Tim Harford's Blog, page 16

The surprising data behind supercentenarians

If there is a Dog Heaven, what must Bobi be thinking as he gazes down? Bobi’s place in the record books seemed assured when he died in October at the age of 31 years and 165 days — more than two years older than his closest rival for the title of the oldest dog who ever lived. Alas, Guinness World Records has stripped Bobi of his record on the basis that “without any conclusive evidence available to us . . . we simply can’t retain Bobi as the record holder”.

If we cannot believe that Bobi the dog was really as old as was claimed, what are we to make of the claimants to human longevity records? The oldest human ever was Jeanne Calment, who died in 1997 at the age of 122, having met Vincent van Gogh when she was a teenager in Arles in 1888. (Calment recalled that van Gogh was “very ugly. Ugly like a louse.”)

To demonstrate such claims requires good records, which is a problem, because the key fact that needs to be verified — a date of birth — only becomes interesting to most observers a century or so after the event in question. By definition all surviving supercentenarians (110 years and up) were born before the first world war.

“No single subject,” the Guinness Book of Records declared in 1955, “is more obscured by vanity, deceit, falsehood and deliberate fraud than the extremes of human longevity.”

Saul Newman, a demographer at Oxford university, has examined the data describing the population of semi-supercentenarians (aged 105 or more) and of supercentenarians. What might predict such extraordinary longevity? Eating plenty of vegetables, perhaps — or a strong social network?

No. In the UK, Italy, France and Japan, Newman finds instead that “remarkable longevity is . . . predicted by regional poverty, old-age poverty, material deprivation, low incomes, high crime rates, a remote region of birth, worse health”. You read that right. They are all factors that are associated with worse population health and a lower probability of reaching 90.

It seems that the very environments that are least conducive to health are the places where people with claims to astonishing longevity pop up. Tower Hamlets — by several measures the most deprived borough in London — also has the highest proportion of supercentenarians.

Another example is Okinawa. Some parts of Okinawa are super-longevity hotspots for Japan, but are also notable for having a higher murder rate, a higher child poverty rate and a diet that, relative to the rest of Japan, skews away from seafood and vegetables and towards Kentucky Fried Chicken and Spam.

In the US, Newman finds that the outstanding predictor of longevity is patchy birth records. Introducing proper records in the late 19th century reduced by more than two-thirds the number of babies who would eventually seem to reach the age of 110. That suggests that, until recently, seven out of 10 apparent supercentenarians were, in fact, younger than claimed.

This all points to error or outright fraud. Elderly people are paid money simply for being alive, after all, so why call attention to their death? A younger relative can claim to be the pensioner and continue to receive benefits. It brings to mind Goodhart’s law that “When a measure becomes a target, it ceases to be a good measure.” If superlongevity becomes a target, claims about age are not a good measure.

Is this common? It might be. Newman notes that the Greek labour ministry launched an investigation after the 2011 census counted fewer than 2,500 centenarians, yet 9,000 pensions were being paid to centenarians. About the same time, the Japanese authorities found that the vast majority of centenarians — almost 240,000 out of 280,000 — were either missing or dead. Many Japanese records were destroyed during the war, then replaced during the US occupation. There is vast scope there for either fraud or error.

The late Jeanne Calment is very much an outlier, because 19th-century France had superb records by the standards of the age. There is no disputing that a baby girl named Jeanne Calment was born in 1875 in Arles, and there are very good reasons to believe that the woman who died in 1997 was the same person.

Some sceptics have advanced the idea that Jeanne died and was replaced by her daughter in the 1930s. This switch would certainly have been profitable: in 1969, when Jeanne was 94, her notary arranged that he would inherit her apartment in exchange for regular payments while she was still alive and in residence. He paid her a fortune, then died before she did. If “Jeanne” was actually her daughter, the notary was grotesquely defrauded.

But could Jeanne’s daughter suddenly have pretended to be married to her own father? Would the locals really have fallen for the switch? A lengthy investigation by The New Yorker writer Lauren Collins found no evidence of fraud.

