March 24, 2010

Free Agents and the Free Market

In an article in the Wall Street Journal today, Reed Albergotti writes that eliminating the salary cap on free agents in the NFL hasn’t caused the season to “become the discombobulated cash volcano everyone was hoping for.” Now, I don’t know very much about football, but I do know enough about economics, and I find the author’s conclusion to be economically nonsensical (emphasis mine):

So with apologies to Messrs. Friedman and Hayek, here’s the likely game summary on the free-agent season that was: The free market ended up making the NFL’s players poorer and its owners richer than ever.

Removing a salary cap would not cause salaries to decrease — it would cause them to either increase or remain unchanged. If the salary cap were ineffective (i.e., above the equilibrium price), then removing it would result in no change in salaries. A football team owner is going to hire q* football players and pay them a salary of p* nevertheless. If the salary cap were effective (i.e., below the equilibrium price), then removing it would cause salaries to increase to the equilibrium level.

ineffective_price_ceiling

From what I can tell from the article, the author is incorrectly assuming that the salary cap for football players was effective (i.e., their past salary was below their market value). On the contrary, the salary cap was probably ineffective (i.e., their salary equals their market value), which would explain why nobody is “throw[ing] irresponsibly large sums of scratch at the sport’s top free agents” upon its repeal. This is evidenced by the fact that, while under the cap, many teams hadn’t used up all the funds they had allocated in salaries. According to a recent article in the Post-Dispatch, this group includes the Saint Louis Rams:

The Rams have only about $76 million committed to salaries so far in 2010, and with projections of $30 million or $35 million in cap space when all is said and done.

University of Michigan Student: Census Participation = Cash

Those of you who become physically ill when you watch ads connecting Census participation and government funding might want to skip this post. Everyone else, prepare to be amazed by the most blatant ad for the Census I have ever seen.

The video was produced by a University of Michigan student for a university-sponsored contest. It won second place. In the clip, students gather numbers representing how many people live in their houses — one takes a big “4,” another a “5,” and so on. The students bring their numbers to a bureaucrat and pile them on his desk. He, in turn, pulls a humongous dollar sign out of a drawer and hands it to them. Words flash across the screen, informing viewers that they can “earn money and recognition” for their communities by participating in the Census.

You have to see it to believe it:

What Is the Point of This Interactive Map?

The Census Bureau has created a map that allows you to track Census mail participation rates, which the bureau defines as the percentage of forms mailed back from households that received them. When I read the map this morning, Missouri’s participation rate was 28 percent, well above the national rate of 16 percent. The map also lists areas with the highest participation rates so far; this morning, two small towns in Iowa were tied at 74 percent.

The map is colorful and easy to use. Still, I can’t help wondering why the Census Bureau displays this information so prominently. The Census isn’t a contest in which we try to beat other states. It doesn’t really matter which cities or counties are “ahead” in mailing back their forms.

March 23, 2010

Public Programs Should Substantiate Claims About Child Development

Last week, I blogged about some advice a Parents as Teachers participant received from a program representative. She says she was told that she “needed” to read to her unborn child every day, and that it was important to read the exact same book each time. I criticized this advice as lacking a scientific basis; in addition, it’s liable to provoke anxiety or unrealistic expectations in parents.

This incident brings to mind a program that was introduced in Georgia back in 1998. The state distributed free classical music tapes and CDs to the parents of newborns, in hopes that listening to the music would stimulate babies’ cognitive development.

In both cases, public programs inappropriately extrapolated from scientific research to prescribe parenting behaviors. Babies can enjoy music — and psychologists have debated the existence of a “Mozart effect” — but that does not mean all babies need to listen to CDs for healthy development. Likewise, research shows that fetuses can detect sounds and that young brains learn from repetition, but that does not imply that reading one book every day will be beneficial. It’s worth noting that despite the research on repetition, repetitive exposure to Baby Einstein language videos has been shown not to help babies’ linguistic abilities. The manner of repetition makes a difference. It’s not sufficient for Parents as Teachers to point to studies about repetition in general; the program would have to show that this specific repetitive activity has a positive effect.

It’s been brought up in our comments section that Parents as Teachers might endorse other ways of interacting with fetuses. This could be true. Similarly, if pressed, Georgia’s governor might have been forced to admit that country music has as much chance of promoting development as classical music. But what matters is the advice that was actually conveyed by the program. When participants honestly come away from a class under the impression that they need to do one particular thing — and I have no reason to believe the blogger I linked to was trying to misrepresent Parents as Teachers or make it look bad — we should evaluate whether that activity is as important as the program claimed. If Parents as Teachers never intended to promote one activity over others, then the program needs to do a better job of communicating with parents so they don’t form erroneous conclusions.

