Whew.
9 years ago
Saturday, March 13, 2010
Tuesday, March 9, 2010
Taxing tobacco
Recent UM Ph.D. Adam Cole points me to this interesting study on tobacco taxes produced by the US Treasury Department.
For me, the most interesting bit is in the appendix. The study authors would like to estimate the volume of cigarettes consumed in the US on which tax has not been paid. One reasonable way to do this starts with using administrative data to determine the number of cigarettes on which federal taxes are paid. Administrative data works well here because federal taxes are paid at the production site and careful records are kept. The number of cigarettes consumed, in contrast, can be estimated using data from a nationally representative survey, in this case the National Health Interview Survey (NHIS), a data set widely used in research in health economics.
The problem is that when you do this, you discover that the number of cigarettes consumed lies well below the number on which taxes are paid - see Table 4. Given that cigarettes degrade in quality when stored reasonably rapidly, which indicates that the excess cigarettes are not being stored by consumers, this finding suggests that the NHIS measure of cigarette consumption has a downward bias, presumably due to "non-classical" measurement error in smoking incidence and/or (probably and) in number of cigarettes smoked conditional on reported incidence. The study does about the only thing one can do in this situation, which is to present estimates - see Table 5 - of the lost tax revenue as a function of assumptions about the downward bias in the NHIS consumption measure. One obvious recommendation here is to improve our knowledge of the degree of downward bias in smoking consumption measures by doing some sort of validation study. More generally, this study provides a nice example of how research on measurement, which might seem rather arcane, actually has a real world payoff.
The other bit of the study that stands out to me is this:
For me, the most interesting bit is in the appendix. The study authors would like to estimate the volume of cigarettes consumed in the US on which tax has not been paid. One reasonable way to do this starts with using administrative data to determine the number of cigarettes on which federal taxes are paid. Administrative data works well here because federal taxes are paid at the production site and careful records are kept. The number of cigarettes consumed, in contrast, can be estimated using data from a nationally representative survey, in this case the National Health Interview Survey (NHIS), a data set widely used in research in health economics.
The problem is that when you do this, you discover that the number of cigarettes consumed lies well below the number on which taxes are paid - see Table 4. Given that cigarettes degrade in quality when stored reasonably rapidly, which indicates that the excess cigarettes are not being stored by consumers, this finding suggests that the NHIS measure of cigarette consumption has a downward bias, presumably due to "non-classical" measurement error in smoking incidence and/or (probably and) in number of cigarettes smoked conditional on reported incidence. The study does about the only thing one can do in this situation, which is to present estimates - see Table 5 - of the lost tax revenue as a function of assumptions about the downward bias in the NHIS consumption measure. One obvious recommendation here is to improve our knowledge of the degree of downward bias in smoking consumption measures by doing some sort of validation study. More generally, this study provides a nice example of how research on measurement, which might seem rather arcane, actually has a real world payoff.
The other bit of the study that stands out to me is this:
Recommendation 3: Allow enforcement officials to pay investigative expenses with proceeds gained through undercover operations.I disagree with this bit for the same reason I dislike asset forfeiture laws. I do not think that law enforcement should be a profit center for the government. Making it such strongly enhances the incentives for misbehavior by law enforcement officials.
Problem: Currently, tobacco tax enforcement programs are funded principally through agency appropriations or from forfeiture proceeds arising from asset forfeitures in concluded criminal cases. Additional funding through the use of proceeds gained through undercover investigations would expand investigative resources without the use of additional appropriated funds.
Recommendation: Existing law should be amended to authorize TTB to use proceeds gained from undercover tobacco tax enforcement operations to fund its investigations.
Abstract puns
Slip Sliding Away: Further Union Decline in Germany and BritainPersonally, I've always tried to avoid large German dummies.
This paper presents the first comparative analysis of the decline in collective bargaining in two European countries where that decline has been most pronounced. Using workplace-level data and a common model, we present decompositions of changes in collective bargaining and worker representation in the private sector in Germany and Britain over the period 1998-2004. In both countries within-effects dominate compositional changes as the source of the recent decline in unionism. Overall, the decline in collective bargaining is more pronounced in Britain than in Germany, thus continuing a trend apparent since the 1980s. Although workplace characteristics differ markedly across the two countries, assuming counterfactual values of these characteristics makes little difference to unionization levels. Expressed differently, the German dummy looms large.
Sunday, March 7, 2010
Expert systems in all things
In this case, the expert system helps with the decision of whether or not to skip class.
Hat tip: Greg Nicholson, who better be in ECON 490 tomorrow morning.
Hat tip: Greg Nicholson, who better be in ECON 490 tomorrow morning.
Science news cycle
This captures it perfectly!
It is a mixture of universities wanting publicity, news outlets wanting to generate excitement and fear, and ignorance of how science works on the part of journalists and the public. The only thing the comic leaves out is the wild over-representation of counter-intuitive findings in the media, because of course they are news, and confirmation of existing views is not.
Hat tip: the agitator
It is a mixture of universities wanting publicity, news outlets wanting to generate excitement and fear, and ignorance of how science works on the part of journalists and the public. The only thing the comic leaves out is the wild over-representation of counter-intuitive findings in the media, because of course they are news, and confirmation of existing views is not.
Hat tip: the agitator
Golden Razzies
My old high school buddy Glenn Simon is somehow involved enough with the Golden Razzies, the bad movie alter ego to the Academy Awards, to be a presenter. Here is this year's press release listing the winners and here is a video of Sandra Bullock living up to her name and showing up to receive her award for worst actress:
Hat tip: Glenn Simon on FB
Hat tip: Glenn Simon on FB
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