Category: Law

Rooftop Solar is Expensive and Inefficient

Noted UC Berkeley energy economist Severein Borenstein writes against the proposal to make solar required on all new residential construction:

Dear Commissioner Weisenmiller:

I just became aware in the last few days of the proposal in the new building energy efficiency standards rule making to mandate rooftop solar on all new residential buildings. I want to urge you not to adopt the standard. I, along with the vast majority of energy economist, believe that residential rooftop solar is a much more expensive way to move towards renewable energy than larger solar and wind installations. The savings calculated for the households are based on residential electricity rates that are far above the actual cost of providing incremental energy, so embody a large cross subsidy from other ratepayers. This would be a very expensive way to expand renewables and would not be a cost-effective practice that other states and countries could adopt to reduce their own greenhouse gas footprints.

Because I, and most other economists studying California’s energy policy, just became aware of this proposal, we have not had time to participate in the policy process or write public documents on the subject. At the least, I would urge you to delay adopting such a rule until independent analysis from energy experts can be made part of the record.

I will add that I have no financial interest in any energy company. I am expr essing my views purely in the interestof moving forward with California’s fight against climate change in a cost-effective way that can be exported to other states and countries.

Sincerely, Severin Borenstein

I agree and would add that allowing more building near transit and other hubs as with California’s rejected SB827 would not only lower housing prices, rather than raise them as with this proposal, it would also be a much better way of reducing carbon emissions and saving energy.

Germany fact of the day

Germany recorded an almost 10 per cent drop in crime last year to its lowest level since the early 1990s despite perceptions that the arrival of more than a million asylum seekers would lead to a rise in offences.

…Overall, violent crime was down by 1.7 per cent last year, the Interior Ministry said, although refugees and asylum seekers were proportionately over-represented in sexual assault cases.

Here is the (gated) Times of London piece.  Ahem…

For the pointer I thank a loyal MR reader.

Google Bans Bail Bond Ads, Invites Regulation

Google: Today, we’re announcing a new policy to prohibit ads that promote bail bond services from our platforms. Studies show that for-profit bail bond providers make most of their revenue from communities of color and low income neighborhoods when they are at their most vulnerable, including through opaque financing offers that can keep people in debt for months or years.

Google’s decision to ban ads from bail bond providers is deeply disturbing and wrongheaded. Bail bonds are a legal service. Indeed, they are a necessary service for the legal system to function. It’s not surprising that bail bonds are used in communities of color and low income neighborhoods because it is in those neighborhoods that people most need to raise bail. We need not debate whether that is due to greater rates of crime or greater discrimination or both. Whatever the cause, preventing advertising doesn’t reduce the need to pay bail it simply makes it harder to find a lender. Restrictions on advertising in the bail industry, as elsewhere, are also likely to reduce competition and raise prices. Both of these effects mean that more people will find themselves in jail for longer.

As with any industry, there are bad players in the bail bond industry but in my experience the large majority of providers go well beyond lending money to providing much needed services to help people navigate the complex, confusing and intimidating legal system. Sociologist Joshua Page worked as a bail agent:

In the course of my research, I learned that agents routinely offer various forms of assistance for low-income customers, primarily poor people of color. It’s very difficult for those with limited resources to get information, much less support, from overburdened jails, courts, or related institutions. Lacking attentive private attorneys, therefore, desperate defendants and their friends and families turn to bail companies to help them understand and navigate the opaque, confusing legal processes.

…In fact, even when people have gone through it before, the pretrial process can be murky and intimidating….[A]long with walking clients through the legal process, agents explain the differences between public and private attorneys and the relative merits of each. Discussions regularly turn to the defendant’s case: Is the alleged victim pressing charges? Will the case move forward if he or she does not? When is the next court date? If convicted, what’s the likely punishment? Any chance the charges will get dropped?

…In a classic 1975 study, sociologist Forrest Dill argued:

One of the key functions performed by attorneys in the criminal process is to direct the passage of cases through the procedural and bureaucratic mazes of the court system. For unrepresented defendants, however, the bondsman may perform the crucial institutional task of helping to negotiate court routines.

