As you are probably aware, an Italian court has reinstated a verdict of Guilty on Amanda Knox and Raphael Sollecito. My guess is that Knox will be able to avoid being extradited to Italy, but Sollecito has already been taken in. This whole post is based upon the assumption that both Knox and Sollecito are completely innocent of the crime. From the reading I've done on the case (the Wikipedia page and a couple of pro-guilt and pro-innocence sites) this seems pretty obvious. To claim that their guilt is "beyond reasonable doubt" is stupid and, in view of the fact that it condemns them to a decade or more in prison, evil. In this post I am more interested in the motivations of various people than in rehashing the evidence.
First, there's the police. I have low prior expectations of the honesty and commitment to epistemic rationality of police in general (combination of a state license to use violence and a lack of accountability) and given the mire of corruption that is Italy, these expectations dip even lower. (There's an anarchist slogan that the state hates organised crime because it doesn't like having to face competition; in the case of the Sicilian Mafia, I would suggest that this is pretty literally true). Why are they pursuing a case against two clearly innocent people? Presumably because they have a theory and because changing your mind is difficult, often painful. People in general don't like to admit they are wrong, and the police are presumably more comfortable sending innocent people to prison than they are practising good epistemic hygiene.
What about the judges and lawyers involved in the case? Lawyers are another group who I would tend to be suspicious of, and this wouldn't be the first time that lawyers have taken advantage of a case to make vast amounts of money.
The judges are less obvious. This whole post is speculation, and given that I have limited knowledge of the Italian legal system I don't hold out much hope of being right in this particular guess.
The jury, I guess, are just subject to many of the common biases that affect us. I remember that, before I read about the actual evidence, I just blithely assumed that Knox was basically guilty. There are a whole load of pro-authority biases we tend to suffer from, and these would encourage the idea that "If the police say they're guilty, then I'm sure they must be guilty." At least part of the motivation for this assumption was that Kercher was British ("us") and Knox was American ("them"), and it's at least possible that some members of the jury hold anti-American sentiment similar to that which I used to hold. Overconfidence bias almost certainly plays a role; and then finally there is the determined campaign of character assassination to which Knox has been subjected.
Finally, what about Kircher's family? Her brother and sister were at the trial, and their lawyer described the re-conviction as "a victory for justice". It clearly isn't - indeed, it's a travesty of justice that Knox and Sollecito have been imprisoned. Their imprisonment does not bring Meredith back. I can understand the desire for revenge, but a) it's not a very healthy desire and b) Knox and Sollecito are innocent, so it's not revenge. It seems to me that Kircher's family, who must surely be familiar with the evidence, are morally reprehensible for endorsing the continued persecution of innocents. Perhaps not as reprehensible as any of the parties with actual power, but then again one shouldn't expect much good from police.
Is it reasonable to describe all of these people as morally reprehensible? I'll grant an exemption to the jury - most people (regardless of intelligence) have no idea how to weigh evidence and they are just people who have been forced into this. But otherwise, these are people who for the sake of not admitting that they were wrong are willing to subject two innocents to decades of imprisonment. And I believe we need to have more shaming of people who use their own poor methods of reasoning as an excuse to force their views on others.
A Persian Cafe, Edward Lord Weeks
Friday, 31 January 2014
Monday, 27 January 2014
The (biggest) Problem with Statistical Significance
Statistical Significance is the standard test of whether a study or experiment in science or social science provides enough evidence to support a conclusion. The basic idea is that in testing some hypothesis H1, you start by assuming a null hypothesis H0. H0 is essentially the negation of H1: for example, if the hypothesis to be tested is that eating deep-fried Mars bars increases one's risk of heart disease, then H0 is that it doesn't.
Having made this assumption, we of course wish to disprove it. To this end we conduct an experiment (or get hold of data forming a natural experiment) which tests a prediction we can make based upon H0 - in the deep-fried Mars bars example, this might be that there should be no correlation between consuming deep-fried Mars bars and suffering from heart disease. If the result of the experiment would have a less than 5% (or, if we're being more stringent, 1%) chance of happening given the truth of the null hypothesis then we are allowed to reject it and conclude in favour of the truth of H1.
To see the problem with this, consider this xkcd comic:
Having made this assumption, we of course wish to disprove it. To this end we conduct an experiment (or get hold of data forming a natural experiment) which tests a prediction we can make based upon H0 - in the deep-fried Mars bars example, this might be that there should be no correlation between consuming deep-fried Mars bars and suffering from heart disease. If the result of the experiment would have a less than 5% (or, if we're being more stringent, 1%) chance of happening given the truth of the null hypothesis then we are allowed to reject it and conclude in favour of the truth of H1.
To see the problem with this, consider this xkcd comic:
Call the evidence - in this case, the output of the neutrino detector - E. Our hypothesis to test, H1, is that the sun has exploded. H0 is that the sun has not exploded. The probability of an event or of the truth of a proposition is denoted by P(event or proposition).
The statistical significance test "works" by finding P(E, conditional upon H0 being true). However, this represents a fundamental confusion, because that isn't what we ought to be interested in: we really want to know P(H1, conditional upon E being true) - that is, the probability of the hypothesis itself, rather than that of the evidence.
How do we find this, though? The answer is through Bayes' Theorem, a simple mathematical equation discovered by the Reverend Thomas Bayes (1701-1761). It is as follows:
P(H1 given E) = P'(H1) x P(E given H1)
P'(H1) x P(E given H1) + P'(H0) x P(E given H0)
Where P'(H1) and P'(H0) are our previous estimates of the probabilities of H1 and H0, the probabilities we attached to these before the experiment, generally referred to as our priors. (Where do our priors come from? That's a deep and involved question, upon which I do not feel qualified to pass even the slightest comment).
