Author: Andrew Norton

Inequality and happiness

~ Andrew Norton ~ 8 Comments

The evidence on higher levels of happiness in Nordic countries has been long and persistent. Could it have something to do with them having less social inequality (less envy and resentment) and more ethnic cohesion (although that is changing)?

– Fred Argy commenting on my Happy Danes post.

As Will Wilkinson’s excellent recent paper on happiness research notes, it’s hard to find consistent results on the well-being consequences of income inequality. As Will argues, one reason for the mixed findings is that the effects of various factors on happiness are ‘culturally and ideologically mediated’. So the impact of income inequality will depend on how intrinsically important equality is seen to be, how justified the differences that are perceived to exist are seen to be, and how people perceive their own prospects. If people in Nordic countries value equality highly, and that is what their society produces, that might help explain why they do well in happiness and life satisfaction surveys.

This does not, however, mean that their model can be easily transposed elsewhere. Other countries with fairly low income inequality like Germany consistently do quite poorly in surveys of happiness and life satisfaction. A 2003 paper by Rafael Di Tella and Robert MacCulloch (can’t find a link) showed income inequality and happiness inequality trends over the period 1975 to 1995 and found that while income inequality rose in the US and Britain happiness inequality was stable or falling.
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Happy Danes

~ Andrew Norton ~ 2 Comments

Last year the new economics foundation came up with the very dubious Happy Planet Index. But there are more reputable sources of international comparisons of happiness and life satisfaction, such as the European Social Survey and the Eurobarometer.

Recent research based on the European Social Survey found very high levels of life satisfaction in Denmark. The researchers say:

One of the most consistent trends is that those [countries] with the highest levels of happiness also reported the highest levels of trust in their governments, the police and the justice system, as well as those around them. Happier people also tended to have plenty of friends and acquaintances, as well as at least one very close friend, or a partner.

Seeing this research reminded me of an article in the Christmas issue of the British Medical Journal (which seemed devoted to amusement; another article was on whether good-looking medical students are more likely to become surgeons) called ‘Why Danes are smug’, a quasi-academic satire of life satisfaction research.

The hypotheses dismissed include: ‘blondes have more fun’ (there are more blondes in less happy Sweden; they could have added that there are lots in significantly less happy Germany as well); good health (on objective indicators, the Danes rank 13th among the 15 old EU countries); climate (‘colder and cloudier version of the balmy English weather’); marriage (high rates of marriage but correspondingly high rates of divorce); and alcohol consumption (high, but heavy drinking is usually associated with lower well-being, unless the Danes ‘were drunk when they participated in the Eurobarometer surveys’).

Some hypotheses not completely dismissed:
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A singeing from Scorcher

~ Andrew Norton ~ 23 Comments

Clive Hamilton is back on the new releases shelves with another book, Scorcher: The Dirty Politics of Climate Change. I’ve dipped into it today, and while there is much criticism of the ‘right-wing’ groups that with the ‘greenhouse mafia’ of fossil fuel industry groups Hamilton believes persuaded the government to go slow on climate change, the initial chapters also have a distinct resemblance to public choice theories favoured by many on the right about how special interest groups capture the political process.

Of course there were other reasons why the government was always likely to lean to the sceptical side of the climate change debate. Industries that produce high levels of greenhouse gas are an important part of the Australian economy, and have contributed significantly to our current prosperity – no government is likely to jeopardise this lightly. As I argued last year when examing polls on the issue, while the public seems to have accepted the alarmist view of climate change, it still seems well short of accepting the measures needed to deal with it. The political commotion that goes with every oil price spike shows how hard it’s going to be to take this issue from abstract principle to practical policies.

Also, there were tribal political reasons for doubting the views of some climate change proponents. As I noted in my review of Hamilton’s Affluenza, he is part of a political tradition that has never much liked modern industrial society. Climate change is a godsend for such people, because it gives them a scientifically respectable way – a way consistent with modern thinking – to oppose material consumption. The instinct of those who like modern industrial soceity would always be to doubt what people like Hamilton say.
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Taxpayers want their money back

~ Andrew Norton ~ 38 Comments

This morning’s Age has the first of the Budget polls on what the government should do with one river that certainly isn’t drying up – the river of taxpayers’ cash flowing into Treasury. For some reason, unlike previous years, they have not asked about a choice between more services or less tax, but simply asked ‘Do you support or oppose cuts to income tax as part of this year’s federal budget?’

Two-thirds of the poll’s respondents think that income tax cuts should be part of this year’s Budget, and a little under a quarter oppose cuts. Taken in isolation from the missing services alternative, that roughly transposes the figures from last year, in which 29% wanted tax cuts and 68% more spending on services and infrastructure.

