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Archive for the ‘Cost-Benefit Analysis’ Category

In the past couple of weeks, we’ve discussed a bunch of coronavirus-related issues, ranging from big-picture topics such as the proper role of government and the catastrophic downsides of excessive bureaucracy to more-focused topics such as how gun control puts families at risk, why laws against “price gouging” are misguided, and how government-encouraged debt makes the economy more vulnerable.

The crisis even led me to unveil a new theorem. And I also shared some amusing cartoons in hopes of lightening the mood.

The latest chapter in the coronavirus saga is that people are beginning to question how much economic damage we should be willing to accept in order to get the disease under control.

Public health experts argue that isolation and lockdown are critical if we we to “flatten the curve” so that new cases don’t overwhelm the ability of the system to treat patients (thus resulting in unpalatable forms of triage, with older and sicker patients set aside to die so that limited resources can be utilized to save others).

But if the economy is put on hold for several months, the economic damage will be catastrophic. At some point, policy makers won’t have any choice but to relax restrictions on people and businesses.

So how do we assess the costs and benefits of various options?

Eline van den Broek-Altenburg and Adam Atherly, both from the College of Medicine at the University of Vermont, explain the necessary tradeoffs.

While a growing number of people are starting to understand the message of the intuitive picture of “Flattening The Curve”, some health economists are starting to wonder how flat the curve should actually be for the benefits to exceed the costs. …how does the economic cost of the flattening fit into the discussion? …we use publicly available data to calculate the cost effectiveness of the flattening the curve. …When considering the value of a healthcare intervention to inform decision-making, benefits are usually measured in terms of life years gained, with the life years adjusted for the “quality” of the life (using standard formulas) to create a “Quality Adjusted Life Year” or QALY. …interventions in younger populations will typically yield more QALYs than interventions in older populations: because younger people have longer life expectancy. …Heath systems then compare the QALYs gained to the cost and calculate a cost per QALY gained. In the United States, interventions that cost less than $100,000 per QALY gained are often considered “cost effective,” although the precise number is somewhat controversial.

What you just read is the theoretical framework.

The authors then apply the model to the current situation.

…is the current “stay at home” and social isolation-policy, with school closed and businesses shuttered, cost effective using the standard health economics framework? …The years of life-gains are relatively straightforward. …statistics on the people who died of COVID19 in China and Italy are the best source of currently available data. …The average 80-year old in the United States has a life expectancy of about 9 years, suggesting that on average, a death averted will “buy” 9 extra years of life. …If we use diabetes as a reasonable proxy for the many chronic diseases, we would adjust the 9 years down to 7.8 years or QALYs. In other words: the average loss per person of quality-adjusted life years is 7.8. …This implies the pandemic, if unchecked, will lead to a loss of between 1.56 million and 13.26 million QALYs. …What, then, is the cost of the intervention of social distancing? One easy estimate would be to use the cost of the current stimulus bill before congress — 1 trillion dollars. This is likely an underestimate of the true cost, but is a reasonable starting place. …the cost per QALY gained from the current approach to be somewhere between approximately $75,000 and $650,000.

So what’s the bottom line?

Here’s a graphic they prepared.

And here’s their explanation.

…the key variable is the expected number of deaths. A pandemic that is likely to lead to 1.7 million deaths can justify the enormous public costs. However, if the pandemic is in the lower end of the predicted range, then the public funds would have been more valuable if spent elsewhere. …Some claim it is impossible or even unethical in times of a crisis, to think about cost when lives are involved. But in a world of finite resources, it’s necessary to make choices. Why not use a framework that has been defended by governments and scientists for decades?

Richard Rahn, former Chief Economist for the U.S. Chamber of Commerce, is very explicit about the downsides of an economic shutdown for future generations.

Some government officials, politicians and commentators keep saying words to the effect, “we need to spend whatever it takes to stop the coronavirus deaths.” They, of course, do not literally mean the government should spend an infinite amount of money to save a life — because, if they did, we would not let people drive more than five miles an hour in order to save more than 35,000 Americans who die on the roadways each year. …What is missing in this discussion is what American taxpayers and workers in terms of job losses should spend to save each life… Such calculations are necessary for insurance companies to price their products correctly, and for all of those government agencies involved in health and safety to determine both the proper form and degree of regulation. …If we learn that a 35-year-old MD has unexpectedly passed away, we are likely to feel far worse about the tragedy than if we hear her 90-year-old grandfather has died.

That’s Richard’s conceptual framework.

Here are his calculations.

Let’s assume that the low-cost measures will result in 50,000 more deaths (which is almost certainly on the very high-side given the experience of other countries). If we value the average death at…$2,000,000 figure… (which is high, because of the advanced age of most of the coronavirus victims), then policies that cost taxpayers, and the hit to GDP, more than $100 billion are counterproductive. Even if you assume that my figures are off by a magnitude of three, the mitigation policies should not cost more than $300 billion — not trillions.

Jeffrey Polet, a political scientist at Hope College, also explores the adverse consequences of an economic lockdown.

