Monthly Archives: October 2007

The first episde of the new series  of More or Less starts tomorrow, Monday, at 4.30pm UK time. It should be possible to listen on line. Here’s the trail:

At "More or Less", we seize the numbers so casually brandished around by politicians and journalists, and put them in your hands. We’ll ask if middle class areas really do have the worst drinking problem in the country. And what does drinking 21 units of alcohol a week actually imply for your health? We’ll also be meeting the numbers wizards making millions in the City, and making radio history with a totally new kind of weather report.

Why am I telling you this? Because I’m presenting the series.

Dear Economist,
I am a woman in my early 30s. I am also a virgin. Should I be?
Gloria, New York

Dear Gloria,
Let me lay out the relevant economic theory and evidence. Theory first: economists have often theorised that women should have evolved preferences to be more careful than men about whom they have sex with. The basic reasoning is that it takes a woman nine months to produce a baby, while it takes a man about 90 seconds. However, birth control is much better than it was in the environment in which these preferences evolved. Perhaps, then, your preferences are more cautious than they should be.

What about the evidence? The economist Alan Collins, in a paper titled Surrender Value of Capital Assets: The Economics of Strategic Virginity Loss, assesses whether men and women lose their virginity in different circumstances. The key conclusion is that almost 60 per cent of women say they lost their virginity because they were in love; just over 35 per cent of men offered this reason. Collins believes this supports the socio-biological view that women are making an investment when they lose their virginity, and so need to choose their partners with care. Men are simply engaging in consumption – that is, having fun.

Collins also discovers that people who found out about sex by talking with friends (rather than, for instance, from books) were more likely to lose their virginity for non-romantic reasons. Perhaps they wanted something to talk about. I suggest that you get some friends over for a girly chat about the facts of life. All investments should begin with research.

Questions to economist@ft.com

I was recently invited to a friend’s wedding in the historic city of Oxford. Wearing our best robes, and with a toddler, a baby, nappies and toys in tow, my wife and I drove from London to Oxford, shunning the alternative of a journey via bus, Tube, train and bus again to the wedding venue. My wife is a keen environmentalist, but not that keen.

On arrival in Oxford, an economic puzzle. It is cheap to park in Oxford’s centre – free, in many areas – but with a maximum stay of two hours, it was impossible to park there for the wedding. I eventually resorted to dropping the family at the city-centre venue and weaving up and down North Oxford’s residential streets for a couple of miles.

I left the car for five hours in a remote two-hour space and hoped I’d get away with it. (I did.) When the wedding was over, I walked back to the car, drove back into the town centre, picked up the family, and drove them home to east London.

I’ve since asked Oxfordshire County Council what they were playing at: they told me that they wanted to minimise congestion, while at the same time supporting local businesses by allowing people to drive into the town centre and spend money.

“The limited-stay parking helps encourage a regular turnover of spaces to maximise the opportunity for such transactions to take place rather than being taken up for long periods by commuters or long-stay parking,” they told me. (They also told me that there are some longer-stay spaces, but they are off-street and priced to discourage long stays.)

I am not sure how to reconcile low congestion with regular turnover of spaces, but anyway the plan backfired in my case. I drove further than I wanted to and spent no money because I was too busy trying to park. And I know a small business based in Oxford where the employees leave every two hours to shuffle their cars into different spaces.

So much for cutting down on driving – or, for that matter, helping Oxford businesses. Beyond these anecdotes – and beyond this particular example – it’s easy to imagine how such regulations can be counterproductive. A Conservative party task force recently recommended mandatory parking charges in supermarket car parks, with the aim – again – of discouraging driving. But in the town where I grew up, the supermarket lay between our house and the congested town centre. A mandatory parking charge might have persuaded us to contribute to the city-centre jams.

This is not to argue for laissez-faire. Driving, it goes without saying, causes congestion, pollution and accidents. I’m all in favour of reasonable measures to discourage it. The trouble starts when the bureaucrats convince themselves that they understand the economy well enough to start tinkering with it by pulling levers here and pushing buttons there.

In both cases the policy starts by aiming to discourage city-centre congestion, and finishes by making silly assumptions – for instance, that shopping trips by car are more essential than commuting trips by car, or that driving to the supermarket is worse than driving to the pub.

