Yikes

I hadn't realized it has really been over a year since my last posting. I am going to be experimenting with bringing this blog back to life in 2011.

I knew it!

This just in from the Sydney Morning Herald:

SYDNEY commuters are paying the second-highest public transport fares in the world.

It is nice to have a gut instinct confirmed without having to do any of the research myself. The comparisons appear to be made on a metric that Sydney transport actually does reasonably well at too: the cost of one 10K ride.

There are two really big problems that I see with Sydney pricing schedules that this doesn't capture: (1) there are no free transfers and the system is on a hub-and-spoke, for the most part, so unless you want to go to the CBD (which is a pretty boring place!) you get to pay the full fare all over again, as well as spending lots of time to-ing and fro-ing and waiting for your second or third ride; (2) fees rise quickly as you go further. Sydney is a sprawling city. I live in one of the closest residential 'hoods to downtown, and yet, that is 3 bus zones away from where I can catch a bus/ferry to other parts of the city. Now, I cheat (too much of the system is on-your-honor!) and use a 2 zone pass most of the time. I plan on using my thickest Southern drawl if I ever get caught. But to purchase a ticket that will legally allow me travel that third zone (an extra couple of stops!) is almost twice the cost.

Furthermore, in general, the system isn't particularly well integrated. While it is possible to buy an unlimited card that can be used on all modes of public transport, there are no other cross-transport options. Unlimited is great if you are a heavy user, but since I walk almost everywhere I go, I would do better buying multiple ride tickets -- which I do for the bus and the ferry (separately). But I can't buy a multiple ride train ticket, and I can't buy a multiple ride ticket that doesn't care about the mode. So I have to carry lots of paper tickets (easy to lose in a large purse!) and I have to spend a lot on the expensive single ride tickets to take the train anywhere.

Now that is all complaining about me, but it does mean that Sydney makes it harder for two important classes of people to use public transport: those who would use it regularly but not as intensively as a daily commuter and poor people who live far away from the center. So the pricing is regressive, when it should be progressive, and it makes the trade-off between using a car versus public transport less obviously in favor of public transport.

I expect that this is one of those situations where if the city were smart about pricing, mostly lowering the marginal costs, and maybe adding some non-spoke routes, usage would increase dramatically, and congestion on the roads would ease some. All good reason to stop spending government money on roads and spending it on transport instead! (Of course, Sydney is currently doing the opposite--when will people learn that increasing road capacity almost never reduces congestion???)

Fun with death statistics

Two somewhat related points about thinking about death rates. One fun, one slightly more serious.

1. I was in the chiropractor's waiting room today, reading some health magazine. They had an article about various habits that are potentially lethal: smoking, drinking, obesity, driving, sex, etc. I'm sorry I forget which blurb had this little gem, but they were talking about some risk group (obese people? heavy drinkers? But definitely not an age group) : "Group X is 44% more likely to die by any cause than Group Y." So watch out fat/drinking/whatever people: you have a 144% chance of dying some day!!!!

2. Did a silly and wandered over to Megan McArdle's page and read her most recent piece on healthcare. I've been following her writings via John Halbo's rebuttals at Crooked Timber and guess I thought I might see what comes from the horse's mouth. As far as I can figure, her argument is that national healthcare will kill all medical innovation, so by covering the uninsured today, we are killing untold millions into the future by preventing the discovery of whatever medicine or technique would have saved their lives had we only seen the light and not reformed the US healthcare system. Her evidence was that:

If the innovation spurred by the private sector could save 1% of the people who currently die each year, the number of people we'd be killing along with the private sector would necessarily be hugely larger than the number of people we'd save by implementing such insurance, since the most grotesquely exaggerated estimates released by interest groups pin the latter figure at around 0.8% of deaths in America (a much smaller number than the number who are estimated to be killed by access to the system--nosocomial infections and treatment side effects). That's even before you consider the people in other countries who would be saved by these advances.

