Monday, December 22, 2014

Striking a blow for statistics…

Today’s ruling by the Supreme Court which stymies the Christchurch City Council’s attempts to impose a 67% of “modern code” rule over older building renovation versus the 34% intended by Parliament is a step some way toward perspective around risk, and respect for statistics not politics and unnecessary fear.

No one is dismissive of the horrors of the earthquake. To misunderstand the meaning of the statistical descriptors of such events and to seek solace and backside cover through upping standards to unrealistic levels adds insult to injury while imposing costs to no great benefit.

In respect of the likelihood of earthquake events nothing has changed. The probability of an event of a specified magnitude remains what it was prior to this event and now, after the event.  Because you saw a head come up in a series of coin tosses does not somehow change the probability of heads or tails coming up next flip.

Much the same applies to the ever misinterpreted “return periods” – just because an earthquake with a 100 year return period (say) has just “happened” does not mean:

  • there won’t be one next year;
  • they were “due for one” because the last was 160 years ago;
  • there won’t be one for 160 years; or,
  • any similar grim or glad warning.

It means that over long periods of time events of this magnitude will be observed, on average, once every 100 years.

The hard questions remain. How much do we want to spend to save a life? Is this area the best place to spend our scarce risk management dollar, does what we are planning to spend match the size of the problem we have.

This calls for use of a concept the legal fraternity fancy themselves as experts in – ensuring proportionate responses to events having regard to the evidence.

Statistics refuse to bow to sensationalism, to justify mad regulators in search of zero risk, bureaucrats trying to hide behind ever tighter regulation, journalists seeking easy stories, construction investors and companies seeking demand for risk proof buildings, material suppliers wanting to sell gold plating and much else besides.

If this is baffling – read more statistics. The cost of being baffled is high.

Wednesday, December 17, 2014

Why being sucked in by “scientific consensus fads” is deadly…

The Big Fat Surprise: Why Butter, Meat and Cheese Belong in a Healthy Diet. By Nina Teicholz. Simon & Schuster; 479 pages; $27.99. Scribe; £14.99. Buy from Amazon.com;Amazon.co.uk
A historical study of how fat came to be demonised, especially in America, by a mix of academics, government officials and food companies, and how the few sceptics who dared take on the fat orthodoxy have been much disparaged for their pains. Detailed in its research and eloquent in its argument, this is the year’s most surprising diet book.

Monday, December 8, 2014

Unhealthy ignorance and healthy foods

Green “healthy food” spokesman Kevin Hague says he has a problem with Food and Grocery CE Katherine Riches “conflict of interest” in being a member of the Health Promotion Agency  which, amongst other things, promotes healthy food while at the same time heading an organisation whose members make a profit out of distributing and selling food.

He’s right. He does have a problem.

Like the numerous others who still some 5,000 years on from first ever production, do not understand what a profit is.

At the simplest level of course, people selling healthy food make a profit. The production of muesli, St John’s Wort, mescaline weeds and all things green and vegie is undertaken for profit – just like the production of pies, potatoes and steak.

A profit is the cost of risk. Risk is an input to making healthy and unhealthy food. Without that input there is no production – healthy or otherwise. Just as a car will not provide transport without fuel so a food business will not provide food without the input of risk.

The cost of providing that risk input (the risk the business will lose its shirt) happens to be called profit. Profit does not come from the devil, thin air, nasty CEs, National Party voters, Labour Party Voters, Kim Dotcon, people who with Commerce degrees rather than BAs in literature or from people who don’t like Morris Dancing.

Profit is the cost of risk pure and simple. If you want healthy food you must pay for the risk involved in producing that food. Just as you must pay for the risk involved in producing unhealthy food. The cost of that risk is called profit.

Sending Katherine Rich out of the room, or asking the Minister of Health to fire her or asking the Auditor General to dispatch her to the corridor will not eliminate the need for profit.

It might though, hinder production of healthy food because the Food and Grocery Council members know more than a little about how to manage risk and profit in food production.

Tuesday, December 2, 2014

Grandiose poverty statements both bury the desperation and understate the progress

In N.Z. poverty is defined by some – including various quasi official qangos as including all who earn less than 50% of the median wage:

image

The line has been trending down since 1990. Is there no poverty? Of course there is. Big gesture alarming statistics hide the extent of extreme poverty while burying the hope which improvement over time is offering.

Study of those in absolute poverty shows they are living far differently from those earning the $30,000 a year the “poverty line” sets – because its a meaningless number – especially if you are poor.

On the other hand even the minimum wage for a 40 hour week delivers a gross income above that line… again probably meaningless because circumstances vary so much.

A more useful idea centres on the fact that a smaller and smaller proportion of people stay low earners for any length of time providing they can enter the workforce. The stress then needs to be on up-skilling to do that and making sure the workforce is easy to enter.

Monday, December 1, 2014

More “F word” problems…

“Forcing in an illiberal way the French style of equality of outcome, cutting down the tall poppies, envying the silly baubles of the rich, imagining that sharing income is as efficacious for the good of the poor as are equal shares in a pizza, treating poor people as sad children to be nudged or compelled by the experts of the clerisy, we have found, has often had a high cost in damaging liberty and slowing betterment.  Not always, but often.”  

McCloskey, D. p.31

Measured, Unmeasured, Mismeasured,  and Unjustified Pessimism: A Review Essay of Thomas Piketty’s  Capital in the Twentieth Century , Erasmus J of Econ and Phil. (forthcoming).