Wednesday, January 30, 2013

False Positives

Human beings are equipped with superb pattern recognition software, software so good that it can even find patterns that are not there. That makes sense from an evolutionary point of view. Seeing a hidden tiger that is not actually there is a much less costly mistake than failing to see one that is there, so biasing the software in the direction of more of the first kind of error and fewer of the second is good design.

The picture above shows is a series of concentric circles. But as I look at it, I see other patterns. With only a little effort, it turns into a series of clockwise spirals. Or counter-clockwise spirals. Or …  . It feels as if my software is thrashing around, trying out one pattern after another.

This bias in our software may help to explain otherwise puzzling features of human life. Religion imposes a pattern on reality, whether or not there is a pattern. With or without religion, a central human drive is to find meaning in life.

Whether or not it is there.

Why Does Anyone Fly Business Class?

I have done it twice in recent years, once to New Zealand and once to London, both times at someone else's expense. The main advantage was a seat comfortable enough to sleep in, fully horizontal in the case of the long flight to New Zealand, reclined in the case of the shorter London flight. I could imagine paying a hundred dollars or so for that, plus a little more for dinner, drinks, an electric socket at my seat to keep my laptop charged, and extra attention—perhaps as much as two hundred dollars each way, four hundred for the round trip. I no longer remember what the cost was for the flight to New Zealand, but I am pretty sure the difference between business class and tourist was considerably more than that. The London flight was more recent—I am currently on it—and the difference was about four thousand dollars.

Which raises the puzzle of the title. I am a reasonably well off inhabitant of one of the world's richest countries. Where do the airlines of the world find enough customers willing to pay ten times what I would be willing to pay to fill their business class (and first class) seats?

One possible answer is that I am not as well off as I think I am, relatively speaking, that there are a lot of people a lot richer than I am, willing to pay a much higher price for comfort. Another is that many people are more profligate—alternatively, less stingy—than I am. A third is suggested by my own experience—that a lot of those people are not paying for their own tickets. But that only replaces the question of why they are willing to pay the price with the question of why someone else is.

Perhaps that someone else is flying the passenger somewhere to do something important the next day, and having him rested and competent is worth the price. I doubt that can be the explanation for very many passengers. I expect that, in most cases, the cost of an extra day or two of recovery time would be considerably less than the extra cost of a business class fare.

Perhaps the explanation is the value of status. Passengers paying a business class fare are buying the feeling that they are Very Important People. Organizations that pay a speaker's fare are demonstrating that they consider him a Very Important Person, and the fact that their speakers are Very Important People makes them Very Important Organizations. That fits my later observation—I am now revising this post on my return flight—that several of the organizations I gave talks for over the past two weeks put me and my wife up in much fancier, and much more expensive, hotels than we would have chosen for ourselves.

Perhaps I'm just a tightwad. Or perhaps, as my wife suggests, the advantage of business class seats is greater for passengers who are more than five feet three and a half inches tall.

My Europe Trip: Final Thoughts

I am writing this in an airplane on my way home; we land in a little less than an hour. Over the past sixteen days I have given thirteen public talks, mostly lectures, a few discussions. Most were set up by libertarian organizations, broadly defined—liberal in the current European sense of the word. The four largest had audiences of about two hundred people each.

There were two related features of my experience that I found encouraging, beyond the size of the audiences. One was that in almost every case most of the audience, so far as I could tell, had come to hear me, not to hear my father’s son. The other was that, with only a few exceptions, the audience contained a lot of people familiar with libertarian ideas. The libertarian movement is alive and well in Europe.

Although a total audience of over a thousand people feels like a lot of people, it is a very small fraction of a population of several hundred million; I am not counting on a European shift to anarcho-capitalism, or even minarchism, in the immediate future. But at least the ideas are out there.

And to shift to a topic that has gotten a good deal of attention lately in the libertarian blogosphere, my wife’s observation of the larger audiences was that women made up about twenty percent. The one exception was my final talk, given to an audience not of libertarians but of college students interested in economics. That audience was almost half women.

Tuesday, January 29, 2013

Heathrow Notes

We flew from Barcelona to London today and observed a number of things in the process of getting from our plane to our hotel near Paddington.