March 19, 2010

This City Is Going on a Diet

Here’s an example of an admirable effort to improve public health without spending a dime of government money: On Jan. 1, Oklahoma City Mayor Mick Cornett challenged the citizens of his city to lose 1 million pounds. As part of this initiative, residents can sign up on the mayor’s interactive website, “This City Is Going on a Diet,” which has recipes, exercise tips, and a place for people to track their weight loss, among other helpful tools.

This program caught my eye because the mayor was featured on Fitness magazine’s “Champions of Health & Fitness 2010″ list. As of January, 40,436 residents have lost a collective 519,460 pounds (the mayor himself lost 38 pounds). Restaurants have responded by creating low-cal offerings that they list as “the mayor’s special” on menus (no government mandates required). The best part is that the interactive website was entirely funded by contributors from the private sector. No taxes or bans on unhealthy foods were imposed, and no taxpayer money was spent. As I noted in my last post, the low level of government spending on public health in Missouri doesn’t necessarily have to result in hampering efforts to encourage our citizens to be healthier. Creative, fully voluntary ideas like this one should be encouraged and copied.

A Ban I Actually Support

That would be a ban on red light cameras, which was recently proposed in the Missouri Senate. Although I am not a fan of most rules, I have no problem with the fair enforcement of effective traffic laws. The problem is that red light cameras are not effective in preventing accidents — quite the opposite — and only serve as revenue streams for the cities that install them.

A 2008 study published in the Florida Public Health Review surveyed the literature on red light cameras and found that they actually increased the number of accidents at red light intersections. Here are some of the study’s key findings:

• Comprehensive studies from North Carolina, Virginia, and Ontario have all reported cameras are significantly associated with increases in crashes, as well as crashes involving injuries. The study by the Virginia Transportation Research Council also found that cameras were linked to increased crash costs.

• Some studies that conclude cameras reduced crashes or injuries contained major “research design flaws,” such as incomplete data or inadequate analyses, and were conducted by researchers with links to the Insurance Institute for Highway Safety. The IIHS, funded by automobile insurance companies, is the leading advocate for red-light cameras. Insurers can profit from red-light cameras, since their revenues will increase when higher premiums are charged due to the crash and citation increase, the researchers say.

Langland-Orban said the findings have been known for some time. She cites a 2001 paper by the Office of the Majority Leader, U.S. House of Representatives, reporting that red-light cameras are “a hidden tax levied on motorists.” The report concluded cameras are associated with increased crashes, the timings at yellow lights are often set too short to increase tickets for red-light running, and most research concluding cameras are effective was conducted by one researcher from the IIHS. Since then, studies independent of the automobile insurance industry continue to find cameras are associated with large increases in crashes.

In the two years since the study was published, there have been numerous reports of cities shortening the length of yellow lights at intersections, which leads to even more accidents, purely in the name of generating more revenue from tickets. If the evidence showed that red light cameras made the roads safer, I would not complain, but they simply encourage cash-strapped city governments to deliberately make them less safe, so they can rake in some much-needed revenue. That’s an unacceptable set of incentives, and Missouri should put a stop to it.

Full disclosure: I did just get a ticket from the city of Saint Louis for running a red light equipped with a camera. I didn’t actually run the light, but a rolling right turn is apparently also illegal.

March 16, 2010

The Census Bureau Should Stick to YouTube

The response to the Census Bureau’s YouTube clips has been mixed. Some videos attracted a lot of hits; others were basically ignored.

However, everything the Census Bureau put up on YouTube has been a wild success when compared with the embarrassing event in Jefferson City yesterday. I say “embarrassing” not because I’m scandalized that there were belly dancers there, but because almost no one showed up to watch them. My Two Census picked up the story as an example of ineffective Census promotion.

I actually feel bad for the belly dancers, who had to perform with little clothing on when the temperature was in the low 50s. The poor turnout couldn’t have helped their self-esteem much, either.

I have a better idea for promoting the Census: Promise that if enough people mail back their forms, the Census Bureau will post a clip on YouTube of its director belly dancing.

March 10, 2010

Dora the Explorer Promotes the Census

The Census Bureau has enlisted Dora the Explorer to spread its message that the Census counts babies and children. In a new video, Dora proclaims that counting small children on Census forms “helps us get important things in our town, like day care centers, schools, and more.”

