Friday, 20 October 2017

Money for old rope with Jolyon Maugham

Anti-Brexit campaigner Jolyon Maugham has been getting thousands of retweets with what he claims are secret government forecasts of what will happen if Britain leaves the EU without a deal and has to 'fall back' on WTO rules.


Maugham doesn't provide a link to the 'major newspaper' but the document he is talking about is probably the one referred to by the Independent and others back in March. Maugham has said that the document was produced 'shortly before the referendum'. It is almost certainly an early draft of the Treasury's notorious 'Project Fear' report that was published 18 months ago and is available online to anyone who wants to read it.

The Treasury also predicted an immediate recession if Britain voted to Leave. Obviously that didn't happen and the National Audit Office has admitted that some of the Treasury's assumptions were wrong. That doesn't make the rest of their predictions wrong, but it gives pause for thought.

So is it possible to get people excited about some predictions made 18 months ago when some of them have already been shown to be wrong? If your audience is one of diehard Remainers, the answer is yes, of course. Any scrap is hungrily devoured if it makes it look like as if the UK cannot become a normal, self-governing country.

Maugham's big 'headline' from his secret document is that every household will be £5,200 poorer under WTO rules.




Big news, eh? Except that is exactly what the Treasury publicly stated in May 2016, as you will see if you turn to page 122...

After 15 years, the UK is estimated to be between 5.4% and 9.5% of GDP better off inside the EU than adopting WTO rules. In 2015 terms, leaving the EU and relying on the WTO rules would mean a long-term loss of GDP of £5,200 a year for each household in the UK...

The net impact on receipts would be £20 billion a year in the central case of the EEA, £36 billion a year in the case of the negotiated bilateral agreement, and £45 billion a year in the case of the WTO.

But there's more...



This is highly debatable but, regardless of its merits, the same claim was made, almost word-for-word, on page 12 of the published report...

Relying solely on the WTO rules would result in a significant reduction in the openness of the UK economy to the outside world. It would be the alternative with the most negative long-term impact.


And on page 10...

WTO membership would amount to a significant closing of the UK’s access to global markets and would likely see the introduction of a much broader range of tariff and non-tariff barriers.

What other scoops has Maugham got for us?




Man! On page 98 of the published report, the Treasury mentions 'the food industry, worth almost £20 billion, over 370,000 jobs and selling almost 55% of exports to Europe'. It then gives exactly the same numbers that has got Maugham excited on page 96...

In 2014 for dairy products these tariffs averaged 36% with a very broad range of duties applied. This is significant because the EU accounted for 61% of UK agri-food exports in 2014, with EU member states accounting for 7 of the UK’s top 8 agricultural export markets.

The rest of Maugham's thread simply explains what WTO rules are and how could work, albeit with a bias towards pessimism. Everything in it has all been in the public domain for ages, mostly in the published report. For example...



This is discussed at greater length in the published report, particularly on pages 92 and 93, with the same conclusion. Woah!

Not exactly the Rosetta Stone, is it? It's kind of sad to see so many people getting hot and bothered about what is, at best, a shorter draft of a publicly available document. The idea that the Treasury had misgivings about leaving the EU but buried them in a secret report is ludicrous. The Treasury quite obviously wanted to remain and it published a 200 page report explaining why.

Some of the replies are hilarious.












Man!

Tuesday, 17 October 2017

Jamie Oliver's sugar tax 'success'

The evidence that taxing sugary drinks has any effect on obesity is - to put it mildly - poor. The great success story is supposed to be Mexico but we now know that per capita consumption of sugary drinks was essentially the same after that tax was introduced (in 2014) as it was before.

The other success story is supposed to be Berkeley, California, where sugary drink sales fell by 9.6 per cent after a soda tax was introduced in March 2015. But as I mentioned last week, you only have to read the study to see what really happened. Sales fell by 0.8 fluid ounces per transaction in Berkeley but they rose by 0.7 fluid ounces per transaction in neighbouring areas. People simply went out of town to do their shopping.



Since the quantities of sugary drinks consumed didn't change after the soda taxes were introduced in Mexico and Berkeley, it is inconceivable that they could have any effect on obesity. The authors of the Berkeley study (who include soda tax fanatic Barry Popkin) admitted that there was no statistically significant change in calorie intake from sugary drinks and that 'caloric intake of untaxed beverages (milk and other diary-based [sic] beverages) increased.'

Things are not looking good for advocates of these taxes, especially after the taxpayers' revolt in Chicago. An element of desperation is creeping in, hence this today...

Jamie Oliver’s 10p tax on sugary drinks sold in his Italian restaurants has resulted in a significant drop in sales, a study has found.