1. Non EU passengers are required to show their passports, although it is not entirely clear what purpose that accomplishes. The line for doing so took about half an hour to get through. My rough estimate, based on two different calculations (one from the number of people in the line, one from the rate at which they were being processed), was that the line used up about fifty person hours per hour. Assuming that’s the average for twenty hours or so a day, it comes to a thousand person hours a day. Valuing the average traveler’s time at ten dollars an hour, that is ten thousand dollars a day worth of waiting time. To be fair, many of those people, including us, have checked luggage, so some of the time would be spent waiting for luggage if it was not spent waiting to have someone glance at their passports, so call it five thousand dollars a day of wasted time. The airport functions 365 days a year, so upwards of a million and a half dollars a year.

Eliminating that waste would not require more person hours of checking, since  in any case they have to check everyone’s passport. It would require the airport to put more people on at busy times, fewer when not many passengers are coming through. I find it hard to believe that the cost of such an arrangement would come to anything close to the value of the time saved.

2. There are three ways of getting from Heathrow to Paddington station. The very slow (and inexpensive) way is by tube and takes an hour or so. The very fast (and expensive) way is the Heathrow Express. The intermediate solution is Heathrow Connect, which takes about half an hour to make the trip—fifteen minutes longer than the express—and costs about ten pounds less. No doubt there are passengers who are happy to pay ten pounds to save fifteen minutes, but I suspect they are in the minority.

Coming through the airport, there are lots of signs for the Heathrow Express, none or almost none for the Connect. The ticket machines that sell tickets for both are labelled “Heathrow Express,” although when you use them they give you a choice. Only by speaking to an airport staff person did we discover that in order to get to the Connect from Terminal 5, where we came in, we had to take the Express (at no cost) to Terminals 1-3 and transfer there to the Connect.

The Express was about one tenth full when it departed for Paddington. I think it is pretty clear that those responsible are doing their best to get people to use it instead of the much less expensive and only slightly slower alternative. The Express runs more frequently than the Connect, every fifteen minutes instead of every half hour, which saves some additional time—but that is a decision made by those running it, and presumably part of the reason it runs mostly empty.

My calculations on the passport line assumed that passengers valued their time at ten dollars an hour. If we figure that the Express saves fifteen minutes of travel time and, on average, seven and a half minutes of waiting, the total saving is worth about four dollars and costs about sixteen. One could make the tradeoff look better by assuming a higher value for time, but that would make the passport line look correspondingly worse.

The common element that explains both observations is that decisions on running the airport are being made by people who put very little value on either the time or the money of the airport’s customers.

To close a negative post with a little sunshine, Barcelona was well worth visiting. Our hotel was somewhat less expensive than the one we are going to in London and somewhat nicer. The food was reasonable and tasty. The old cathedral is a lovely medieval building; the adjacent cloister has been crossbred with a cathedral interior and the combination works. Much of the city architecture is nineteenth century gothic, obviously inspired by surviving real gothic buildings and very attractive. The weather was pleasant. The one disappointment was that the permanent exhibit of the Maritime Museum was closed—it’s apparently being redone—so I didn’t get to see the replica of the galley in which Don John of Austria won the battle of Lepanto.

Obviously  I will have to come back.

Thursday, January 24, 2013

Overcharging: The Aaron Swartz Case

As many readers of this blog probably know, Aaron Swartz, a young, talented, and prominent figure in the internet world, recently committed suicide after being charged with multiple offenses against the Computer Fraud and Abuse Act and threatened, if he refused a plea deal, with a total penalty of fifty years in prison. I did not know Aaron, although we had a friend in common who has expressed his reaction to the tragedy in strong and moving terms. Further, I have no definite view on exactly what the relevant law, on I.P. and on access to computers, ought to be, although I have discussed both in writing and teaching.