The only reason to doubt that Jeanne Calment reached the age of 122 is that nobody else has ever come close. Wikipedia lists 68 people who made it to 115. More than half of them died before reaching 116. More than half the survivors died before reaching 117. Only four people made it to 118, and only Calment to 120.

Calment is such an outlier as to stretch our credulity, but otherwise her claim to the record seems solid. Sometimes miracles happen, as in the case of Calment. And sometimes miracles should be disbelieved. Sorry, Bobi.

Written for and first published in the Financial Times on 19 April 2024.

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Cautionary Tales – WW2: How Britain Ignored the Mother of All Secrets

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Neatly dressed in his suit, Hans Ferdinand Mayer was every inch the unassuming corporate executive. So, when he asked to borrow a typewriter from his hotel in Oslo, nobody could have guessed he would use it for one of the most extraordinary intelligence leaks in history. Mayer’s gloved fingers punched out the details of Nazi Germany’s most sensitive military operations and, when he had finished, he immediately dispatched his documents to the British  —  who did nothing.

Why did the British ignore Mayer? Did they fail to pick out the crucial signal amid the noise of detail — or was something else going on?

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Further reading

This episode of Cautionary Tales is based with permission on Tom Whipple’s new book The Battle of the Beams.

Other sources include Robert Wohlstetter’s Pearl Harbor: Warning and Decision, RV Jones’s Reflections on Intelligence, and Steven Johnson’s Farsighted.

Why, deep down, we’re all ultramarathoners

Jasmin Paris is not built like ordinary mortals. Last month she won a moment of fame after completing the Barkley Marathons, a race so brutal that only 19 men have managed to finish in the past 35 years. Paris is the first woman to complete the race. It is not Paris’s first brush with greatness. Five years ago, she won the Spine Race: 268 miles along the Pennine Way in January, when it is dark 16 hours a day, cold enough to be covered in snow but warm enough for the rain to soak through everything, and where every snatched minute of sleep is a minute conceded to one’s rivals. As the mother of a breastfeeding daughter, Paris had the additional disadvantage of having to express milk at rest stops, but she nevertheless beat both the Spine Race record and the men trying to keep pace with her. Her nearest challenger, Eugeni Roselló Solé, had to be rescued four miles from the finish line after he became dangerously cold and disoriented. The eventual winner of the men’s race, Eoin Keith, was about 50 miles behind Paris when she crossed the finish line.

Paris recently told the BBC she wanted to inspire people, particularly women. I suspect most people feel more awestruck than inspired; Superman does not inspire me to try flying.

The agony involved in these endurance races defies belief. I think not just of the winners, but competitors such as Roselló Solé, who spectacularly dropped out of the Barkley Marathons in 2019. A former winner of the event, he had to quit part way through in 2020, 2022, 2023 and 2024. And yet he keeps returning.

Why would anyone subject themselves to this? A quarter of a century ago, the behavioural economist George Loewenstein addressed that question. He focused on the experiences of mountaineers and polar explorers, which he summarised as “unrelenting misery from beginning to end”, and dangerous, too. He wanted to expand upon George Mallory’s reported answer to the question, “Why do you want to climb Everest?” (“Because it’s there.”) Mallory died near the summit in 1924.

The question should intrigue anyone interested in human decision-making. Textbook economics merely states that people act so as to satisfy some consistent set of preferences, but preferences are defined only as whatever it is that people are trying to satisfy. Surely it is not useful to insist that, by definition, mountaineers “prefer” to be exhausted, cold and in mortal fear?

Behavioural economics adds more to the story, notably that people may mis-predict and misremember the joys and sorrows involved in any enterprise. There certainly is some selective memory involved; many extreme athletes report vowing never again to subject themselves to some ordeal, only to return once the agonies have faded in the mind.