But there are all sorts of logical mistakes contained in this argument. Starting with that 0.8% figure: according to National Coalition on Health Care (yes, one of those interest groups), in 22,000 "excess deaths" can be attributable to lack of insurance in the 25-64 age group. If one takes the CDC's estimates of total deaths in the US and do the math, you do indeed come up with 0.8% (or a bit more, but I may be comparing the wrong years). But is this the right statistic? Some portion of those deaths are those who, like my dearly departed grandfather, lived to 100+ and died well and happy. A big part of the moral offense of the uninsured is that these are young people dying unnecessarily. Less than 25% of the deaths in the US in 2006 were in the age group 25-64. None of this is to say that deaths after 64 don't matter, but I think it is important to keep the scale consistent. These 22,000 deaths are 3.7% of their age group's mortality. So even if you were to be very pessimistic about the number's accuracy, and were to cut it in half, you still have 1.5% of this younger age group dying prematurely due to lack of insurance. And this is just the uninsured, not the underinsured who die unnecessarily sometimes as well.

The comparison statistic of 1% of lives saved (deaths postponed) is, as far as I can tell, delivered directly from McArdle's butt. (pe-ew!) So there is no way on thinking properly about the best statistic to use: number of life-years saved versus life-years lost. You'd have to kill a lot of 99 year olds with lost innovation to make preventing the deaths of this group amoral from a utilitarian perspective.

Then, of course, is the notion that all innovation would come to a screeching halt. I find it bizarre to think that we are that inept at problem solving, and further that the current R&D system is so fabulous. Money drives lots of choice for erectile dysfunction and cholesterol drugs, not so much rapid rates of brand new life savers. I expect that the bulk of medical research that is really adding significant life-years to the US is done in the research labs of universities and the NIH. Megan sneers, but I sneer back.

And then, finally, she commits the sin of partial equilibrium analysis. Yes, research on pharmaceuticals in the US might just decline some. And yes, currently the rest of the world free-rides on our research, funded by our paying far more for our drugs than anyone else (though, as an expat, I should say YOU are paying more for your drugs--mine are quite cheap, thank you!) But, if the US money train stops, do you think Australia and France will just say "darn it! I guess we'll never see another medical advance again!"? Really? Maybe something good, like getting the rest of the world to chip in some, would come of our finally refusing to put up with it all.

To do

I really must write that paper on reputation-reliant oligopolies.... Went to a lovely seminar today on banks that reminded me all over again about how relevant a paper this will be!

Data porn

"Data porn" is the presentation of meaningful data in a visually interesting and absorbing way. The New York Times has a great example. The only problem is that as far as I could figure there was no way to embed it directly here.

Laughing at Laffer

This is making the rounds of the intertubes today, but I cannot resist piling on, if only to help illustrate the knee-jerkiness of resistance to all things government by econo-ideologues:

If you like the Post Office and the Department of Motor Vehicles and you think they’re run well, just wait till you see Medicare, Medicaid and health care done by the government.

This said by Art Laffer of the Laffer curve, the knee-jerk bit of econ theory used by said knee-jerkers to taxes...

I really wish there were an intellectually honest opponent. It would be so much more interesting.

UPDATE: Just in case it isn't obvious to all already, Medicare and Medicaid are already "done" by the government. And the Post Office is a weird hybrid government sponsored corporation, so not entirely government. And the DMV is a state responsibility, so it isn't entirely obvious that state government and federal government should be lumped together. Just sayin'.

The public servant tax

What is in a name?

I was listening to NPR this morning and again hearing about some state or other that is trying to furlough its workers because the legislature refuses to raise taxes on anyone, because as anyone with half an econ brain knows that taxes hurt the economy ... right? But of course, a furlough is really just a surtax on public servants. Sorry for the lack of precision, but I think the story I was half-listening to was talking about 12 days of furlough, presumably spread over the year. That is equivalent to approximately a 5% tax on pay.

And while some particulary uncompassionate out there may take satisfaction in the idea of their DMV workers paying for needed revenue, we are also taxing "good guys" like teachers and firefighters. All of whom can little afford a tax hike of 5%. You may not like the DMV worker, but he or she buys stuff with her pay check, and one way or the other his or her purchasing habits stimulates whatever private sector job the anti-tax folks work at.

This kind of tax is both unfair and a bad idea for the economy.