Tuesday, 17 October 2017

Jamie Oliver's sugar tax 'success'

The evidence that taxing sugary drinks has any effect on obesity is - to put it mildly - poor. The great success story is supposed to be Mexico but we now know that per capita consumption of sugary drinks was essentially the same after that tax was introduced (in 2014) as it was before.

The other success story is supposed to be Berkeley, California, where sugary drink sales fell by 9.6 per cent after a soda tax was introduced in March 2015. But as I mentioned last week, you only have to read the study to see what really happened. Sales fell by 0.8 fluid ounces per transaction in Berkeley but they rose by 0.7 fluid ounces per transaction in neighbouring areas. People simply went out of town to do their shopping.

Since the quantities of sugary drinks consumed didn't change after the soda taxes were introduced in Mexico and Berkeley, it is inconceivable that they could have any effect on obesity. The authors of the Berkeley study (who include soda tax fanatic Barry Popkin) admitted that there was no statistically significant change in calorie intake from sugary drinks and that 'caloric intake of untaxed beverages (milk and other diary-based [sic] beverages) increased.'

Things are not looking good for advocates of these taxes, especially after the taxpayers' revolt in Chicago. An element of desperation is creeping in, hence this today...

Jamie Oliver’s 10p tax on sugary drinks sold in his Italian restaurants has resulted in a significant drop in sales, a study has found.

Jamie knows a thing or two about losing sales. He's been closing restaurants left, right and centre this year. However, the study looks at soft drink sales per customer so should not be affected by the general decline of Oliver's businesses. So what's the story?

A study of the effects of the levy, published in the Journal of Epidemiology & Community Health, has found that sales of sugar-sweetened drinks such as colas and lemonades fell by 11% in the first 12 weeks. At the end of six months, sales were 9.3% lower than they had been before the levy was introduced.

The price elasticity of sugary drinks is generally though to be around 0.8-1.2, meaning that a 10 per cent increase in price leads to a fall in demand of roughly 10 per cent. Jamie Oliver's drinks are so expensive - at £2.60 to £3.25 - that a 10p 'tax' only increases the price by 3.5 per cent.

A decline in sales of 9.3 per cent as a result of a 3.5 per cent price rise is implausible. It would imply a price elasticity of about 3.0, ie. three times higher than has been observed elsewhere.

To their credit, the researchers admit that this is not very likely...

Prof Steven Cummins of the department of social and environmental health research at the London School of Hygiene and Tropical Medicine, who carried out the study, acknowledged that the clientele of Oliver’s restaurants tended to be affluent, and that the price hike on a drink costing between £2.60 and £3.25 might not make a lot of difference to them.

“I don’t think the financial element of it is a massive disincentive,” he said. But he likened it to the plastic bag charge, which prompts people to think about having one.

It's worth remembering that Jamie introduced his 'tax' after presenting a ridiculous documentary on Channel 4 that portrayed sugary drinks as something akin to asbestos. This is likely to have had an effect on the kind of morons who admire the man and go to his restaurants. By the same token, it is likely that people who enjoy sugary drinks and don't want to be lectured by a fat-tongued Essex pea-brain would have been less likely to go to his restaurants after Oliver got on his high horse.

In other words, the people who visited his poxy restaurants after he introduced this gimmick were not necessarily the same people who visited before.

The drop in sales at six months of 9.3% was only in the restaurants that previously had higher levels of sales of sweetened drinks. There was a general drop in sales on non-alcoholic beverages, except for fruit juices, which went up. 

This is an important point. The most interesting thing about sugary drinks taxes is seeing what substitution effects take place. The Guardian doesn't give the figures, but the study says that there was a 22 per cent rise in the sale of fruit juice (which has about the same amount of sugar as a fizzy drink), although fruit juice orders from the children's menu fell. Sales of off-menu mixers went up slightly, but sales of diet cola and bottled water went down (by 6-7 per cent).