What I would like to comment on is the issue of overcharging. In theory, most crimes have a range of possible penalties—one to five years in prison, a fine of a thousand to two thousand dollars, or something similar. In practice, prosecutors can and do make a single criminal act the basis for multiple charges—Aaron Swartz was charged with 13 felonies—with at least the possibility of consecutive sentences, making possible sentences far outside the specified range. One reason to do so is to persuade the defendant to plead guilty to one or more of the charges in exchange for the implicit promise of a shorter sentence, presumably what was happening in the Swartz case. This does not seem like a desirable practice—even when used against less sympathetic defendants. I do not know whether what Aaron Swartz did ought to have been punished at all, but I think it would be hard to find anyone, including the prosecutor, willing to argue that it ought to have received the punishment that the prosecutor threatened to impose.

How might one prevent it? One possibility would be to try to eliminate the practice of plea bargaining. On its face, it is a pretty ugly procedure—among other things, a way of getting an innocent defendant to confess in court to a crime he did not commit in order to avoid the risk of a much more severe punishment. In other contexts that would be described as suborning perjury, itself a criminal offense—in this case by the prosecutor.

Eliminating plea bargaining raises two problems. The first is that it would greatly increase the number of trials, since most criminal cases currently are settled out of court. That could be dealt with either by greatly reducing the number of things treated as crimes—eliminating the war on drugs would be a good first step in that direction—or by substantially increasing expenditure on courts. Courts at present absorb only a very small fraction of government expenditure, so the increase would cost considerably less than many things the government now does and could save money by not doing—such as enforcing drug prohibition.

The second problem is how to do it. Plea bargaining involves only an implicit agreement between prosecutor and defendant, which makes it hard to enforce a rule against it. And it makes little sense to refuse to accept a guilty plea.

One possibility, suggested by the previous paragraph, would be to treat offering a plea bargain as subornation of perjury by the prosecutor and punish it accordingly. A more plausible alternative might be a rule under which a defendant could not plead guilty until the prosecutor had entered his charges and the only guilty plea that the court would accept would be to the offenses as charged.

Short of abolishing plea bargaining, how could we make overcharging impossible, or at least not in the interest of prosecutors? One possibility would be to limit prosecutors to treating a single act as a single crime, although defining what was or was not a single act might raise problems. Alternatively, one might permit multiple charges, but specify that if the defendant was convicted of more than one only the most serious conviction would count. But that would not solve the problem of overcharging on a single charge, treating the computer equivalent of a panty raid  as interstate transportation of stolen property worth more than five thousand dollars (I am thinking of a famous early computer law case; those who have read The Hacker Crackdown may recognize it).

My current research on legal systems very different from ours suggests two approaches  based on the legal system of Periclean Athens, which I sometimes describe as the legal system of a mad economist—ingenious in ways that sometimes probably worked, and sometimes probably did not. One is to punish the prosecutor for a failed prosecution, at least if it failed badly enough. In the Athenian system, which used very large juries, if the (private) prosecutor failed to get at least a fifth of the jurors to vote for conviction he was fined a thousand drachma. A modern equivalent might be a rule under which a District Attorney who failed to convict on more than a specified fraction of his charges, or repeatedly prosecuted charges that resulted in a unanimous jury vote for acquittal, was automatically removed from office. Like the Athenian rule, it would provide a prosecutor an incentive not to make charges that he did not have a reasonably good chance of proving.  Of course, it would also have the disadvantage of giving a prosecutor who had made charges an even stronger incentive than under present rules to convict the defendant, whether or not he was guilty.

An alternative would be the Athenian rule for setting criminal punishment. The prosecutor proposes a punishment, the defendant proposes a punishment, and the jury that has voted for conviction must choose between them. That was, famously, the rule that got Socrates killed. Instead of offering an alternative somewhat milder than execution, such as exile, he first suggested that he deserved a reward rather than a punishment then, at the urging of friends, proposed a fine which his friends were prepared to pay.

Despite the unfortunate outcome in that case, that rule does give the prosecutor an incentive not to seriously overcharge. A jury asked to choose between putting Aaron Swartz in prison for fifty years for what was essentially an act of civil disobedience or giving him a one month suspended sentence and a hundred dollar fine would probably have chosen the latter.

Tuesday, January 22, 2013

European Notes: The Milan Taxi Industry

In Milan, as in New York and some other U.S. cities, the number of taxis is restricted by the local government; each one requires a permit, of which a fixed number are in circulation. In both cities the permits are transferable. In Milan, the price of a permit is more than a hundred thousand Euros; in New York it is a good deal higher than that—currently over seven hundred thousand dollars.