Yet this hardly explains why Mallory tried to conquer Everest, or Jasmin Paris pushed herself through the Barkley and the Spine Race. Nor does fame or money. With a small number of exceptions, these endeavours offer little chance of either. Loewenstein suggests there are four motives for extreme feats of endurance. The first is signalling your own character to yourself: proving that you can do hard things. (After smashing the Spine Race record in 2019, Paris returned to finish the last few weeks of her PhD. Most people don’t do PhDs for the fame or the money, either.)

The second is goal completion. Having set ourselves a challenge, we don’t like to leave it unfinished. The third is to experience mastery, the pleasure of doing something that requires great skill.

And the last, and most elusive, is the sense of meaning that can be found after surviving extreme conditions and perhaps even cheating death. We only truly appreciate a warm bed after trying to sleep in a bivvy bag on a cliff ledge; we value time with friends and family all the more when reminded of the fragility of life.

Self-signalling, goal completion, mastery and meaning: it’s not a particularly counterintuitive list, but it is a challenging one for economists and social scientists more broadly, because it is clear that these drives are not unique to explorers and ultramarathoners. Who among us does not value the satisfaction of achieving a goal, or finding ourselves the equal of a testing challenge?

I am rarely happier than when performing on stage, even though I feel anxious beforehand and drained afterwards. Why do I enjoy it, then? Because performance is difficult and I flatter myself that I’m good at it. It’s a pleasure to be fully absorbed in the challenge of doing a hard thing well.

A pleasure, too, to do hard physical activity. Over the past year, I’ve made a habit of a Saturday morning 5k Parkrun. I’ve never been a runner. I am always afraid before I start, and in pain until I finish. Still, the run is not a grim obligation I do only for the sake of my health. It’s a highlight of my weekend.

The same is true for a really tough day walking in the hills: uncomfortable at the time and uncomfortable afterwards, and a true pleasure. Why? In part, surely, because it feels good to be the kind of person who sets himself a stretching goal and achieves it.

There is a lesson here for those pulling the levers of public policy, taxing and subsidising and regulating in an attempt to make the world a better place, and for corporations setting “compensation” packages. People want money and pleasure, but also to challenge themselves, to feel a sense of meaning and enjoy a sense of mastering their craft. Policymakers and managers ignore such desires at their peril. In each of us, there is a tiny spark of Jasmin Paris.

Written for and first published in the Financial Times on 9 April 2024.

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Cautionary Tales – The Fraudster’s Guide to Magic Money

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Sam Israel had a problem. The investors in his hedge fund, Bayou Capital, were expecting spectacular returns. Sam himself had spent years proclaiming the fund’s brilliant results. In reality, Sam had been marking his own homework, publishing fraudulent accounts and using these to lure in new investors.

What to do? Well, the logical thing of course: wait around for an extraordinary profitable streak, and in the meantime keep up the ruse…

This episode of Cautionary Tales was recorded live at the Bristol Festival of Economics and studies three incredible investment scams. How do pyramid and ponzi schemes snowball out of control, flattening victim and fraudster alike?.

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The first-hand account of the Women Empowering Women pyramid scheme is Julia Stephenson’s “Broken Hearts Club… or how my Sloaney friends and I fell for the oldest trick in the book”, published in the Mail on Sunday on 1 June 2003.

Daniel Davies’s wonderful book Lying for Money describes both the snowball effect and the Ladies Deposit Company scheme.

And we could barely scratch the surface of Sam Israel’s disappearance into a whirlpool of conspiracy theories. The incredible story is vividly told in Guy Lawson’s book, Octopus.

Why the biscuit tax leaves a bad taste in the mouth

Earlier this year, two distinguished gentlemen, Judge Hyde and his adviser Julian Stafford, sampled a mineral-enriched flapjack — alas, a year past its sell-by date — and pondered its qualities. (Flapjacks are slabs of oats stuck together with a glue made of butter, sugar and syrup.) The question: was this unconventional flapjack, designed as a pre-exercise snack, “of a standard to be served to guests as a treat with afternoon tea”?

