False flags

Frances Woolley has a nice post about retirement and women's rights:

Yes, there are older female academics who will enjoy greater financial security as a result being able to work past 65. But let's think not about anecdotes - the stories of particular men and particular women. Overall, how many of the beneficiaries from the end of mandatory retirement are men, and how many are women? Who bears the costs of the transition?

Two thirds of university teachers between 65 and 69 are men (p. 22 here), as are three quarters of those over the age of 70. This is not simply a reflection of an academy that, 20 or 30 or 40 years ago, when these folks were hired, favoured men over women. Let's rewind five years, to when the people who are now 65 to 69 were 60 to 64. This is more or less the same group of people, just at two different points in time.

In 2005-6, just before the standard retirement age ended, 65 percent of academics aged 60 to 64 were male (p. 22 here).

In 2010-11, when that same cohort of people were 65-69, 68 percent of those working as university teachers were male. There is hardly any hiring of individuals into university teaching in that age group. The only plausible explanation of the three percentage point increase in the proportion of men in the academia is that the more women than men retired in that cohort.

In other words, while there might be other reasons to end mandatory retirement, it is pretty clear that it did very little to increase the participation of women in the academy.  Furthermore, since it is very costly (professors at the end of their careers make a lot in Canada), it may well outcompete alternatives like a massive pay equity program. 

You see this sort of principal a lot when people don't want to admit the actual reasons that they are doing something.  Or, even worse, when they are pretending to be on the side of the people who will lose the most from the policy.

My current favorite example is the opposition to gas and congestion taxes under the rubric that they hurt the poor the most.  That can only be true in a very narrow sense.  First of all, the poorest of people don't actually own cars (which are expensive).  Second, subsidizing car commuting makes it more difficult to put in alternative systems like public transit -- as this approach both makes driving easier and starves government of revenue.  Who benefits the most from public transit?  I'll give you a hint -- it's not the people with brand new SUVs. 

Furthermore, the real test of a false flag is when people resist alternative ways to help the populations who are under discussion.  For example, do the people who are against mandatory retirement also want to ensure strict gender equality in pay?  What about paying for long maternity leaves to make it easier for women to retire at 65 with full pensions? 

Similarly, why can't we increase the gas tax and then give money to poor people (who could spend it on gas or something else)?  Heck, to be logically consistent, the tax that would hurt the poor the least would be a wealth tax.  Why not do that instead of a gas tax? 

Now this is not to say that these policies may not be okay on the merits without the false flags.  The policy alternatives that I pointed out may have other good reasons to be rejected.  But the failure to even engage these adjacent arguments is a pretty good evidence that the main priority is not the concern for the group in question but rather worry that the policy argument is weak on the merits.

And we should be less forgiving of that. 

Inequality

Frances Woolley has a post about inequality up in which she notes:

It's impossible for all firms to pay their CEOs above the median salary - by definition, half of executives must be paid below the median. If the majority of firms adopt a compensation policy like the Bell Canada Enterprises one quoted above, CEO salaries will increase inexorably. At the same time, allowing firms to bring in temporary workers at less than the prevailing market wage prevents the price of labour from being bid up in response to labour shortages, dampening salary growth for workers at the lower wage end of the labour market.
 

What I found interesting was not just the argument, but rather what happened in the comments.  People focused on the second piece of the argument (temporary workers at below mean wages) and whether the sense of justice should be local or global.  Consider Mike Moffat:

The inequality discussion changes a great deal if you consider the effects it has on Canadian inequality vs. global inequality. Why should the former necessarily be the lens we use to look at this problem? \
 

The question here is why is the focus on workers and not on CEOs?  I am a big fan of flexible immigration policies and I celebrate them.  But I wonder if a temporary workers program (at below market wages) isn't just a half-way measure.  Why not have permanent workers who have full rights to switch jobs? 

I am not sure that removing the best and brightest from the third world is always a good plan, but if we are going to do it then why not make it easy for them to stand as equals in the society they are helping to build? 

Transformations

Frances Woolley has a post on the use of the inverse hyperbolic sine transformation for handling wealth as a variable (skewed and with lots of zeros).

The post is worth reading and the comments are really interesting. In particular, Chris Auld makes a very good case for simplicity and interpretability as a desirable property of statistical models in several of the comments.

There is also a thought provoking discussion of how to parameterize wealth that involves the sort of deep thinking about variables that we should do more of in epidemiology. In particular, in what sense is it reasonable to consider a person (especially in a country like Canada with strong entitlement programs) to truly have zero wealth.