Dill’s observation still rings true: bail agents and administrative staff (at least in Rocksville) act as legal guides for defendants who do not have private attorneys—and at times they provide this help to defendants with inattentive hired counsel. They provide information about court dates and locations, check the status of warrants, contact court staff on defendants’ behalf (especially when the accused have missed court or are at risk of doing so), and, at times, drive defendants to their court dates. These activities help clients show up for court, thereby protecting the company’s investments.

The bail agents are not purely altruistic, they are in a competitive, service business and it pays to help their clients with kindness and care. When I asked one bail agent why he was so polite to his clients and their relations–even when they had jumped bail–he told me, “we rely a lot on repeat business.”

Ian Ayres and Joel Waldfogel also found that the bail bond system can (modestly) ameliorate judicial racial bias. Ayres and Waldfogel found that in New Haven in the 1990s black and Hispanic males were assigned bail amounts that were systematically higher than equally-risky whites. The bail bondpersons, however, offered lower prices to minorities–meaning equal net prices for people of equal risk–exactly what one would expect from a competitive industry.

My own research found that defendants released on commercial bail were much more likely to show up for trial than statistical doppelgangers released by other methods. Bounty hunters were also much more likely than the police to capture and bring to justice people who did jump bail. The bail bond system thus provides an important public service at no cost to the public.

In addition to being wrongheaded, Google’s decision is disturbing because it is so obviously a political decision. Google has banned legal services like bail bonding and payday lending from advertising on Google in order to curry favor with groups who have an ideological aversion to payday lending and the bail system. Google is a private company so this is their right. But every time Google acts as a lawgiver instead of an open platform it invites regulation and political control. Politicians on both sides will see that Google’s code is either a quick-step to political power without the necessity of a vote or a threat to such power. Personally, I don’t want to see greater regulation but if, for example, conservatives decide that Google doesn’t represent their values and threatens their interests, they will regulate.

Google’s decision to use its code as law is an invitation to politicization. Moreover, Google is throwing away its best defense against politicization–the promise of neutrality and openness.

Sex Redistribution and Disability

I am surprised that the subject of sex and disability has not arisen in the controversy surrounding Robin Hanson’s and Ross Douthat’s remarks on sex redistribution. The subject is one of active debate in the literature on medical ethics. Bioethicist Jacob Appel writing in the Journal of Medical Ethics in 2010 argued:

If sexual pleasure is a fundamental right, as this author believes, then jurisdictions that prohibit prostitution should carve out narrow exceptions for individuals whose physical or mental disabilities make sexual relationships with non compensated adults either impossible or high unlikely.

…A second area in which reform is desperately needed is the ‘no sex’ policies that exist in American nursing facilities, mental hospitals and group homes. Many such facilities require the doors of patients’ rooms to be open at all times, making intimacy all but impossible. The assumption underlying these restrictions is that anything short of clearly expressed wishes by a fully competent and rational individual does not fulfil a minimum standard to consent to sexual relations. The principle advanced by this approach is that institutionalised individuals require a higher degree of protection than those living outside of institutions. In many matters, this is certainly the case. However, in regard to sexual relations, this ‘higher’ standard often serves as an obstacle to meeting both the wishes and interests of individuals who cannot conform to ‘real world’ standards of consent.

More challenging than a ‘negative rights’ conception of sexual liberty is one that also embraces a ‘positive right’ to sexual pleasure for the disabled–either for those individuals who are too impaired to find mates and/or those who are so physically incapacitated that they are incapable of pleasuring themselves. Several European nations, including Germany, The Netherlands, Denmark and Switzerland, allow limited ‘touching’ services for the severely disabled through non-profit organisations.

In the UK charities exist to help match sex workers with the disabled. Similar services are available in Denmark and in the Netherlands and in those countries (limited) taxpayer funds can be used to pay for sexual disability services. The Green party has proposed such services elsewhere:

A German politician has sparked controversy by suggesting people with severe disabilities could receive “sexual assistance” paid for by the state.