A panicking public will produce bad consequences, and we are already seeing its destructive effects on our economy. …While the elderly and infirm are the most vulnerable populations, small businesses, low wage laborers, and less healthy social institutions are the most likely to succumb to the economic consequences of the reaction to the virus. …The result will be, as we already see, a call for more government programs to aid those made destitute by the government’s reactions. …collective overreacting has profound social, economic, and political effects. …Good leadership neither overreacts nor under-reacts but reacts sensibly. …Calling something a “pandemic” excites public fear, even if the majority of the population is unlikely to be either directly or indirectly harmed. …For many people in this country, the prospect of losing their business or their job is far more frightening and harmful than the prospect of getting infected with the virus. An already insolvent government is hardly in a position to get this economy up and running, particularly if its policies create massive economic dislocations. …One of the appeals of utilitarianism is that it actually provides a functioning calculus, however imperfect in implementation.

I’ll close with the observation that I want to err on the side of public health in the short run, though I confess I’m not even sure what that means in terms of public policy since we not only need to agree on how much a life is worth (an unpleasant number to consider), but also get a handle on how many lives might be at risk (a very speculative number).

The goal of today’s column is simply to point out that the tradeoffs are real and to applaud the people who have the honesty to write about the issue.

In the long run, we should all appreciate the overlooked point that there is no tradeoff between health outcomes and economic outcomes.

That’s because wealthier societies are healthier societies. Here are a couple of chart from an article I wrote for the Journal of Regulation and Social Costs way back in 1992.

I’ve written about this correlation many times, both as a general concept, and also when addressing specific topics such as the adverse impact of President Obama’s anti-growth policies (and I cited one of Obama’s top economic appointees, Cass Sunstein, who explicitly agrees about the link between health and wealth).

P.S. There’s a very amusing Remy video about health-and-wealth tradeoffs at the end of this column.

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Back in 2012, I asked readers to pretend they were criminals and to contemplate whether they would want to rob a house with armed residents.

This “IQ test” was designed to help people understand that cost-benefit analysis applies to all types of human behavior, including criminality. Some criminals are smart and some criminals are stupid, but all of them want to get the most benefit at the lowest cost.

And, at the risk of understatement, the possibility of getting shot is definitely a potential cost.

But don’t take my word for it. A Colorado TV station has a very revealing story about burglars engaging in cost-benefit analysis.

In the dead of night, when no one is awake — that’s when it’s most likely that a burglar will break into your home. It usually happens in minutes, but of all the house on the block, the thieves picked yours. What about your house made it a target? Two El Paso County jail inmates are spilling their secrets. They are two men behinds dozens of break-ins back in 2011. …Their opportunities came in the form of doors left unlocked, garage doors never closed and patio screens unlatched… When asked, what in a home will make you turn away? …They say any indication on your home or vehicles that you could fight back could keep them away. Inmate #2 explains, “If it’s something that says you’re Republican, you’re not going to get hit because Republicans like their 2nd Amendment rights. They love carrying guns. I’m not going to mess with that guy.” …”I don’t know if you’re in there with a shotgun waiting for me. We’re literally terrified,” Inmate #1 says.

Here’s a screenshot from the interview.

The obvious takeaway is that criminals prefer unarmed victims (as do dictators, terrorists, mass shooters, etc).

This is common sense, which is why some folks on the left have had epiphanies on the issue of guns.

It also may explain why a strong majority of Americans agreed that gun ownership promotes safety.

Nearly six in 10 Americans say that gun ownership increases safety…58 percent agree with the statement that gun ownership does more to increase safety by allowing law-abiding citizens to protect themselves. …These findings represent a reversal from 1999, when a majority — 52 percent — said gun ownership reduces safety. And they come at a time when 47 percent of American adults say they have a firearm in the household, up from 44 percent in 1999.

There was a very recent episode in Texas that underscores why it’s important for good people to possess weapons.

New Texas gun laws made it possible for a security team at the West Freeway Church of Christ in White Settlement to act quickly and save countless lives of worshipers on Sunday, some lawmakers said. A gunman killed two people before a member of the congregation’s security team fatally shot him. “…we have taken a number of steps to help make sure that our places of worship — which should be a refuge from evils of the world — are safe for all who attend,” Lt. Gov. Dan Patrick said… State Sen. Donna Campbell…said the new law worked. “This is clearly why it was passed,” she said. “Evil is out there. But it’s not the gun. It’s the person who has control of the gun.” …State Rep. Matt Krause, R-Fort Worth, echoed the sentiment. …“The Texas Legislature understood there were some weaknesses in the laws preventing law abiding Texans from protecting themselves,” Krause said. “I think we saw the benefits of those recent laws taking effect.”

The gunman presumably thought the church was filled with unarmed victims.

Thankfully, that wasn’t the case. And this will send a signal to other lunatics. At least in Texas.

An entire town in Georgia is sending a message to bad guys about potentially very high costs.

An unconventional welcome sign greets visitors….addressing would-be criminals and warning them not to cross the locals.“Welcome to Harris County, Georgia,” it reads, sarcastically adding: “Our citizens have concealed weapons. If you kill someone, we might kill you back. We have ONE jail and 356 cemeteries. Enjoy your stay! -Sheriff Mike Jolley.” The sheriff said it’s his saucy way of welcoming people to his county while…warning them that a number of the citizens exercise their right to bear arms. …Jolley said over that the past several years, concealed weapon permits in Harris County have tripled. …Jolley said he is giving out-of-towners fair notice about what they can expect.