In the sun example, then, suppose our prior for "the sun has exploded" is one in a million. Then
P(sun has exploded) = P'(H1) x P(E given H1)
P'(H1) x P(E given H1) + P'(H0) x P(E given H0)
= (one in a million) x (one)
(one in a million) x (one) + (999,999 in a million) x (one in thirty-six)
Which works out at somewhat less than one in a million, but still very unlikely. In real life, our prior for the sun having exploded would be well under one in a million.
So the result of this is that statistical significance can give credence to ridiculously unlikely views. But the mistake involved is subtle - my guess is that most people give a less than 1% chance to the idea that another person can read their minds and yet if this happened...
... you wouldn't be inclined to count it down to blind luck.
My new favourite book of the Bible
One of the reasons I enjoyed The Great Escape was the specific passages we were studying. The first four sessions - Friday and Saturday evenings, plus two sessions Saturday morning - were looking at the opening chapters of the Book of Hebrews. After this the speaker left in order to preach at his home church on the Sunday morning, and so we had a talk looking at the implications of what is possibly my single favourite verse - Philippians 1:21, "For me to live is Christ, and to die is gain". The talks were very thought provoking - the suggestion that "we fear death because, deep down, we realise that it is not natural" brought to mind Nick Bostrom's Fable of the Dragon Tyrant (animated version here). Now that I think back to it I'm also thinking of the naturalistic fallacy appeal to nature; then again, Fallacy Fallacy.
But I digress. Why did I enjoy reading from the book of Hebrews so much? Because it makes claims, and backs them up with evidence. I should clarify by this that I don't mean scientific or historical claims, but about points of doctrine. That said, every claim is backed up by at least one direct quotation from the Old Testament. I'd like to quote the entire first chapter, but I'm not certain how copyright applies to translations. A brief look at the NIV website suggests I'm not providing enough original comment on this post to be able to reprint a full chapter, so I'll just invite you to read it here.
I have frequently heard said things to the effect that the Christian merit of a church is identical to the extent to which it relies on the Bible. I think that this understates the role of critical reason - the Bible can be completely infallible, and yet we can still be prone to misunderstand it - but there is certainly a great deal of truth to that statement. So it is a delight to see theology being done by direct reference to scripture, as a divine example as to how we should do our own biblical analysis.
But I digress. Why did I enjoy reading from the book of Hebrews so much? Because it makes claims, and backs them up with evidence. I should clarify by this that I don't mean scientific or historical claims, but about points of doctrine. That said, every claim is backed up by at least one direct quotation from the Old Testament. I'd like to quote the entire first chapter, but I'm not certain how copyright applies to translations. A brief look at the NIV website suggests I'm not providing enough original comment on this post to be able to reprint a full chapter, so I'll just invite you to read it here.
I have frequently heard said things to the effect that the Christian merit of a church is identical to the extent to which it relies on the Bible. I think that this understates the role of critical reason - the Bible can be completely infallible, and yet we can still be prone to misunderstand it - but there is certainly a great deal of truth to that statement. So it is a delight to see theology being done by direct reference to scripture, as a divine example as to how we should do our own biblical analysis.
Sunday, 26 January 2014
I'm back!
Back both to the blog and in Manchester. I haven't been writing much here recently due to exams, and then with exams finished I spent this weekend on The Great Escape, the church students' weekend away. I enjoyed the weekend, there was lots of great teaching and I have a whole host of thoughts I intend to write down here over the next few days. It was also fun spending a whole weekend with a number of friends who I generally see only once or twice a week. The food was good, the walking path was disappointing but usable.
Wednesday, 8 January 2014
Unfunded Liabilities
Historically, governments - including liberal, democratic governments - have done some terrible things and committed horrible injustices. The victims of these injustices (or, in many cases, their descendants) clearly deserve compensation, so clearly the government should give them money.
Except the government doesn't have money of its own. The money it receives comes from taxpayers, and in most cases it is not at all clear that taxpayers can reasonably be expected to pay. I see two reasons why a taxpayer might have an obligation to contribute to compensation: first, that they are somehow morally responsible for the injustice, and second that they have (involuntarily) benefited from the injustice. (Actually, there is sort-of a third - that taxpayers have consented to the State, and that part of what they have consented to is paying for its cock-ups, but apart from the general implausibility of non-hypothetical consent based arguments this just seems like a very ad hoc argument. Moreover, if the State were actually committed to paying compensation for every single one of its historical injustices with a traceable victim or descendant of victims, then even ignoring administration costs this would be so expensive that I really can't see anyone consenting to paying the bill, even in light of all of the other supposed benefits of the State.)
Moral responsibility: where to begin? Well, first note that the average person has essentially no power over what their government does, due to a mixture of large population size and the actual power being held by civil servants, politicians and various other interests. Second, this does not help explain any duty to pay compensation for anything which happened before the taxpayer in question was able to vote. That said, we might be able to justify a policy of holding actual politicians responsible for their mistakes, and if necessary selling them into slavery into to pay for any injustices they have ordered.
