Let’s pay people $50/week to use contraception.

First – let’s be clear that I support a Universal Basic Income (UBI). The policy I suggest here could be used in additional to a UBI (ie. people would receive this allowance on top of their UBI), or in the context of our current welfare entitlements, as a less costly, less universal UBI.

The allowance

The proposal is simple. We give people of reproductive age $50/week if they are taking long term contraception (ie. IUD, depo, or implant).

Because the nature of our biology dictates that long term contraception is only available to women, only woman of ages say 16-40 would be eligible for this allowance.

The woman would, upon having her contraception installed, get a signed certificate from her doctor, which she can then take to her welfare office to start receiving her allowance. In the case of contraception that requires renewal (eg. depo), she would be required to bring this certificate to the welfare office every renewal period.

The contraception and doctor’s visit would be paid for by the state.

Someone women don’t suit certain certain kinds of contraception. Fortunately there are three different kinds – so it seems unlikely that a woman would be unsuitable to all three. In the case that she is – she could be given an alternative (eg. condoms if need be), and still be eligible for the allowance – unsuitability would need to have strict criteria.

The allowance wouldn’t be means tested; all women aged 16-40 would be eligible, regardless of whether they’re unemployed, a single mother, or they earn a million dollars a year. The reasoning for this allowance, is that it would provide people with immediate short term incentive to take contraception – making the default position to be not having children. 

Why? Decision making – the discount rate

This necessity for this policy comes down to an economic concept called discount rateIf I were to offer you $1000 now, or $1000 in a year’s time, it would make sense that you would choose the $1000 now, as you can make some use of it now, even if just to put it in the bank to earn interest.

What if I offered you $1000 now, or $2000 in a year’s time? Depending on your situation, you might take the money now, if say you had a power bill you desperately needed to pay; if you were already plenty flush, you’d more likely take the money in a year’s time, 100%pa being a pretty good return on investment. If I was offering $1000 now, or $10,000 in year’s time, you’d be even more likely to put off taking the money.

The exact ratio of how much money I’d need to offer in order for you to delay, is what determines your discount rate. The higher your discount rate, the more money I’d need to offer you to delay; or in other words, the higher your discount rate, the less the same dollar now, is worth in a years time.

Discount rates also apply to costs. Imagine if I were selling you a new phone and you can pay $500 for it now, or $1500 in three years’ time – depending on your discount rate, you might, or might not think that the three years’ time deal is a good deal.

This same decision making factor applies to taking contraception. There’s an immediate cost of taking contraception – the time spent going to the doctor, the cost of contraception etc. There’s also a cost of not taking contraception – the potential that you have a child, (or face the decision of having an abortion), the corresponding time and money costs of raising a child.

Because of peoples’ discount rate – the cost of having a child is reduced – it’s in the future and abstract, compare to the immediate real cost of using contraception. Additionally – New Zealand’s welfare entitlement for children discounts the cost having children for those not already employed by giving increased welfare entitlement.

Anecdotally – this is reflected in doctor’s offices, where a sexually active young girl, who is not on contraception is asked ‘well what are going to do if you get pregnant?’ responds with, ‘I don’t know – receive a benefit’.

An allowance for contraception provides immediate incentive to use contraception – using contraception becomes a lot more worthwhile if you’re receiving $50 a week to do so.

Why is this necessary? What’s wrong with having children? 

Firstly – global warming. The single most significant thing you can do to blow out your carbon footprint is to have children. We shouldn’t be cavalier about bringing an additional person into the world. It should be a well considered decision – which is what the allowance seeks to do – change the default from ‘having children’ to ‘not having children’.

Secondly – the social cost of additional people.

I think that the investment required to raise someone who is able to contribute to society in a meaningful manner has increased.

Where one hundred years ago – an illiterate person could have a child, and that person grows up less educated than the average person today, that person could still make a useful contribution to society – working as a labourer in a factory or building roads. This is a little glib, but all that was required to produce a useful human being, is having the person healthy and limbs intact.

Now – technology is quickly outstripping our requirement for human labour,  increasingly – those jobs machines can do.

Just being educated also won’t enough. Computers are increasingly taking on intellectual jobs – for example it’s conceivable that doctors wont be required in the future – as evidence by Watson’s ability to diagnose a patient where doctors were not.