There is one striking difference between the two industries. In U.S. cities—certainly in San Jose, where I live, but I believe also in New York and other large cities—most cab drivers are immigrants. In Milan, they seem to all be natives. The explanation, I believe, is a difference in the regulatory rules and a resulting difference in the structure of the industry. In the U.S., the permits are mostly owned by cab companies, each of which employs multiple drivers, although in New York there are some that are restricted to owner operators. In Milan, no individual or firm is allowed to own more than one permit. The result is that the typical driver is self-employed, owning his own cab and his own permit.

Cab drivers in the U.S. are immigrants because it is a job that does not require a lot of qualifications or capital and pays better to people who work hard—are willing to drive many hours a day. But in Milan, the driver also has to have, or be able to borrow, something over a hundred thousand Euros to buy his permit, plus more money to buy his cab. That prices poor immigrants out of the market.

Self employment has attractions. But in this case, the rule that creates an industry of self-employed cab drivers also eliminates a major employment opportunity for poor people.

European Notes: The Obesity Gap

I've now been in Europe for a little over a week, mostly in London, Zurich and Milan. As of yesterday afternoon, I had not seen a single person who was extremely overweight. In an hour or two walking around a U.S. city I would expect to see several such. 

Yesterday evening, while I was describing my observation to my host, someone entered the restaurant we were eating at whom I would describe as extremely overweight. But that's one out of (I'm guessing) more than a thousand people I have seen over that period.

The obvious explanation is that food is somewhat more expensive in Europe than in the U.S. and incomes somewhat lower, but while obvious I do not think it can be correct. In the U.S., obesity exists all the way through the income scale—I think a little more common at the lower end. I do not believe a poor person in the U.S. can more easily afford to eat a lot than an average person in London, Zurich or Milan.

My current guess is that the explanation is cultural. Perhaps the norms against being very overweight are stronger in Europe, or perhaps some other difference explains the pattern. Readers are welcome to suggest explanations or provide additional observations.

Saturday, January 12, 2013

My Europe Trip

As I mentioned some time back, I'm going to be giving a series of talks in Europe. It occurred to me that it would be worth listing them, in case any readers of this blog were in places where I was going to speak and interested in coming. I have not checked with all of the sponsoring organizations as to which talks are open to the public and which are not, so if you do want to come, check first. Here is my schedule:

1/14: 7 P.M., Libertarian Alliance, London Institute of Education, off Russell square, Rm S 16, Thornhaugh Street, London, WC1B 5EA   

1/15: 2:00 Oxford, Oxford Libertarian Society, Christ Church Rm 1  

1/15: 6:30 London, IEA,  2Lord North St, Westminster  

1/16: 12:30 Buckingham University, Hunter street campus. Anthony the Rothschild building.
Global Warming, Population and the Problem With Externality Arguments

1/16: 6:00 London, Adam Smith institute, National Liberal Club, Whitehall Place, Charing Cross 

1/18: 11:45 Zurich, Avenir Suisse, Zunfthaus zur Meisen 
Market Failure: An Argument Both for and Against Government

1/21: 6:00 Milan, Istituto Bruno Leoni, Residenza Vignale, Via Enrico Toti, 2

1/22: 5 P.M.  Milan, Bocconi University (arranged by IBL)
Market Failure, Considered as an Argument both for and Against Government

1/24: 7 P.M. Madrid, Fundacion Rafael Pino, Paseo de Ia Castellana, 37. 28046 
Market Failure: an Argument both for and Against Government

1/25: 8:00. Madrid, Rojano CenterOpportunities and Threats on Our Technological Future.
1/26: 8 P.M.  Madrid, Juan De Mariana Institute,  Angel Street, 2
General Discussion

1/28: 9 P.M. Barcelona, Restaurant (Saint-Rémy of Barcelona), Carrer Iradier, number 12. General Discussion.

1/29: 6:30 P.M. King’s College, Strand Campus, Strand, London WC2R 2LS;
What Economics Is and Why it isn't Boring

Again, note that, while some of these are open lectures, I don't think all of them are, so you should check with the sponsors if possible. 

