voluntaryXchange

Root Causes Craps Out Again

Root causes is the idea that crime and terrorism are caused by poverty and idleness.

The literature has been stunningly silent on how Katrina showed how wrong this view is: crime went down after Katrina, way down, because all the targets had moved away. Root causes would suggest that it would have picked up due to the destruction of wealth and livelihoods. Didn’t happen. Here’s some supporting evidence from Baltimore.

Now we have this piece from the Journal of Conflict Resolution. It shows that when unemployment goes up, terrorism goes down.

Here’s some plausible explanation of why the root causes explanation fails so miserably:

One is that insurgents are prompted to act when the economy is doing well, because the resources and land that insurgents want to seize are more valuable. Another theory posits that when unemployment is high, governments find more willing sellers of intelligence about insurgency efforts. Still another theory asserts a different kind of causality: The checkpoints and other security measures that suppress insurgent violence also hamper local economies, driving up unemployment.

Via Marginal Revolution.

Technorati Tags: root,causes,terrorist,insurgent,unemployment,katrina

OMG–Would You Look at That

I love these nighttime satellite shots, but this one shows something new:

I was picking out the big cities for fun when I noticed the brand new big city: it’s not that centrally bright, but you can easily see the smudge of oil drilling in North Dakota (at the top center).

Technorati Tags: bakken,shale,fracking,north,dakota,night,lights,satellite

Elasticity of Carbon Dioxide and Economic Growth

Now for a second round of applying some basic economics to anthropogenic climate change.

Economists advocate figuring out how sensitive one thing is to another by calculating elasticity: a ratio of percentage changes.

Why do this? In short, because it prevents the sort of mistakes that alarmists make when pointing at data on climate change.

Data on real world GDP is easy to come by. From 1960 to 2000 there was about 500% growth.

Data on carbon dioxide concentration is also easy to come by. Over the past 50 years it has increased from about 315 to 370. That’s a change of about 17%.

Very roughly, the elasticity of atmospheric carbon dioxide concentration with respect to real GDP growth is the ratio of those two percentages: 17%/500% = 0.03.

This is close to zero. Economists call that inelastic.*

Really inelastic. Elasticities for cigarettes with respect to price 10 to 20 times higher.

That’s right: smokers will change their consumption in response to price increases far more readily than the planet will change its atmospheric carbon dioxide concentration in response to our economic growth.

So … if most of us know we can’t change smokers, why are some claiming that economic growth is the lever to be adjusted to change in atmospheric carbon dioxide concentration?

This is why it’s so important to invoke possible non-linearity or hysteresis in climate processes … along with the all important claim that there will be bigger effects mañana.

* There’s a lot of quibbles in the details and method, but none of them change the fact that we’re looking at nearly perfect inelasticity.

P.S. This post is motivated by an oldie but goodie from Bigwig at Silflay Hraka.

Technorati Tags: anthropogenic,global,warming,carbon,dioxide,growth

Elasticity of Temperature and Carbon Dioxide

Time to apply some basic economics to anthropogenic climate change.

Economists advocate figuring out how sensitive one thing is to another by calculating elasticity: a ratio of percentage changes.

Why do this? In short, because it prevents the sort of mistakes that alarmists make when pointing at data on climate change.

One pitfall in doing these calculations is that atmospheric carbon dioxide concentration is a ratio measurement, while the temperatures we’re used to are interval measurements. The solution is easy: use the Kelvin temperature.

Data on temperature is easy to come by. World average temperature is about 290º (big differences in that guesstimate will have little bearing on my final result). Over the past 50 years, temperatures have increased from about 289.8º to 290.5º. That’s a change of 0.25%.

Data on carbon dioxide concentration is also easy to come by. Over the past 50 years it has increased from 315 to 392 ppm. That’s a change of 24.44%.

Very roughly, the elasticity of temperature with respect to atmospheric carbon dioxide concentration is the ratio of those two percentages: 0.25%/24.44% = 0.01.

This is close to zero. Economists call that inelastic.*

Really inelastic. Elasticities for cigarettes with respect to price 20 to 50 times higher.

That’s right: smokers will change their consumption in response to price increases far more readily than the planet will change its temperature in response to carbon dioxide.

So … if most of us know we can’t change smokers, why are we trying to change carbon dioxide concentrations when it won’t do much good?

This is why it’s so important to invoke possible non-linearity or hysteresis in climate processes … along with the all important claim that there will be bigger effects mañana. 

* There’s a lot of quibbles in the details and method, but none of them change the fact that we’re looking at nearly perfect inelasticity.

P.S. This post is motivated by an oldie but goodie from Bigwig at Silflay Hraka.

