Monday, January 19, 2015

Anti-Vaccine Movement as Class Conflict

A small measles outbreak at Disneyland (for more information, turn to this reporting) could reinject (or provide the first injection of) real talk into the anti-vaccine movement currently sweeping the nation. Maybe. Maybe it changes nothing. What's true is that the movement is racist and classist. Truth.

Two groups of people fail to fully vaccinate their children. According to the New England Journal of Medicine, the first type have kids that are more likely "to be white, to belong to households with higher income, to have a married mother with a college education, and to live with four or more other children." Suburban housewives? A nice portion of the equation. They also cluster, and probably hate science ($5 says if you know an anti-vaccer, they either don't believe in evolution, or know GMO corn causes cancer. Or both). Why should we care? Aside from the child endangerment they're wantonly engaging in, there's a second group of people who don't vaccinate: poor, predominantly minority families.

Aside from Michelle Bachmanns' crazy ramblings (does she have any other kind?), I was largely unaware that there was actually an anti-vaccination movement. Then this winter I started following IMGUR, and noticed a lot of posts seeking to disprove fallacies pushed by this anti-vaccination agenda. So I started looking into it, discovered these enclaves of anti-vaccer mothers in hippie dippie enclaves like Boulder, Portland, and Seattle, and became frightened. And frustrated. Low-income families have traditionally had issues with proper vaccination. There are a list of problems: low information, cost, transportation access, and a lower likelihood to follow up for a missed appointment due to additional life burdens not found in the cul-de-sacs of Boulder.

When someone brings measles onto a playground, two kids are going to get sick. One has anti-vaccer parents screaming, "bring it on!" Then they take their kid to a well-financed hospital and receive appropriate medical care in a sterile environment. The other kid has access to shit medical care, lives in an unhygienic and overcrowded community, and suffers greater harm. Generally speaking, rich people not vaccinating their kids doesn't put other rich kids at risk. Just the poor ones. Class conflict.

Sunday, January 4, 2015

Tragedy of the Commons in State Tobacco Revenue

Following years of battle that consumed millions of dollars in legal fees, "Big Tobacco" signed an agreement with the states in 1998 that promised money to state governments as compensation for the health care costs associated with smoking. The fascinating aspect of the agreement was that it didn't merely cover costs already incurred and some static agreement about the future. Rather, it promised payments to states in perpetuity. An escrow account currently receives 18.8482 cents per cigarette sold, divided among the signatories to the Master Settlement Agreement. Forever.

Here's where your classic tragedy of the commons kicks in: the more cigarettes sold nationwide, the more money an individual state accrues. Yet states often rely on tobacco taxes to help backfill their general funds. And because cigarettes are easily vilified in the political and media spheres in the 21st century, this is just about the easiest tax lawmakers can impose. These taxes, combined with increased health concerns, legally curtailed advertising avenues, and a general shift in societal attitudes, have greatly reduced the incidence of tobacco use in the United States.

It's impossible to know what impact cigarette taxes alone have played in the decline of active smokers. And some of the tobacco tax revenues are dedicated to anti-smoking campaigns. But peel away everything else, and you're left with a classic bit of game theory:
A state can heighten its tobacco revenue by increasing taxes, but but in doing so reduces cigarette sales. A reduction in cigarette sales decreases overall payments to the national escrow account that pays out to signatories of the Master Settlement Agreement. Of course, reduced escrow payments can be compensated for by further increasing cigarette taxes, which further reduces cigarette sales, which reduces escrow payments...

Some lawmakers truly wish to see the elimination of smoking. This desire has led to the proliferation of smoking bans, advertising restrictions, and commercials with people talking through holes in their throats. Others prefer to use tobacco as a cash cow. For these policymakers, there's a fascinating intellectual exercise out there just waiting to be picked: Is there a cigarette tax that maximizes revenues (escrow account receipts plus individual state remittances)? Variations in smoking rates among the states would complicate such a calculation, but there could be an answer. And if every state signed on to an agreement not to raise taxes by more than this amount, they could all be profit maximizers. Of course, it just takes one financial crunch to make a lawmaker in New Jersey propose a $1/pack increase, and then the tragedy rears its ugly head.

*A fascinating development in the public bond market has rendered this idea mute. Several states immediately went out and sold their future revenues for some upfront cash in agreements that made about as much sense as calling J.G. Wentworth as soon as you win the lottery. They've already spent their escrow payments, and have little concern for what happens in the future. Tobacco bonds truly are fascinating - and ProPublica has done a solid job covering them. Click here if you have even the faintest interest in learning more.