Much turns on the answer, since the enriched flapjack hovers in the liminal space between a muesli bar, which, in the UK, attracts value added tax at 20 per cent, and an ordinary flapjack, which, by long-hallowed British tradition, is a cake and, therefore, zero rated for VAT purposes.

I am serious about the long-hallowed tradition. His Majesty’s Revenue & Customs notes that “at the inception of VAT, traditional flapjacks were widely accepted as cakes of common perception”. When HMRC drew the line between cake and confectionery, it nodded through the idea of flapjacks-as-cakes because to insist otherwise would be to incite a revolution. Is it absurd that a British judge found himself pondering the qualities of a flapjack and the “slightly unpleasant mouth feel” of the protein-enriched brownie with which it was packaged? Of course, it is absurd. But it is an inevitable consequence of the way the UK’s VAT rules try to draw distinctions that cannot sensibly be sustained.

FT Alphaville rightly lavished 5,000 words on the flapjack tribunal, which we can add to the infamous Jaffa Cake controversy — in which what is self-evidently a fancy chocolate biscuit was ruled to be a cake for tax purposes, and to the more recent case of the giant marshmallows, which were ruled to be an ingredient for toasted-marshmallow-and-cookie sandwiches (zero rated) rather than a standalone sweet (20 per cent rated).

It would take a heart of scone not to laugh, but there is more to the flapjack problem than mere British eccentricity. It exemplifies a fundamental unseriousness at the heart of the UK’s tax system. It says a lot that George Osborne, the UK’s chancellor from 2010 to 2016, attempted to remake the relationship between citizen and state, but is equally remembered for trying and failing to introduce VAT on warm Cornish pasties. (Hot takeaway food attracts VAT, cold takeaway food does not, so what tax should be charged on a cooling pasty? If this strikes you as ludicrous, I am not going to tell you you’re wrong.)

Set alongside Osborne’s squeeze on public spending, the pasty tax meant nothing, but it attracted attention. I suppose Cornish pasties are more relatable than austerity.

As a general rule, it is unwise to levy different rates of tax on two fundamentally similar things, because doing so generates red tape, distorts the economy and opens up easy opportunities for tax avoidance. It also attracts lobbyists.

It is often forgotten that when Lady Godiva rode naked through the streets of Coventry, she was agitating for a tax cut. That makes sense: her act was both shameless and irrelevant to the merits of the case, making her a suitable emblem for special interest pressure groups ever since.

But the real problem with all the nonsense about flapjacks and pasties is that they are a distraction. The UK’s public finances are frail. We have high debt, a chronic deficit and fragile public services. That is a trio of problems which strongly suggests a need to raise taxes.

At the same time there is a good reason to cut taxes instead, which is that tax revenues are hitting their highest level since the 1940s. The contradiction could be resolved by raising the economy’s growth rate.

With the government taking in tax more than 37 per cent of all economic output, part of any sensible effort to improve growth will involve serious tax reform, raising more revenue while imposing less drag on the economy.

In 2010, the Nobel laureate economist Sir James Mirrlees led a comprehensive review of the British tax system, which has with equal comprehensiveness been ignored by governments ever since. Mirrlees and his team argued for a “progressive, neutral tax system”.

By “neutral” they meant “a tax system that treats similar economic activities in similar ways”, be they flapjacks or muesli bars, warm pasties or cold ones, or — to pick a more consequential example — income from employment or from self-employment.

By “progressive”, the Mirrlees team meant that the rich should pay relatively more. But the word “system” is also important: while the taxman should be trying to tax the rich more than the poor, he shouldn’t do so flapjack by flapjack. The UK’s VAT system is full of flapjack-esque exemptions, often motivated as some ineffectual gesture towards helping low-income households.

This is silly. VAT could be much broader — as it is in Denmark — while allowing income tax and benefits to make the system as a whole robustly progressive.

A well-designed tax system should be able to raise more money without denting growth. The trouble is that a well-designed tax system leaves less opportunity for successive chancellors to pull metaphorical rabbits out of their hats whenever they present a new Budget or Autumn Statement. (Did I mention that rabbits are among the most tax-efficient of pets because they are also edible? I’m not joking.)