Thursday, January 10, 2013

Thank you, Jim

A number of people have written tributes to James Buchanan, the Nobel Prize winning economist largely responsible, with his colleague Gordon Tullock, for public choice theory, the application of economics to politics. As it happens, I owe two debts to him, and it seems an appropriate occasion to acknowledge them.

One debt is for the role he played in my becoming an economist. After I got a doctorate in physics and spent two years as a post-doctoral fellow, I decided to switch fields. Julius Margolis, who ran the Fels Institute of Government at Penn and had seen some of my work, invited me to come there. I spent two years as a post-doc at Penn, a third as a lecturer; during that time I wrote my first econ journal article, an economic theory of the size and shape of nations published in the JPE. 

At some point I met Jim and discovered that we had somewhat similar ideas about applying economics to political behavior, the subject of my article and large volumes of his work. He invited me to come to VPI as an assistant professor of economics. During the next four years, I suspect as a result of his deliberate policy, I taught a wide range of courses, more or less the whole curriculum. Teaching things is a good way of learning them. That, a large chunk of my shift into economics, is one debt.

The other started even earlier. My first book, The Machinery of Freedom, received only one good review—where I define a good review not as a friendly one but as a review which makes the author think. Jim wrote it. A significant part of what will go into the third edition of that book is my response to a problem he pointed out with my exposition and analysis of a system of privately produced law. Readers who do not feel like waiting for the third edition can find the problem, and the response, in several of my webbed talks, including one I gave last year at Buchanan house at George Mason University.

Jim, by then, had retired, so was not at GMU to hear the talk. I planned at some point to send him a link to the recording, or somewhere else where I responded. But I never got around to it. 

And now I can't.

Wednesday, January 02, 2013

How to Jump-Start a Third Party

I recently read a post comparing the UK Independence Party, which describes itself as libertarian, with the US Libertarian Party. The author pointed out that the UKIP is supported by between 7 and 14 percent of the electorate, while the LP was able to get only about one percent of the votes in the most recent presidential election, despite the facts that libertarianism is a more familiar idea in the U.S. and that  the U.S. is in various ways more libertarian than the U.K.

His explanation was that the IP draws its support almost entirely from a single issue—Euroskepticism. A large fraction, possibly a majority, of the electorate is against U.K. membership in the E.U. All three of the major parties are for it. He goes on to argue that, in a world where most people are not very interested in political philosophy, what the IP is doing is the right way for a minor party to become major. Find an issue compatible with your philosophy that a sizable fraction of the population supports but the major parties oppose. Adopt that issue, identify with it, use it to recruit support. Retain the rest of your position, more or less in the background—people who join you for the single issue and have no strong beliefs of their own on the rest of the package are likely to accept it without paying very much attention to it. He offered the Republican party, whose initial issue was opposition to slavery, as a historical example in the U.S.

It seems like a plausible argument, and leads to an obvious question: What issue should the LP, or the libertarian movement more generally, try to claim? The author of the post suggested "economic justice." That strikes me as an unsatisfactory answer. Considered as a slogan, lots of people support it—but so do the major parties. Once you give substance to it, you end up with either something at least one of the major parties supports or with something that not much of the electorate supports. Are there any good alternatives?

One possibility that occurs to me is something along the lines of reducing the deficit or scaling back federal spending. Both parties say they are in favor of those things, but neither  acts that way—the "fiscal cliff" that has just been avoided consisted almost entirely of increases in taxes, with reductions in expenditure estimated in one source I saw at .3% of the budget. Republican proposals for expenditure reduction are reductions in planned increases, not actual reductions, year to year, in what the federal government spends. And my guess is that, not only are proposals by both parties to reduce expenditures, or the debt, or at least the rate at which the debt is increasing, almost entirely bogus, they are perceived as bogus by a sizable fraction of the population.

In which case there might be an opportunity to build a third party around serious proposals to scale back spending and the deficit.

