August 27, 2006
Doping in Sports-BECKER
I watched on television Floyd Landis' stirring victory in the hard mountain-ascending stage 17 of the Tour de France after he stumbled badly in the difficult previous stage. Landis went on to win what seemed like a remarkable victory, but tests taken after stage 17 showed abnormally elevated levels of testosterone. The French then stripped him of his title as winner of the 2006 Tour. Professional cycling is now in bad repute partly because of this latest scandal, and partly also because just prior to the Tour several major riders were disqualified for testing positive for banned substances.
These cycling scandals came not long after scandals in American baseball, where Bobby Bonds, Jason Giambi, Mark McGuire, Sammy Sosa, and other stars appear to have been guilty of using performance-enhancing steroids to push them to record breaking performances, especially in home run hitting. World class track stars, such as Olympic 100 meter champion Justin Gatlin, professional football players, weightlifters, swimmers, and outstanding athletes in other sports also have either failed drug tests or are suspected of using banned substances.
Why should various chemicals, like steroids, blood transfusions and other forms of drug doping, and looming possible gene doping, be banned in competitive athletic contests if the athletes know the risks to their health from using banned substances to enhance their performance? The principle justification for banning doping when it harms persons using "dope" comes from the fundamental nature of athletic competition. The reward system is based not so much on absolute performance levels, although that does count, as on performance relative to competitors. For example, Lance Armstrong, who has successfully fought off continuing claims that he used dope, is remembered primarily for his six consecutive triumphs in the Tour de France, not for his winning times in any of the races, or on any of the stages. Victories are primarily what count also in World Cup soccer and American football, in weightlifting and boxing, in running, in tennis, and all other competitive sports.
Rewards are related to victories because live and television audiences and the media are mainly interested in outcomes from competition, not absolute performance levels. That is, they pay primary attention to who wins tennis match, a baseball, basketball, or football game, a marathon, or other contests. In essence, competitive sports are an example of the "super star" phenomena analyzed by my late colleague Sherwin Rosen. Super stars, including superior teams, get large rewards even when they are only slightly better than competitors, while those who are only modestly inferior receive much lower incomes and prestige. As a result, professional baseball, basketball, soccer, golf, tennis, and many other sports have a few performers and teams that do very well, like Tiger Woods, Roger Federer, and the New York Yankees, while the vast majority of their competitors get much more modest benefits.
In this environment, certain types of doping are attractive to athletes because it gives them a competitive edge. The problem arises because overall outcomes when many of the performers use dope is essentially zero sum in the sense that if all leading athletes take steroids, other chemicals, or different forms of dope, they all tend to increase their performances without often having much effect on who wins or scores high in a race, game, or contest. In other words, participants may engage in doping to improve their performance and hence chances of doing relatively well, but obviously not everyone can improve their relative position. In a contest where relative performance is what matters, what may be rational for the individual athlete makes little sense for the collection of athletes.
This becomes a matter of concern when the performance enhancers, like steroids and other forms of doping, have a negative effect on long-term health. For then users of these enhancers are hurting themselves in the long run without on the average improving their short-term rewards from athletic competition, as long as competitors also use harmful enhancers. This is the main rationale for trying to ban steroids and other forms of doping from athletic competitions. It sometimes also leads to bans of other costly enhancers that do not affect overall outcomes. For this reason, golf limits the number and size of clubs that can be used in competition, baseball bats cannot be "corked", professional tennis limits the types of rackets permitted, and professional baseball, soccer, and other team sports limit the number of players that teams can have on their rosters.
The same argument applies but in much weaker form to performance enhancers that benefit athletes using them, such as training hard and keeping in very good shape, eating a balanced diet and keeping weight at healthy levels, or spending time studying opponents and videos of one's own past performance. Athletes would tend to use more of these enhancers than if they were not competing, which helps explains why many of them "go to pot" after they retire from active competition. But since the effect of these enhancers is on the whole beneficial to athletes using them, or at least not very harmful, there is little concern about such activities, and no effort to regulate them.