Crooks presumably realize that there are some unarmed homes in Harris County, notwithstanding the sign, but this message may influence their cost-benefit analyses.

The bottom line is that there are bad people in the world and gun-free zones (whether in public areas or private homes) tilt the playing field in favor of those bad people.

Which is why the idea is so ripe for satire (also see here and here).

P.S. Speaking of satire, this comparison of Chicago and Houston is entertaining.

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When I want to explain that excessive government shortens lifespans, I’m going to have a new and powerful argument thanks to the Trump  Administration’s misguided efforts to restrict vaping.

The issue is very simple.

Some people want nicotine. If vaping products are not available, they will opt for cigarettes, which are vastly more dangerous.

The Wall Street Journal recently opined on the issue, echoing the point I made about how the Trump policy will open the door for higher-risk black-market products.

The Food and Drug Administration on Thursday announced a ban on flavored e-cigarettes…don’t think this will…make teens stop vaping. …it’s not clear how much good the FDA ban will do. It is already illegal for teens under age 18 to buy e-cigarettes, but that hasn’t stopped them. …One risk of the FDA’s flavor ban is more teens might buy e-cigarettes on the black market that are less safe. Illegal products are the main culprits in the recent cases of vaping-related lung illness.

Here’s some of what Jacob Sullum wrote on this topic.

In a wake-up call for people who claim to be concerned about smoking-related disease and death, five prominent public health scholars warn that the “tremendous” harm-reducing potential of e-cigarettes could be nullified by panicky political responses to underage consumption and vaping-related lung injuries. …”There is solid scientific evidence that vaping nicotine is much safer than smoking,” the authors note, while “evidence from multiple strong observational studies and randomized trials suggests that vaping nicotine is more appealing and more effective than [nicotine replacement therapy, such as patches and gum,] at displacing smoking.” …that displacement is not limited to adults. Fairchild and her co-authors point out that “population youth smoking rates dropped much faster in the years vaping surged the most (2013–2019) than in prior years, reaching record lows during that same period, which suggests that nicotine vape use may be replacing smoking more than promoting it.” E-cigarette prohibitionists may think they are acting “out of an abundance of caution,” but the policies they advocate look downright reckless when you consider the ongoing death toll from cigarette smoking.

In the interview, I mentioned that the United Kingdom has a far more sensible approach.

Matt Ridley wrote a piece for the Wall Street Journal about his country’s policy.

Nicotine itself is far less harmful to smokers than the other chemicals created during combustion. Heavyweight studies confirm that there are much lower levels of dangerous chemicals in e-cigarette vapor than in smoke and fewer biomarkers of harm in the bodies of vapers than smokers. …In both the U.K. and the U.S. the rapid growth in vaping has coincided with rapid reductions in smoking rates, especially among young people. Yet there is a stark contrast between the two countries in how vaping has been treated by public health authorities… Many British smokers have switched entirely to vaping, encouraged by the government, whose official position is that vaping is 95% safer than smoking, an assertion now backed by early studies of disease incidence. The organizations that have signed a statement saying that vaping is significantly less harmful than smoking include Public Health England, the Association of Directors of Public Health, the Royal College of Physicians and the Royal Society for Public Health. …The argument for harm reduction is not one that comes easily to some public-health advocates, because it means promoting behaviors that may still be harmful, just less so than the alternative. Vaping doesn’t have to prove entirely safe for it to save lives, given that it mostly replaces smoking.

Brad Polumbo adds some details in a column for the Washington Examiner.

America’s war on vaping is in full swing. But when you consider the positive approach taken in the United Kingdom, the foolishness of this new conflict is laid bare. …Vaping is much healthier than smoking traditional cigarettes. E-cigarettes do contain nicotine, but nicotine was never really the problem with traditional cigarettes in the first place — it’s essentially similar to caffeine. Rather, the enormous public health problem posed by cigarettes is due to the cancer-causing chemicals they contain, such as tar, for example. Vaping products do not contain similar chemicals, making them much, much less likely to cause cancer. …If the government is to do anything to address vaping, it should be to promote it as an alternative to smoking. This is what the U.K.’s government has done, to massive success. …A sober analysis reveals that we are doing exactly the opposite of everything we should be doing. We are putting up more barriers and restrictions on vaping, and instead, we should embrace the U.K.’s approach.

Let’s shift from international policy to state policy.

In another column for Reason, Jacob Sullum explains that awful politicians in Massachusetts want to combine two bad policies – vape bans and asset forfeiture.

Massachusetts has “the worst civil forfeiture laws in the country.” It looks like state legislators are about to outdo themselves. The Massachusetts House of Representatives…approved a bill that would ban flavored e-cigarettes, impose a 75 percent excise tax on “electronic nicotine delivery systems” (including e-liquids as well as devices), and authorize forfeiture of cars driven by vapers caught with “untaxed” products. …The bill also says a police officer who “discovers an untaxed electronic nicotine delivery system in the possession of a person who is not a licensed or commissioner-authorized electronic nicotine delivery system distributor” may seize both the product and the “receptacle” in which it is found, “including, but not limited to, a motor vehicle, boat or airplane in which the electronic nicotine delivery systems are contained or transported.” …Massachusetts is poised to deprive vapers of the harm-reducing products they used to quit smoking, then steal their cars if they dare to defy that unjust and irrational edict.