Jamie knows a thing or two about losing sales. He's been closing restaurants left, right and centre this year. However, the study looks at soft drink sales per customer so should not be affected by the general decline of Oliver's businesses. So what's the story?

A study of the effects of the levy, published in the Journal of Epidemiology & Community Health, has found that sales of sugar-sweetened drinks such as colas and lemonades fell by 11% in the first 12 weeks. At the end of six months, sales were 9.3% lower than they had been before the levy was introduced.

The price elasticity of sugary drinks is generally though to be around 0.8-1.2, meaning that a 10 per cent increase in price leads to a fall in demand of roughly 10 per cent. Jamie Oliver's drinks are so expensive - at £2.60 to £3.25 - that a 10p 'tax' only increases the price by 3.5 per cent.

A decline in sales of 9.3 per cent as a result of a 3.5 per cent price rise is implausible. It would imply a price elasticity of about 3.0, ie. three times higher than has been observed elsewhere.

To their credit, the researchers admit that this is not very likely...

Prof Steven Cummins of the department of social and environmental health research at the London School of Hygiene and Tropical Medicine, who carried out the study, acknowledged that the clientele of Oliver’s restaurants tended to be affluent, and that the price hike on a drink costing between £2.60 and £3.25 might not make a lot of difference to them.

“I don’t think the financial element of it is a massive disincentive,” he said. But he likened it to the plastic bag charge, which prompts people to think about having one.

It's worth remembering that Jamie introduced his 'tax' after presenting a ridiculous documentary on Channel 4 that portrayed sugary drinks as something akin to asbestos. This is likely to have had an effect on the kind of morons who admire the man and go to his restaurants. By the same token, it is likely that people who enjoy sugary drinks and don't want to be lectured by a fat-tongued Essex pea-brain would have been less likely to go to his restaurants after Oliver got on his high horse.

In other words, the people who visited his poxy restaurants after he introduced this gimmick were not necessarily the same people who visited before.

The drop in sales at six months of 9.3% was only in the restaurants that previously had higher levels of sales of sweetened drinks. There was a general drop in sales on non-alcoholic beverages, except for fruit juices, which went up. 

This is an important point. The most interesting thing about sugary drinks taxes is seeing what substitution effects take place. The Guardian doesn't give the figures, but the study says that there was a 22 per cent rise in the sale of fruit juice (which has about the same amount of sugar as a fizzy drink), although fruit juice orders from the children's menu fell. Sales of off-menu mixers went up slightly, but sales of diet cola and bottled water went down (by 6-7 per cent).

In fact, the sale of nearly every type of drink went down. It is not clear what, if anything, people were switching to. The authors don't have figures for alcohol sales for some reason, but the rise in the sale of mixers suggests that the sale of spirits may have increased. Alternatively, people could have switched to tap water. Either way, it left Oliver out of pocket.

He [Cummins] said he thought the effect was “entirely transferable” to other less expensive chains. “There is no reason why other restaurants couldn’t do exactly the same,” he said. 

Actually, there is a very good reason. Drink sales are an important revenue stream for restaurants and Oliver seems to have lost them overall. It speaks volumes about 'public health' researchers that Cummins doesn't think this would play a part in a restaurateur's planning.

This study doesn't tell us anything useful about the impact of sugary drink taxes as a government policy. I'll leave it to Kevin McConway, emeritus professor of applied statistics at the Open University, to have the last word:

“The menu was redesigned: it explained that the proceeds of the levy would go to the Children’s Health Fund, new drink products were introduced, and Jamie himself appeared in a television programme about sugar. So we certainly can’t be sure that the fall in consumption of sugary drinks was entirely, or even mainly, caused by the extra 10p.

“The researchers do provide some circumstantial evidence that the 10p played a role in the reduction in consumption, but they (rightly) make it clear that a study like this can’t prove what caused what. Actually, it doesn’t even establish that any of the specific changes at Jamie’s Italian restaurants had anything to do with the lower consumption – for instance, the researchers had no data from any other restaurants, and maybe consumption fell there as well"

“It’s interesting that, in this study, the consumption of fruit juice from the children’s menu fell as well – indeed it fell by rather more than the consumption of the sugar-sweetened drinks, while consumption of fruit juice from the main menu went up. Maybe the numbers of children going to the restaurants changed, relative to the numbers of adults – the researchers couldn’t tell because they had no data on whether customers were adults or children. Maybe things would have been clearer if they had had data over a full year after the change, rather than just from September to February.

Quite so.

Monday, 16 October 2017

Problem gambling figures misrepresented yet again

Back in May, I wondered why Phillip Blond had suddenly taken an interest in fixed odds betting terminals. It now transpires that his think tank, Respublica, had been commissioned by the Campaign for Fairer Gambling to write a report about them. It was published today and you won't be surprised to hear that it supports Derek Webb's longstanding goal to reduce the stakes to an unplayable £2.