Perhaps the next government will fancy a systematic redesign of the tax system, but the political rewards probably lie elsewhere. We can expect to be chewing over the usual patchwork of nonsensical taxes for a long time to come. A slightly unpleasant mouth feel, indeed.

Written for and first published in the Financial Times on 29 March 2024.

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Cautionary Tales – Blood and Gold (with Dan Snow)

Bonus: When Spanish conquistadors arrived in Peru in 1526, it was the beginning of the end for the Inca. Their bloody pursuit of gold, fame and fortune was rife with treachery and deceit. Within a few short years, the once-thriving Incan empire had been decimated.

Tim Harford is joined by Dan Snow for a special crossover episode of Cautionary Tales and Dan Snow’s History Hit. Tim and Dan first recap the spectacular defeat of the French Knights at Crécy in 1346 and draw surprising parallels with the fall of the Inca Empire two centuries later.

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A TikTok ban won’t solve social media’s collective trap

US legislators are eager to ban TikTok. They are missing a bigger question: should they also ban Instagram, Facebook and the network formerly known as Twitter? The obvious answer is “no”, because although everyone grumbles about social media, we still use these networks, which strongly suggests that deep down we still value them.

But what if that’s wrong? What if something about social media networks induces us to use them even though we dislike them?

One obvious parallel is with addictive activities, such as smoking or playing slot machines. A famous study by the economists Jonathan Gruber and Sendhil Mullainathan asked, more than two decades ago, “Do Cigarette Taxes Make Smokers Happier?” and concluded that the answer was “yes”. Strictly speaking, they found cigarette taxes benefit the-kind-of-person-who-is-likely-to-smoke, because the taxes dissuade some of those people from starting, and persuade others to stop.

A more intriguing prospect is that social media is, in the words of economists Leonardo Bursztyn, Ben Handel, Rafael Jimenez and Christopher Roth, a “collective trap”. Let’s say that you dislike Instagram or Facebook, but that all your friends find it a convenient way to communicate. You might then find it rational to use these social media platforms, even if you believe that you would be better off if they simply did not exist.

If Bursztyn and his colleagues are right, even if smartphones aren’t addictive (and, let’s face it, they are), we may have to use social media networks that we hate, because the alternative is to be cut off entirely.

The researchers tested this idea by recruiting students and offering them money to deactivate their TikTok and Instagram accounts for four weeks. On average, students needed to be paid about $50 per account to agree to do this ($59 for TikTok and $47 for Instagram). However, when told that if there were enough recruits, every student at the university would be required to deactivate their accounts, students viewed the services very differently. Now they would pay about $50 to live for a month in a world without TikTok and Instagram ($67 to have everyone switch off TikTok, $39 to have everyone switch off Instagram).

You don’t have to take the precise numbers seriously to be struck by the contrast. Students dislike the idea of being the only one to lose social media access, but would be delighted to live in a world where social media simply did not exist. It’s a pernicious kind of externality.

As Leonardo Bursztyn told the Freakonomics podcast, a collective product-market trap is like second-hand smoke, except “the only way to avoid second-hand smoke is by smoking”.

This finding sheds new light on the broader evidence that social media networks are making us — particularly teenagers and particularly teenage girls — miserable.  This week, the World Happiness Report revealed that in the US, the happiness of the under-thirties has slumped. Since the inception of the World Happiness Report in 2012, the US has always placed in the top 20 happiest countries in the world, but has been dragged out of that club by the misery of young Americans: rated by the wellbeing of the under-thirties, the US now ranks 62nd in the world. (Looking at the over-sixties, the US is in the top 10. OK, boomer? The boomers are indeed OK.)

Is that because of the ubiquity of smartphone-enabled social media for American teens? That’s unclear. There is a striking difference between what the broad trends tell us, and what more focused work on individuals has found. 