As for benefiting from the injustices? It is rare to find a clear-cut case of this. The biggest injustices I can think of committed by governments which are, in some form, still around today include:
Except the government doesn't have money of its own. The money it receives comes from taxpayers, and in most cases it is not at all clear that taxpayers can reasonably be expected to pay. I see two reasons why a taxpayer might have an obligation to contribute to compensation: first, that they are somehow morally responsible for the injustice, and second that they have (involuntarily) benefited from the injustice. (Actually, there is sort-of a third - that taxpayers have consented to the State, and that part of what they have consented to is paying for its cock-ups, but apart from the general implausibility of non-hypothetical consent based arguments this just seems like a very ad hoc argument. Moreover, if the State were actually committed to paying compensation for every single one of its historical injustices with a traceable victim or descendant of victims, then even ignoring administration costs this would be so expensive that I really can't see anyone consenting to paying the bill, even in light of all of the other supposed benefits of the State.)
Moral responsibility: where to begin? Well, first note that the average person has essentially no power over what their government does, due to a mixture of large population size and the actual power being held by civil servants, politicians and various other interests. Second, this does not help explain any duty to pay compensation for anything which happened before the taxpayer in question was able to vote. That said, we might be able to justify a policy of holding actual politicians responsible for their mistakes, and if necessary selling them into slavery into to pay for any injustices they have ordered.
As for benefiting from the injustices? It is rare to find a clear-cut case of this. The biggest injustices I can think of committed by governments which are, in some form, still around today include:
- Colonialism, in particular the slave trade and the scramble for Africa c.1870-1900
- Various wars
- Immigration restrictions
- Various measures by nanny states, moralising states and surveillance states (in which category I include racially and sexually motivated discriminatory measures such as Jim Crow laws and the widespread persecution of homosexuals and of various religious groups)
It seems unlikely that most Britons benefited from the slave trade. Certainly a minority did - embarrassingly perhaps, John Locke (he of the "natural rights") was among them - but the wealth of the First World is due to industrialisation, not slavery or colonialism. In fact, the one group who clearly have benefited are in fact the descendants of the people trafficked to the Americas. This doesn't make the initial injustice okay, but I would suggest we apply something like the Advantage Rule from football.
Wars do not tend to enrich the winning nation. There are thousands of people killed and injured, there are billions of productive man-hours foregone to soldiering and to armaments/materiel production.
Perhaps the majority of the absolutely vast benefits from open borders would accrue to those allowed into richer countries, but it seems unlikely verging on completely implausible that none of them would accrue to the native population. I for one look forward to the day when all of my housework is done by cheap immigrant labour.
The final category of injustices which I have outlined tends to be perpetrated against the native population. Hence in many cases it would simply be a case of I-pay-the-government, the-government-gives-me-the-same-money-back-minus-administration-costs. But even if this weren't the case, who are the supposed beneficiaries? These kinds of measures are (at least officially) supposed to help the people they target.
So we're left with something of a quandary: there are many people deserving compensation, and no-one with an apparent duty to pay it (other than politicians, and from their own pockets rather than through taxation). This is an unpleasant situation, so to finish I'll quote David Henderson, talking about the late economist Walter Oi:
Wars do not tend to enrich the winning nation. There are thousands of people killed and injured, there are billions of productive man-hours foregone to soldiering and to armaments/materiel production.
Perhaps the majority of the absolutely vast benefits from open borders would accrue to those allowed into richer countries, but it seems unlikely verging on completely implausible that none of them would accrue to the native population. I for one look forward to the day when all of my housework is done by cheap immigrant labour.
The final category of injustices which I have outlined tends to be perpetrated against the native population. Hence in many cases it would simply be a case of I-pay-the-government, the-government-gives-me-the-same-money-back-minus-administration-costs. But even if this weren't the case, who are the supposed beneficiaries? These kinds of measures are (at least officially) supposed to help the people they target.
So we're left with something of a quandary: there are many people deserving compensation, and no-one with an apparent duty to pay it (other than politicians, and from their own pockets rather than through taxation). This is an unpleasant situation, so to finish I'll quote David Henderson, talking about the late economist Walter Oi:
The second story begins with a phone call I received from Walter when I was a senior economist with President Reagan’s Council of Economic Advisers in the early 1980s. A government commission looking into the World War II imprisonment of all Japanese-Americans living on the West Coast had just come out with a report, and its recommendation was that each person imprisoned be compensated with a check for $20,000. Walter wanted me to get him a copy of the report.When I had first met Walter, while interviewing at Rochester, I had followed my curiosity. I have learned that, contrary to what almost all my elders told me when I was growing up, people generally love to talk about themselves, even about sensitive issues, if you ask them with some sensitivity. I had asked Walter if he had been imprisoned as a child during the war. He had been. He reminisced talked about being taken prisoner by the U.S. government when he was 13 years old and, before being shipped inland, living with his family for the first few days in a horse stall at the Santa Anita race track in Los Angeles. He had some pretty strong feelings about his imprisonment. I told Walter I would get him the report and then asked, “So what do you think of the commission’s recommendation?”“I’m against it,” he snapped. He then went on to tell me that yes, the Japanese Americans were treated unjustly, but that the best thing to do for Japanese Americans was to move on and not create a new government program.
Tuesday, 7 January 2014
Review of Tangled
Last night I watched Tangled on Netflix, and having very much enjoyed it I thought I'd review it here.
I won't go through the plot in great detail, you can read it on Wikipedia if you haven't seen it yourself. This is more a collection of my thoughts on various bits of the film.
First, there's a philosophical question of who owns the magical, life-giving plant. If you believe that Gothel has a good claim to the plant, then she has a strong claim against the King and Queen to be compensated for removing her source of eternal life - ultimately, for killing her.