The Green party’s spokeswoman for age and care policy, Elisabeth Scharfenberg, said the government could “provide grants” for sexual services to disabled people who cannot achieve satisfaction by any other means.

Such a system is currently operating in Denmark and the Netherlands, where certified “sexual assistants” with special training conduct visits to disabled people who cannot afford to pay themselves.

Regardless of the answers one gives, I think these are legitimate questions of profound and deep importance to the people involved. It’s unfortunate and wrong that someone who brings these issues to the public forum is denounced and called creepy. We can and should do better.

Comprehensive occupational licensing reform in Nebraska

Also known as the Occupational Board Reform Act, LB299 requires legislative committees to review 20 percent of licenses under their purview a year, in a continuous five-year cycle.

This process creates a framework for identifying less restrictive regulations than licensing, including private certification, registration, insurance or bonding requirements, inspections, open market competition, or a combination of these approaches.

Workers with conviction histories could also receive an advisory opinion from state licensing boards about their eligibility to work in a licensed profession prior to beginning a training program.

While piecemeal occupational licensing changes have passed in the Nebraska Legislature before, reforms of more burdensome licenses have had trouble advancing from committee. That motivated the Platte Institute to educate lawmakers about the need for a more comprehensive approach.

Here is the full story, via Daniel Klein.

The effect of corporate taxation on investment

This study estimates the investment, financing, and payout responses to variation in a firm’s effective corporate income tax rate in the United States. I exploit quasi-experimental variation created by the Domestic Production Activities Deduction, a corporate tax expenditure created in 2005. A 1 percentage point reduction in tax rates increases investment by 4.7 percent of installed capital, increases payouts by 0.3 percent of sales, and decreases debt by 5.3 percent of total assets. These estimates suggest that lower corporate tax rates and faster accelerated depreciation each stimulate a similar increase in investment, per dollar in lost revenue.

That is by Eric Ohrn, in the American Economic Journal: Economic Policy.  And from Lu Wang at Bloomberg:

After months of heated debate over whether companies would hand the biggest tax break in three decades back to shareholders or reinvest it in their businesses, there’s finally some hard data.

Among the 130 companies in the S&P 500 that have reported results in this earnings season, capital spending increased by 39 percent, the fastest rate in seven years, data compiled by UBS AG show. Meanwhile, returns to shareholders are growing at a much slower pace, with net buybacks rising 16 percent. Dividends saw an 11 percent boost.

That is hardly conclusive, but…

Authoritarian gridlock

Legislative gridlock is often viewed as a uniquely democratic phenomenon. The institutional checks and balances that produce gridlock are absent from authoritarian systems, leading many observers to romanticize “authoritarian efficiency” and policy dynamism. A unique data set from the Chinese case demonstrates that authoritarian regimes can have trouble passing laws and changing policies—48% of laws are not passed within the period specified in legislative plans, and about 12% of laws take more than 10 years to pass. This article develops a theory that relates variation in legislative outcomes to the absence of division within the ruling coalition and citizen attention shocks. Qualitative analysis of China’s Food Safety Law, coupled with shadow case studies of two other laws, illustrates the plausibility of the theoretical mechanisms. Division and public opinion play decisive roles in authoritarian legislative processes.

That is from Rory Truex, via the excellent Kevin Lewis.

What will it take to reduce Bay Area housing costs?

2016 academic analysis by David Albouy, Gabriel Ehrlich and Yingyi Liu estimated that, in general, rents decrease by 3 percent for each 2 percent increase in the housing stock. (This estimate is close to the estimate of a lengthy blog post analysis at Experimental Geography, done two years ago, looking specifically at San Francisco’s history over the last six decades.)

If our goal is to reduce the average market-rate apartment rent to 27.5 percent of median household income (the midpoint between the 25-30 percent range that is normal), that means reducing the rent from $43,200 to $24,895, a 42.4 percent reduction. Using our ratio of a 2 percent housing stock increase leading to a 3 percent decrease in rents, that means, keeping all else equal, the Bay Area would theoretically need to increase the number of housing units overnight by 28.3 percent. (Let’s round up to 30 percent to make the subsequent calculations more intuitive).