Point is – it’s not enough to accept raising a healthy child as successful parenting – there’s a rising bar for what’s required for someone to comfortably navigate the society of the future. Even if all that ‘raising the bar’ means is ‘having parents who really wanted to have you’.

And to do that – we should be delaying parenting until people really want to (enough to forego the contraception allowance), at a point where they’re presumably more prepared and capable as parents.

Immigration

There’s another reason that I think we should be raising the standard of parenting – we can make up a short fall of unskilled and semi-skilled labour via immigration.

There is an existing tension where unskilled or semi-skilled labour in New Zealand are concerned with immigrants taking their jobs.

In a global society, with increased global cooperation I don’t think it’s fair for New Zealand to shut the doors to vast numbers of people in lesser off countries to preserve the jobs of the people lucky enough to be born here.

At the same time – I’m not proposing a fully open door policy, I think cultural tensions need to be managed, but this is out of scope for what we’re discussing here.

By having less children ourselves – that increases our ability to import labour – which is a good thing, because it means that we can select the kinds of education and skills we have to fill the gaps, rather than having to reskill or acccomodate people with skills that we didn’t choose to have.

Addressing criticisms:

“This will cost a lot of money”

Using this page from Stats NZ I estimate that 802,700 are women in the 15-39 age bracket, and using this page  2,510,000* people are employed.

That gives a cost of approximately $16/week per employed person.

Personally, I’m perfectly ok spending this kind of money, and I think many other people would be too. Especially if this program was shown to reduce money spent on sole parent welfare – the cost does not seem like a lot.

*nb. Employed counts as doing at least one hour work, so this number includes people working part time. I had a hard time trying to find fulltime employment statistics.

“This is unfair, because only woman can receive it.” 

Actually, I think this is good measure to address the gender pay gap.

“This is eugenics.”

The entire reason for making the allowance applicable to all women aged 16-40, is avoid the demographic targeting slippery slope.

“This targets the poor, because they’ll be more affected by the monetary incentive than a rich person.” 

I agree that a poor person’s decision making will be more affected by this allowance than the wealthy.

However, what’s important to highlight is that this is giving people free money, where they wouldn’t have received it before. If someone doesn’t want to subscribe to the scheme, they don’t have to.

I would be concerned if the existence of the allowance was used as a reason to cut other entitlements. For example – it wouldn’t be fair to reduce unemployment benefits with the rationale that the cut can be made up with the allowance. But given that only woman are eligible for this contraception allowance – this is quite nicely mitigated – as you couldn’t cut unemployment welfare without affecting the men, and you couldn’t apply unemployment welfare unequally between sexes.

The argument that this policy would be bad for the poor is an interesting one – because essentially it argues against giving more money to the poor.

“This might cause people to delay having children until it’s too late.”

The argument here is that for a couple who both work lower wage jobs, they might keep putting off having children while they earn that extra $2600 a year, and it eventually be too late.

There’s a couple I’d make here:

Firstly, we have Working for Families in New Zealand, which serves to assist families on lower incomes – and I wouldn’t propose scrapping that.

Secondly – I think people who really want to have children, $50/week wouldn’t be enough to put them off. The $50/week really serves as an incentive for those who don’t really intend to have kids right now.

 

An uneasy shared interest – The Trump Regime and the Anti-Free Trade Left.

anti-wto.jpg

In the early 2000’s the anarchistic left held anti-globalisation and anti-free trade as one its core issues.

You had events like the 1999 Seattle WTO protests.

More recently the attention has been on the TPPA – the left generally opposing it.

Commentators have pointed out that perhaps the only issue that Donald Trump has been consistent on, is his isolationist stance.

In the 2016 US Election, both Donald Trump and Hillary Clinton said they oppose the TPPA, though in the case of Hillary, I can’t help but wonder if this is a political compromise on her part. Bernie Sanders also opposed the TPPA. 

I don’t really understand why people oppose the TPPA. The main argument I’ve seen is that it gives corporations the power to sue governments if they pass legislation that contravenes the treaty. However, my understanding is that this would only allow corporations to sue if the countries government is passing legislation that in contravention to the trade agreement. I’m not sure that the trade agreement is anti-environment and anti-workers-rights itself.