Near the beginning we are introduced to Rapunzel. What a girl! Pretty, nice singing voice, good at art, strong moral code (at least with regard to promises), strong-willed, enjoys dancing, and best of all she knows how to deal with intruders. (Oh, and remarkably logical with regard to her usage of Flynn when she has him captured). Flynn/Eugene is a lucky guy.
I enjoyed the sequence in the Snuggly Duckling pub. You have a room full of ruffians and quite possibly outlaws, and they are portrayed as good people. Indeed, everyone in the film seems to have a clear motive or dream, whether it's wealth, love, revenge, extended life and youth, or just to see "the lights".
Fourth, how feasible are prying pans as weapons in the real world? There's a common misconception about sword-fighting (that is, real sword-fighting, not fencing) exemplified by the phrase "a clash of blades" . If you block your opponent's sword with your own, then both swords will quickly go blunt. Ideally one would use both a sword and shield, attack with the shield, and use the sword to stab the opponent once their defences are down. In the absence of shields for either combatant, stabbing becomes high priority. A sufficiently resilient frying pan might be used feasibly as both a mace and a shield, but would suffer from a short reach. There'd be no worry of it going blunt, at least. Perhaps the biggest risk would be that the enemy could grab it and wrench it out of your hands. I'd guess it probably wouldn't be all the good, but still I'd take a frying pan over a switchblade any day.
The lanterns are very nice. Apparently in real life they're a far-eastern tradition, we should totally copy that.
All that subtext relating to virginity! Even if Mother Gothel were not an abusive kidnapper, there would be a huge problem with her parenting in that she prohibits Rapunzel from taking any risks at all. The rest of the movie, however, seems to advocate the extreme opposite, of taking wild risks with regard to your personal life as a teenager/young adult. Rapunzel runs off with a guy she's never met before, they go off in a boat together to watch the lanterns, they release their lanterns together, almost-kiss and then she gives him the crown he's been after all this time (Mother Gothel having warned her "He's only after one thing... You give him that crown and he'll no longer have any interest you," or words to that effect). And okay, immediately after that he suddenly seems interested in something else entirely and runs off away from her, but it turns out that he is actually trying to save her and they eventually end up married, happily ever after. No. Girls, if you want a relationship with a guy, and then you sleep with him and suddenly he's distracted and runs off... you probably made a mistake in sleeping with him. He's not trying to save you both, he was genuinely after only one thing, i.e. sex. Even perpetually-single virgins such as I know that. In that sense, I don't think that this is necessarily a positive message Disney is promoting - there is a fine balance to be trod between enjoying yourself, gaining experience of the world and staying safe and it doesn't seem obvious that downplaying the risk of the first and demonising advocates of the latter is a useful signal to send to children.
The whole tear-healing thing seemed rather deus ex machina to me. It turns out, however, that this is a reference to the original story by the brothers Grimm, in which this mechanism happens to repair the Prince's eyes after they are pierced by thorns. The original also featured teen pregnancy but little else to concern, which marks it as remarkably mild by the standards of historical culture. There are some brutal songs celebrating domestic violence, and anyone who thinks of Shakespeare as good, clean fun has clearly never read him.
The end really put me in mind of a gospel classic entitled "Soon and very soon". I can't find any sufficiently celebratory performances on Youtube, so you'll have to sit through mine. (Technical note: that is, when I can sort out the upload, the server keeps disconnecting, possibly as a public service to protect you from my playing).
I recommend the film to anyone reading this, and I intend to watch it again.
PS. I forgot to mention the music. It's by Alan Menken so of course it's good, but he has written better. "I've Got a Dream" was very fun, as noted above.
I won't go through the plot in great detail, you can read it on Wikipedia if you haven't seen it yourself. This is more a collection of my thoughts on various bits of the film.
First, there's a philosophical question of who owns the magical, life-giving plant. If you believe that Gothel has a good claim to the plant, then she has a strong claim against the King and Queen to be compensated for removing her source of eternal life - ultimately, for killing her.
Near the beginning we are introduced to Rapunzel. What a girl! Pretty, nice singing voice, good at art, strong moral code (at least with regard to promises), strong-willed, enjoys dancing, and best of all she knows how to deal with intruders. (Oh, and remarkably logical with regard to her usage of Flynn when she has him captured). Flynn/Eugene is a lucky guy.
I enjoyed the sequence in the Snuggly Duckling pub. You have a room full of ruffians and quite possibly outlaws, and they are portrayed as good people. Indeed, everyone in the film seems to have a clear motive or dream, whether it's wealth, love, revenge, extended life and youth, or just to see "the lights".
Fourth, how feasible are prying pans as weapons in the real world? There's a common misconception about sword-fighting (that is, real sword-fighting, not fencing) exemplified by the phrase "a clash of blades" . If you block your opponent's sword with your own, then both swords will quickly go blunt. Ideally one would use both a sword and shield, attack with the shield, and use the sword to stab the opponent once their defences are down. In the absence of shields for either combatant, stabbing becomes high priority. A sufficiently resilient frying pan might be used feasibly as both a mace and a shield, but would suffer from a short reach. There'd be no worry of it going blunt, at least. Perhaps the biggest risk would be that the enemy could grab it and wrench it out of your hands. I'd guess it probably wouldn't be all the good, but still I'd take a frying pan over a switchblade any day.
The lanterns are very nice. Apparently in real life they're a far-eastern tradition, we should totally copy that.
