Is walking worse for greenhouse gases than driving?

It appears it could be depending on how you get your calories.

These posts at Freakonomics, pointing to a long post calculating the impact of walking versus driving goes some way to turning conventional wisdom on its head. Here's the story: walking requires energy. The fuel for this energy is food. The amount of food required to replenish the calories burnt walking can require more energy and produce more externalities than driving.

I love economics because of its ability to confound conventional wisdom. And no where, perhaps, does conventional wisdom need more confounding than in confronting the very real challenges of climate change.

Rent-seeking bloodsuckers

As some of my friends and occassional dinner companions have found out, I don't have the world's most positive view of farmers. Generally, it's a bit of a show, but I do think the evidence is more or less clear that consumers -- especially the poor -- are not well-served by supply management and by the readiness of our politicians to give to farmers subsidies which they do not give to other industries. So, the argument is a bit of put-on because I like being contrarian, and a bit true, because I think the facts are with me. All of that aside, you can be sure I will pull out this article the next time the debate comes up.

It takes no foresight to guess that tobacco demand is going to continue to decline. And it takes no small amount of gumption to complain that "high taxation and anti-smoking policies have had the effect of expropriating their livelihood without compensation." No, all it takes is some incredible romantic sense that one is entitled to compensation because they work in a field as opposed to an office. Never has the term rent-seeking bloodsuckers come so easily to mind.

Halifax Taxis

Halifax taxis are absurd. For some reason, cab drivers there are legally obligated to keep their lights on even when they have a fare. If you've ever tried to flag a taxi there on a cold night then you'll know the frequent dissapointment of full-but-lit cabs passing you by. But this isn't the greatest absurdity. If you read David Rhodenheiser's column today in the Daily News, he points out that taxi licenses - i.e. the right to possess a taxi number - sell for just $50 a year. And they are owned for life. Yet, taxis are being leased for as much as $500 a month. Now, in a bout of economic illiteracy, Rhodenheiser suggests that this is leading to the exploitation of cab drivers who are paying the $500 a month to lease the licenses. Of course it is no such thing, as these drivers are neither compelled nor coerced into leasing the licenses. Rather, the travesty is that the Halifax council would price so meagerly a commodity which is obviously of much greater value. What should be occurring, of course, is that Halifax taxpayers should be receiving the market rate for every cab which is on the road, which is apparently about 120 times what they are receiving now. But what do you expect from a city that goes so far as to force cab lights to stay on when the cab is taken?

The empirical effects of minimum wage increases

There is a pretty lively if not totally well-informed debate occurring on a couple of blogs. As with a lot of things, Cherniak got it started with a post on the Ontario NDP's proposal to increase Ontario's minimum wage to $10 (it is currently at $7.75, but is moving to $8 soon). He's added a couple of other posts, and he has seen responses from MyBlahg and Plawiuk.

The problem with these posts - and especially the comments which follow them - is that none of them seem to know or at least acknowledge that there really isn't a consensus on what the effects of minimum wage increases are. And to the degree that a consensus is emerging, it's that any measurable effects are negative, but quite slight. The Economist summed up the shift in thinking quite nicely in an article last October:

The academic argument—and there has been plenty of it in recent years—has focused on the employment effects. Elementary economics would suggest that if you raise the cost of employing the lowest-skilled workers by increasing the minimum wage, employers will demand fewer of them. This used to be the consensus view. But a series of studies in the 1990s—including a famous analysis of fast-food restaurants in New Jersey and Pennsylvania by David Card at Berkeley and Alan Krueger of Princeton University—challenged that consensus, finding evidence that employment in fast-food restaurants actually rose after a minimum-wage hike. Other studies though, particularly those by David Neumark of the University of California at Irvine and William Wascher at the Federal Reserve, consistently found the opposite. Today's consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst. Lawrence Katz, an economist at Harvard University and signatory of the EPI's letter, agrees that “most reasonably well-done estimates show small negative effects on employment among teenagers”. **

I know some folks will insist that what works in theory (or in their conception of economic theory) should work in practice. Others will reject conventional economics as biased in its approach. But these objections just won't cut the empirical mustard. So, before someone of whatever political orientation starts telling you what the consequences of minimum wage increases will be, remember that the people who actually get paid to study this stuff don't really know themselves.

** (I note and particularly like the Card and Krueger article cited, because it used a natural experiment to call into question years of wisdom based on more conventional observational studies).

The moral hazards of Liberal fundraising

The Globe has a story today about how the Liberal Party is going to hold fundraisers to pay off the collective leadership debts of all leadership candidates. On the face of it, this seems like a nice show of unity. But, on deeper thought, it obviously invites a moral hazard, especially if candidates are given money proportionate to their debts. The only way the party can avoid this is by distributing the dollars entirely evenly between the candidates (i.e. total raised/# of candidates), or, even better, by giving them a share of the money equal to the their first ballot placement (i.e. total raised*share of first ballot). If the money is distributed proportionate to debt, then it just encourages behaviour like Bob Rae's (borrow tonnes of cash from corporate donors) and discourages action like Michael Ignatieff's (work your tail off through countless small fundraising endeavours).

I am glad that there is unity in the Liberal party. It's good for them and good for our democracy. But unity shouldn't overcome reason, and there seems little justification, in my mind, for rewarding foolish behaviour during the leadership race. If they do, expect to see a lot of blown banks after the next race.