Given that TPPA also takes place in the a context of governments trying to make progress on climate change (Barack Obama supports the TPPA, and is clearly for making progress on climate change) – I don’t think there’s a conspiracy that makes the TPPA a fundamentally anti-environment conspiracy.

So the question I have for those on the anti-globalisation left – that Donald Trump says he’s going to rip up NAFTA and opposes the TPPA – is that in itself a good thing for the world?

Book Review: Everything I ever needed to know about economics, I learned from online dating.

Everything I ever needed to know about economics, I learned from online dating. Paul Oyer. Havard Business Review Press 2014.

I was told about this book when I posted this question on an economics forum. The city library didn’t have it stocked, so I filled in a request form and two weeks later they emailed me saying that they now had it.

The book is as good as its clever pop title suggests it might be.

It’s a light, easy and entertaining read. Paul Oyer takes a shameless economic approach to discussing the dynamics of online dating. While on one hand he uses economics and game theory to explain why people act a certain way in online dating, at the same time he uses the dynamics of online dating that we might be familiar with, to outline economic concepts. The reader thus becomes more informed about the dynamics of online dating and dating in general, as well as economics in general.

The book is fairly short, I read it in a week reading about an hour a day. You could finish it in a weekend no worries if you had the time.

I won’t summarise all of the points Oyer makes, the book is short and easy enough to read yourself. However, I’ll share a couple of thoughts I had in reading it.

The basic premise Oyer makes from chapter one is that people are always looking for their highest value possible mate, even if they’ve successfully romantically matched someone. Someone settles, and discontinues their search for a higher value mate, when they evaluate that the cost of continuing search exceeds to possible additional value they’ll find. Oyer likens this search to the search between employers seeking employees, where either party might settle for a matching that isn’t their perfect job or perfect employee, because it’s too costly to continue searching. He then outlines various techniques used to assist in the search.

One interesting point Oyer made, was that for some people, their cost of search is negative – that is they’re actually getting a benefit out of searching for their perfect mate – they’re having fun, going out to dinner etc. This explains why some people don’t settle, even if they’re attracting plenty of good mates – they’re having too much fun dating to discontinue their search for the perfect mate. This resonates with my experience. In the past I’ve been happily single or dating casually and meeting people, but not willing to settle into a more serious relationship. Recently though, the appeal of meeting new people seems less attractive than the appeal of talking to someone regularly. Oyer doesn’t explicitly mention what causes one’s cost of search to increase, but I’d suggest that it’s matter of the novelty of dating wearing off, one’s values changing with maturity, and one’s biological clock ticking.

I started reading the book about two weeks after I deleted my Tinder profile, having gotten frustrated with it, and one chapter poignantly explained why my experience might have changed. Oyer gives the example of a book club. A single man seeking romance might realise that a book club has a high proportion of women, and so joining the book club would be an effective use of time for meeting a potential mate. However, as more men make this realisation and join the club, the proportion of men increase, and our initial man might consider that the book club is no longer the most effective use of his time. At the same time, the women in the book club while maybe enjoying the company of the additional man at the start, may become disillusioned with the new men joining for the intent of romance, and leave.

What this highlights is that online dating pools, like Tinder aren’t static, and can’t be modelled statically (ie. You can’t formulate a set of strategies for approaching dating in a certain pool, because by the time you have, the rules have changed). Where two years ago when I first joined it may have been a lot more novel, you might find that some people have found their match on the app and dropped out, and others are less enamoured with the concept, and others are more jaded. The idea of dynamically evolving dating pools was a new one for me, and is helpful in understanding why one’s experience with dating may change over time.

Overall, it should be clear that I think this is an excellent book, and is well worth purchasing to add to your bookshelf. It’s a very easy read and makes for some great discussion points, even if you disagree with what might be considered an unromantic approach to thinking about dating.

The book sets a good standard for discussing dating and relationships I hope that more books continue in this vein.

Charity

I have a resolution to each year donate $250 to charity.

As a single, government employee, with no kids, this is perfectly affordable and I could easily give more.

This year, I donated my money to The New Zealand Red Cross in the wake of the Nepal earthquake.

About two weeks after I gave the donation, I recieved a letter from the New Zealand Red Cross, acknowledging my donation, and asking for me to donate another $250.