Needless to say, two negatives don’t make a positive.

Let’s close with this chart, which (in a logical world) should put an end to the debate.

Yes, it would be nice if nobody used any sort of dangerous product. But in the real world, where we face tradeoffs, I’d much prefer that people get nicotine from vaping.

P.S. And people should have the freedom to make choices that involve risk. Libertarianism is about treating people like adults.

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One of the quirkier aspect of Washington policy making is the strategizing that occurs when proposed laws get names such as the “Social Security 2100 Act,” the “PATRIOT Act” or the “Affordable Care Act“.

The obvious goal is to put pressure on other lawmakers, who don’t want to go on record for…gasp…being unpatriotic or for…heaven forbid…supporting expensive care.

I was reminded of this when reading a new study examining the “Corporate Transparency Act” and the “ILLICIT CASH Act” (an acronym for “Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act”).

Who could be for secretive companies, or for criminal activity?

Well, as David Burton explains, these pieces of legislation would be all costs and no benefits.

Both bills…would impose a new, burdensome beneficial owner-ship reporting requirement on the smallest businesses in America, while exempting those most able to abuse the financial system. The Corporate Transparency Act would also burden “exempt” entities, including not-for-profit organizations. Moreover, both reporting regimes would be easily and lawfully avoided by criminal elements with even a rudimentary knowledge of business. Better, more comprehensive information is available from tax forms already provided to government—but jurisdictional turf jealousies in Congress have made it difficult to adopt less burdensome approaches using this tax information.

The report has plenty of details about how these proposals would impose onerous regulatory requirements on small businesses and non-profit organizations – including the fact that there are extremely harsh penalties for inadvertent failure (or inability) to comply with the vague legislative language.

Every small business in America would need to either file the beneficial ownership report or, if the business is in an exempt category, file a certification with FinCEN asserting the exemption. Most would not be exempt. In the case of small firms that have other entities as investors or have any-thing other than entirely conventional corporate governance, the reporting burden may be quite high. …roughly 13 million corporations or LLCs would likely be subject to the new reporting regime and required to either report or seek an exemption. Of those, about 11.2 million are small businesses that are not exempt. If even 9 percent were unaware of this new requirement and fail to file with FinCEN, two years after enactment there would be over 1 million small business owners, religious congregations, and charities in non-compliance, subject to fines and imprisonment. …the likely cost will be over $1 billion annually, and perhaps many billions of dollars each year.

Sadly, congressional supporters presumably don’t care about billions of dollars of costs being imposed on the private sector.

They don’t think beyond the fact that they can issue press releases saying they’re against “dirty money.”

What makes this particular case so disgusting is that the federal government already has all the information that would be collected by the two proposed laws. And it would be relatively simple to make it accessible for financial regulators.

The alternative approach would require the Internal Revenue Service to compile a beneficial ownership database ( based on information already provided to the agency in the ordinary course of tax administration) and to share the information in this database with FinCEN. …This approach would provide more comprehensive information to FinCEN than the proposed reporting regime. Furthermore, the social cost of this approach—creating a database based on information already provided to the IRS—would be a very small fraction of the approach contemplated in the proposed reporting regime. The increase in private compliance costs would be negligible… To implement this approach, Internal Revenue Code § 6103(i)…would need to be amended to allow the IRS to share the information with FinCEN.

So why aren’t politicians choosing this simple, low-cost, and non-intrusive approach?

The answer may cause your jaw to drop.

…this approach involves changes to the tax law (notably Internal Revenue Code § 6103), it falls with the jurisdiction of the House Ways and Means and Senate Finance Committees. …Because the primary congressional proponents of beneficial ownership reporting are on the Financial Services and Banking Committees and are not willing to relinquish control of the issue, the less burdensome, more effective approach has not moved forward.

Not that it would be a good idea to go with the alternative approach.

Yes, it would be a less-misguided way of achieving the goal, but David’s concluding analysis points out that that the entire anti-money laundering regime fails any sort of cost-benefit analysis.

The current U.S. framework is overly complex and burdensome, and its ad hoc nature has likely impeded efforts to combat terrorism, enforce laws, and collect taxes.The proposed beneficial ownership reporting regime would add substantially to the complexity and burden of the existing AML and tax information reporting regime. It would, however, do little to further law enforcement objectives. …there is no actual evidence (as opposed to bare assertions or anecdotes) that the beneficial ownership reporting regimes in other countries have had any material effect on money laundering or terrorism. …The existing AML regime is extraordinary expensive. The AML regime costs an estimated $4.8 billion to $8 billion annually.87 Yet this AML system results in fewer than 700 convictions annually, a substantial proportion (probably most) of which are simply additional counts against persons charged with other predicate crimes. …There is a need to engage in a serious cost-benefit analysis of the AML regime and its constituent parts before adding yet another poorly conceived requirement that burdens the smallest businesses in the country.

Amen.

At the risk of understatement, I’m not a big fan of these laws and regulations.

But Democrats don’t care since they see anti-money laundering laws as a way of destroying financial privacy, which they think is necessary to collect more tax revenue.

And Republicans don’t care because they mindlessly support a tough-on-crime approach, regardless of whether it actually produces positive results.

Gee, isn’t bipartisanship wonderful?

