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.