…For example, if it takes 20 years to make up our housing deficit, and underlying trend growth for the U.S. population is 0.7 percent per year (15 percent over 20 years), and the average household size remains 2.3 persons, then the Bay Area will need to grow households 30 percent more than the amount of households needed to accommodate trend U.S. population growth (i.e. 30 percent more than the underlying 15 percent population growth), for a total growth of housing stock of approximately 50 percent over 20 years.

Let’s state it plainly: The Bay Area must increase its total housing stock by 50 percent over the next 20 years to bring affordability down to a reasonable level.

That is from the excellent Patrick Wolff.

The monitoring culture that is China

…the workers wear caps to monitor their brainwaves, data that management then uses to adjust the pace of production and redesign workflows, according to the company.

The company said it could increase the overall efficiency of the workers by manipulating the frequency and length of break times to reduce mental stress.

Hangzhou Zhongheng Electric is just one example of the large-scale application of brain surveillance devices to monitor people’s emotions and other mental activities in the workplace, according to scientists and companies involved in the government-backed projects.

Concealed in regular safety helmets or uniform hats, these lightweight, wireless sensors constantly monitor the wearer’s brainwaves and stream the data to computers that use artificial intelligence algorithms to detect emotional spikes such as depression, anxiety or rage.

The technology is in widespread use around the world but China has applied it on an unprecedented scale in factories, public transport, state-owned companies and the military to increase the competitiveness of its manufacturing industry and to maintain social stability.

That is from STephen Chen at SCMP, via someone forgotten over at Twitter.

Let the boy Brexit!

Pope Francis has been praying for the British toddler Alfie Evans — and the Italian government has granted the child Italian citizenship and lined up a transportation plan that could swiftly bring the sick little boy to a Vatican hospital.

But Alfie’s doctors say he cannot be healed, and shouldn’t make the trip at all.

On Tuesday, according to lawyers representing Alfie’s family, a British judge sided with the doctors, saying that the family cannot accept the offer to take Alfie to the Vatican for treatment.

Here is the full story.  The boy’s situation is dire, but he has not even received a definitive diagnosis from the British doctors.

The new economics of Tanzanian blogging

Repressive regimes across the world have found inventive ways to stifle internet freedom, from deleting posts to blocking service. But Tanzania’s government has come up with a scheme that could prove even more draconian: it plans to charge hundreds of dollars a year for the privilege of blogging.

As part of new online regulations, bloggers will be required to pay hefty registration and annual licence fees that add up to roughly $920 — prohibitive for most in a country with a nominal per capita income of under $900.

In proportion to GDP, the Tanzanian registration and licence fee would be the equivalent of asking Americans to pay nearly $60,000 to start a blog.

That is from John Aglionby and David Pilling at the FT.

Who’s complacent? Penn State is complacent

The student “Outing Club,” which has gone backpacking, kayaking, and hiking in state parks over the course of its 98-year-existence, will no longer be allowed to host outdoor events after administrators conducted a risk assessment, according to The Pittsburgh Post-Gazette.

“The types of activities in which [Penn State Outing Club] engages are above the university’s threshold of acceptable risk for recognized student organizations,” according to an official announcement.

A key issue for administrators was that the Outing Club frequently visit locations with poor cell phone coverage. This wasn’t an issue during the Coolidge administration, but now that cell phones exist, students are apparently expected to remain glued to them at all times.

“Student safety in any activity is our primary focus,” Lisa Powers, a Penn State spokeswoman, told The Post-Gazette.

And yet the treasurer of the Outing Club said that he hadn’t heard of any injuries sustained on club outings in recent years.

Here is the full story at Reason, via Maximilian Roos.

Defensive Gun Use and the Difficult Statistics of Rare Events

In the mid-1990s, Kleck and Gertz (1995) estimated that in a typical year about 1.3% of US adults used a gun for self-defense against another person. Kleck and Gertz’s estimate, which came from a survey of nearly 5000 people, implied that there were millions of defensive gun uses every year.