All that subtext relating to virginity! Even if Mother Gothel were not an abusive kidnapper, there would be a huge problem with her parenting in that she prohibits Rapunzel from taking any risks at all. The rest of the movie, however, seems to advocate the extreme opposite, of taking wild risks with regard to your personal life as a teenager/young adult. Rapunzel runs off with a guy she's never met before, they go off in a boat together to watch the lanterns, they release their lanterns together, almost-kiss and then she gives him the crown he's been after all this time (Mother Gothel having warned her "He's only after one thing... You give him that crown and he'll no longer have any interest you," or words to that effect). And okay, immediately after that he suddenly seems interested in something else entirely and runs off away from her, but it turns out that he is actually trying to save her and they eventually end up married, happily ever after. No. Girls, if you want a relationship with a guy, and then you sleep with him and suddenly he's distracted and runs off... you probably made a mistake in sleeping with him. He's not trying to save you both, he was genuinely after only one thing, i.e. sex. Even perpetually-single virgins such as I know that. In that sense, I don't think that this is necessarily a positive message Disney is promoting - there is a fine balance to be trod between enjoying yourself, gaining experience of the world and staying safe and it doesn't seem obvious that downplaying the risk of the first and demonising advocates of the latter is a useful signal to send to children.
The whole tear-healing thing seemed rather deus ex machina to me. It turns out, however, that this is a reference to the original story by the brothers Grimm, in which this mechanism happens to repair the Prince's eyes after they are pierced by thorns. The original also featured teen pregnancy but little else to concern, which marks it as remarkably mild by the standards of historical culture. There are some brutal songs celebrating domestic violence, and anyone who thinks of Shakespeare as good, clean fun has clearly never read him.
The end really put me in mind of a gospel classic entitled "Soon and very soon". I can't find any sufficiently celebratory performances on Youtube, so you'll have to sit through mine. (Technical note: that is, when I can sort out the upload, the server keeps disconnecting, possibly as a public service to protect you from my playing).
I recommend the film to anyone reading this, and I intend to watch it again.
PS. I forgot to mention the music. It's by Alan Menken so of course it's good, but he has written better. "I've Got a Dream" was very fun, as noted above.
Against State Provision of Public Goods
Suppose that there is an expanse of land, a small part of which is prone to flooding. Obviously no-one likes having their house flooded, and so people avoid building houses on the flood plain and instead they all live elsewhere.
Gradually, the population grows and so there is greater pressure on the land. People start to think about building houses on the flood plain. But they are still wary of flooding. The problem is, of course, one of public goods. Building flood defences would protect numerous houses, but there would be no way to charge anyone who refused to pay.
Except... at this moment, there is. The houses have not yet been built, which makes it highly feasible for a single entrepreneur to buy up an area of flood plain sufficient for building numerous houses. He then builds flood defences and sells off the land at a vastly higher price than that for which he bought it.
But what if this isn't the scenario, and the houses have already been built? This could happen in a number of ways: perhaps there was an implicit state subsidy for living on the flood plain through the guarantee of being rescued for free by emergency services. Perhaps people didn't mind being flooded quite so much when they had fewer possessions, but as material wealth increases so does the cost of being flooded. Perhaps there was a genuine market failure with poorly-designed incentives at an insurance company. The point is that it is now infeasible to buy up the land and then sell it at a higher price. People are not likely to be willing to to sell their own house and then buy it back at a higher price. Moreover, this wouldn't even overcome the public goods problem now, because someone could hold out on selling and still free-ride on their neighbours paying (indirectly) for the flood defences.
This is the point at which many people - including people who are generally rather pro-market - would call "Public Goods Problem" and call the state in. I'll admit that it took a fair bit of thinking for me to work out the solution, and there are still a few kinks to be worked out. The solution I came up with - there may be others - lies in insurance.
Let the cost of insuring a house against the risk of flooding be P1. Let the cot of insuring a house against all other risks against which it is worth insuring the house be P2. Let (the cost of erecting flood defences, divided by the number of households benefiting from the defences) be P3.
The prevailing market rate for insurance will be P1 + P2. This means that an insurance company (which we shall call Flood Plain Insurance Ltd, or FPI) could make a profit by offering a price P4 to all people on the flood plain, where (P2 + P3) > P4 > (P1 + P2). (What if such a price does not exist? I'll get to that later). People will flock to buy insurance from FPI due its lower prices; once everyone (or nearly everyone) has transferred to FPI, they build flood defences. The cost of insurance to the company is reduced to (P2 + P3), and so the company makes a profit.
What if there is no price which will allow this profit? If there is no price P4 satisfying (P2 + P3) > P4 > (P1 + P2), then this means that
(P2 + P3) <= (P1 + P2)
Remove P2 from both sides:
P3 <= P1
And we see that the building flood defences is at least as costly as insuring the houses, if not more expensive. Under these circumstances, it is not worth building the flood defences.
Given all this, we must ask: why doesn't this already happen? Why don't insurance companies already carry out this kind of scheme? I see three possible explanations:
First, if the barriers take a number of years to pay off in terms of reduced cost of insurance and insurance is bought on an annual basis, then FPI may not gain sufficient revenue in one year to pay for the defences profitably. This is a problem because once the defences are built, any company can charge a reduced insurance fee since there is little/no risk of flooding regardless of who sells you your insurance.
The most obvious fix to this would be for the insurance company to insist on selling five or ten year insurance contracts - freely transferable to anyone who buys the house - as a condition of the cheaper prices. My suspicion is that some home-owners would prefer to have greater flexibility and would refuse such a contract, which would threaten this idea. Selling insurance futures would probably be too complicated for most people's liking. I don't know how exactly to solve this, but I would suggest that it is likely to be a small problem - hopefully the people who refused long-term contracts would be a minority.