Nobody knows when these assumptions hold true. What we do know is that if someone pays a £5 parking charge – or, better still, a £5 congestion charge – then the trip was worth more to them than £5. Tinkering should end there.

The bureaucrats have finally grasped the old economists’ idea that taxes can change behaviour. But they don’t understand that economists like the idea, not as a way to turn citizens into the puppets of omniscient officials, but for the opposite reason – which is that, in a complex economy, omniscience is the scarcest resource of all.

FT Comment

An economist once dubbed “champion of choice” by The Guardian newspaper would like your employer to organise an exercise hour for you and your colleagues. Professor Julian Le Grand was once a social policy adviser who had the ear of Tony Blair.

Now he has everybody in Britain sitting up (sorry) and taking notice. Even though Prof Le Grand intends to offer an opt-out to anyone who doesn’t much care for the idea of doing a bench-press with the boss as spotter, that doesn’t make the idea appealing.

Prof Le Grand – who emphasises that these are just ideas for discussion – has also suggested a ban on salt in processed foods and on the sale of cigarettes except to holders of a smoker’s permit. That permit would cost £200 and require a doctor’s signature.

Most worryingly of all, he has been observed brandishing the best oxymoron since “military intelligence” – “libertarian paternalism”.

An unsympathetic reading of all this is that a respected policy wonk has lost the plot. But the professor’s prescriptions – and the libertarian paternalist philosophy behind them – make more sense than you might think. He is not crazy. He is just wrong.

Via Dave Ewalt at Forbes, Bruce Schneier writes about the future of computer viruses.

Symptoms don’t appear immediately, and an infected computer can sit dormant for a long time. If it were a disease, it would be more like syphilis, whose symptoms may be mild or disappear altogether, but which will eventually come back years later and eat your brain.

Read the whole thing – fascinating and slightly unnerving, even for a rugged undercover guy like me.

Mappoor Maprich Not really, suggests the statistical modelling blog.

Neill Denny, editor in chief of The Bookseller, has what I think is the first review of my next book, The Logic of Life. Impressive – the book’s not out until early 2008. But I suppose The Bookseller has to be ahead of the curve. Anyway, I was pleased:

Harford is pretty clever, using a series of headline grabbing dilemmas to illustrate what would otherwise be quite dry economic theory to suck you in, before he then goes on to cover a whole range of meatier subjects such as the "rewards for failure" amongst chief execs and why lobby groups have such a grip on the democratic process. I haven’t quite read the whole book yet but it has been pretty eye-opening so far. Harford is very funny and very brutal when he applies economic theory to love and marriage…

My divorced colleagues disagree that I am funny on this subject, but agree about the brutality. The whole review is quite brief and is here.

I once asked whether a drug dealer’s life was worth more than a prostitute’s. Steve Landsburg has commented on similar matters. But if you want it from the expert, look for Kip Viscusi’s name. Here’s the latest:

Thomas J. Kniesner, W. Kip Viscusi, Christopher Woock, James P. Ziliak:

Pinning Down the Value of Statistical Life

Abstract:
Our research addresses fundamental long-standing concerns in the compensating wage differentials literature and its public policy implications: the econometric properties of estimates of the value of statistical life (VSL) and the wide range of such estimates from about $0.5 million to about $21 million. We address most of the prominent econometric issues by applying panel data, a new and more accurate fatality risk measure, and systematic selection of panel estimator in our research. Controlling for measurement error, endogeneity, individual heterogeneity, and state dependence yields both a reasonable average level and narrow range for the estimated value of a statistical life of about $5.5–$7.5 million.

The pdf is here.

Probably not, says Ed Glaeser (HT: Greg Mankiw). For a related argument, see my "What have cities ever done for us?"

Amit Varma has won the Bastiat Prize for economic journalism. My esteemed colleague Clive Crook is runner up. Last year I shared the prize with Jamie Whyte, who coincidentally I am meeting with tomorrow. Jamie and I will raise a glass to you, Amit.

The Undercover Economist: a guide

Publishing schedule: Excerpts from "The Undercover Economist" and "Dear Economist", Tim's weekly columns for the FT Magazine, are published on this blog on Saturday mornings.
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