Following Kleck and Gertz’s 1995 paper, the CDC added a question about defensive gun use to their Behavioral Risk Factor Surveillance System (BRFSS). In 1996, 1997, and 1998 the CDC asked:

“During the last 12 months, have you confronted another person with a fire arm, even if you did not fire it, to protect yourself, your property, or someone else?”

But here is the surprise. The CDC buried the question and the results. Only recently was the data discovered and made public by Kleck in a new paper.*(see addendum) So what were the results? You will perhaps now not be too surprised that the CDC’s survey supports Kleck and Gertz’s original finding, about 1% of survey respondents reported a defensive gun use, implying millions of such uses over a year.

The case isn’t closed on defensive gun use, however, because of a statistical conundrum.

The CDC asked 12,870 individuals about defensive gun use over the three samples.That’s a relatively large sample but note that this means that just 117 people reported a defensive gun use, i.e. ~1%. In comparison, 12,656 people (98.33%) reported no use, 11 people (0.09%) said they didn’t know and 86 people (0.67%) refused to answer. People answering surveys can be mistaken and some lie and the reasons go both ways. Some people might be unwilling to answer because a defensive gun use might have been illegal (Would these people refuse to answer?). On the other hand, mischievous responders might report a defensive gun use just because that makes them sound cool.

The deep problem, however, is not miscodings per se but that miscodings of rare events are likely to be asymmetric. Since defensive gun use is relatively uncommon under any reasonable scenario there are many more opportunities to miscode in a way that inflates defensive gun use than there are ways to miscode in a way that deflates defensive gun use.

Imagine, for example, that the true rate of defensive gun use is not 1% but .1%. At the same time, imagine that 1% of all people are liars. Thus, in a survey of 10,000 people, there will be 100 liars. On average, 99.9 (~100) of the liars will say that they used a gun defensively when they did not and .1 of the liars will say that they did not use a gun defensively when they did. Of the 9900 people who report truthfully, approximately 10 will report a defensive gun use and 9890 will report no defensive gun use. Adding it up, the survey will find a defensive gun use rate of approximately (100+10)/10000=1.1%, i.e. more than ten times higher than the actual rate of .1%! Those numbers are, of course, approximately what the CDC survey found which doesn’t prove that Kleck’s interpretation is wrong only that very different interpretations are also plausible.

The bottom line is that it’s good to know that the original Kleck and Gertz survey replicated–approximately 1% of adult Americans did report a defensive gun use in the 1990s–but the real issue is the interpretation of the survey and for that a replication doesn’t help.

Addendum: The paper has since been taken down perhaps because in addition to the issue of interpretation that I raised the survey may not have been national. Robert VerBruggen has further details.

How common is child marriage in the United States?

Approximately 6.2 of every 1,000 children surveyed had ever been married. Prevalence varied from more than 10 per 1,000 in West Virginia, Hawaii and North Dakota to less than four per 1,000 in Maine, Rhode Island and Wyoming. It was higher among girls than among boys (6.8 vs. 5.7 per 1,000), and was lower among white non‐Hispanic children (5.0 per 1,000) than among almost every other racial or ethnic group studied; it was especially high among children of American Indian or Chinese descent (10.3 and 14.2, respectively). Immigrant children were more likely than U.S.‐born children to have been married; prevalence among children from Mexico, Central America and the Middle East was 2–4 times that of children born in the United States. Only 20% of married children were living with their spouses; the majority of the rest were living with their parents.

That is from Alissa Koski and Jody Heymann, via the excellent Kevin Lewis.

How big are the buyer and renter gains from SB 827?

This article considers a counterfactual thought experiment: how would California’s housing market be different today if a policy currently under consideration in the California Senate—SB 827, which would allow new residential building along public transit corridors—had been implemented six years ago? I estimate that rent would be 5.8 percent lower in San Francisco, a savings of $266 per month on the median home, and 4.2 percent lower in Los Angeles County, savings of $124 per month.

That is from Salim Furth at Mercatus, here is much more.  You will note those numbers do not include the higher output and innovation from a more efficient allocation of talent.

Here is Salim’s podcast with Matt Yglesias and Emily Hamilton.