Wednesday, October 30, 2013

Sprawl again

I had previously cited Bumoo Lee's study (here) of commuting in 2000.  He looked at where commuters worked (downtowns, sub-centers or dispersed) for the 14 largest MSAs in 2000. Of these 42 average trip times, the shortest commutes were for workers driving to dispersed job sites in Phoenix. Call it sprawl.

There are good commuting data from NHTS 2009.  These are the most detailed, offering summaries of individual records for MSAs for four metropolitan subdivisions: "urban," "suburban," "second city," "town and country," as well as the "metropolitan" area as a whole.

Consider NHTS' three major trip types: journey-to-work, home-based shopping, and home-based recreational.  Consider also average trip time for each area and purpose as well as the corresponding variances.  There are, then, as many thirty readings for each major metropolitan area (three trip types, five area designations, two statistics each). There are fewer than thirty readings for some MSAs where observations are too few (I ruled out cases of N less than 100).

I looked at the 14 major MSAs that Lee studied. Which of these had the most of 30 possible readings better than than US 50-metro area average?  You guessed it. For Phoenix, 29 of the 30 readings beat the 50-area overall. No other metro area came close. Call it sprawl.

This is all about the co-location of people and their destinations.  Co-location was most successful in most places for shopping trips.  Where was co-location least noticed?  In Washington, DC. As far as worktrips go, Washington's major employer is the least footloose.  The traffic consequences are clear.

Head-to-head comparisons between Phoenix and Portland (not one of Lee's biggest 14) were possible for only four summary statistics because of small NHTS sample sizes for Portland. For journey-to-work metropolitan area average commute times, Portland outperformed Phoenix, 22 minutes vs 24.6 minutes; for the corresponding variances, Phoenix wins, 263.1 vs. 414.9. For metropolitan area shopping trips, Phoenix wins, 11.9 minutes vs. 14.4 minutes.  For the corresponding variances, Phoenix wins again: 91.5 vs. 154.7. But in 2009, Phoenix had a population almost 70 percent greater than Portland. Good for sprawl.

I must say that the cost comparisons ignore the benefits side and are therefore incomplete. But the "high costs of sprawl" have been the popular drumbeat for years.

Sunday, October 27, 2013

What goes up?

I enjoyed Joe Studwell's How Asia Works: Success and Failure in the World's Most Dynamic Region.  The author notes (p. 267), "The historical review of east Asian economic development shows that the recipe for success has been as simple as one, two three: household farming [land reform], export-oriented manufacturing and closely controlled finance that supports these two sectors." He attacks western economists who (seemingly) push the "Washington consensus" view that Studwell disdains.

The author makes his case by carefully describing the post WW II experiences of Japan, Korea, Taiwan and China. Thailand, the Philippines and Indonesia did not or could not execute one-two-three. North Korea, Cambodia, Myanmar and Vietnam would merit another book.

Is one-two-three the "Take-off" of W.W. Rostow's famous Stages of Development? Studwell seemingly thinks so. I am clearly not an Asia expert, but I have two questions.  The first comes from Econ 101, "At what cost?" For the case of China, the answer boggles the mind. 

The second question comes from Tom Sowell. He suggests "And then what?" This weekend's WSJ includes Josef Joffe's "China's Coming Slowdown: History shows that every economic miracle loses its magic. How much longer can China sustain such astounding growth"?  Post-1980s Japan offers one lesson. Here is Joffe's summary of what the others have done. You have to wish them well. But a betting man would look at the record.

Thursday, October 24, 2013

Bad spiral

Incumbents in the U.S. House of Representatives are overwhelmingly re-elected.  The explanation is simple.  Most are gerrymandered into safe districts.  But these graphics show that U.S. Senate incumbents are re-elected with about the same frequency. Senate seats are not gerrymandered. What is going on?

A related data point involves the widely cited Congressional "approval ratings." These have apparently gone from 73% in 1958 to 19% now. Why do commentators even cite these in light of the incumbent re-election frequencies?

There is a fascinating discussion of voter ignorance (rational, irrational, or any other kind) at Cato Unbound. Most people are basically sensible, but the opportunity costs of further investigation rise quickly while the marginal benefits are small, usually limited to the joys of team membership. The political parties understand the game and realize that obfuscation is a plausible strategy.  This makes the costs of sorting out arguments much higher for voters. The political parties, of course, find common cause with interest group lobbyists who spend wisely and generously.  We have seen that politicians cannot figure out a way to spend less of other people's money.  The "sequester" was pathetic.

High opportunity costs of participation is good news and bad news. The fact that many people have bigger fish to fry is good news. The fact that successful obfuscation causes many to decide it's hopeless to bother is the bad news.  We end up with a bad spiral when enough people are turned off for interest groups to have their way. That augments obfuscation by the entrenched, etc., etc., etc.