The broad trends look grim indeed, according to Jean Twenge, author of iGen, and Jonathan Haidt, author of The Anxious Generation. They point to sharp increases in credible measures of anxiety, depression and self-harm in teenagers, particularly teenage girls, beginning at the same time that social media apps on smartphones became widely available to them.

On the other hand, critics such as Amy Orben and Andrew Przybylski point out that these trends are very broad correlations. More focused work finds little evidence that teenagers feel better when they try a “digital detox”, temporarily switching off their social media accounts, and some evidence that they feel cut off when they do.

But from the point of view of the collective trap, there is no contradiction here. It’s perfectly plausible that social media is laying waste to the wellbeing of a generation, yet each teenager is right to believe that things would be even worse if they unilaterally unplugged. 

Once you start pondering the idea of a collective trap, you see them everywhere. Tall, heavy cars such as SUVs are an example. Why does anyone drive such an inefficient, impractical vehicle in an urban environment? The answer, surely, is that they are worried about being hit by another tall, heavy car. 

You could broaden the argument to the car itself. People often drive when they could walk or cycle (or let their children walk or cycle) because they do not feel safe on the roads. But the main danger on the roads? All those people driving, many of whom are only driving because they do not feel safe. I

t’s at times like these that the libertarian slumbering deep inside me splutters awake and warns that individual freedom is precious. True, true. I do not actually think either Instagram or driving should be illegal. But collective traps are real. There are times and places (near schools in particular) where almost everyone would be better off if nobody was allowed a smartphone or, for that matter, a car.  

Written for and first published in the Financial Times on 22 March 2024.

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Cautionary Tales – the Rise and Fall of a Megalomaniac

Nicolae Ceaușescu was not beloved. His regime was vicious and he treated Romania as his personal wallet: while Ceaușescu emptied the coffers to construct a vast, ornate palace, his people starved. He imposed disastrous population control policies on his country too, which saw hundreds of thousands of unwanted children left to rot in squalid orphanages.

Ceaușescu’s rule endured for a quarter of a century – then crumbled overnight.

How do dictatorships unravel? Tim Harford partners with HBO’s new series “The Regime” to investigate real-life dictatorships and the social science that explains them.

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Further Reading

The account of the Ceausescus’ misrule and attempted flight draws principally on three books – The Rise and Fall of Nicolae and Elena Ceausescu by Mark Almond, The Life and Evil Times of Nicolae Ceausescu by John Sweeney, and Kiss the Hand You Cannot Bite by Edward Behr – with additional details taken from various online sources (e.g. 1, 2, 3, 4). You can watch Nicolae Ceausescu’s final speech on YouTube.

Information cascades were initially described in 1992 paper by Sushil Bikhchandani, David Hirshleifer and Ivo Welch. Steven Pinker and colleagues explain their butcher-baker experiment and other work in Common knowledge, coordination, and strategic mentalizing in human social life. 

Why Swifties, holidaymakers and the hygienic should cheer for surge pricing

The “Wendy’s Dave’s Triple” is a fast-food offering that stacks two possessives and three hamburgers. I am not sure how easy it is to swallow in either regard, but what has really been sticking in people’s throats is the prospect of surge pricing at the Wendy’s fast-food chain. 

A few weeks ago, the new CEO of Wendy’s announced that the company would be installing new digital menu displays that would allow “dynamic pricing” — that is, changing the price of products in real time. A minor backlash erupted, and Wendy’s patiently explained that they would, of course, not be charging higher prices in busy times. Instead, they might be charging lower prices at quiet times, which is a distinction to ponder.

This is by no means the first such drama. A quarter of a century ago, Douglas Ivester, then chief executive of Coca-Cola, mused about vending machines that would raise the price of Coke on a hot day. He quickly backtracked after an outraged response, although reportedly these vending machines are the latest trend in Japan, so the brilliant Mr Ivester was merely ahead of his time.

Not only is dynamic pricing unpopular, there is even an argument that it is illegal. One legal scholar, Ramsi Woodcock, argues that surge pricing (dynamic pricing by a less popular name) violates US competition law and that the courts should ban it.