P.S. It’s not relevant to big-picture issues such as regulatory burden and cost-benefit analysis, but I want to share one final passage about the The ILLICIT CASH Act from David’s study.

The bill would raise FinCEN salaries to the level of the Federal Reserve. While it is unsurprising that FinCEN personnel want a raise, this is war-ranted only if it is established that FinCEN is systematically having difficulty attracting qualified, competent personnel. Since only five individuals out of 285 (1.8 percent) quit the agency in fiscal year 2018, it is unlikely that its compensation packages are uncompetitive. In contrast, the annual quit rate in the private sector in 2018 was 30 percent; it was 13 percent in the finance and insurance sector.

In other words, the legislation is also a back-door vehicle to further enrich a portion of the already-overpaid federal bureaucracy.

P.P.S. For what it’s worth, I have a 1-1 record in my inadvertent career as a global money launderer.

P.P.P.S. You may not think AML policy lends itself to humor, but here’s an amusing anecdote involving a former President.

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For a multitude of reasons, I wasn’t a fan of Mitt Romney’s candidacy in 2012. But when supporters of Barack Obama accused him of somehow being responsible for a woman who died from cancer, I jumped to his defense by pointing out the link between unnecessary deaths and bad economic policy.

Simply stated, market-friendly policies produce more prosperity and wealthier societies enjoy longer lifespans. Indeed, even one of Obama’s top appointees openly acknowledged that wealthier is healthier.

Which is why folks on the left are failing to do proper cost-benefit analysis when they assert that we need redistribution and intervention to help people live longer.

This issue was hot in 2017 when Republicans briefly toyed with the idea of fulfilling a campaign promise and repealing Obamacare.

Defenders of the law said repeal would cause needless deaths.

In a column for National Review, Oren Cass debunked those assertions.

If you are going to claim that someone’s policy will cause upward of 200,000 deaths, I feel that you should have relevant supporting evidence. Maybe I’m just old-fashioned that way. Certainly, no such standards seem to hamper the editors at Vox. Instead, they’ve just published “208,500 additional deaths could occur by 2026 under the Senate health plan,” in which Ann Crawford-Roberts et al. assure readers that they are using “solid estimates firmly rooted in scientific evidence — unlike the dubious claim that the ACA has saved ‘zero’ lives.” Except here’s the thing: That claim about zero lives saved is supported by multiple independent lines of analysis. …There are the numerous studies showing that patients on Medicaid achieve worse health outcomes than those without any insurance. There is the “gold-standard” randomized controlled trial in Oregon that found no significant improvement in physical health from Medicaid coverage. …There is a paper from Yale researchers that found states achieve better health outcomes when they allocate less of their social spending toward health care. And now we even have data from the ACA itself. …the nation’s mortality rate stopped decreasing and actually increased when the ACA was implemented, and matters were worst in the states that accepted the ACA’s Medicaid expansion. …None of that makes Medicaid worthless. It does not mean that Medicaid, or the ACA generally, is killing people (though the evidence for that proposition looks as good as the evidence for the idea that it is saving many lives).

Max Bloom also wrote that year about the controversy for National Review.

Repealing Obamacare will kill 24,000 people a year! No, 36,000! No, 43,000! The tax cuts are blood money! There is more than a little hyperbole about the overhaul of Obamacare proposed by the House and the Senate, and the rhetoric about tens of thousands of deaths is not a bad example. …The only thing better than a natural experiment is a random experiment, in which people are randomly distributed into groups that, in this case, either receive health insurance or don’t. Exactly this happened in Oregon in 2008, when the state randomly selected 30,000 from a waiting list of 90,000 low-income adults to participate in a limited expansion of Medicaid. In theory, this should have produced a perfect test of the effects of insurance on health-care outcomes — indeed, as Peter Suderman notes, a bevy of liberal writers touted an early analysis of the experiment as a conclusive vindication of the effects of health insurance. Until they saw the final data, that is. The Oregon study found that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years.” …In short, the only problem with the estimate that Obamacare repeal will kill tens of thousands is that it cherry-picks one study out of several, ignores the limitations of that study, assumes that private insurance and Medicaid are equivalent, assumes that losing health insurance and gaining health insurance are precisely symmetric, uses implausible estimates of coverage loss, and relies on an idiosyncratic definition of the word “kill.” Otherwise, it’s fine.

By the way, these two articles didn’t even consider the “cost” side of cost-benefit analysis.

The columns simply noted that there’s no evidence for the notion that Obamacare-type subsidies help people live longer. In other words, the “benefit” side of cost-benefit equation is empty.

So imagine what we would discover about health outcomes if various Obamacare costs (job losses, tax increases, lower income, etc) were added to the analysis.

A similar debate is happening on the other side of the ocean.

In a column for CapX, Guy Dampier addresses the silly claim that spending restraint kills people.