In fact, the sale of nearly every type of drink went down. It is not clear what, if anything, people were switching to. The authors don't have figures for alcohol sales for some reason, but the rise in the sale of mixers suggests that the sale of spirits may have increased. Alternatively, people could have switched to tap water. Either way, it left Oliver out of pocket.

He [Cummins] said he thought the effect was “entirely transferable” to other less expensive chains. “There is no reason why other restaurants couldn’t do exactly the same,” he said. 

Actually, there is a very good reason. Drink sales are an important revenue stream for restaurants and Oliver seems to have lost them overall. It speaks volumes about 'public health' researchers that Cummins doesn't think this would play a part in a restaurateur's planning.

This study doesn't tell us anything useful about the impact of sugary drink taxes as a government policy. I'll leave it to Kevin McConway, emeritus professor of applied statistics at the Open University, to have the last word:

“The menu was redesigned: it explained that the proceeds of the levy would go to the Children’s Health Fund, new drink products were introduced, and Jamie himself appeared in a television programme about sugar. So we certainly can’t be sure that the fall in consumption of sugary drinks was entirely, or even mainly, caused by the extra 10p.

“The researchers do provide some circumstantial evidence that the 10p played a role in the reduction in consumption, but they (rightly) make it clear that a study like this can’t prove what caused what. Actually, it doesn’t even establish that any of the specific changes at Jamie’s Italian restaurants had anything to do with the lower consumption – for instance, the researchers had no data from any other restaurants, and maybe consumption fell there as well"

“It’s interesting that, in this study, the consumption of fruit juice from the children’s menu fell as well – indeed it fell by rather more than the consumption of the sugar-sweetened drinks, while consumption of fruit juice from the main menu went up. Maybe the numbers of children going to the restaurants changed, relative to the numbers of adults – the researchers couldn’t tell because they had no data on whether customers were adults or children. Maybe things would have been clearer if they had had data over a full year after the change, rather than just from September to February.

Quite so.

Monday, 16 October 2017

Problem gambling figures misrepresented yet again

Back in May, I wondered why Phillip Blond had suddenly taken an interest in fixed odds betting terminals. It now transpires that his think tank, Respublica, had been commissioned by the Campaign for Fairer Gambling to write a report about them. It was published today and you won't be surprised to hear that it supports Derek Webb's longstanding goal to reduce the stakes to an unplayable £2.

I wouldn't bother mentioning it here if it weren't for the fact that it does what so many anti-FOBT campaigners do and lies about the problem gambling statistics... 

The latest available research has found that the number of problem gamblers has surged – from 280,000 in 2012 to 430,000 in 2015. 

Respublica provide two references for this: a Gambling Commission report about England and Scotland with statistics from 2012 and a Gambling Commission report about England, Scotland and Wales with statistics from 2015.

Respublica don't mention the fact that the latter report has an extra four million people in it (three million people live in Wales, plus UK population growth of around one million). In fact, they explicitly claim that both reports only look at England and Scotland. They then claim that there was a rising in problem gambling in these three years 'of over 50 per cent'.

This is implausible on the face of it and it is untrue. The 2012 report gives an estimate of the number of problem gamblers under the two usual measures: 

The confidence interval for the DSM-IV estimate was 0.3%–0.7%, for the PGSI estimate 0.2%–0.6% and for either screen 0.4%–0.9%.

And the 2015 report says:

The confidence interval for the DSM-IV estimate was 0.5% to 1.0%, for the PGSI estimate 0.4% to 0.9% and for either screen 0.6 % to 1.1%.

The figures from 2015 are higher, but there is not a statistically significant difference. All these estimates tell us is that there is a 95% probability that the real figure lies somewhere between the confidence intervals.

Even a naive reading of the stats does not imply a 50 per cent increase, however, and the Gambling Commission's most recent (absolute) number is 320,000 people, not 430,000 people.