I wouldn't bother mentioning it here if it weren't for the fact that it does what so many anti-FOBT campaigners do and lies about the problem gambling statistics... 

The latest available research has found that the number of problem gamblers has surged – from 280,000 in 2012 to 430,000 in 2015. 

Respublica provide two references for this: a Gambling Commission report about England and Scotland with statistics from 2012 and a Gambling Commission report about England, Scotland and Wales with statistics from 2015.

Respublica don't mention the fact that the latter report has an extra four million people in it (three million people live in Wales, plus UK population growth of around one million). In fact, they explicitly claim that both reports only look at England and Scotland. They then claim that there was a rising in problem gambling in these three years 'of over 50 per cent'.

This is implausible on the face of it and it is untrue. The 2012 report gives an estimate of the number of problem gamblers under the two usual measures: 

The confidence interval for the DSM-IV estimate was 0.3%–0.7%, for the PGSI estimate 0.2%–0.6% and for either screen 0.4%–0.9%.

And the 2015 report says:

The confidence interval for the DSM-IV estimate was 0.5% to 1.0%, for the PGSI estimate 0.4% to 0.9% and for either screen 0.6 % to 1.1%.

The figures from 2015 are higher, but there is not a statistically significant difference. All these estimates tell us is that there is a 95% probability that the real figure lies somewhere between the confidence intervals.

Even a naive reading of the stats does not imply a 50 per cent increase, however, and the Gambling Commission's most recent (absolute) number is 320,000 people, not 430,000 people.

If you look at the figures from 2010 you will see that they are higher than in either of the subsequent reports, being 0.7%-1.2% under the DSM-IV estimate and 0.5%-1.0% for the PGSI estimate. (The 2010 report didn't combine the two to come up with a third estimate.)

And the 2010 figures were slightly higher than the 2007 figures. So it goes. These estimates have wide confidence intervals and they fluctuate a bit but there is no visible trend in either direction. (See here for more details about this.)

There was not a significant increase between 2012 and 2015, just as there was not a significant decline between 2010 and 2015. Every problem gambling survey since 1999 has been consistent with the hypothesis that problem gambling prevalence has held steady at around 0.7%.

As I have said before, you can only pretend that there is a trend if you cherry-pick your reports and ignore the confidence intervals. That's why rates of problem gambling have appeared to be doubling and doubling in the last decade, if you believe the media, without the number of problem gamblers ever getting larger. 

There isn't much else in the Respublica report to discuss because it doesn't provide much in the way of evidence, but a dishonourable mention should go The Times for making this howler in its coverage...

In total about 1.5 million people play the machines, collectively losing more than £1.7 billion last year, almost £12,000 each on average.

£1.7 billion divided by 1.5 million people is £1,133, not £12,000. The Times is out by a factor of ten.

Thursday, 12 October 2017

Nudge and liberty

The behavioural economist Richard Thaler won the Nobel Prize this week. I was on the Moral Maze with Thaler back in 2010 and it was obvious that we were the only two people out of the eight on the show who had read his book. This wouldn't have mattered except that the show was all about nudging and Thaler had to listen to his ideas being totally misrepresented. I remember him saying to one panellist, 'you could not be wronger'.

People have been getting nudge wrong ever since and Thaler occasionally corrects them...




Some libertarians find nudging a bit sinister but most of them have never read the book either. Personally, I have always thought that libertarian paternalism was much more libertarian than paternalistic. The main criticism of nudging is not that it is authoritarianism but that it is quite trivial. In practice, there are not many problems that can be solved by nudging, particularly by government.

I've written about this in my forthcoming book, Killjoys, which will be published on November 10th and I've given CapX an excerpt which you can read here.

I'll say more about the book in a future post but here's the cover.



Wednesday, 11 October 2017

A great day in Chicago

In what is undoubtedly the feelgood story of the week, officials in Cook County, Illinois overwhelmingly voted to repeal their hated soda tax after just two months. Cook County is the home of Chicago, America's third largest city, so this is kind of a big deal, even if the UK media chooses to ignore it.

I've written about it here for Spectator Health, so do pop over and read my article, but let's take a moment here to savour the defeat of that evil old fossil Michael Bloomberg who has been bankrolling soda tax campaigns all around America (and beyond). He's not short of money but even a billionaire must smart from pouring millions of dollars down the drain, as he has in Chicago.

In 2016, Bloomberg handed over $1 million for ads to build support for the tax, and then donated another $2 million in August 2017.

In September, Bloomberg funnelled in another $3 million to the pro-tax cause.

And two weeks ago, in an extraordinary act of hubris, he handed out a $2.5 million grant to some 'public health' researchers at the University of Illinois to study the effects of the tax.


