Domestic Violence

Domestic violence is constantly in the news these days which can lead to the impression that the problem is increasing. To the extent that scrutiny and public discussion shines light in dark places, we might have expected the real underlying rates to be tapering.

So I was more than surprised when The Age reported figures from Victorian Police Family Violence statistics in the left section of the table below, along with the headline “Family Violence Epidemic.” They specifically highlighted the increases from 2011-2012 to 2012-2013. (Warning; This is a long post so set aside some time!)

table 1

Victorian Totals are taken from Police Crime Statistics.

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Ratings on Airbnb

As readers will know, I’ve been a fan of the way in which the internet generates reputational information which greatly improves the efficiency of markets. Still it’s surprising how tricky these things are, something I’ve been pondering while using Airbnb for quite a few stays in Europe.  There are several major problems with Airbnb’s rating system, which are enough to have me much less keen to use it.

Firstly it seems that there’s a happy clappy vibe in collaborative consumption. Perhaps once people have met others they don’t want to reflect on them invidiously. Perhaps they are hyping the vibe of collaborative consumption and how luvvie duvvie it can be. Or perhaps they’re thinking of the incentives. I don’t like leaving bad reviews because when I’m seeking to rent a place, hosts can look up my previous reviews, and if they’re lower than others, they mightn’t want me to so review their place. Perhaps this drives grade inflation on the system.

And perhaps to prevent that, Airbnb do separate out streams of feedback including feedback for all, private feedback for the host and private feedback to Airbnb.

But there’s another problem. Airbnb’s survey is the kind of survey that irritates me when I get one from a hotel. It asks for five stars in various categories which make logical sense.

Accuracy, Communication, Cleanliness, Location, Check In, Value. The thing is, it remains quite possible to have a flat that is more or less uninhabitable whilst retaining a four and a half star rating. How do I know? Because I’v been staying in such a place in Barcelona. It gets four or more stars in all categories and a four and a half star rating overall. About half of the reviews are very positive. So on a quick squiz we booked. Four and a half stars overall? What could go wrong?  Here’s a not untypical review from the remaining reviews.

Jordi met us, and gave us a lot of great information about the neighborhood and the city. The location and price are excellent.

However… I must mention that this is the noisiest place I have ever stayed. The apartment is upstairs from Bar Mariatchi, which is open until at least 3am EVERY DAY, and which has loud music that you will hear through the walls, making sleep nearly impossible, even with earplugs. Plus, you can count on street noise–talking and yelling–until the wee hours EVERY DAY. The noise factor derailed our rest, pushed our sleeping to the “quiet” times (7am-noon), and thus rather derailed our daily sightseeing plans.

If it weren’t for this excessive noise factor, I would recommend this apartment wholeheartedly. As it is, I can only recommend it to those who plan to party into the wee hours every night and sleep the days away.

Note how people are at pains to be nice, even if their time has been effectively ruined. Yet the place keeps getting it’s four and a half plus ratings. Enough to swing my preferences back towards hotels I’m afraid.

Global roaming: Srsly, what gives?

Reliance Communications roaming plans

I have always assumed that the outrageous prices for global roaming on telcos is the problem of double marginalisation. Each of the monopolists takes their cut and here there’s your domestic carrier and then the others in the other market. Perhaps there are some other carriers along the way. But this doesn’t seem to me to explain more than a tiny bit of the extraordinary prices. And there are some very big telcos in the world with investments in many countries. They could span countries and overcome double-marginalisation.

It’s perhaps plausible that businesspeople pay the outrageous charges. Thus for instance one finds oneself paying a dollar or so per megabyte which is a markup of the cost you can get locally of ten thousand per cent or so. And tourists just don’t pay the prices – they get local SIMs. But in any event, it’s not a monopoly. So even if this is the profit maximising price, it should be easily undercut.

It’s not so bad in the US - you toss T-Mobile $60 odd and your right for a month with a gig or so of downloads and unlimited calls – including to a country of your choice for an additional $5 or so. But Europe? Well it’s more balkanised than banking it seems. And there’s a good reason for banking to have trouble as it’s all domestically regulated. Telecommunications is (I presume) also domestically regulated in Europe, but there’s no need to regulate it to so constrain the law of one price. Is there really regulation saying that Lebara in the UK can’t give its Oz customers access to Lebara’s network in the UK?