If you look at the figures from 2010 you will see that they are higher than in either of the subsequent reports, being 0.7%-1.2% under the DSM-IV estimate and 0.5%-1.0% for the PGSI estimate. (The 2010 report didn't combine the two to come up with a third estimate.)

And the 2010 figures were slightly higher than the 2007 figures. So it goes. These estimates have wide confidence intervals and they fluctuate a bit but there is no visible trend in either direction. (See here for more details about this.)

There was not a significant increase between 2012 and 2015, just as there was not a significant decline between 2010 and 2015. Every problem gambling survey since 1999 has been consistent with the hypothesis that problem gambling prevalence has held steady at around 0.7%.

As I have said before, you can only pretend that there is a trend if you cherry-pick your reports and ignore the confidence intervals. That's why rates of problem gambling have appeared to be doubling and doubling in the last decade, if you believe the media, without the number of problem gamblers ever getting larger. 

There isn't much else in the Respublica report to discuss because it doesn't provide much in the way of evidence, but a dishonourable mention should go The Times for making this howler in its coverage...

In total about 1.5 million people play the machines, collectively losing more than £1.7 billion last year, almost £12,000 each on average.

£1.7 billion divided by 1.5 million people is £1,133, not £12,000. The Times is out by a factor of ten.

Thursday, 12 October 2017

Nudge and liberty

The behavioural economist Richard Thaler won the Nobel Prize this week. I was on the Moral Maze with Thaler back in 2010 and it was obvious that we were the only two people out of the eight on the show who had read his book. This wouldn't have mattered except that the show was all about nudging and Thaler had to listen to his ideas being totally misrepresented. I remember him saying to one panellist, 'you could not be wronger'.

People have been getting nudge wrong ever since and Thaler occasionally corrects them...

Some libertarians find nudging a bit sinister but most of them have never read the book either. Personally, I have always thought that libertarian paternalism was much more libertarian than paternalistic. The main criticism of nudging is not that it is authoritarianism but that it is quite trivial. In practice, there are not many problems that can be solved by nudging, particularly by government.

I've written about this in my forthcoming book, Killjoys, which will be published on November 10th and I've given CapX an excerpt which you can read here.

I'll say more about the book in a future post but here's the cover.

Wednesday, 11 October 2017

A great day in Chicago

In what is undoubtedly the feelgood story of the week, officials in Cook County, Illinois overwhelmingly voted to repeal their hated soda tax after just two months. Cook County is the home of Chicago, America's third largest city, so this is kind of a big deal, even if the UK media chooses to ignore it.

I've written about it here for Spectator Health, so do pop over and read my article, but let's take a moment here to savour the defeat of that evil old fossil Michael Bloomberg who has been bankrolling soda tax campaigns all around America (and beyond). He's not short of money but even a billionaire must smart from pouring millions of dollars down the drain, as he has in Chicago.

In 2016, Bloomberg handed over $1 million for ads to build support for the tax, and then donated another $2 million in August 2017.

In September, Bloomberg funnelled in another $3 million to the pro-tax cause.

And two weeks ago, in an extraordinary act of hubris, he handed out a $2.5 million grant to some 'public health' researchers at the University of Illinois to study the effects of the tax.

Bloomberg therefore spent at least $6 million campaigning for a soda tax that died on its arse after two months. He then spent another $2.5 million to study its non-existent impact. Evidently, Bloomberg's efforts to change the law in another city were not appreciated...

Funny as this all is, Bloomberg could be using his fortune to do some good in the world and heal the sick, but he chooses to spend it on campaigns to make fizzy drinks a bit more expensive which are a waste of time whether they succeed or not. At best, they will fail and we can have a good laugh at him. At worst, they succeed and the cost of living goes up. Meanwhile, there are important medical services that could spend the money usefully.

Anyway, do read my Spectator piece.

Tuesday, 10 October 2017

Fake obesity news

There are more worthless obesity predictions on the front page of The Guardian today...