Bloomberg therefore spent at least $6 million campaigning for a soda tax that died on its arse after two months. He then spent another $2.5 million to study its non-existent impact. Evidently, Bloomberg's efforts to change the law in another city were not appreciated...


Funny as this all is, Bloomberg could be using his fortune to do some good in the world and heal the sick, but he chooses to spend it on campaigns to make fizzy drinks a bit more expensive which are a waste of time whether they succeed or not. At best, they will fail and we can have a good laugh at him. At worst, they succeed and the cost of living goes up. Meanwhile, there are important medical services that could spend the money usefully.

Anyway, do read my Spectator piece.


Tuesday, 10 October 2017

Fake obesity news

There are more worthless obesity predictions on the front page of The Guardian today...

In 2014, a third of men and women in the US were obese (34%). By 2025 that is predicted to be 41%. 

Really? Because in 2007 we were told that the obesity rate would have reached 41% two years ago...

More than three quarters of American adults will be overweight by 2015, a survey has found. A further 41 per cent will be obese if people continue to gain weight at the current rate, according to the study by Johns Hopkins University.

Still, I'm sure they'll be right this time, eh? I mean it's not as if the obesity rate is falling in America or anything, is it? Oh.

How about Britain? What do the ball-gazing experts of the World Obesity Federation reckon will happen here?

In the UK, more than a quarter of adults (27%) were obese in 2014 and that will rise to 34% by 2025.

Yeah? Well, it was supposed to have hit 32% two years ago according to the government's ill-titled Foresight report of 2007 which said...

The extrapolation of current trends, which underpins the microsimulation, indicates that, by 2015, 36% of males and 28% of females will be obese.

And the new prediction of 34% by 2025 is a bit of a climb down from the 41.5% predicted in Foresight...

By 2025, these figures are estimated to rise to 47% and 36% respectively.

As I have said before, I will happily take a bet with anybody that these predictions do not come true, which is to say that the real rate will be lower than the forecast. It always is because these 'microsimulations' are not serious attempts to plan for the future. They are quack statistics made up by spivs to draw attention to special interests (in this instance, it's World Obesity Day tomorrow).

Obesity forecasts are among the most useless trash in the whole 'public health' racket. Any journalists who give them credence should be ashamed of themselves.

A one-man anti-gambling torpedo

The Financial Times published an interview with Derek Webb recently. Webb is the multi-millionaire inventor of Three Card Poker who has put a small fortune into the Campaign for Fairer Gambling, an organisation he formed to attack fixed-odds betting terminals in betting shops.

He clearly feels that he has the wind in his sails because he's eyeing up his next target...

He adds he may broaden CFG’s focus to target online gambling next. “I want to fight where I can win,” says Mr Webb.

I'm told that he expressed a similar intention to go after the internet next at the Conservative conference last week.

Webb's growing addiction to attacking non-casino gambling sectors will come as no surprise to students of the slippery slope, but few people seem to understand just what a whirlwind of destruction he is unleashing.

Webb wants to reduce the stake on FOBTs to £2, knowing that this will make the machines unplayable for most punters. This will likely mean the end of FOBTs in bookies in Britain.

And that will mean the end of many bookies. FOBTs contribute around half of the average betting shop's revenue. They have no way of making that money from sports betting, which has largely gone online. If they lose half their revenue, there will be thousands of closures. The Association of British Bookmakers says 92 per cent of betting shops are at risk. Nobody knows how many, but it is not unlikely that most would go.

And that has severe repercussions for the horse-racing industry. Under a system set up in the 1960s, horse-racing gets 10.75 per cent of the profits from bets placed on races in bookmakers. This amounts to a subsidy of £60 million per annum but it will be much less if bookmakers go out of business.

As Lawrence Robinson, chair of the All-Party Parliamentary Group on Racing & Bloodstock, says:

If FOBTs go, bookmakers’ shops will go, and racing will lose out. 
The government has recently extended the levy to online betting, but online operators do not necessarily pay tax in Britain (to put it mildly) and it remains to be seen how many people bet on horse-racing without betting shops acting as its high street shop window. Horse-racing has been in decline for decades. This could be the final nail in the coffin for some racecourses.  

But it doesn't end there. If FOBTs go, the government will lose £400 million per annum in gambling revenue. To claw it back, the Chancellor is reported to be looking at taxing casinos more.

Formal proposals to be circulated among senior ministers to increase taxes on casinos, sources say.

That would put casinos under added financial pressure to go alongside all their other problems (as with FOBTs, casinos can't pass the costs onto customers via their table games because the odds are fixed).

And now Webb is going to go after online gambling too! From top to bottom, Britain's gambling industry is going to suffer more from one millionaire with a bee in his bonnet than from all the religious campaigners and moral guardians put together.