And there are plenty of merchants trying to arbitrage the market. So much so that Woolies is into it. But their prices hardly tempt one to let them do the arbitraging. They charge 45 cents a megabyte of data which makes 2 Gigs cost $900. Lebara will sell it to you for £12. Woolworths offering is pretty standard. After an hour of looking I found some that charged around 35 cents per megabyte.

Seriously does anyone know why this problem is so bad?

 

Tips and tricks, or ‘tips and tricks of the iceberg’: Going meta on behavioural economics

Standard economics’ traditional penchant for focusing on problems that are chosen for their formal tractability rather than their resemblance to real world problems squeezed non-monetary incentives and ‘irrational’ motives from economists’ purview. At the same time bureaucracies are very good at doing the same thing – of ignoring the specific nature of the life world of those they serve. (Of course ‘cultural incentives’ and if you like ‘irrational’ motives are at the heart of what makes bureaucracies work at all, but that’s internally. Those very conditions create fertile ground in which the organisation will make presumptions on the rationality of those whom they serve. But I digress.)

There are two potential ‘narratives’ as we say these days about behavioural economics as an antidote to this state of affairs. The first – exemplified, for instance in this blog post from behavioural economics consultancy 42 ideas - is that behavioural economics and the policies that emerge from it provide an example of economics’ taking upon itself the injunction “Physician health thyself”. Thus in the place of homo economicus - a simplified but unrealistic view of human nature – behavioural economics investigates the way this model is wrong and policy inspired by it takes those things into account in proposing new policy.

Thus the nudge unit in the UK (we have a small clone of it in NSW) does AB testing on government correspondence – discovering and exploiting the fact that taxpayers show stronger compliance to an arrears letter from the tax authorities if it contains a sentence like “over 90% of taxpayers pay their taxes on time” and the response is a bit higher still if the sentence makes the comparison more personal still “Over 90.5% of your neighbours in Notting Hill pay their tax on time”. These are ‘nudges’ in the vernacular of this field and so too is attention to trying to set the most benign possible defaults to take into account the power of inertia. The classic example – used around the world in both government and business these days is setting people’s savings plans to save higher proportions of their income (often by diverting any pay rise they have received into savings) unless they make a conscious decision not to go along, in which case it’s as easy as ticking a box on a form and they can (consciously) choose some alternative. This is behavioural economics as a box of tips and tricks to be added on to neoclassical economics. The physician, if he hasn’t healed himself, has introduced some routines that are better suited to the world.

But there’s another way to look at these tips and tricks – to look at them as ‘tips and tricks of the iceberg’. Ultimately people must be encountered as such. The tips and tricks of behavioural economics are no more or less than a summary of rules that have been gleaned that have the generality necessary to find their way relatively straightforwardly into the learned journal literature. But there’s a whole life world out there. That’s what needs to be encountered and that’s what is always in danger of being given insufficient weight. As Hayek put it

Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is . . . a body of very important but unorganized knowledge: . . . the knowledge of the particular circumstances of time and place. [In this] respect . . . practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation.

Hayek only ever paid any attention to one particularisation of this general proposition – he’s thinking of the value the trader adds in a market to the knowhow of the scientist, the accountant, the engineer, the boss. But the observation is a much wider one. Yet the very tyranny of central planning against which he set himself is alive and well inside organisations, not least government organisations and those that deliver their services.

 

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Hypocrisy and the outbreak of crypto-socialism amongst our corporate overlords: Shock!

Mark zuckerberg tim cookIn an outbreak of cross-pontification Tim Cook thinks that Facebook and Google customers should be pretty suspicious of them because they collect a lot of data. Not to be outdone, Mark Zuckerberg thinks that Apple should cut its prices so it doesn’t make as much money. He doesn’t think that Facebook should cut it’s prices to its users – perhaps by paying them a cut of the revenue they bring in – to bring Facebook’s profit down to the kinds of reasonable levels he feels Apple’s profitability should be.

Still, it’s nice to see St Thomas Aquinas’s theory of the just price if not making a comeback, then at least poking its head over the parapet.