In 2014, a third of men and women in the US were obese (34%). By 2025 that is predicted to be 41%. 

Really? Because in 2007 we were told that the obesity rate would have reached 41% two years ago...

More than three quarters of American adults will be overweight by 2015, a survey has found. A further 41 per cent will be obese if people continue to gain weight at the current rate, according to the study by Johns Hopkins University.

Still, I'm sure they'll be right this time, eh? I mean it's not as if the obesity rate is falling in America or anything, is it? Oh.

How about Britain? What do the ball-gazing experts of the World Obesity Federation reckon will happen here?

In the UK, more than a quarter of adults (27%) were obese in 2014 and that will rise to 34% by 2025.

Yeah? Well, it was supposed to have hit 32% two years ago according to the government's ill-titled Foresight report of 2007 which said...

The extrapolation of current trends, which underpins the microsimulation, indicates that, by 2015, 36% of males and 28% of females will be obese.

And the new prediction of 34% by 2025 is a bit of a climb down from the 41.5% predicted in Foresight...

By 2025, these figures are estimated to rise to 47% and 36% respectively.

As I have said before, I will happily take a bet with anybody that these predictions do not come true, which is to say that the real rate will be lower than the forecast. It always is because these 'microsimulations' are not serious attempts to plan for the future. They are quack statistics made up by spivs to draw attention to special interests (in this instance, it's World Obesity Day tomorrow).

Obesity forecasts are among the most useless trash in the whole 'public health' racket. Any journalists who give them credence should be ashamed of themselves.

A one-man anti-gambling torpedo

The Financial Times published an interview with Derek Webb recently. Webb is the multi-millionaire inventor of Three Card Poker who has put a small fortune into the Campaign for Fairer Gambling, an organisation he formed to attack fixed-odds betting terminals in betting shops.

He clearly feels that he has the wind in his sails because he's eyeing up his next target...

He adds he may broaden CFG’s focus to target online gambling next. “I want to fight where I can win,” says Mr Webb.

I'm told that he expressed a similar intention to go after the internet next at the Conservative conference last week.

Webb's growing addiction to attacking non-casino gambling sectors will come as no surprise to students of the slippery slope, but few people seem to understand just what a whirlwind of destruction he is unleashing.

Webb wants to reduce the stake on FOBTs to £2, knowing that this will make the machines unplayable for most punters. This will likely mean the end of FOBTs in bookies in Britain.

And that will mean the end of many bookies. FOBTs contribute around half of the average betting shop's revenue. They have no way of making that money from sports betting, which has largely gone online. If they lose half their revenue, there will be thousands of closures. The Association of British Bookmakers says 92 per cent of betting shops are at risk. Nobody knows how many, but it is not unlikely that most would go.

And that has severe repercussions for the horse-racing industry. Under a system set up in the 1960s, horse-racing gets 10.75 per cent of the profits from bets placed on races in bookmakers. This amounts to a subsidy of £60 million per annum but it will be much less if bookmakers go out of business.

As Lawrence Robinson, chair of the All-Party Parliamentary Group on Racing & Bloodstock, says:

If FOBTs go, bookmakers’ shops will go, and racing will lose out. 
The government has recently extended the levy to online betting, but online operators do not necessarily pay tax in Britain (to put it mildly) and it remains to be seen how many people bet on horse-racing without betting shops acting as its high street shop window. Horse-racing has been in decline for decades. This could be the final nail in the coffin for some racecourses.  

But it doesn't end there. If FOBTs go, the government will lose £400 million per annum in gambling revenue. To claw it back, the Chancellor is reported to be looking at taxing casinos more.

Formal proposals to be circulated among senior ministers to increase taxes on casinos, sources say.

That would put casinos under added financial pressure to go alongside all their other problems (as with FOBTs, casinos can't pass the costs onto customers via their table games because the odds are fixed).

And now Webb is going to go after online gambling too! From top to bottom, Britain's gambling industry is going to suffer more from one millionaire with a bee in his bonnet than from all the religious campaigners and moral guardians put together.