I felt a little dirty receiving this message, I posted about this on Facebook and my friends quite rightly pointed out that the purpose of a charity is to raise money for its cause, and the research shows that people who have donated before are more likely to donate again. Sending a letter to ask me to donate is simply effective usage of their resources.

Today’s post addresses this issue.

A good starting point for this conversation is with this Ted Talk.

Video summary:

Dan Pallotta highlights that as a society, we assign different rules to non-profit charities, than we do to for-profit organisations, and that this kind of thinking is counter productive.

Compensation

Charities aren’t allowed to use money to incentivise its employees. It’s seen as wasteful or unethical to pay a non-profit executive a large salary.  While a for-profit organisation can pay a lot of money to attract the best talent – employees of charities are expected to be working out of the kindness of their hearts.  In Dan’s words:

You want to earn fifty million dollars selling violent video games to kids, go ahead we’ll put you on the cover of Wired magazine, but if you want to earn half a million dollars curing kids of malaria and you’re considered a parasite.

Dan points out even if a smart business exec wants to help a charity, it makes more economic sense for the him to go into the for profit sector, donate a significant amount of his income to the charity, and then get recognition as a philanthropist and a tax refund for his donation, than it would be for him to take a huge paycut and work as the CEO of the charity. (This was a particularly good part of his speech, and you can see it here.)

Dan points out that this makes working for charity a distinct mutually exclusive choice between doing well for yourself and your family, OR helping the world. The suggestion is that one should be able to to both.

Marketing 

Again, it’s seen as wasteful or unethical to spend charity funds on advertising, even though that advertising money may help the charity bring in more money.

Growing without producing a dividend. 

Dan points out that Amazon operated for six years without producing a single dividend, instead putting all its revenue into scaling the company up to size. Dan points out that it would be considered unacceptable for a charity to focus on growing its brand and size, without donating a single cent to the cause it’s committed to, even if growing big is what will help the charity in the long run.

Overhead vs The size of the pie. 

It’s often seen as a good thing if the charity has low operating costs, so that the charity can spend money on helping its cause. However, this neglects considering the scale of a charity. For example a bake sale that has only 5% overhead, isn’t as good as a large charity that has 40% overhead, if the bake sale is only producing $100 of revenue, and the large charity is producing $100m revenue.

Essentially Dan argues that as a society, we should treat charities the same way that we treat for-profits, and allow them to compensate their workers and spend money on advertising in the same way.

A charity focusing on growing in scale is good thing, because it’s essentially growing the pie which will ultimately be served to the cause.

I agree with all Dan’s points, people’s ethical assessments of charities a lot more stringent than we our assessments of non-profits, ourselves, or others.

However, there are a couple of limits to his his pie growing philosophy.

Is the over charity pie growing, or is taking market share from another charity? 

Say you have a charity with annual revenue of $10m. It’s going to adopt this pie growing philosophy to try increase its revenues to $50m. If this additional $40m has simply come from donations that people would have otherwise donated to other charities, then I’m not sure our charity has improved the world by increasing its own pie.

The overall charity pie can only grow so big. 

Let’s say that advertising is effective in convincing people to donate more to charity overall.

People can only donate so much, before they start running out of disposable income. Granted society overall can donate a lot more than it currently does, the caveat here is at some point the charity does need to monetise and start giving its money to the cause.

Simply increasing revenues can be unethical. 

Charities, like all organisations, should have some degree of social responsibility. Just like a business shouldn’t have the single bottom line of making as much money for its shareholders as possible, without consideration to its social and environmental impact, charities should adopt the same triple bottom line thinking.

This is where ‘it’s effective targeted marketing, the charity is just doing its job’ falls down. It’s also well known that the poor give more money to charity than the rich.  I would argue that it would be unethical for charities to target poorer areas for cold calling, simply because they more likely to donate money.

Instead an innovative charity (perhaps led by a highly paid CEO) could come up with ways to convince the rich to donate more to their charity.

Bottom line. 

Yes, charities seeking to increase their revenue is a good thing. However, they should be doing this in an ethical and innovative manner, rather than, what I see was quite a cynical manner in this case.

Things like the Ice Bucket challenge, were good examples of innovative charitable thinking.