Definitely worth the read.

I am surprised Mark did not post this

But one of the blogs on our blogroll has a fun probability problem. It's fun to head on over and work it out!

Some perspective

A nice quote from the comments on Worthwhile Canadian Initiative:

I'm sure we can all agree that in any organization the size of the Canadian federal gov't ($175 billion per annum in revenue!), there must be inefficiency somewhere. But the issue at hand is not "is there inefficiency?" but rather "is there $10-12 billion of annual waste?".

I think that it really puts questions into perspective.

And if you don't follow WCI, it really does have some of the best commentary around (right up there with Marginal Revolution at its best)

Tenure and the end of mandatory retirement (Canada edition)

Frances Woolley has a nice post about the intersection between tenure and the lack of a mandatory retirement age in Canada. It is a different case than the debate in Canada. The background is that salary scales and tenure agreements (at Canadian Universities) were negotiated when there was a mandatory retirement age of 65. The removal of mandatory retirement was a windfall for professors who were already employed as they work under a salary scale designed for workers who would leave at 65.

In practical terms this can have a fairly important impact on budgets as it adds additional years of salary at the highest levels (often 2.5 x starting salary in a Canadian University). Frances has a nice chart here. The short term implications are stark:

Such a pay structure can be profitable as long as the pay structure is similar to the one shown in the diagram above, where the high costs of paying workers between 45 and 65 are counter-balanced by the low cost of paying workers between 25 and 45. But if the terms of the employment arrangement were changed so that workers stayed on until 75, the firm's pay structure would no longer be profitable: the costs of paying experienced workers more would exceed the gains from underpaying junior workers.

I think that there is an important balance between job security and balancing out employment contracts. In this case, due to regulatory changes, I think it would make a lot more sense if tenure elapsed at the traditional retirement age. In this case we have the reverse of what is happening in the United States for teachers -- the employment contract changed in mid-stream. I think it is consistent to argue, in both cases, that a change of contract terms should not result in a windfall for either party unless the change was by mutual consent.

More thoughts on fluoride and lithium

Yesterday, Joseph posted his reaction to the possibility (discussed by Mike Moffatt at Worthwhile Canadian Initiative) of adding lithium to the municipal water supply of cities with low naturally occurring lithium levels. Joseph made some good points but I'd like to go a bit further, starting with the way the original question was stated:

How Much Would You Be Willing to Pay to Reduce Murders by 30%?

I don't have a problem with assigning a dollar value to a life when discussing policy (there's generally no alternative), but I think this is the wrong way of framing the problem for a number of reasons. We are talking about getting a drug to the relatively small portion of the population that needs it by giving it to everybody. There are other options for getting lithium to the people who need it. The water supply approach has the advantage of missing fewer people though not all (I suspect this will make some people, particularly the paranoid, switch to bottled water), but it comes with other concerns.

The obvious comparison here is with fluoride, a comparison that Moffatt himself makes here:

Will it work? I don't know. It seems like it would be worthy a pilot study or two. Although those levels of elemental lithium are believed to be safe, there may be side-effects we are not considering. There are ethical considerations as well, but it is hard to make a case that adding fluoride to the water supply is ethical but lithium is not - and we've been adding fluoride to drinking water for over half a century.

But there are at least two important differences between lithium and fluoride, and both differences have practical and ethical considerations.

First, tooth decay affects most people and virtually all children (whose health society has a responsibility to protect). There was no other practical way to get this treatment to everyone who needed it. Relatively few people need lithium treatment. As mentioned before, there may be other options for getting treatment to those people.

From an ethical standpoint, we are talking about exposing the majority of the population to a heightened level of a chemical that treats a condition that they don't have. This doesn't mean that adding lithium is a bad idea, but it is certainly possible to make an ethical case for fluoride that doesn't hold for lithium.

Add to that the concerns, noted by Joseph, over adding a mind-altering substance to a city's water supply. On the practical side, there have to be unexpected consequences (even with fluoride, there were enough minor side effects to reduce the level used). On the ethical side, you're adding a mind-altering substance to a city's water supply.

I don't know whether we should consider manipulating lithium levels, but I'm pretty sure we should start by acknowledging the complexity of the problem and taking a good look at the alternatives. Though much beloved by economists, this is one situation where "how much would you pay to..." is not going to cut it.

Lithium in the water supply

There is an interesting post over at Worthwhile Canadian Initiative on whether to add Lithium to the water supply:

A city with no-to-little elemental lithium would need to add 70 micrograms/L of elemental lithium to the water supply. Since we're adding lithium carbonate (not pure lithium), we would need roughly 200 micrograms/L. (For reference, there are a million micrograms in a gram).