…a November 2017 paper in the British Medical Journal…found a link between restrictions on health and social care spending – austerity – and 120,000 additional deaths between 2010 and 2017. The paper’s authors..reached this by extrapolating from an estimated 45,000 “higher than expected” number of deaths between 2011 and 2014 and then projecting that to cover 2010 to 2017. …although even they had to admit they had only captured association and not discovered causation. …The medical community responded to the BMJ paper with scepticism. …Others pointed out the many issues in the methodology. …the IPPR, a think tank with close links to Labour, published a report in June this year with a similar claim: that if trends in mortality between 1990 and 2012 had continued there “could have been 130,000 deaths averted between 2012 and 2017”. …When pressed the IPPR admitted that the apparent spike in mortality had started two years before austerity began… The years of austerity have been tough for many people, without doubt. But these issues show that neither claim – of 120,000 or 130,000 deaths – stands up to scrutiny.

Once again, the left’s numbers only look at one side of the equation.

There’s no attempt to measure the health benefits of a faster-growing, less-encumbered economy.

Yet even using incomplete analysis, they don’t have any persuasive evidence for bigger government.

Let’s now close by looking at a global example.

Last year, the Washington Post published a fascinating article on pollution and life expectancy, and it included analysis on which parts of the world are getting cleaner and dirtier.

University of Chicago researchers wanted to make air quality measurements less abstract and more relatable — and what is more relatable than years of life? The pollution most responsible for shortening lives consists of the tiniest airborne particles, called PM2.5. They are small enough to penetrate deep into the lungs and bloodstream, causing breathing and cardiovascular problems, cancer and possibly even dementia. They’re bad for healthy people and terrible for young children, the elderly and anyone who already has heart or respiratory problems. …The Chicago team started with satellite data that mapped the annual PM2.5 concentration in air all over the world, from 1998 to 2016. …Then they calculated how much longer people would live if the air they breathe had fewer — or none — of these particles. The result of the project is the Air Quality Life Index.

Here’s the accompanying map, which shows good news for most parts of the world other than China, India, and Indonesia.

The obvious takeaway from this article is that nations should strive mightily to reduce this type of air pollution. Especially in Asia.

And maybe that’s actually true.

But let’s consider both sides of the equation. These Asian nations are in the process of industrialization, which means they are getting much richer and therefore have the ability to enjoy much better levels of food, housing, and health care.

We also know that life expectancy has significantly improved in China. So the bad impact of pollution obviously is being offset by something.

And the article notes that China is now working to curtail pollution, which makes sense since nations become more environmentally conscious as incomes increase.

By the way, I’m not trying to identify the right tradeoff between pollution and growth. Or the ideal tradeoff between redistribution and growth.

Instead, I’m simply pointing out that tradeoffs exist, even if some of my friends on the left like to pretend otherwise.

If you’ve been diligent enough to get to this point, you deserve to enjoy this very topical Remy video.

Rather appropriate that Elizabeth Warren plays a starring role.

P.S. You can enjoy more Remy videos by clicking here, hereherehere, and here.

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Moral panics in Washington are not a recipe for good policy.

That’s why the current attack on vaping (the use of e-cigarettes) is so misguided.

Policy makers want to ban and/or restrict e-cigarettes (especially flavored varieties) for two reasons.

  • Consuming e-cigarettes may cause harm to users.
  • Vaping may lure some young people into using nicotine.

Both of these concerns are reasonable, at least from a utilitarian perspective.

But if we’re taking that approach, policy makers also should be looking at the other side of the cost-benefit equation (the Food and Drug Administration sadly does a lousy job of comparing costs and benefits).

And the under-appreciated benefit of e-cigarettes is that they reduce tobacco consumption, which is far more risky.

The Wall Street Journal opined recently on this issue.

A campaign against vaping products is moving at land speed records, with the Trump Administration announcing this week it will pull flavored e-cigarettes from the market. This is becoming a political pile on, and regulators risk foreclosing one of the best opportunities in public health, which is to reduce cigarette smoking. …Vaping devices include an array of products from pens to tanks. …The point is to offer the buzz of a cigarette without the combustion of tobacco that releases carcinogens and makes smoking so dangerous. …agencies like Public Health England have said such e-cigs are 95% safer than smokes. …No one wants kids addicted to nicotine, and the question is how to balance these competing equities. It is hardly obvious that banning flavors will keep teens from vaping. …A Juul executive told Congress this summer that a result of exiting convenience stores has been other actors exploiting the vacuum by selling illegal flavor pods. Expect more such unintended consequences. And if the flavor ban doesn’t reduce the number of teen vapers, then what? The next step looks like an even broader ban, which won’t be a net positive to public health. …The question is not whether vaping is healthy—it isn’t—but whether the frenzy against e-cigarettes is moving faster than the evidence. …forgotten in the rush are the 480,000 Americans who die each year from smoking.

In addition to his attacks on the twin scourges of salt and large-sized drinks, Michael Bloomberg is a leading advocate of vaping restrictions.

Jacob Sullum of Reason explains why, if successful, his efforts will cause more death.