Monday, 9 October 2017

It's 10 years since George Monbiot said 'Bring on the recession'

Ten years ago today, George Monbiot wrote an article for the Guardian titled 'In this age of diamond saucepans, only a recession makes sense'. Columnists don't write their own headlines, but when he reproduced it on his own website, Monbiot gave it an even less ambiguous title: 'Bring on the recession'.

Three weeks earlier, Lehman Brothers had filed for bankruptcy and there had been a run on the Northern Rock bank. These were the early rumblings of a financial crisis that would engulf most of the world in 2008. The British economy went into recession in the second quarter of 2008 and remained there until mid-2009.

As the graph below shows, it took until 2014/15 for GDP and median incomes to return to pre-crash levels. Median wages have still not caught up.

None of this pain could be felt in 2007 after more than a decade of uninterrupted economic growth. For miserablists at the Guardian, it was growth that was the problem. Sneering at people's desire to own 'stuff' and wanting the market economy to be replaced by a vaguely defined 'sustainable' and 'steady-state' (ie. zero growth) system was a standard, flat-pack anti-capitalist opinion at the time (see chapters 4 and 7 of Selfishness, Greed and Capitalism).

Worn and wearisome though this view was, Monbiot presented it as iconoclastic as he began his article...

If you are of a sensitive disposition, I advise you to turn the page now. I am about to break the last of the universal taboos. I hope that the recession now being forecast by some economists materialises. 

He goes on to complain that some people on jet skis had recently spoilt his visit to an estuary and that the world is getting too noisy. This, he argues, is because people are getting too rich. He then touches on his favourite topic, global warming, with a lament that 'carbon dioxide emissions are higher than they were in 1997, partly as a result of the 60 successive quarters of growth that Gordon Brown keeps boasting about.'

It cannot be seriously argued that the problems Monbiot identifies are not, in part, facilitated by economic growth. The question is whether the benefits of growth outweigh the costs. Monbiot does not deny the benefits. He admits that recessions cause 'hardship' and he acknowledges that...

The massive improvements in human welfare - better housing, better nutrition, better sanitation and better medicine - over the past 200 years are the result of economic growth and the learning, spending, innovation and political empowerment it has permitted.

But at some point, he argues, the costs must exceed the benefits. And he says that point is now (ie. 2007).

It seems to me that in the rich world we have already reached the logical place to stop...

Surely the rational policy for the governments of the rich world is now to keep growth rates as close to zero as possible?

But why was 2007 the logical place to stop, as opposed to 1997 or 1957 or 1907? If carbon emissions are the real issue, the optimum point at which to stop was some time in the nineteenth century, but that would require a dramatic fall in living standards.

Monbiot does not want to go that far. He just wants to settle for the living standards of 2007 and sacrifice future gains. This, I would suggest, is because existing living standards are tangible and we would feel their loss whereas we cannot feel, or even necessarily imagine, the benefits of future economic progress.

Could Monbiot really be confident that the balance had been tipped by 2007? At any stage in the last 150 years you can find people saying that people are rich enough and that the job of government is to redistribute the wealth that exists rather than encourage people to create more. With the benefit of hindsight even the likes of the anti-growth New Economics Foundation would struggle to argue that they were right.

One of the themes of JK Galbraith's The Affluent Society (1959) was that people do not really need to have such extravagances as wall-to-wall carpets, televisions and vacuum cleaners. He claimed that the desire to own such frivolous goods was magicked into them by advertisers.

A lot of people, particularly on the left, agree with Galbriath's analysis but you will never hear them use his particular examples. Nobody outside the lunatic fringe would claim today that a vacuum cleaner was a luxury, or call for economic growth to be wound back to the point at which wall-to-wall carpeting is unaffordable.