A second possibility is opposition to the War on Drugs. Neither party is willing to adopt that one. In its mildest version, proposals to legalize marijuana, it now appears to be supported by a majority of voters. Perhaps if the LP or some newer attempt in the same direction adopted marijuana legalization as its issue along with less radical reductions in other parts of current anti-drug policies, that would do the job.

Readers are invited to offer other suggestions.

Framing Gay Marriage

I just came across an interesting post by an author in the U.K. He pointed out that gay marriage could be viewed either as an issue of equality or as an issue of freedom. Seen in one way, the argument for it was that homosexual couples were entitled to the same rights as heterosexual couples. Seen in the other, the argument is that people are entitled to marry whom they please. 

It can be viewed either way but, he argued, in practice it was framed as an issue of equality. His explanation was simple. The right, which was against gay marriage, was much more comfortable criticizing arguments from equality than arguments from liberty. The left, which was for gay marriage, was much more comfortable making arguments for equality than making arguments for liberty. So both sides agreed that what the controversy was really about was equality.

I suspect his point is more accurate for the U.K. than for the U.S., that the liberty argument plays at least some role here. But his distinction may be relevant to one feature of the argument as I observe it. In the U.S., one argument against gay marriage is that, if it is accepted, the next step is polygamy. Supporters mostly deny that there is any connection, rather than arguing (as I think they should) that polygamy too should be legal.

If the argument is about equality, one can plausibly deny any link to polygamy on the theory that as long as nobody is entitled to be married to more than one partner at a time, everyone is equal—more plausibly, I think, than one can make the corresponding argument against gay marriage, that everyone is equally entitled to marry a member of the opposite sex. If the argument is about liberty, on the other hand, it would seem to apply just as strongly to the case of polygamy. So in this case, the right seems to prefer to view the case for gay rights as a (mistaken) argument about liberty, and only the left as an argument about equality.

I am curious as to how that part of the argument plays out in the U.K. Readers with expert information are invited to comment. And I may put the question to the author of the post.

Weight Propaganda

A recent article in the Journal of the American Medical Association reports that being overweight, as defined by body mass index, may be good for you—that people in the recommended BMI range are more likely to die ("all cause mortality") than people whose weight classifies them as overweight but not obese. What I found most interesting about the news coverage of the article was the reaction reported—people quoted as criticizing the article without offering any good reason to think it was wrong. From the USA Today story:
Walter Willett, head of the department of nutrition at the Harvard School of Public Health, says the findings are "complete rubbish" because the methodology used in the analysis seriously underestimates "the hazards of being overweight and obese."

Steven Heymsfield, one of the authors on the accompanying editorial in the journal and the executive director of the Pennington Biomedical Research Center in Baton Rouge. "We don't really know the ideal weight for a long life and optimal health. Science is still working that out. But falling in the normal, healthy weight range is still the safest place to be."
Other people offered possible ways of explaining away the result, such as the suggestion that overweight people got more medical attention, but no actual evidence. My impression was that in this case, as in the case of evidence in favor of the moderate consumption of alcohol that I discussed some time back, there is an official truth and a tendency to discount evidence against it. The Heymsfield quote is a nice example of one way of doing so, since it appears to endorse the orthodox view of what people should do while actually saying nothing: Falling in the healthy weight range is the safest place to be—and we don't know what the healthy range is.

A related point is the popularity of the body mass index, along with the use of objective sounding terms ("overweight," "obese," "obesity grade 1," ...) for arbitrary categories. The nice thing about BMI is that it is easy for anyone to calculate, since it is merely weight divided by height. The problem is that it is a poor measure, since people differ in other relevant dimensions, most notably in how wide they are. If your objective to produce accurate information relevant to health, you would want to take that into account. But doing so makes it harder to pressure other people into losing weight, since the more complicated the measure, the easier it is for people who don't want to diet to explain away their weight.

The friend I am currently visiting with tells me that he was offered, by both a doctor and a physical trainer, a simple rule for telling whether you are overweight: Take a deep breath and jump in the water. If you float you weigh too much. The theory, presumably, is that the test measures your average density, that fat is less dense than muscle which is (I'm guessing) less dense than bone, so the test is measuring the relative amount of each in your body. It doesn't work for women, since even women who are not overweight are likely to float.