I disagree. There is a danger that dynamic pricing might blunt competition by making price comparisons more difficult. But consumers are already so irritated by the practice that the risk is not that we have too much dynamic pricing, but that we have too little.

The basic case for dynamic pricing is simple: it’s the same as the case for the price mechanism in general. In most markets, people are keen to sell when the price is high and buy when the price is low. And at the right price, supply and demand match perfectly.

If the price is either too high or too low, then there are missed opportunities to trade. We might see a queue of eager buyers but shortages of products to buy. 

The most obvious cost of such mismatches is the queue. If I credibly promised to give away £20 to everyone who formed an orderly line in Piccadilly Circus, people would keep joining that line until it was so long that people were being paid £20 to queue for £20 worth of time. I would have achieved the self-defeating miracle of giving away a small fortune without managing to help anybody except the lucky few who joined the queue early.

The same logic applies if I was offering any product or service at £20 below the market price. The time wasted by the queue incinerates the potential value of the bargain, and what the seller loses, the buyer fails to gain.

Of course, not every underpriced product is rationed by queue. Some are rationed by political or social connections. Some are rationed by chance. That is also inefficient. Maybe it’s a rainy night, and everyone would like to get an underpriced taxi home, but only some people also have the option of catching a bus? Those on the bus route are just as likely to get lucky with a passing cab as those who face a five-mile walk in a downpour. If the taxis were more expensive and hence less scarce, those with the choice of catching the bus would be more likely to take it. 

That is the case for the price mechanism in general. But what’s true for prices in general is also true for the price of hotels on the weekend that Taylor Swift is playing a concert in town, of flights on the first day of the school holidays and of toilet paper in the first week of a pandemic. If the price doesn’t adjust, then the result isn’t efficient. Nobody likes to feel that they are being ripped off (so the haters gonna hate) but a sharp increase in the prices of these products would immediately produce the kind of adjustments that any reasonable person would want. If Taylor Swift is playing in Seattle one weekend, it would be a good idea for people who aren’t Swifties to holiday either on a different weekend or in a different city. 

You can tell a similar story about childless holidaymakers, and for people who already have spare toilet paper but might as well pick up more just in case. We are outraged that the price increase squeezes more money out of people who are keen on Taylor Swift, a late July getaway or a clean bottom. We tend not to realise that the price surge gently encourages those who can make alternative arrangements to do just that.

Little rides on the nothingburger question of whether Wendy’s might vary the price of junk food. But if more supermarkets used digital labels to vary the price of food, shifting food near its sell-by-date and warding off shortages of hotly demanded produce, the world would be a less wasteful place.

And there is a market in which the fate of the planet turns on dynamic pricing, namely electricity.  Electricity demand varies a great deal depending on the weather and the time of day, and increasingly electricity supply also fluctuates depending on the sun and the wind. The cost of offering customers a static price for electricity is enormous: it requires huge overcapacity in general, and overcapacity of fossil fuel plants in particular, because gas turbines are well suited to coping with brief spikes in demand.

Part of the solution is obvious: encouraging electricity users or their smart devices to draw less power at peak times, and batteries or other forms of energy storage. The basic way to fund storage? Allow the battery to buy electricity when it’s cheap and sell it back to the grid when it’s expensive. All this is much easier with dynamic pricing. We have a planet to save, after all.

Written for and first published in the Financial Times on 15 March 2024.

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The surprising public health benefit of unemployment

Here’s a discovery to bring you up short: unemployment is good for you. Really? Well, no, not really. But a new research paper has found a correlation that points in that direction: more unemployment, fewer deaths. Underneath lies something real, shocking and yet somehow inspiring.

First, let’s unpack the research, conducted by economists Amy Finkelstein, Matthew Notowidigdo, Frank Schilbach and Jonathan Zhang. They examine the impact of the great recession of 2007-09 on death rates in different parts of the US, some of which suffered sharper increases in unemployment than others. They discover this striking correlation: when the unemployment rate rises by one percentage point in one of the US’s 741 city regions or “commuting zones”, the mortality rate in that area falls by 0.5 per cent. This benefit persists for at least a decade, and it is spread evenly across the age distribution although, in absolute terms, the elderly are most at risk of death and so enjoyed the largest benefit.