The prospectus Bear Stearns sent New Jersey to acquire their tobacco settlement funds.

Friday, December 26, 2014

A Vehicular Race to the Bottom

This idea inspired by Matt Johnson's entry on Syracuse. It's an quick read (like, one-page memo quick), but if you can't bring yourself to visit his great site, the premise is thus: Syracuse was partially built on being the home of Carrier air conditioners, and eventually became the "Air Conditioning Capital of the World." The city was spurred on by the economic activity of the air conditioning industry. However, air conditioning allowed the south to become much more productive, and as jobs moved south, the industry that helped build Syracuse also contributed to its demise.

Where else can success lead to demise? The car industry. I'm unabashedly one of those dreamers who sees an interstate featuring self-driving cars in 2020 - and with them, the fall of private car ownership. While some will still own cars, being able to schedule a pick up and drop off from automated Uber should become cheap, simple, and ubiquitous once automated cars become the norm. The demise of private car ownership would be disastrous for car companies.

The company that puts the best automated car on the road will make bank. It will also be responsible for a marked decrease in overall industry profits. That's why the most fascinating research in this technology is happening in Silicon Valley - not Detroit. GM and Ford will step up and provide the vehicle for this technology, but it will be a reluctant union.

Thursday, December 11, 2014

College Football Playoff Committee Gets Caught in Headlights, Ohio State Wins

Did the oversaturation of dumb sports network talking heads lead to the Big 12's exclusion from the 2014 college playoffs to Ohio State's benefit? Probably. There's a thesis statement in there, but I'm too lazy to rewrite it.


We're still on the subject of the playoff, but I'm jumping to Florida State for a moment. Florida State went undefeated this year and will (rightfully, IMO) be featured in the four-team playoff. The issue isn't their inclusion, but their seeding that interests me. Florida State is the number three seed and will face Oregon in the first round. That's fine and dandy, and everyone is happy.

Consider this scenario: there is no playoff, and America only gets a championship game. The Committee only gets to choose the top two teams in the nation to play each other. In this scenario, Oregon would not be ranked ahead of Florida State. Crazy? Absolutely. Factual? Darn tootin'. 

Alabama is a powerhouse, only lost one game, and beat up on Mizzou to win the SEC. So we collectively acknowledge the Tide's rightful place in the championship game. But who should Alabama play? The Committee collectively believes that Oregon is the better team. It won a better conference, had the better nonconference showing (most notably a win over Michigan State), and is just easier to love than the boys from Tallahassee. But you can't leave out an undefeated team[1]! And the Committee wouldn't leave them out. If it was tasked with simply picking two teams, the fear of backlash would force an Alabama-Florida State game. BECAUSE YOU CAN'T LEAVE AN UNDEFEATED TEAM OUT OF THE CHAMPIONSHIP GAME. Yet once again, the nation largely agrees that it was appropriate to seed Oregon over Florida State, and Vegas is backing this decision by declaring Oregon a decent favorite. So the perceived best team is influence by the format of the playoff system.

BACK TO OUR THESIS (Blame the Media?)

The above logic, while lacking unassailability, should still leave you nodding your head. And if you believe that Florida State's ranking could be influenced by the playoff format, then we accept that the committee is subject to outside influence (everything is subject to outside influence). And this influence was TCU's downfall.

TCU fielded an excellent team this year, and finished the season 11-1. Its only loss was to another 11-1 team - Baylor. However, due to the circumstances of that game, a superior nonconference schedule, and other factors, the Playoff Committee unapologetically ranked TCU ahead of Baylor for the last month of the season. Which is fine. A worse team can beat a better team. It happens every week. It probably happened in this instance. Subscribing to a head-to-head preference system simply takes you down a transitive property rabbit hole. The Committee's obligation remains to rank the teams in order of best to worst, and it refused to subscribe to the head-to-head fallacy.

The Committee was steadfast until the final rankings, at which time inexplicably dropped TCU from #3 to #5 (even after crushing Iowa State 51-3 despite playing its reserves with extremely conservative playcalling). Florida State, winning a 37-35 nailbiter over Georgia Tech, moved up from #4 to #3. To round out the four-team field, Ohio State's dominance over Wisconsin won it the #4 spot, placing a team from the oft-mocked Big 10(+4) in the inaugural college football playoff. So after being on the outside looking in for so long, Ohio State played itself into the final spot.