Their desire to stop progress now rather than wind the clock back is a tacit acknowledgement that people's lives would be made worse if progress had stopped a few years earlier. It also reveals a lack of imagination and/or optimism about what the future has in store. 

Writing in the 1950s, Galbraith would not have been able to imagine a thing called The Internet, and yet access to high speed broadband is now on the verge of becoming a legal right. Galbraith would have thought nothing about wearing leather shoes, whereas Adam Smith - writing in the 1770s - remarked that neither leather shoes nor linen shirts were 'strictly speaking' necessities and were only considered essential for even the 'poorest creditable person' as a result of 'custom'.

If ordinary people are able to take for granted goods and services that had once been the preserve of the wealthy, most people would see this as a good thing (as Adam Smith did). But for the miserablists, it is a sign that everybody is rich by historical standards, therefore we can stop bothering with the whole capitalism thing.

By 2007, the equivalent of Galbraith's vacuum cleaner was a mobile phone, and Monbiot adjusted the Galbraith argument to fit the times:

I now live in one of the poorest places in Britain [rural Wales - CJS]. The teenagers here have expensive haircuts, fashionable clothes and mobile phones. Most of those who are old enough have cars, which they drive incessantly and write off every few weeks. Their fuel bills must be astronomical. They have been liberated from the horrible poverty that their grandparents suffered, and this is something we should celebrate and must never forget. But with one major exception [which is housing, as Monbiot later explains - CJS], can anyone argue that the basic needs of everyone in the rich nations cannot now be met?

This is an argument that you would usually associate with right-wing conservatives: 'Don't talk to me about poverty! They've all got widescreen televisions!' It is not an argument we've heard much in the Guardian in the last ten years, even from Monbiot, and that is not because the poor have got poorer. As the graph from the ONS shows, the incomes of the bottom fifth of households has risen by 13 per cent (in real terms) since 2007.

If people's 'basic needs' were being met in 2007, they are being met today. I am not sure whether Monbiot still wants to 'keep growth rates as close to zero as possible' but if he does, he must be happy with the way the last ten years have panned out. We hasn't quite seen zero growth, but it has been very close to it.

Far too close, I would say. What a miserable decade it's been. We have seen stagnant productivity, a fall in real wages and a trivial amount of economic growth (all of which are connected). Meanwhile, the government has managed to borrow £1.3 trillion pounds (and counting) with no obvious means of paying it back.

Perhaps there are fewer boy-racers on the streets of Wales as a result. Perhaps there are not as many jet skis to ruin George Monbiot's day trips. Perhaps carbon emissions are slightly lower than they would have been. But what a price to pay.

Monbiot was not the only pundit pining for recession in the carefree days before it became a reality. The following year, the Observer published 'Hurrah for the recession. It will do us a power of good' in which Hephzibah Anderson suggested that being 'poorer in pocket may not make us richer in spirit, but it could just help us get there'. The Independent, which used to be a newspaper, published a column by Tim Lott under the self-explanatory headline ‘Bring on the pain of the recession and purge our coarsened souls’. The Sunday Times published an article by India Knight headlined ‘Aah, what a relief the boom has turned to bust’ in which she was 'happy to observe that the decades of vulgar excess are finally over.'

The theme of all these articles is that we - the little people - had become vulgar consumerists with too much money for our own good and would benefit from a little make-do-and-mend. Saying 'this bad thing is actually good' is bread and butter for op-ed writers. Even so, it was a stupidly callous line to take on the eve of the biggest financial downturn since the Great Depression. As I said in The Spirit Level Delusion: 'When the full impact of the recession hit home a few months later, these columnists had the good sense to shut up about unemployment cleansing the soul for fear of being lynched by their readers.'

Thereafter, journalists began agonising over every 0.1 per cent of GDP growth and lamenting the government's failure to get the economy moving at full throttle. This is how the cycle works - when the economy is bust, we are too poor, and when the economy is booming, we are too rich. We will only know for sure that the economy is back on its feet when Monbiot is calling for another recession.