To be sure, absolute performance also counts to some extent, such as the number of home runs in baseball, scoring averages in basketball, pass completion rates in American football, the number of goals scored by a soccer player, and speed in running the mile and other races. But even here there is a crucial relative aspect. Roger Bannister’s breaking of the 4 minute mile barrier was noteworthy not mainly because 4 minutes has some special significance, but because no one had done that before. Baseball fans are upset that Bonds, McGuire, and Sosa apparently took steroids because that enabled them to break the single season record for home runs established by Roger Maris, who did not take drugs, allowed Bonds to pass Babe Ruth in total home runs-Ruth did not use enhancers unless one counts constantly getting drunk- and helped Bonds close in on the all time home run leader Hank Aaron-who has a squeaky clean reputation.
While the case for banning various types of drugs and other enhancers is strong, the ability to control doping is limited. For there is a continuing battle between bans and the discovery of new enhancers that have not been banned. So steroid use in baseball was not banned until after several major players greatly improved their slugging performance through using them. Perhaps some sports would like to restrict excessive use of weights and other forms of training, but detection and control of these activities would be impossible.
The result is a fragile equilibrium between the banning of various substances, enforcement of bans, and the search for new substances and ways to evade bans on old substances. This is not a perfect outcome, but I believe it is on the whole better for competitive sports and for participants than a policy that allows all kinds of performance enhancers and stimulants.
Posted by Gary Becker at 09:00 PM | Comments (30) | TrackBack
Doping Athletes--Posner's Comment
Becker rightly stresses relative as distinct from absolute performance norms. I would add that this is a well-nigh universal phenomenon rather than one confined to athletics. The reason is that there are very few absolute standards in nonempirical fields of human endeavor. We form a judgment about the quality of a musical or literary work, an artist, a musical performer, and so forth by comparison with other works, other artists, performers, etc. So it is natural for the writer, the artist, etc. to do whatever he can to increase his performance relative to his peers. The reason empirical fields are different is that in them success can be measured in absolute terms; a contribution to knowledge can be deemed important on the basis of the value of the knowledge alone.
Why then the objection to permitting athletes to use steroids and other drugs to enhance their performance? (The objection to permitting some athletes to cheat by using these drugs sub rosa is too obvious for discussion: that really is unfair competition. The objection would disappear if the ban were lifted.) One valid objection, which seems however minor, is that it complicates comparison with earlier athletes, who didn't have access to performance-enhancing drugs. But in many sports, such as baseball, they had an advantage denied to current athletes: black and Hispanic athletes were excluded from the competition. Other changes that complicate comparison between baseball players of this generation with those of earlier generations include the advent of night baseball, natural gains in height and weight because of better nutrition, improved vision correction, longer seasons, better equipment, better orthopedic surgery, more sophisticated techniques for managing a team, and better health care generally.
As Becker points out, no objections are raised to athletes' improving their performance by better training, more exercise, more practice, or abstention from alcohol and cigarettes. So maybe the root of the objection to the performance-enhancing drugs is that they have long-term deleterious effects on the health of the user. This in turn gives rise to an externality, since use by some athletes depresses the relative performance of non-users. Yet I do not think that serious objections would be raised to self-destructive behavior in pursuit of athletic distinction as long as the behavior did not involve drug use. A football lineman will not be criticized for blowing himself up into a 400-pound freak if he does it without the aid of drugs, even though the long-term effects on his health of the added weight are very bad and even though his weight gain may place pressure on other linemen to match it.
Nor do we criticize poets and other artists who deliberately lead unhealthy lives, either in search of experiences that they can incorporate into their work or out of sheer irresponsibility or mental derangement, even though they might be thought to be competing unfairly with the normals. Some associates at large law firms work much too hard for the good of their health in order to steal a march on their competitors, but they are not criticized either.
So is the ban on doping athletes just a mindless reaction against novelty and science, a Luddite reaction? Or does it just reflect a confusion between cheating when drugs are banned and lifting the ban? I think not. There are two valid reasons for the ban. One is the pure "arms race" character of the doping; there is no improvement in the entertainment quality of football if 400–pound linemen confront each other rather than 200-pound linemen. In contrast, the overworking law firm associates increase their firm's utput.