Technorati Tags: anthropogenic,global,warming,climate,change,elasticity

File Under “You Just Don’t Get It”

Russ Roberts:

It reminded me of a recent conversation I had with a very nice woman sitting next to me on a flight to California. We were talking about California’s fiscal problems and she suggested that the state should raise taxes on the rich. I pointed out that a lot of people had left California for lower-tax states like Nevada and Arizona and that raising taxes would encourage even more people to leave. Her reply was “Good riddance! Let them go!” I suggested that that might make the funding problem a little more challenging than it already was. She was eager to be free of people whose political views she found unappealing and who didn’t want to support programs she believed were important. But someone has to pay for those programs. California is in trouble …

I sometimes think the world would be a better place if you had to own a bond to vote; a bond you could get by being born in or moving to a state, but whose coupons you could only redeem for cash if you continued to live there, and whose value depended on the quality of life in the state.

In short, if you vote for things now that point the state toward ruin, you end up with coupons that have lost most of their value. A lot of people who voted in California would end up with worthless bonds if we did this.

But, of course, I’m an economist, and I view things like the conditions of the roads, the crime rate, and pollution to be a form of bond. The coupon isn’t in cash, of course, instead it’s in the stream of services you receive from decent roads, low crime, and clean air. So Californians already own those bonds. And on those counts, California isn’t doing too well.

Technorati Tags: california,bond,tax,rich

Bettors Say Ohio Has Switched

I’ve been pushing the conclusions of the betting markets, as shown at Intrade, for predicting the outcome of the election.

There’s been a big change. Bettors are now calling Ohio to go for Romney:

This is what is required for a narrow Romney victory. Currently Intrade’s bettors are predicting a 275-263 Romney win in the electoral college.

N.B. Ohio shows up as bright red because I highlighted it to show the details at the bottom right. It’s actually the palest pink when you click on it.

BTW: Marginal Revolution reports that someone tried to manipulate the market on Intrade after last week’s debate. They go on to note, because there is money to be made, someone who tries to push the price one way or the other is offering up an arbitrage profit to serious traders, and may end up strengthening the conclusions of the market.

Technorati Tags: intrade,2012,election,obama,romney,betting

October 12 Update to the Intrade Map

Big changes since yesterday:

Florida and Virginia have joined Florida in turning towards Romney.

This puts the winner-take-all electoral vote forecast at 257-281.

Iowa is closest for Romney, but it won’t give him enough. He still needs Ohio.

The expected value is still holding steady at 53 votes from the swing states, and Romney totaling 244.

Technorati Tags: 2012,intrade,electoral,votes,romney,obama

We’re Still Prejudiced

Sellers who show black hands holding baseball cards for sale on eBay get lower prices. Sheesh.

Via Chris Blattman via Marginal Revolution.

Technorati Tags: prejudice

Seen In the Parking Lot

It didn’t occur to me to take pictures until it was too late. But … I spotted more than one vehicle in the parking lot at Saturday’s football game with a dealer plate from Williston, North Dakota.

The game was between Southern Utah and New Mexico Highlands U. Both schools are over a thousand miles from the oil fields of the Bakken Shale.

Technorati Tags: bakken,shale,oil,jobs

Obama’s Letter Grades

Way back in 2005 I started pushing the idea here at vX that we ought to grade economic growth on a letter grade scale.

I proposed two scales: an “old school” letter grade based on the normal distribution, and a “new school” letter grade scale based on a contemporary distribution across majors from my school.

Here’s collected in one place, are Obama’s letter grades:

Quarter	“Old School”	“New School”
2012 II	C	B
2012 I	C	B
2011 IV	B	A
2011 III	D	C
2011 II	C	B
2011 I	D	C
2010 IV	C	B
2010 III	C	B
2010 II	C	B
2010 I	C	B
2009 IV	B	A
2009 III	D	C
2009 II	F	D
2009 I	F	F

Of course, some claim “it’s all Bush’s fault”. Fair enough.

The table below shows the GPA for Obama using a cumulative sum. This means that entries at the top of the table include only the most recent quarters, while those towards the bottom include progressively more quarters in Obama’s average:

Quarters Included	“Old School”	“New School”
2012 II Only	2.0	3.0
2012 I to 2012 II	2.0	3.0
2011 IV to 2012 II	2.3	3.3
2011 III to 2012 II	2.0	3.0
2011 II to 2012 II	2.0	3.0
2011 I to 2012 II	1.8	2.8
2010 IV to 2012 II	1.9	2.9
2010 III to 2012 II	1.9	2.9
2010 II to 2012 II	1.9	2.9
2010 I to 2012 II	1.9	2.6
2009 IV to 2012 II	2.0	3.0
2009 III to 2012 II	1.9	2.9
2009 II to 2012 II	1.8	2.8
2009 I to 2012 II	1.6	2.6

For the period from 1947-2005, the “old school” GPA for America is 2.5. Obama never reaches that level. Brian Gongol has a graphic showing this.

The “new school” GPA for the same period is 3.25. That matches the average for all matriculated students in all graded classes at my school in 2004-5. In short, it’s what’s normal for today’s student given the grade inflation of the last few decades.

Obama beats that only if your reference set is exceptionally selective, and includes only the last 3 quarters. No more, no less.

I don’t know about hope, but we did get change.

Technorati Tags: obama,letter,grade,gpa,real,gdp,growth,rate