Though it would be interesting to see a repeat of the tax cuts versus services question, the insertion of the phrase ‘as part of’ into the question does highlight that the question in earlier years at least partly created a trade-off that did not need to be made – the government could (and did) cut tax rates while also increasing spending. Indeed, as the tax revenue statistics released earlier in the month showed despite the cuts to tax rates for 2005-6 tax revenues increased by more than 5% per person on the previous year.

Perhaps also voters are wising up to the realistic alternatives available. If we don’t get tax cuts, where will the money go? As the AFR reports this morning, the government is sitting on more than $2 billion in discretionary programs even before it dips into the surplus to finance its election promises. If you don’t live in a marginal seat, you’d be mad to prefer this pork barrelling to tax cuts. Or if the money isn’t being spent on marginal seats, it will be stashed away in the Future Fund to provide a comfortable retirement for public servants. Again, I can’t think of a strong reason to prefer that to tax cuts now. I’m in the 24% of voters who ‘strongly support’ tax cuts.

Gay neighbours

~ Andrew Norton ~ 30 Comments

A sketch in one of the early 1990s comedy shows (Fast Forward?) used a suburban house auction to make a point about Australian prejudices. With Aboriginal actor Ernie Dingo posing as a neighbour during the auction the bidders melted away, and his accomplice in the audience was able to buy the house at a bargain price. This study by Queensland academic John Mangan and co-author Vani Borooah, reported in the SMH yesterday, tells us who we should send to auctions to keep prices down in a range of Western countries, including (partially) Australia, at least over the years 1999-2000.

Though overall what the survey shows is that most people are not fussed by the groups described – people of a different race, Muslims, Jews, immigrants or foreign workers, and homosexuals – Muslims or homosexuals are the least preferred as neighbours. For Australia there was no question about the religious groups, but less than 5% were worried by people of another race or by immigrants and foreign workers, while a quarter did not want homosexuals as neighbours.

The paper does not report it, but this question has been asked before in Australia by Roy Morgan Research. In 1983, 34% of respondents did not want homosexuals as neighbours, while in 1995 it was 25%, the same figure as recorded at the turn of the century. The other groups triggering non-trivial objections in 1995 were Aboriginal people (12%), members of a new religious movement (27%) and drug addicts (74%).

For all these I’d guess that concerns about how a member of that group would behave toward their neighbours (ie the respondent) influence answers, but I am not sure whether this is the case with homosexuals. I’m not sure that any of the gay stereotypes are linked to behaviour that would be regarded as uneighbourly, except perhaps their musical tastes when indulged loudly – which in any case tend to be shared with the far more numerous teenage girls who never turn up in prejudice surveys. It’s perhaps an aversion to what the respondents think gays do in private, which remains unpopular decades after polls recorded majority opinion for decriminalisation.

HECS for TAFE

~ Andrew Norton ~ 9 Comments

This week Treasury Secretary Ken Henry launched a Treasury Working Paper called ‘HECS for TAFE: The case of extending income-contingent loans to the vocational education and training sector’, by Bruce Chapman, Mark Rodrigues and Chris Ryan. This is an idea I have supported myself; there is no intrinsic reason why where a course is placed in the Australian Qualifications Framework should determine whether a student should have to pay up-front or being able to take out an income-contigent loan. As with many aspects of policy, the difference is due to a quirk of history rather than principle. In the 1970s, the Commonwealth acquired funding responsibility for higher education, but vocational education was left with the states. So HECS was introduced in 1989 to help the Commonwealth discharge its resposibilities, but vocational education was left as a state responsibility.

While I support the principle of not differentiating between vocational and higher education, I would not support the version of income-contigent loans apparently proposed in the Chapman et al. paper. Their calculations seemed to be based on a straight application of HECS, but they are vague (apart from a footnote which only semi-clarifies the situation) on how they would handle the current debt surcharge element of HECS-HELP.

At universities, students paying their student contribution amount up-front get a 20% discount. Or to put it another way, if you don’t pay up-front you pay a debt surcharge of 25%. (eg say a subject costs $1,000. If you pay up-front with a 20% discount you get $200 off, leaving a price of $800. If the real price is $800, $200 extra is 25% more.) For full-fee students, the surcharge is more obvious. If undergraduate full-fee payers take out a FEE-HELP loan, they pay the advertised price plus 20%.
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School type and uni completion

~ Andrew Norton ~ 26 Comments

Several studies have come to the conclusion that, for a given ENTER score, university students who went to private schools do not do as well in first year as their peers who went to government schools. Various theories have been advanced to explain this, including the coaching of private schools leading to ENTER scores that over-state the student’s underlying ability, poor adjustment from the spoon-feeding that apparently goes on at some private schools to the more self-directed learning at university, and private school students taking advantage of the absence of constant school and parental supervision to enjoy themselves after several years of hard work.

