Posted by Marc Hodak on February 12, 2008 under Unintended consequences | 
In the forthcoming Journal of Public Economics, a pair of researchers conclude that smoking bans in certain areas increase the number of deaths due to drunk driving.
A rigorous statistical examination has found that smoking bans increase drunken-driving fatalities. One might expect that a ban on smoking in bars would deter some people from showing up, thereby reducing the number of people driving home drunk. But jurisdictions with smoking bans often border jurisdictions without bans, and some bars may skirt the ban, so that smokers can bypass the ban with extra driving. There is also a large overlap between the smoker and alcoholic populations, which would exacerbate the danger from extra driving. The authors estimate that smoking bans increase fatal drunken-driving accidents by about 13 percent, or about 2.5 such accidents per year for a typical county.
The ban on smoking in bars has had several unintended consequences. But this research is among the first to demonstrate that one of those consequences may be a higher death toll. And getting involved in an accident with a drunk person is far more damaging than second-hand smoke.
HT: Tyler Cowen at MR
Posted by Marc Hodak on February 8, 2008 under Revealed preference |
A city council outside of St. Louis was the target of a disgruntled citizen who went on a shooting rampage. This story recounts the unfortunate loss of life that ensued. Two police officers just doing their jobs were slain. Two council members and the Public Works commissioner were killed as well. The mayor was also shot and is in critical condition. The story relates how the gunman was apparently aiming for council members, especially the mayor.
Now is not the time for jokes about how one might get to this point versus City Hall. I was reading this story for the tragedy that it was, for the Kirkwood community where this happened, for the families of those slain, and especially for the cops who were at the wrong place at the wrong time. Then I come across this:
Deputy Mayor Timothy Griffin said this morning. “This is a tragedy of untold magnitude.”
Now, I would be much more than upset at losing friends and colleagues. But I would hope that I wouldn’t publicly lose my sense of proportion, especially if I were a public official.
Read more of this article »
Posted by Marc Hodak on under Executive compensation |
Even Megan McCardle laments:
I wish someone had a better answer to the question of why large institutional investors aren’t more active in corporate governance.
Here’s two reasons:
1) Rational apathy
2) Lack of comparative advantage in doing so
Posted by Marc Hodak on February 4, 2008 under Revealed preference |
McCain gets down to brass tacks:
“I can lead this nation and motivate all Americans to serve a cause greater than their self-interest,” he said while campaigning at a fire station in New Jersey.
So, what could he mean by that?
A) Some other individuals’ interest (not you or me or John McCain)
B) Some collective interest
C) John McCain’s self-interest
“A,” of course, is a dummy variable that makes this list comprehensively exhaustive; we can safely dismiss it out of hand. It’s highly unlikely that John McCain intends to make your or my self-interest subservient to some particular for John Smith’s self-interest.
“B” seems plausible. Almost everyone falls for it, but it can’t be “B.” “Interest” is a characteristic of consciousness, and a collective has no consciousness. No matter how much we’re “all in it together,” we can’t taste each other’s food, experience each other’s triumphs, or (no matter how much our politicians try) feel each other’s pain. Collective “interests” can be more loosely defined as the product of decision rules accounting for the interests of distinct individuals, but even with that semantically sloppy substitution of one kind of “interest” for another, that doesn’t save “B.” Decision rules can’t yield rational results without defaulting to the decisions of a dictator. In other words, the “collective interest,” if we attempt to glean it through a collective decision-making process like voting, is really just the leader’s interests in disguise, or, at best, the interests of the most powerful agenda-setters.
So, the correct answer is pretty close to “C.” Fortunately, it’s easy to understand what John McCain’s self-interest is; John McCain is all about getting elected. No one gets this far in politics by accident, without being acutely, intensely aware of where their personal interests intersect with the voter’s willingness to hand them power–not McCain or Romney or Hillary or Obama. Each of these politicians has survived this far in an extraordinarily demanding tournament for power by selling the interests that motivate them as somehow more noble and worthy than yours or mine. Amazingly enough, they achieved this by disguising their self-interest as “something larger than our self-interests.” And, more amazingly enough, tens of millions of individuals buy it.
UPDATE: BTW, Mr. McCain, Reagan would not have said that. His pitch was about how the government should serve the people (largely by getting out of their way), not the other way around.
Posted by Marc Hodak on February 3, 2008 under Invisible trade-offs |
The stimulus debate rages on. Here is the current level of the debate:
“Every economist will tell you that stimulus spending will get into the economy much quicker than a tax rebate,” says Sen. Charles Schumer, D-N.Y.
Mark Zandi, chief economist at Moody’s Economy, estimates that every dollar spent on extending jobless benefits will generate $1.64 in new economic activity. Income tax rebates, he said, generate $1.26 of economic activity for every dollar they cost the Treasury.
“It is hard to think of a group of Americans who are more likely to spend the marginal dollar than families that have been forced by job loss to scale back their normal standards of living,” said Alan S. Blinder, a Princeton University economics and public affairs professor.
The Republican opponents to the particular stimulus of extending unemployment benefits make a cogent point, but one hardly likely to convince the bleeding hearts:
“Most people find a job in the last two weeks of their unemployment,” Gregg said. “That’s human nature. They stay on unemployment almost until the end and then they find a job. If you extend it another year, those folks who could be productive, producing a job, creating economic activity by having a job will stay on unemployment even though there may be a job out there that they could take.”
I prefer the all-purpose argument against the effectiveness of “stimulus”–it’s like taking water from one end of the pool, pouring it into the other end, and hoping the overall level rises. For the animal lovers out there, “spurring” the economy should bring images of an unhealthy, short-term solution for a sick horse. It’s an appropriate image if you consider that the money taken by the government to spend on stimulus necessarily comes from the most productive part of our society, the part most likely to bring the economy back to health.