The second potential problem is transaction costs. FPI would need to advertise its insurance to everyone on the flood plain and go through the whole process of signing everyone up. The government, by comparison, could just build the defences.
That said, there are also costs to the government doing things. Most obviously, problems like the dead-weight cost of taxation, but the government also needs to carry out a cost-benefit analysis whereas FPI needs only turn a profit. It seems unlikely that it is genuinely cheaper for the government to build the defences than for FPI to do so. If transactions costs are what stops the defences from being built, then perhaps we have to just accept that no system is perfect, not even the free market, and that in this case the benefits of flood defences over insurance are probably fairly small given that there is no profit to be made.
Finally, there exists an implicit state subsidy to your house being drowned, in that you can be confident that emergency services will come to rescue you and the cost is spread across the entire population. Putting flood defences in place would abolish this subsidy, and so the subsidy acts to reduce the private gain from putting up flood defences. There are several ways this could be fixed.
My preferred solution from reasons of both justice and efficiency, but one which would be politically impossible, is for the state to simply pull out of the business of rescuing people from flooding. Alternatively, the state could levy extra taxes on populations at risk of flooding, with the tax abolished if flood defences are put up. This would be less unpopular, but there might be problems in implementation - what, precisely, counts as sufficient flood defences for the tax to be lifted? Finally, the most politically feasible option: state subsidy for building of flood defences, up to the cost of rescue services. This third solution would represent a subsidy to the local population whether or not they put up flood defences, but at least it would sort out the misaligned incentives problem.
In any case, it is almost never going to be a good idea for central government to intervene. Apart from the standard problems with public goods interventions (see this and, indeed the post you are currently reading) there is a problem in economics traditionally illustrated using diners at a restaurant. If each pays his own bill, then each pays for what she/he believes will bring best value for money. If the bill is split between many of them, then since each now pays only a fraction of the price for his/her own bill, there is little incentive to keep the costs down. A man who would have bought himself a simple steak and chips with a Stella Artois to drink might well go for a full mixed grill with side salad and Peroni when most of the bill is paid by others. Similarly, if a centralised government - that is to say, the population of taxpayers at large - bears the cost of local projects (not just of flood defences, but also bridges, libraries, concert halls, etc) then we will end up with far more of these things than we need.
In conclusion, there is little to no reason why government should need to provide flood defences, and to the extent that there is this is as a result of previous mistaken government intervention.
See also: http://cafe-regence.blogspot.co.uk/2013/08/every-market-failure-is-business-idea.html
Gradually, the population grows and so there is greater pressure on the land. People start to think about building houses on the flood plain. But they are still wary of flooding. The problem is, of course, one of public goods. Building flood defences would protect numerous houses, but there would be no way to charge anyone who refused to pay.
Except... at this moment, there is. The houses have not yet been built, which makes it highly feasible for a single entrepreneur to buy up an area of flood plain sufficient for building numerous houses. He then builds flood defences and sells off the land at a vastly higher price than that for which he bought it.
But what if this isn't the scenario, and the houses have already been built? This could happen in a number of ways: perhaps there was an implicit state subsidy for living on the flood plain through the guarantee of being rescued for free by emergency services. Perhaps people didn't mind being flooded quite so much when they had fewer possessions, but as material wealth increases so does the cost of being flooded. Perhaps there was a genuine market failure with poorly-designed incentives at an insurance company. The point is that it is now infeasible to buy up the land and then sell it at a higher price. People are not likely to be willing to to sell their own house and then buy it back at a higher price. Moreover, this wouldn't even overcome the public goods problem now, because someone could hold out on selling and still free-ride on their neighbours paying (indirectly) for the flood defences.
This is the point at which many people - including people who are generally rather pro-market - would call "Public Goods Problem" and call the state in. I'll admit that it took a fair bit of thinking for me to work out the solution, and there are still a few kinks to be worked out. The solution I came up with - there may be others - lies in insurance.
Let the cost of insuring a house against the risk of flooding be P1. Let the cot of insuring a house against all other risks against which it is worth insuring the house be P2. Let (the cost of erecting flood defences, divided by the number of households benefiting from the defences) be P3.
The prevailing market rate for insurance will be P1 + P2. This means that an insurance company (which we shall call Flood Plain Insurance Ltd, or FPI) could make a profit by offering a price P4 to all people on the flood plain, where (P2 + P3) > P4 > (P1 + P2). (What if such a price does not exist? I'll get to that later). People will flock to buy insurance from FPI due its lower prices; once everyone (or nearly everyone) has transferred to FPI, they build flood defences. The cost of insurance to the company is reduced to (P2 + P3), and so the company makes a profit.
What if there is no price which will allow this profit? If there is no price P4 satisfying (P2 + P3) > P4 > (P1 + P2), then this means that
(P2 + P3) <= (P1 + P2)
Remove P2 from both sides:
P3 <= P1
And we see that the building flood defences is at least as costly as insuring the houses, if not more expensive. Under these circumstances, it is not worth building the flood defences.
Given all this, we must ask: why doesn't this already happen? Why don't insurance companies already carry out this kind of scheme? I see three possible explanations:
First, if the barriers take a number of years to pay off in terms of reduced cost of insurance and insurance is bought on an annual basis, then FPI may not gain sufficient revenue in one year to pay for the defences profitably. This is a problem because once the defences are built, any company can charge a reduced insurance fee since there is little/no risk of flooding regardless of who sells you your insurance.