Unfortunately these studies tend to focus on first year, rather than what happens in subsequent years. A new study out today by Gary Marks of the Australian Council for Educational Research doesn’t examine marks at university, but does look at completion of university courses by 2004 of students who were in Year 9 in 1995.

Without adjusting for any background variables, the study finds that university students who went to Catholic schools were the most likely to complete a course with a completion rate of 87.7%. Independent school students were next on 81.4%, and government school students just below that on 78.5%. But ‘overall, after controlling for background characteristics and ENTER scores, school sector had no impact on expected completion rates.’ So whatever problems some private school students have in first year, they do not translate into lower completion rates in the end.
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A separation of partisan power?

~ Andrew Norton ~ 1 Comment

A Newspoll in this morning’s Australian (can’t see a link, but it should be on the Newspoll website soon) explored whether voters see the federal structure as a way of distributing power not just between the States and the Commonwealth, but also between Liberal and Labor. At first glance, a plurality see benefit in such a division of power. 42% of respondents thought that overall it would be bad for Australia if Labor controlled both levels of government, while 37% said it would be good.

But a breakdown of such opinion according to party support suggests that this result has less to do with preferring a separation of partisan power than with concern about one’s own party. For example, 76% of Coalition supporters think that having Labor in power at both levels would be bad for Australia, compared to 22% of Labor voters. On the other hand, 60% of Labor supporters think that it would be good for Australia if Labor controlled both levels of government, compared to 9% of Coalition voters (That many? Perhaps they think that it would end blame shifting and encourage cooperation.)

This is unlikely to be just Labor voters, with their faith in the state, lacking concern with a division of power. We can see this from a question in the 2004 Australian Election Survey about a semi-analagous situation, the same party controlling both the Senate and the House of Representatives. With knowledge of the Senate outcome (the survey was conducted after the election) 56% of Coalition voters thought that it was better for the same party to control both houses, compared to 12% of Labor voters.
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The Melbourne Model

~ Andrew Norton ~ 46 Comments

This morning’s papers ran a lot of pre-launch publicity for the Melbourne Model, the University of Melbourne’s new approach to higher education that was officially launched today and will be phased in from 2008.

Over time, the number of undergraduate degrees will drop to six: Arts, Science, Environments, Commerce, Music and Biomedicine. Most professional courses will be taught in graduate schools, with a dozen of these new Masters-level courses starting in 2008, and more to follow in subsequent years.

I’ve said little about this on the blog, as part of a general effort to keep separate and conflict-of-interest-free my roles as an employee of the University of Melbourne and as a higher education commentator. I’ll keep avoiding public discussion of the merits and demerits of the changes (though of course I think that there should be more choice in Australian higher education, with the market rather than the Commonwealth deciding what is offered). Plenty of other people have been offering their views on the substance of the changes at Melbourne. But there are a couple of contextual policy points worth making.
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Is the Commonwealth a university customer or shareholder?

~ Andrew Norton ~ 4 Comments

Universities … should be accountable to the taxpayers who sustain them…

Universities have a responsibility to demonstrate to taxpayers that they are efficient and well governed.

Education Minister Julie Bishop, in a speech to the Australian Financial Review Higher Education Summit last week.

That’s certainly how the Commonwealth sees universities – as federal government institutions that spend the Commonwealth’s money and are therefore ‘accountable’ to it. But one immediate problem here is that universities are not federal government institutions, but (with the exception of the ANU) creations of state legislation with accountability mechanisms, mainly in reporting information, established by state governments.

Another way of looking at is that the Commonwealth is simply a major client of universities. This is an analysis they have impliedly encouraged, by moving away from block grants, which universities could spend on very broadly defined purposes, to funding of programmes with specified outputs. For example, instead of providing a block grant for teaching, as occurred until 2004, the Commonwealth now specifies – sometimes down to specific courses at specific campuses – how many student places universities will provide. If the Commonwealth is simply a client of universities, it is entitled to ensure that the university supplies the number of places it said it would, but has no authority beyond that, just as when you order something from a retailer you are entitled to get what you pay for, but not to instruct them to reduce the number of people on their board of directors.

But instead of seeing the Commonwealth as a customer, Bishop sees it as a shareholder entitled to tell universities how to run their business:

The sector needs to continue its governance reforms so that taxpayers can be assured that the institutions – in which they are effectively shareholders – are being run efficiently.

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