Given that the great recession pushed unemployment rates up by nearly five percentage points, that suggests that mortality rates were reduced by more than 2 per cent as a result of the financial crisis and subsequent downturn. Or, as the researchers put it, “these estimates imply that The Great Recession provided one in twenty-five 55-year-olds with an extra year of life.”

These are huge effects. What might explain them? There is no shortage of theories: recessions take people from low-quality, high-stress jobs; by freeing up labour, recessions might improve the quality of care in nursing homes; people who lose their jobs tend to smoke less, eat less fast food and have more time to exercise; recessions may reduce the spread of transmissible diseases.

But Finkelstein and her co-authors find scant evidence for any of this. Instead, they point to air pollution. The air becomes cleaner in areas where the economy slumps. The researchers estimate that this cleaner air accounts for more than one-third of the mortality reduction. This may come as a surprise, because we are not accustomed to regarding air pollution as a problem for rich countries — the trope is that industrialising cities in Asia are smog-ridden, but that for America and Europe the only pollutant that need worry us is the greenhouse gas carbon dioxide.

There is some truth in that. As Hannah Ritchie’s book Not the End of the World documents, local air pollutants such as nitrogen oxide, carbon monoxide, black carbon and sulphur dioxide have plummeted in the UK after peaking more than 50 years ago (they are also beginning to fall in China). Globally, estimated death rates from air pollution have nearly halved since 1990, according to the Institute for Health Metrics and Evaluation, and they have long been higher in middle-income countries than rich ones.

Even so, air pollution increases the risk of both respiratory and cardiovascular disease, and the global number of deaths caused by air pollution is estimated by both the World Health Organization and the IHME as still being around seven million people a year, nearly as much as the death toll from smoking. In the US, the death toll from air pollution is often estimated to be about 100,000 people a year. These numbers are uncertain, but however we look at them, they are large.

What makes the study by Finkelstein and her colleagues so shocking is that they were not examining the effect of a dramatic shutdown of everyday economic activity because of a lockdown or a natural disaster: this was merely a recession, albeit a severe one. Most people kept their jobs; everyday life would have seemed like business as usual. And yet pollution from sources such as traffic fell sufficiently to produce a substantial and lasting drop in the death rate.

One response to this discovery is to join the “degrowth” movement calling for curbs on economic activity. Quite apart from the fact that this is politically unthinkable, it would also be unwise. We know that rich countries enjoy cleaner air than middle-income countries and we also know — thanks to the work of economists Hannes Schwandt and Till von Wachter — that while the great recession may have given everyone’s lungs a break, it is likely to do lasting harm to the health of young people who graduated into the teeth of that downturn.

But above all, we know that there are much easier ways to reduce air pollution than a severe recession. Start by replacing some (then most, then all) diesel cars with electric cars, some gas stoves with induction hobs and some gas boilers with heat pumps. These steps move combustion, and thus pollution, away from people. Meanwhile, generate the electricity for the new clean appliances from nuclear or renewable sources, and the pollution is all but eliminated.

Better technology and smarter regulations can do more for air quality than the worst recession you can imagine, and they can do it at low cost, too.

It may occur that all this is something we might care to do anyway as part of decarbonising the energy system and limiting climate change. Quite so, but it seems striking that one can make such a strong case for these clean technologies without any reference to the greenhouse effect.

As Chris Goodall explains in his new book Possible: Ways to Net Zero, removing fossil fuels from our energy system is technologically feasible, but it is a daunting task requiring huge upgrades to the electricity grid, our storage capacity and much else besides. We should take heart from the fact that these steps to fight climate change will also lead to large and immediate gains in our day-to-day health. No great recession is required.

Written for and first published in the Financial Times on 8 March 2024.

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