The most obvious fix to this would be for the insurance company to insist on selling five or ten year insurance contracts - freely transferable to anyone who buys the house - as a condition of the cheaper prices. My suspicion is that some home-owners would prefer to have greater flexibility and would refuse such a contract, which would threaten this idea. Selling insurance futures would probably be too complicated for most people's liking. I don't know how exactly to solve this, but I would suggest that it is likely to be a small problem - hopefully the people who refused long-term contracts would be a minority.
The second potential problem is transaction costs. FPI would need to advertise its insurance to everyone on the flood plain and go through the whole process of signing everyone up. The government, by comparison, could just build the defences.
That said, there are also costs to the government doing things. Most obviously, problems like the dead-weight cost of taxation, but the government also needs to carry out a cost-benefit analysis whereas FPI needs only turn a profit. It seems unlikely that it is genuinely cheaper for the government to build the defences than for FPI to do so. If transactions costs are what stops the defences from being built, then perhaps we have to just accept that no system is perfect, not even the free market, and that in this case the benefits of flood defences over insurance are probably fairly small given that there is no profit to be made.
Finally, there exists an implicit state subsidy to your house being drowned, in that you can be confident that emergency services will come to rescue you and the cost is spread across the entire population. Putting flood defences in place would abolish this subsidy, and so the subsidy acts to reduce the private gain from putting up flood defences. There are several ways this could be fixed.
My preferred solution from reasons of both justice and efficiency, but one which would be politically impossible, is for the state to simply pull out of the business of rescuing people from flooding. Alternatively, the state could levy extra taxes on populations at risk of flooding, with the tax abolished if flood defences are put up. This would be less unpopular, but there might be problems in implementation - what, precisely, counts as sufficient flood defences for the tax to be lifted? Finally, the most politically feasible option: state subsidy for building of flood defences, up to the cost of rescue services. This third solution would represent a subsidy to the local population whether or not they put up flood defences, but at least it would sort out the misaligned incentives problem.
In any case, it is almost never going to be a good idea for central government to intervene. Apart from the standard problems with public goods interventions (see this and, indeed the post you are currently reading) there is a problem in economics traditionally illustrated using diners at a restaurant. If each pays his own bill, then each pays for what she/he believes will bring best value for money. If the bill is split between many of them, then since each now pays only a fraction of the price for his/her own bill, there is little incentive to keep the costs down. A man who would have bought himself a simple steak and chips with a Stella Artois to drink might well go for a full mixed grill with side salad and Peroni when most of the bill is paid by others. Similarly, if a centralised government - that is to say, the population of taxpayers at large - bears the cost of local projects (not just of flood defences, but also bridges, libraries, concert halls, etc) then we will end up with far more of these things than we need.
In conclusion, there is little to no reason why government should need to provide flood defences, and to the extent that there is this is as a result of previous mistaken government intervention.
See also: http://cafe-regence.blogspot.co.uk/2013/08/every-market-failure-is-business-idea.html
Sunday, 5 January 2014
Inaugural Link Post
Loads of people seem to do link posts. I thought I'd do one, although many of the links probably aren't very interesting to most people. I've highlighted in green the ones which the casual reader may care to look at.
I've never visited this stretch of canal while it's snowing. It looks rather less drab. Also on the subject of canals, I'd almost be interested in seeing this and these pictures are worth a quick look even if you're not interested in canals.
While watching the early part of Sherlock's Best Man Speech, I felt the need for a mini Julia Galef to pull out of my pocket at appropriate moments.
More pretties!
I wouldn't say conversation is really this bad, but it's an excellent poem.
SOCIALISM!!! Was writing a response, but realised it would need a whole post of its own; this may or may not be appearing shortly (I feel that rather too many of my recent posts have been politics-related). Most obvious point to make in response: distinguish between socialism the system of government (stupid, evil, anyone seriously advocating it needs to get their head checked) and socialism the social movement (sometimes stupid, sometimes evil, sometimes both, and the bits which both meant well and thought well - Benjamin Tucker, for example - are now far more part of the libertarian tradition).
This is what happens when you attempt a Sicilian Dragon without learning the theory. (I'm playing as black, just to be clear. For future reference in case the game disappears from the archive, I get mated in 23 moves by a player rated 200 points below myself).
More culture which ought to be better known. My favourite songs are The Young Slaver (track 2) and The Sea and the Sky (track 11).
I'm uncertain as to whether I should read this until I've got my (firmly old-Keynesian) economics modules for my degree done. Also, I'd be interested in a non-partisan discussion of this topic: I honestly have idea to what extent the piece is fair to the writer's opponents, a group with whom it would be ideologically convenient for me to disagree and therefore one I should be extra careful to make certain that if I reject them, it is for the right reasons. On a related note, this really made my New Years Day.
Feminist ideas can be just as screwed-up as the ideas they replace.
I've never visited this stretch of canal while it's snowing. It looks rather less drab. Also on the subject of canals, I'd almost be interested in seeing this and these pictures are worth a quick look even if you're not interested in canals.
While watching the early part of Sherlock's Best Man Speech, I felt the need for a mini Julia Galef to pull out of my pocket at appropriate moments.
More pretties!
I wouldn't say conversation is really this bad, but it's an excellent poem.