Monday, October 21, 2013

It is happening

The Copenhagen Consensus project is a heroic attempt to conduct some very difficult policy analysis. Where markets cannot be expected to do their magic (e.g., vaccines or treatments for rare diseases), we rely on policies. Choosing among these is a huge challenge. Economics is useful here because it is micro, not macro, that is relevant.

Here are the Copenhagen Consensus current recommendations for sixteen policies that ought to be priorities. Look them over. Chances are that most people have not heard of most of them.  You will not find green energy, sustainable development, high-speed rail, obesity, or any of the favorites of western media and policy elites.  In a world of scarcity, this is of course tragic. Rather than take actions that channel resources to where they can quickly save and prolong lives, we have long and learned discussions of policies that make elites feel good about themselves

Can we turn Copenhagen around and pick and rank the most wasteful and most mendacious projects or policies? The choice set is huge and the ranking would be difficult. Brad Hill alerts me to a contender, California high-speed rail.  I know that many thought it is so crazy that it will never happen. Wrong. It is happening.

Saturday, October 19, 2013

Market failure?

If you just just make an effort, you can find market failures everywhere. Many of my friends explain that some Americans are obese because they are stuck in "food deserts" -- places where dark forces (profits) conspire to keep the locals from eating healthy foods. The many food truck operators (as well as the rest of the food industry) have not noticed and have ignored the opportunity to rush in and fill a market void (profit).

Today's WSJ reports "At McDonald's, Salads Just Don't Sell". Letting the international leader in food marketing do what they do best creates the "food desert" phenomenon. But shame and browbeat them into going against their professional instincts and doing the right thing and what happens? Apparently nothing? What to do?

Make them a public utility. We can do that with health care and health insurance. But that may have its own issues. At this writing, HHS cannot get their health exchanges to work. There are "technical problems." And HHS will not reveal (just yet) how many have signed up.

But these things can be fixed. Spend enough money and the government can put a man on the moon. You eventually run out of other people's money (M. Thatcher)? No true. In recent weeks, Congress proved that.

Thursday, October 17, 2013

Not the flu

Elizabeth Kolbert writes about Malthus and neo-Malthusians in the current New Yorker ("Fertilizer, fertility, and the clashes over population growth"). I once (briefly) thought that Julian Simon had dealt Malthus a knockout punch but that was silly of me. I mean knockout not only in the way of ideas (people have brains and hands as well as mouths to feed) but also by putting his money where is mouth was and winning the bet with Paul Ehrlich. Kolbert cites Ehrlich and his poor forecasts ("England and all civilized nations stand in peril of not having enough to eat.") but fails to mention Simon or the bet.

She takes a dig at Jonathan Last and then ends on a very strange note. Social insurance proponents had guessed wrong about population growth. This has now put these Ponzi schemes on thin ice. So some guess there will be too many people (Ehrlich and the Malthusians) while others (social insurance engineers) underestimate fertility and population decline.  She seems to shrug.  "It seems that one world can't have two population problems: either the glass is too empty or too full."  Forecasting is hard work.

Kolbert could not bring herself to suggest that lawmakers go easy on the social engineering. That would improve the odds of high-fertility places developing. Let people become prosperous and they will choose smaller families. Depopulation is not some flu-like thing that just seems to show up unexpectedly.

Monday, October 14, 2013

To the rescue

Here is Russ Roberts' interview with Cliff Winston re Cliff's recent JEL paper. Various important points are made. 1. Try privatization of facilities; we would be surprised at what entrepreneurs come up with in terms of innovation; 2. Try experimentation; give cities and states the leeway to experiment (even as they receive federal money); 3. Get the prices right before you decide that more "needs" to be built.  Hear, hear.

My one quibble with the discussion is over the discussion of congestion on U.S. roads and highways. Of course, there is too much of it where we do not price. But it is also true that average commuting times are remarkably constant over time. ACS (site shut down for some strange reason) reports the U.S. average at between 25 and 26 minutes for every year between 2000 and 2010), over metro area sizes, as well as within metro areas (between cities and suburbs).

We have recently found that even travel time variances are remarkably invariant to metro areas size. Workers and their employers do a fairly decent job of staying within each other's range.  Land markets are quite encumbered with rules and regulations, making this result interesting.  The land market comes to the rescue of transportation policy.

Friday, October 11, 2013

No paradox here

We are on fairly solid ground when we study revealed preferences. Until the neuroeconomics people make a lot of progress, that may be it. There are many "happiness"surveys and I have no idea how to interpret them. We all have mood swings and making inter-personal comparisons is risky.

I just read "Stress that Doesn't Pay: The Commuting Paradox" (by Alois Stutzer and Bruno Frey; H/T Wendell C). Why a paradox? Because if surveys show that long commutes are judged onerous by commuters, that would contradict the idea of a theoretical equilibrium wherein markets adjust to compensate those who travel further.