Dora didn’t discover the connection between Census data and federal spending on her own. The Census Bureau is itself emphasizing the link between counting kids and spending:

“The adults among themselves sometimes forget the census is about everyone, and kids should be counted,” said Census Bureau director Robert Groves. “If we fail to count a newborn that is born this month, that newborn misses all the benefits of the census for 10 years.”

If you forget to count your newborn on this year’s form, does that mean your baby won’t get to attend a publicly funded daycare or school for the next decade? Obviously not. So, what “benefits of the Census” are the uncounted babies missing out on?

March 8, 2010

Disappointment for Family That Sells Raw Milk

A judge refused to dismiss the state lawsuit against a family that was caught selling raw milk from its distribution stand in a parking lot. The state claims that it’s illegal for farmers to set up any raw milk pickup locations away from their farms.

In a Springfield News-Leader article, the assistant attorney general explains why selling milk “from a farm,” as state statute requires, should preclude off-site pickup spots:

“A farm is not anywhere defined in Missouri statutes as a vehicle in a parking lot away from the farm premises,” Blome argued.

Of course, no one would define a farm as a vehicle temporarily parked in a lot. But that isn’t a good definition of a food establishment, either — and the state, calling this family’s parked vehicle a food establishment, says it should be subject to the same regulations as a mini-mart or a grocery store.

If you can’t pick up raw milk from a farmer’s vehicle, what can you do with it? You can pick it up yourself at the farm. But suppose you drive your car to a parking lot, meet a friend there, and give him a gallon of the milk. Does your car now become a food establishment? Or maybe you bring your milk home, invite guests over, and serve them milk with dinner. Does your house turn into a restaurant?

March 7, 2010

Counting the Smallest Towns’ Residents

This AP story is one of the most enjoyable articles about the Census I’ve ever read. It explores how residents of very small towns respond to inaccuracies in Census tallies.

Many reports about the Census (like the Springfield News-Leader article I wrote about) stress the connection between Census data and funding for government programs. They include quotes anticipating dire things if participation is low and funding falls short. From this point of view, the larger the total the Census Bureau arrives at for your area’s population, the better.

What sets the AP’s article apart is that the people quoted in it are focused on accuracy. Whether the Census records eight or nine residents in a town doesn’t change federal appropriations. The difference matters only to people who want the numbers to be exactly correct, for truth’s sake. One woman is actually quoted complaining that the Census Bureau states there are two residents in her town, when in fact she alone lives there. I haven’t seen any other calls for the Bureau to revise its numbers downward.

March 5, 2010

More Rent Seeking — National Style

Rent seeking has been a major topic around here recently. I don’t need to provide links — if you’re reading this on the main page of the blog, you can just scroll down a bit for some excellent posts. Now we are going to do a little bit more rent seeking as a nation, by charging international visitors without visas (I guess this means residents of Windsor going to Detroit for a Red Wings game) a new $10 fee that will be used to market the United States internationally. Basically, it will be a national version of what just about every city (including St. Louis and [probably] Kansas City) does with hotel taxes: charge an extra fee and use it to promote the local travel industry. I think we can admit that there are plenty of worse examples of rent seeking than this, but it still entails private enterprise using the government and taxation in order to benefit one sector of the economy at someone else’s expense. (It makes it a lot easier to do this if the expense is borne by someone who does not live here.)

Now, I want to get into their numbers:

The association says the U.S. welcomed 2.4 million fewer overseas visitors last year than in 2000. And that, the group says, has cost it an estimated $509 billion in total spending and $32 billion in direct tax receipts.

We can presume that 2.4 million is for one year, and $509 billion is for 10 years. Taking 2.4 million a year for 10 years, and dividing that into the total spending amount, yields an average amount spent per visitor of just more than $21,000. This article states that the average spending per visitor is $4,500. I don’t think I believe the number put out with the bill signing, but the alternative would be to accuse the PR and lobbying group behind this effort of inflating their numbers. And we all know that would never happen. …

March 4, 2010

Miniature Goats

Now that Columbia permits residents to own chickens, it’s a good time for the city to look into the next trend in urban agriculture — miniature goats:

The Carbondale, Ill., Planning Commission was debating this month whether to allow residents to keep chickens when Priscilla Pimentel, a member of the city’s Sustainability Commission, added goats to the mix.

“If you can have a 250-pound dog in town, why not a miniature goat that can produce milk?” she says. “It’s just common sense.”

Miniature goats are about as big as medium-sized dogs, and can be led around on leashes. Like chickens, they’re domesticated animals that don’t threaten anyone. People should be allowed to own them in cities.

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