SOCIALISM!!! Was writing a response, but realised it would need a whole post of its own; this may or may not be appearing shortly (I feel that rather too many of my recent posts have been politics-related). Most obvious point to make in response: distinguish between socialism the system of government (stupid, evil, anyone seriously advocating it needs to get their head checked) and socialism the social movement (sometimes stupid, sometimes evil, sometimes both, and the bits which both meant well and thought well - Benjamin Tucker, for example - are now far more part of the libertarian tradition).
This is what happens when you attempt a Sicilian Dragon without learning the theory. (I'm playing as black, just to be clear. For future reference in case the game disappears from the archive, I get mated in 23 moves by a player rated 200 points below myself).
More culture which ought to be better known. My favourite songs are The Young Slaver (track 2) and The Sea and the Sky (track 11).
I'm uncertain as to whether I should read this until I've got my (firmly old-Keynesian) economics modules for my degree done. Also, I'd be interested in a non-partisan discussion of this topic: I honestly have idea to what extent the piece is fair to the writer's opponents, a group with whom it would be ideologically convenient for me to disagree and therefore one I should be extra careful to make certain that if I reject them, it is for the right reasons. On a related note, this really made my New Years Day.
Feminist ideas can be just as screwed-up as the ideas they replace.
Thursday, 2 January 2014
Historic Warlords
One of the more memorable scenes from Monty Python and the Holy Grail (and later Spamalot) is a conversation between King Arthur and a group of anarcho-syndicalist peasants who refuse to recognise Arthur's authority over them.
There are several copies of the scene on Youtube, including one titled "Monty Python- The Annoying Peasant". I can't help but think that the person who uploaded that video has rather missed the point of the scene. The point, as I see it (with my of course completely unbiased perspective) is to hang a lampshade on the fact that the protagonist is ultimately a violent warlord. For all of his talk of Divine Right and Noble Questing, he has no popular consent and in no way represents an institution created for the common good of society.
The fact is, of course, that more than 99% of historical governments have been violent impositions. Even if you believe that the modern state is legitimate and wields genuine authority, you will surely not believe that this was the case in more than one or two nations before the mid-19th century. (David Hume famously savaged the view that living within a country's borders constitutes tacit consent to its laws on the ground that there was simply no alternative for most people; his argument does not have quite the same force today in that it is "merely" extremely difficult, rather than impossible, to emigrate, for most people. In any case, tacit consent has critical problems). Perhaps for utilitarian reasons they might still have been justified on balance, but there were still many state actions with no possible utilitarian justification.
This all seems fairly obvious once you think about it, but I suspect it is something we do not really think about. Historical figures are still referred to as Kings and Queens as a term of honour. We take pride in the past successes of our countrymen at subjugating foreigners through military force. Being a Princess is seen as dreamy and romantic, rather than being a way of living off industrialised theft. I suspect a lot of this is due to the sentiments discussed in Daniel Klein's magnificent The People's Romance: Why People Love Government (as Much as They Do), although there are plenty of possible contributing factors. Existing states have little incentive to promote the view that past states were illegitimate and people would have been justified in resisting them, since it could easily lead to more people questioning the moral foundations of the modern state.
Here's another question: suppose you believe the modern state to be legitimate, but accept that the historical state was a violent, coercive and ultimately evil institution. At what point did the transition come? I ask this not as an attack on the modern state, merely out of interest. Obviously the answer will depend on what you personally see as the justification for the state. The most obvious answers for the UK would be 1215 (Magna Carta, although this is very shaky for anyone below the rank of baron), 1485 (end of the Wars of the Roses, one of the most visibly destructive and anti-utilitarian consequences of British governance), 1832 or 1867 (First and Second Great Reform Acts, to improve democracy), and 1908 or 1945 (the People's Budget and the introduction of the Welfare State, for the more Rawlsian-inclined thinker).
The fact is, of course, that more than 99% of historical governments have been violent impositions. Even if you believe that the modern state is legitimate and wields genuine authority, you will surely not believe that this was the case in more than one or two nations before the mid-19th century. (David Hume famously savaged the view that living within a country's borders constitutes tacit consent to its laws on the ground that there was simply no alternative for most people; his argument does not have quite the same force today in that it is "merely" extremely difficult, rather than impossible, to emigrate, for most people. In any case, tacit consent has critical problems). Perhaps for utilitarian reasons they might still have been justified on balance, but there were still many state actions with no possible utilitarian justification.
This all seems fairly obvious once you think about it, but I suspect it is something we do not really think about. Historical figures are still referred to as Kings and Queens as a term of honour. We take pride in the past successes of our countrymen at subjugating foreigners through military force. Being a Princess is seen as dreamy and romantic, rather than being a way of living off industrialised theft. I suspect a lot of this is due to the sentiments discussed in Daniel Klein's magnificent The People's Romance: Why People Love Government (as Much as They Do), although there are plenty of possible contributing factors. Existing states have little incentive to promote the view that past states were illegitimate and people would have been justified in resisting them, since it could easily lead to more people questioning the moral foundations of the modern state.
Here's another question: suppose you believe the modern state to be legitimate, but accept that the historical state was a violent, coercive and ultimately evil institution. At what point did the transition come? I ask this not as an attack on the modern state, merely out of interest. Obviously the answer will depend on what you personally see as the justification for the state. The most obvious answers for the UK would be 1215 (Magna Carta, although this is very shaky for anyone below the rank of baron), 1485 (end of the Wars of the Roses, one of the most visibly destructive and anti-utilitarian consequences of British governance), 1832 or 1867 (First and Second Great Reform Acts, to improve democracy), and 1908 or 1945 (the People's Budget and the introduction of the Welfare State, for the more Rawlsian-inclined thinker).
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