Former New York City Mayor Michael Bloomberg, the billionaire busybody who can be counted on to oppose individual freedom in almost every area of life, is launching a prohibition crusade against flavored e-cigarettes. …The premise of Bloomberg’s $160 million campaign, which aims to persuade “at least 20 cities and states” to “pass laws banning all flavored tobacco and e-cigarettes,” is that flavored e-liquids are obviously designed to entice “children,” because only children like them. That is demonstrably false. ..Last year, Vaping360, a site aimed at former smokers who have switched to vaping and current smokers who are thinking about it, surveyed readers about their favorite Juul pod flavors. It got more than 38,000 responses, and the top pick by far was Mango (46 percent), followed by Cool Mint (29 percent), Crème Brulée (11 percent), and Fruit Medley (8 percent). …Surveys of former smokers find that flavor variety plays an important role in the process of switching to vaping. The Food and Drug Administration has acknowledged “the role that flavors…may play in helping some smokers switch to potentially less harmful forms of nicotine delivery.” …Bloomberg has “committed nearly $1 billion to aid anti-tobacco efforts.” Now he is committing $160 million to pro-tobacco efforts, lobbying for laws that will drastically reduce the alternatives to conventional cigarettes, resulting in more smoking-related disease and death.

Robert Verbruggen also explains cost-benefit analysis in his column for National Review.

The Trump administration’s Food and Drug Administration is gearing up to ban e-cigarette flavorings besides the ones that taste like tobacco. It’s unclear if this would have any benefits for public health. …Upstart products such as e-cigarettes, which deliver nicotine without all the tar and other nasty chemicals that cigarettes contain, and are estimated to be 95 percent safer as a result. …even for minors it’s far better to vape than to puff Camels, and it’s not as if no adult enjoys, say, strawberry flavoring. Better taste is one reason to vape instead of smoke for pretty much anyone who has to decide between the two, and if e-cigs are limited to tobacco flavoring, this rule could push some people back toward traditional cigarettes. And if real cigarettes are 20 times as dangerous as e-cigs, it doesn’t take much switching to cancel out the benefit of a reduction in vaping.

But I also like his article because he points out that this is another example of the “administrative state” in action.

…this is not a decision that Congress ever should have left in the executive branch’s hands. …in 2009 Congress, in its infinite wisdom, gave the FDA the authority to regulate tobacco products — except for all the products that were already on the market. This meant that the agency would have authority over upstart products competing with cigarettes, but the rules would not apply to cigarettes themselves. ……Congress should write laws, especially laws that ban entire product categories, not turn that power over to unelected busybodies who will opt for regulation over personal freedom every single time they encounter a choice between the two.

Best of all, he makes the libertarian argument that people should enjoy liberty.

What is clear is that it will be a disaster for personal freedom… Smoking cigarettes is one of those things that we allow adults to do even though it’s obviously bad for them, causing numerous cancers and other health problems. …It’s a free country. …One does not need to be a dyed-in-the-wool libertarian to be disgusted at this affront to personal freedom and responsibility. …Adults should be free to do what they want, so long as they take responsibility for the consequences of their actions. That includes smoking. And it definitely includes the far safer alternative of vaping fruit-flavored e-juice.

Amen.

I think the utilitarian argument for vaping is strong. As this visual from an anti-cancer group in the U.K. notes, it passes a cost-benefit test for savings lives.

But utilitarianism isn’t everything.

I can’t resist also unleashing my inner libertarian as we conclude today’s column.

The bottom line is that people should be allowed to take risks. They should even be allowed to make dumb choices.

That includes drug use, sugary drinks, gambling, over-eating, smoking, voting for socialists, hang gliding, alcohol usage, and standing between a politician and a TV camera.

It’s called freedom.

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While it’s very good to have a clean environment, many environmentalists don’t understand cost-benefit analysis. As such, they make our lives less pleasant – inferior light bulbs, substandard toilets, inadequate washing machines, crummy dishwashers, dribbling showers, and dysfunctional gas cans – for little if any benefit.

We can add recycling to that list.

To be sure, all the hassle and time of sorting our garbage might be an acceptable cost if something was being achieved.

Unfortunately, as Jeff Jacoby has explained, that’s not the case. Not even close.

Let’s explore the issue.

In an article for the American Institute for Economic Research, Professor Michael Munger explains that most recycling actually is a net negative for the environment.

…I was invited to a conference called Australia Recycles! …Everyone there, everyone, represented either a municipal or provincial government, or a nonprofit recycling advocacy group, or a company that manufactured and sold complicated and expensive recycling equipment. …Recycling requires substantial infrastructure for pickup, transportation, sorting, cleaning, and processing. …For recycling to be a socially commendable activity, it has to pass one of two tests: the profit test, or the net environmental-savings test. If something passes the profit test, it’s likely already being done. People are already recycling gold or other commodities from the waste stream, if the costs of doing so are less than the amount for which the resource can be sold. …The real question arises with mandatory recycling programs — people recycle because they will be fined if they don’t, not because they expect to make money… If you add up the time being wasted on recycling rituals, it’s even more expensive to ask each household to do it. The difference is that this is an implicit tax, a donation required of citizens, and doesn’t cost money from the public budget. But time is the least renewable of all resources… For recycling to make any sense, it must cost less to dispose of recycled material than to put the stuff in a landfill. But we have plenty of landfill space, in most of the country. And much of the heaviest material we want to recycle, particularly glass, is chemically inert and will not decompose in a landfill. …landfilling glass does no environmental harm… So, is recycling useful? As I said at the outset, for some things it is. Aluminum cans and corrugated cardboard, if they can be collected clean and at scale, are highly recyclable. …But for most other things, recycling harms the environment. …If you care about the environment, you should put your bottles and other glass in the regular garbage, every time.

Jon Miltimore explains, in a column for the Foundation for Economic Education, that hundreds of cities have repealed recycling mandates because they simply don’t make sense.

