizens are done as the result of extrapolating from the fruits of other people's labour.
Raising taxes depletes our present day assets, and increasing borrowing to pay for Corbyn's short-sighted policies depletes our future assets and only defers its main damage to a few decades' time when Jezza is a distant memory. No wonder Corbyn loves these policies - he'll be long gone when the voters that love them most end up feeling the costs.