But perhaps there is no paradox.  Minimizing the commute is neither realistic nor desirable. The average commute in the U.S. is remarkably stable -- while everything else changes (Anas in Brooks et al.). Most workers and their employers seemingly choose locations that keep the whole thing ("costs of sprawl") in check. Many people actually choose a longer commute because they traded that off against a hundred other things in their lives that matter. They may want to be near a particular school, amenity, spouse's job, etc.

Twenty-five years ago, urban economists wrote about "wasteful commuting."  People took longer trips than a very restrictive model or cities predicted. "Wasteful" was always in quotation marks. Stutzer and Frey have not really discovered a paradox.

Monday, October 07, 2013

Detroit and much more

Today's WSJ includes "GM Prods Dealers to Sell Cars Online ...Software Lets Shoppers Bypass the Showroom."  There is an app. But there is also understandable opposition from dealers, most of whom have state franchise laws on their side. Dealers are influential in local politics.

I just read David Nye's America's Assembly Line which I greatly enjoyed. The book is a great blend of history, economics and engineering.  Students in at least these three fields will learn plenty.

But, to go back to today's GM news, Nye mentions that in 2002 only 6 percent of American cars were made to order whereas more than 60 percent were ordered this way by Japanese and German customers. "As a result, US automobile production was still 'pushed' to the consumer far more than it was pulled by orders" (p. 236).

Even great authors stumble. Why, of all people, does Nye mention "planned obsolescence" (p. 261)? Surely, Nye knows that the international competition he writes about has increased the quality and longevity of cars.  Nevertheless, a great read.

Sunday, October 06, 2013


Richard Thaler writes about Americans' appalling financial illiteracy. As a result, many plan poorly and become dependent on others, including the various forms of public assistance.  This links to the various debts and unfunded liabilities at the various levels of government.  Timothy Taylor cites a 75-year $50-trillion problem at the federal level (mostly medicare and social security).

Federal budget problems are all over the news and have given us the (partial) closure of the federal government, the debt ceiling debate(s) and all of the associated problems.  Both sides have their well rehearsed talking points, many of which were recited on this Sunday morning's TV talk shows. It is just sound bites and talking points because of the many uninformed and untrained in the audience who Thaler writes about. They would be unable to grasp national financial planning and debt if they cannot even understand their own financial situation.

What to do? Tyler Cowen mentions that the brightest spot on the horizon for improved learning involves games. Here is the relevant quote from his recent econtalk conversation with Russ Roberts:
Russ: I agree with that. Let's talk about games. You have some interesting things to say about games and the application toward education. Guest: Well, if you ask in what sphere of modern life has education really succeeded, I think it's gaming. These games are incredibly complex. When I look at them I feel they are too complicated for me; I could never learn them. But the people who are interested--the game itself teaches people how to play. It's all done by software and very often online. And it seems it really works. They teach you in steps. They make it hard enough to be interesting but easy enough that you feel you are making progress. And in my view the big educational breakthrough has already come with games. It's just a question of how do we apply that to educating everyone else to do other things. And we're far behind on that. Russ: What are some of the ways that might be applied? Guest: Imagine an intro to economics textbook but structured more like a game, where you move on to different levels and maybe you capture pieces or you acquire points. And there's a competitive angle. And I'm not saying everyone has to do it that way. But I think there's really a big chunk of people who get interested in games, who would otherwise, say, never be interested in medieval history or battles or whatever else, but the games get the interested. And I think that's a big frontier for education, where we've actually solved the problem. We don't quite even know we've done it yet. Now we just need to apply what we've already learned.
Bill Gates and other philanthropists have been supporting various educational experiments. All this suggests that the way out may involve pairing philanthropists with gamers. The latter would have to invent games that boost financial literacy. Would that put an end to the sorts of claims the talking heads and pols were making on TV this morning?  One can hope.

Friday, October 04, 2013

Chicken and egg in LA

Last June, the LA Times lamented the low voter turnout for LA's recent mayoral election (23.3%). Today's LA Times reports that (no surprise to those who live here) we lead U.S. big cities in the condition of our roads ("L.A. has worst big-city road in the nation ...").  A coincidence?  Just like the fact that chickens and eggs are often found in close proximity. Chicken-and-egg will probably go on for a very long time. In our other cycle (voters are turned off-interest groups win and take all the money-city services decline-voters are turned off) how long can that go on?

Los Angeles' core area will continue to have declining share of a growing metropolitan area. The core and the periphery continue to hang on together -- even as their relative weights continue to shift. The New York metropolitan area has been #1 in the U.S. for a long time, even as New York City went through bad as well as good times.  LA has been #2 for many years too (although not as many) for the same reason. Chicago has been #3 since 1960 when it switched places with LA. There is remarkable stability at the top because big cities get big suburbs.

How can "car crazy" Los Angeles have the worst roads?  How can it survive with a dysfunctional city hall? It hangs on as center of a large patch that offers just enough variety of opportunities to remain attractive to just enough labor and capital. This suggests that the dysfunctional city hall will also survive.