Or did it? The week before the final standings were announced, I couldn't listen to sports radio without a talking head relentlessly espouse the head-to-head fallacy. The tide of public opinion was turning, and Baylor's hiring of a lobbyist/PR firm fanned the flames. The Committee was in a no-win situation: placing TCU ahead of Baylor places the nation in an uproar as the head-to-head fallacy has successfully entered the mainstream groupthink. Voting for TCU is now akin to voting for the Affordable Care Act in a district convinced the legislation contains panels of death (this is actually a solid analogy, for while several more factors are at work that should legitimately influence your opinion on the matter, the only thing people latched on to was a lie). 

Yet if the Committee placed Baylor ahead of TCU, where's the rationale? Nothing happened that weekend to justify the move - while TCU rolled, Baylor struggled greatly with a home game against K-State. Solution: leave them both out. No one is focused on the fact that Baylor jumped TCU in the final standing - they're focused on the two Big 12 teams being left out. Except that these are two small schools that play in the Big 12. While the Big 12 remains a better conference than the Pac-12, Big 10, or ACC, it lacks any coastal media presence. Plus, these are small schools! They're not Ohio State! No one actually cares about Baylor!

I'm not alleging any grand conspiracy - these things are often done without conscious devilishness. Yet the outcome remains the same. In the last week of the season, it suddenly became unfashionable to consider TCU better than Baylor. But you couldn't put Baylor in the playoff and leave out TCU. What's a Committee to do? Alabama and Oregon are considered the best two teams, and take seeds #1 and #2. They can't leave Florida State out (undefeated fallacy?). This leaves one spot for two deserving teams, and they offer a damned if you do and damned if you don't option. Unless you give that spot to Ohio State instead. Problem solved. So when Ohio State gets stomped by 20 points, just remember that it should have been TCU and Baylor playing that game. But they can't both play. So it's easier to just put the Buckeyes there.

I started off blaming the media. Maybe I should blame the spinelessness of the committee.

[1]  unless it's Baylor or a non-BCS program

Friday, November 14, 2014

Every Story Has Two Sides (Earned Income Tax Credit Edition)

America's favorite welfare policy is the Earned Income Tax Credit (commonly referred to as the EITC). I can't verify this, but I'm sure a good poll would back up the assertion. The basics of the credit are that low-income earners receive additional money from the government to match wages on a sliding scale. The lower your income, the greater the match (if you're interested yet unfamiliar, the left-leaning Tax Policy Center breaks it down here). The larger question is if this policy is more important to poor people, or corporations.

That seems to be a weird question at first blush - why would a welfare program that costs money (and therefore requires higher taxes) be such a benefit to McDonald's? After all, the primary reason Republicans and Democrats get behind it is that it incentivizes work (you're not eligible for the matching credit if you're not earning wages to match) and the lowest earners get the biggest benefit by ratio (the most goes to those who are the most in need).

But the part that makes the tax credit great is the part that makes it the biggest corporate giveaway. Minimum wage earners are more satisfied with their low wages if the government provides a bit of extra cheddar to supplement income. Remove this subsidy, and earners will either pursue more leisure (following our Econ 102 work/leisure charts) or demand higher wages. And while workers eligible for the EITC have very low bargaining power, the fact remains that money is money. As long as a worker earns X, they're willing to provide Y amount of labor. Take away this government policy (X becomes X - EITC), and Y goes down correspondingly.

Following this line, the government is paying to subsidize willingness to work. Without the EITC, companies would be forced to pay higher wages to receive the same work. In times of high unemployment like 2008 this wouldn't be a concern, but in 2014 unemployment is dropping like a piece of paper (slowly but surely, while floating back and forth in an unpredictable pattern). People are happy working now, but maybe a minimum wage isn't enough in a world without this corporate subsidy. At least when there is greater demand for labor.

None of this is to suggest the EITC is a big corporate giveaway that should be scrapped - indeed, it serves a valuable purpose for people in need. And I'm not singling out big corporations - the small business owner with two low-wage employers struggling to stay open benefits just the same as Subway does. To characterize it as a corporate subsidy is misleading as it's more of an employer subsidy. But it's safe to assume the fast food industry is a lobbyist for the credit; I'm sure that makes for interesting bedfellows.

Every story has two sides.