The interregnum at the Australian Public Service Commission

Many years ago now, Steve Sedgwick the Australian Public Service Commission explained to me that it wouldn’t be right to publish the hoard of information the APSC has on APS employees’ attitudes to their workplaces agency by agency because that would undermine the relationship of discretion and cooperation the APSC has with agencies.

Just thinking about that argument it falls apart it seems to me. If the rules are the results are published the APSC publishing the data isn’t a hostile act, it’s just process. Anyway, no progress has been made while this kind of data has been published in other countries routinely and the whole world gets the bug on open data.

Meanwhile I suspect the reports the APSC sends each agency outlining its performance are FOIable. If that’s true it’s all a bit of a house of cards waiting to fall. And all of a sudden five capability reviews appeared on the APSC website one Friday afternoon. The Mandarin covered the contents of the reviews which are quite candid about departmental shortcomings. Only two of the five capability reviews were recent. One was from earlier this year and two were from last year.

No press release, no date on the website. Why? Who knows, but here’s hoping the house of cards continues to collapse.

Where are we with Geo-Engineering in 2014?

Geo-engineering is increasingly looking like the only politically viable way of averting temperature rises above 2 degrees in the coming century. This is for three interlocking reasons: i) Any mayor country can try geo-engineering on its own without permission from anyone else, meaning one does not need a world coalition sustained for centuries to have an effect; ii) It holds the promise of immediate relief because ‘natural Solar Radiation Management’, ie volcanic eruptions that add lots of light-reflecting particles into the atmosphere, were found to cause immediate worldwide temperature drops, which compares favourably with the lags of decades and centuries that hold for CO2 emission reduction plans; and iii) It might be exceedingly cheap compared to any policy involving emission markets. For instance, according to a 2012 piece by McClellan and co-authors, we could keep the planet at current temperature levels at a cost of merely 10 billion dollars a year by having a fleet of planes deliver reflective particles high in the earth’s atmosphere.[1]

Given that continued global warming is predicted to happen in the next century no matter what emission policies are adopted, geo-engineering by some impatient large country is starting to look nigh inevitable. I reported in 2012 on the research efforts funded by the Royal Society, the Gates Foundation, and others. You now have dedicated institutes on this issue (eg. http://iagp.ac.uk ), and lots of new proposed experiments. With a large glut of published studies in recent years, it is time for an update: how far are we now in the world of geo-engineering?

The honest answer is that the scientific community is pussyfooting around when it comes to geo-engineering. Field experiments are largely stalled as scientists are awaiting regulatory frameworks that will protect them from criticisms of other scientists and environmental groups. Proposed regulatory frameworks designed to deliver this, such as by Nordhaus and colleagues, find it hard to get much political traction because politicians seen to support regulatory frameworks themselves become targets for criticism, both by those who pretend there is no climate change and by those who insist there is climate change but who also insist on emission reductions as the only way to return to our current climate some 300 years from now. Voters who agree the world is getting too hot and who would like it cooled down in their own lifetime rather than that of their great-great-great-great-grandchildren are still too rare to bother with for politicians.

This does not mean there is a lack of bright ideas. The engineers looking into this really are a very creative bunch, talking about whitening clouds, aerosol sprays, reflective shields, and artificial trees. One new idea that I hadn’t heard before is to genetically alter our crops so that they reflect sunlight better than the current crops. I don’t know whether this has any chance of getting serious traction, but one has to admire the ingenuity of the idea. Still, ominously, almost no field tests or large scale long-term testing is underway as scientists are waiting for societal approval to go ahead. Continue reading

Cut the waste! Stop the boondoggles!

Junction Oval

Junction Oval

Victorian Premier Dennis Napthine announces a “plan” to spend $20 million upgrading Junction Oval at St Kilda to accommodate the AFL team named after the suburb, even though it hasn’t played or trained there for decades. The plan appears not to have been checked with the local council or the AFL, and would apparently need another $37 million in infrastructure funding from the Abbott government.  At first glance it looks to be a complete waste of money with few if any redeeming features.

The Melbourne East West Link tunnel is a vastly more expensive but equally dubious project in cost-benefit terms that Napthine has rammed through despite very widespread opposition, including from the ALP which has said it won’t build it under any circumstances if elected.

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