The average Canadian domestic user uses just over 100,000 L of water a year (Source). At 200 micrograms/L, we would need to add roughly 20 grams per person of lithium carbonate for a total cost of $1.53 per person, or $153,000 per 100,000 people.

The city of Toronto has 3.3 murders/100,000 people (Source). A 30% reduction in this rate would lower it by 1 murder per year per 100,000 people. If our rough back-of-the-envelope calculations are correct and the lithium carbonate method works like the Texas study suggests, $153,000 buys us one less murder. That does not take into account the reductions in rapes, suicides, drug use or thefts.

Will it work? I don't know. It seems like it would be worthy a pilot study or two. Although those levels of elemental lithium are believed to be safe, there may be side-effects we are not considering. There are ethical considerations as well, but it is hard to make a case that adding fluoride to the water supply is ethical but lithium is not - and we've been adding fluoride to drinking water for over half a century.

My first reaction is to note that Lithium is clearly a mind-altering drug and there does seem to be a basic principle that adding mind altering drugs to the water supply is a generally bad idea. Heck, the theme of the Firefly movies (Serenity) was all about a plan like this going very, very wrong. Or, more realistically, one could easily imagine the addition of sedatives to the water as being a response to political unrest (and this would also reduce the murder rate).

Furthermore, the original (ecological) study in Texas was based on naturally occurring Lithium in the water. This brings up two questions to me:

1) Is the distribution of Lithium independent of the characteristics of the inhabitants? This is necessary to make sure that this is not a confounding effect, of some kind (another way to say the same thing is whether water supply is a valid instrument for an instrumental variables analysis).

2) Is the causal agent lithium, or is it another substance that is associated with Lithium?

It is a complex question but it is very effective at making us evaluate our intuitions on public health intervention. Go read . . .

Minimum Wage Thoughts

An interesting point from Worthwhile Canadian Initiative:

That's not to suggest that the minimum wage is necessarily bad for the low-skilled. I suspect most low-skilled workers would rather live in a world with a $10.25/hr minimum wage where it's harder to find worker than a $6.85/hr one where it is easier. But given the possible alternatives (technology, outsource, do without) a higher minimum wage does reduce low-skill employment.

I think that this is a very perceptive point. I have often heard that the minimum wage hurts the working poor because it removes their ability to lower their wage rate to get jobs (by biding under the cost of current employees). But it is an open question whether the cost in employment rates is an aggregate harm to low skilled workers. It might very well be the case that the loss in jobs is more than offset by the higher wages; especially given the low bargaining power of those with few job skills.

I think it is worth reflecting on whether the net impact of minimum wage laws might be positive despite the decrease in net employment among these workers.

Boom, bust and echo

There is a really nice chart in Worthwhile Canadian Initiative (WCI) about youth unemployment over time (in Canada). I was too young to actually be influenced much by the recession in the 1980's but the recession of the early 1990's (about 6% higher than it is today) dramatically influenced my career trajectory. As a young person, I never imagined that I would end up in the United States.

However, poverty has a way of changing opinions and I headed south for employment reasons. I am struck by how different the tenor of the times was: the articles that were linked to in the WCI post suggest that the issue is greed among those in the older generations. But, back in the day, we were much more likely to hear that young people were unmotivated or spoiled.

I think that we are actually seeing signs of the economic power of young people today that the narrative has shifted so far from what it used to be. But, as a card carrying member of Generation X, I can definitely attest that careers were pushed back and we started a lot later than everyone else simply because jobs were so hard to find.

Merit?

From the comments section of Worthwhile Canadian Initiative:

Actually one of my favourite questions on the 2008 US Jump$tart survey is this one:

Don and Bill work together in the finance department of the same company and earn the same pay. Bill spends his free time taking work-related classes to improve his computer skills; while Don spends his free time socializing with friends and working out at a fitness center. After five years, what is likely to be true?

a) Don will make more because he is more social.
b) Don will make more because Bill is likely to be laid off.
c) Bill will make more money because he is more valuable to his company.*
d) Don and Bill will continue to make the same money.

Not at all obvious to me that (c) is the right answer.

[Note: the * next to (c) indicates that it is the correct answer for the key.] I can certainly think of examples where this answer would seem to be contradicted by empirical reality. And that is before one worried about outsourcing or what happens if the company completely changes software platforms in a major re-org.

The post and comments are worth reading, throughout.