…after sending my five-year-old daughter off to school, she came home reciting the same cheerful environmental mantra I was taught in elementary school. “Reduce, reuse, recycle,” she beamed, proud to show off a bit of rote learning. The moral virtue of recycling is rarely questioned in the United States. …recycling is tricky business. A 2010 Columbia University study found that just 16.5 percent of the plastic collected by the New York Department of Sanitation was “recyclable.” “This results in nearly half of the plastics collected being landfilled,” researchers concluded. …hundreds of cities across the country are abandoning recycling efforts. …Like any activity or service, recycling is an economic activity. The dirty little secret is that the benefits of recycling have been dubious for some time. …How long? Perhaps from the very beginning. …there are the energy and resources that go into recycling. How much water do Americans spend annually rinsing items that end up in a landfill? How much fuel is spent deploying fleets of barges and trucks across highways and oceans, carrying tons of garbage to be processed at facilities that belch their own emissions? …It’s time to admit the recycling mania is a giant placebo. It makes people feel good, but the idea that it improves the condition of humans or the planet is highly dubious.

On a related topic, another FEE column even shows that anti-waste campaigns may actually increase waste.

To reduce waste, most governments run communication campaigns. Many try to make consumers feel guilty by telling them how much people like them waste (food, paper, water…). …The idea is that once people realise how much they waste, they will stop. Unfortunately, research has shown that when people are told that people like them misbehave, this makes them act worse, not better. In a June 2018 study, we confirm this backfiring effect in a series of studies on waste… Indeed, we found that backfiring effects of anti-waste messages happened because of difficulty. When consumer read that everyone wastes a lot, they think that it must be difficult to cut waste – so they don’t even try.

Let’s get back to the specific issue of recycling.

The fact that it doesn’t make sense is hardly a new revelation.

Way back in 1996, John Tierny had a very thorough article in the New York Time Magazine that summarized the shortcomings of recycling.

If you don’t want to read this long excerpt, all you need to know is that landfills are cheap, safe, and plentiful.

Believing that there was no more room in landfills, Americans concluded that recycling was their only option. Their intentions were good and their conclusions seemed plausible. Recycling does sometimes makes sense — for some materials in some places at some times. But the simplest and cheapest option is usually to bury garbage in an environmentally safe landfill. And since there’s no shortage of landfill space (the crisis of 1987 was a false alarm), there’s no reason to make recycling a legal or moral imperative. Mandatory recycling programs…offer mainly short-term benefits to a few groups — politicians, public relations consultants, environmental organizations, waste-handling corporations — while diverting money from genuine social and environmental problems. Recycling may be the most wasteful activity in modern America: a waste of time and money, a waste of human and natural resources. …Americans became racked with garbage guilt…  Suddenly, just as central planning was going out of fashion in eastern Europe, America devised a national five-year plan for trash. The Environmental Protection Agency promulgated a “Waste Hierarchy” that ranked trash-disposal options: recycling at the top, composting and waste-to-energy incinerators in the middle, landfills at the bottom. …Politicians across the country…enacted laws mandating recycling and setting arbitrary goals…, typically requiring that at least 40 percent of trash be recycled, often even more — 50 percent in New York and California, 60 percent in New Jersey, 70 percent in Rhode Island. …The Federal Government and dozens of states passed laws that required public agencies, newspapers and other companies to purchase recycled materials. …America today has a good deal more landfill space available than it did 10 years ago. …there’s little reason to worry about modern landfills, which by Federal law must be lined with clay and plastic, equipped with drainage and gas-collection systems, covered daily with soil and monitored regularly for underground leaks. …Clark Wiseman, an economist at Gonzaga University in Spokane, Wash., has calculated that if Americans keep generating garbage at current rates for 1,000 years, and if all their garbage is put in a landfill 100 yards deep, by the year 3000 this national garbage heap will fill a square piece of land 35 miles on each side. …This doesn’t seem a huge imposition in a country the size of America. …The millennial landfill would fit on one-tenth of 1 percent of the range land now available for grazing in the continental United States. …many experts and public officials acknowledge that America could simply bury its garbage, but they object to this option because it diverts trash from recycling programs. Recycling, which was originally justified as the only solution to a desperate national problem, has become a goal in itself… The leaders of the recycling movement…raise money and attract new members through their campaigns to outlaw “waste” and prevent landfills from opening. They get financing from public and private sources (including the recycling industry) to research and promote recycling. By turning garbage into a political issue, environmentalists have created jobs for themselves as lawyers, lobbyists, researchers, educators and moral guardians.

The bottom line is that most recycling programs impose a fiscal and personal cost on people for very meager environmental benefits.

Indeed, the benefits are often negative once indirect costs are added to the equation.

So why is there still support in some quarters?

In part, it’s driven by contributions from the companies that get paid to process recycled material.

But that’s only part of the story. Recycling is a way for some people to feel better about themselves. Sort of an internalized version of virtue-signalling.

That’s not a bad thing. I like a society where people care about the environment and feel guilty about doing bad things, like throwing trash out car windows.

But I’m a bit old fashioned in that I want them to feel good about doing things that actually make sense.

P.S. There’s a Washington version of recycling that is based on taxpayer money getting shifted back and forth between politicians and special interests.

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