Monday 31 March 2014

Death Rates and Human Capital: Puzzling Evidence

Interestingly, a paper in the British Medical Journal (BMJ) from late 2011 shows that musicians (band members and solo artists) with a number-one album in the UK between the years 1956 and 2007 have consistently higher death rates than do comparable cohorts from the general UK population. For musicians in their 20's and 30's, the death rate is over twice as high. Now I have not read this paper really carefully, but from what I can gather its results are puzzling, because they seem to go against basic human capital theory.
 
Acquiring more human capital (skills and whatever makes what one can do more valuable to others) should result in a greater willingness to take care of your health. This is simple enough; living  longer with intact abilities gives you more time to enjoy the extra income generated by the higher level of human capital. (Finding out that you are going to live longer should also increase your propensity to acquire more human capital, since the benefits will accrue for a longer time.)

So, people of indubitably high levels of human capital should, all else equal, live longer than people of indubitably low levels of human capital. In samples large enough that chance events may be neglected, successful musicians should live longer than do people on average.
 
What, then, could explain the findings of the BMJ article? A few tentative suggestions:

1. The musicians sampled in the BMJ article are not necessarily the ones who wrote the songs. Writing songs and performing them are distinct skills and it may be that singers, even singers of hits, simply are not generally that important to a song's becoming a hit, so their human capital is not as valuable as one might first think. Maybe the people with really valuable skills are the song writers and maybe (I don't know) they actually do live longer?

2. Some of the commercial success of singers and bands may be due to their leading a dangerous existence, so a number-one album might not happen if the hard-core rock-'n'-roll image is absent. In other words, perhaps a dangerous lifestyle complements musical ability for commercial success?
 
3. For painters, it is often said that the value of their art increases greatly upon their demise. If art purchasers rationally anticipate the death of living painters, however, they should, ceteris paribus, be willing to pay more for paintings by artists who do not take good care of their health. I haven't seen any data on this, but is it possible that something similar is going on with musicians? The prices might conceivably be higher for tickets to concerts ("last chance to catch a live performance") and for certain memorabilia. Yet, music and paintings are rather different art forms and if this is a significant incentive for one group of artists, it seems it should be painters rather than musicians.
 
4. I suppose it is also possible that some sort of culture exists in (parts of) the music business, such that there are social pressures to engage in risky activities. If successful musicians (of vast human capital) associate with terrible colleagues who will never amount to anything (negligible human capital), the latter, having less of an incentive to live long lives, could exert pressure on the former to drink, do drugs and smoke and other such activities which put good health at significant risk. But why should successful musicians have such strong ties with unsuccessful musicians? It would make more sense if they associated mostly with other high-quality performers and in such circles bad habits cease to exist, not the people constituting the circle.
 
I doubt the validity of 3 and 4. Maybe 1 and 2 are worth exploring, though I am not really happy with them either. Either I am deficient in insight, or this is tricky stuff.

Sunday 30 March 2014

Public Choice and Annexations of Territories

The recent situation in the Crimea has made me think about the field of public choice and its potential implications for annexations of territories from one political jurisdiction by another. According to public choice theory, politicians are as self-interested as are the rest of us and will consequently take out as much as the traffic will bear from their subjects. Supposing politicians maximize pecuniary income, for instance, they will choose policies which best serve these goals. Institutional frameworkmight not actually matter too much for which public policies are chosen, so why, in terms of what legislation there is, should it matter whether one is governed by a fellow national or from the capital of a foreign power?

Maybe the annexed territory is more easily governed from the annexing power, but if politicians maximize all the time, this difference should not be too great at the time of annexation. Suppose, for instance, that the politicians of the annexing power can extract X from the annexed territory, while present rulers there can extract Y. If X is less than Y, present rulers could compensate the potential annexing power to retain status quo and thereby avoid annexation, but as soon as X gets bigger than Y, this strategy no longer pays and so annexation occurs. The point at which annexation becomes optimal from the point of view of the politicians of the annexing power is when X is just bigger than Y, so total extraction from the annexed territory should not be very different as a result of annexation.

Maybe there is a fear among members of some minority in the annexed territory of persecution under the new regime, because their new fellow nationals are apt to hate them. If so, total extraction from the population remains about the same, but different segments of the population are affected in different ways. However, mistreatment of minorities could have been part of the compensation mentioned above for as long as annexation was not chosen. This would have been a likely outcome if the annexing power really was full of haters of this minority. Again, it is hard to see why, purely as a result of annexation, any ordinary citizens should worry much about changing legislation.
It seems to me that much of this problem boils down to how large are the transaction costs associated with compensations occurring in lieu of annexation. Negligible transaction costs imply smoothness in transitions, but if it costs, say, 2Y to arrange for compensation while Y is greater than X, present rulers will not compensate the potential annexing power and X and Y can differ, potentially very greatly, at the time of annexation. I am inclined to believe politicians do not face too many obstacles in devising ways of compensating foreign powers. Trade agreements (with appropriately selected restrictions), taxation with loop-holes selected so as to effectively target specific individuals, not to mention different treatments of different individuals based on ad hoc rationales, are all “harnessable” instruments for reducing transaction costs.

Yet, if we return to the situation in the Crimea, the Tatar population there must be quite up-to-speed about the recent developments, and I would not feel comfortable announcing their recent exodus uncalled for. So, what is wrong with my analysis of annexations?

First Post

This is my weblog where I will discuss whatever is on my mind. I am Greg Heslop and I am trained in Economics, Social Science and Philosophy. These disciplines I have learnt in my spare time as well as at University, in my case mostly the University of Edinburgh and the University of Chicago. I run a small business over at Le Mot Juste which is essentially a service for individuals who wish to be able to better express themselves in writing. Check it out.

This blog will mostly follow my own interests; mainly society, economics and philosophy, although I suspect additional stuff is likely to appear. I do it because I enjoy writing and speculating about issues of interest, so feel free to leave comments if you think you have got something worthy of being said.