The other justification for the ban is that it is a rational means of protecting children. Because successful athletes earn high salaries, because success as an athlete does not require a high order of intelligence, and because an athletic career to be successful must begin in high school (in the case of tennis, perhaps even earlier), there is enormous competition by minors to achieve athletic success. If performance-enhancing drugs were legal, their use by teenagers would be pervasive, and teenagers lack sufficient maturity to trade off the benefits of an athletic career (discounted by the very low probability that any given teenage athlete will have a really successful athletic career) against the long-term damage to their health. Of course adult athletes could be permitted to use such drugs but minors forbidden to do so, but such a legal regime would be difficult to enforce, especially given the "role model" status of adult athletes in the eyes of minors. The lifting of the ban would remove all stigma from the use of such drugs. Their legal and widespread use by star athletes would validate the drugs in the eyes of impressionable youth.
Posted by Richard Posner at 08:16 PM | Comments (21) | TrackBack
Response to Comments on Stem Cell Research--Posner
There were a number of interesting comments. I will reply to a few.
Several comments oppose federal support of medical or other research. That is a legitimate position, but it is not directly relevant to the stem cell issue. The reason is that banning federal support of stem cell research does not entail a reduction in the total federal funding of research, but merely a reallocation from stem cell research to other research.
In support of federal funding of basic research in general, as distinct from relying on state and private donations, David points out that "Almost every lab in a reputable academic institution in this country pursues multiple projects at once. Thus, scientists from those labs would have to create entirely new labs, devoid of federal funding, to perform even one experiment using stem cells."
Federal fundingof research is not ideal, because of political interference--the ban on stem cell research is only one example. More important is the overinvestment in research on AIDS, relative to the number of lives at risk, and the disproportionate investment in research on breast cancer, compared for example to research on prostate cancer. In general, though, the federal peer review process assures that NIH grants (for example) go to high-quality projects. I do not believe there is the same kind of politicized geographical dispersion that one finds in more politicized and less objective areas that federal largesse supports, such as grants by the National Endowment of the Humanities.
A number of the comments debate what seem to me purely metaphysical questions concerning when life begins, whether five-day embryos should be treated as full-fledged human beings, etc. By "metaphysical" I mean can't be resolved by reference to logic or evidence. They are matters of opinion and endless contestation, strongly influenced by religious views that cannot be verified or refuted (modern religions are careful to avoid proposing falsifiable hypotheses, such as that the world will end on September 1, 2006). I get no nourishment from such debates. I believe that upbringing, temperament, experience, emotion, and certain brute facts determine one's answers to such questions, not truth or falsity. If stem cell researh fulfills its promise, I believe that the moral objections will be swept aside, because even religious Americans are pragmatists.
I do not agree that if you think it's okay to harvest stem cells from a five-day old embryos, you've got no grounds for condemning the murder of children and adults or even the killing of a three-month old fetus. All societies draw lines in these matters; none I think considers a decision to be celibate the equivalent of murder because the decision results in extinguishing potential life. Where the lines are drawn depend ultimately, I have suggested, in our society at least, on practical considerations.
Posted by Richard Posner at 07:57 PM | Comments (4) | TrackBack
August 20, 2006
The Economics of Stem-Cell Research--Posner
Stem cells are "general purpose" cells out of which the cells specialized to particular organs develop. Stem cells could, in principle, be used to "grow" human organs for transplant purposes. The thereapeutic potential of stem cells is considered enormous, but, for the most part, not imminent; stem-cell research is at the basic- rather than applied-science stage.
For research purposes, embryonic stem cells, found in fertilized ova of a few days old, are greatly superior to adult stem cells. The usual source of embryonic stem cells is embryos created for use in vitro fertilization. More are created than are used to produce a fetus, and the surplus embryos are stored for future use or destroyed. Stem cells can be extracted from these “excess” embryos, but, thus far, not without destroying the embryo.
In a thoughtful speech in August 2001, President Bush laid out the pros and cons of continued stem cell research. The principal pro is obvious: the therapeutic potential of stem cells. (Later I'll give some additional reasons why we shouldn't want to discourage such research.) The cons are ethical in nature. Many religious people believe that a fertilized human ovum is a human being and they therefore regard the extraction of stem cells from the embryo, when it causes the embryo's destruction, to be murder, just like therapeutic (as distinct from spontaneous) abortions. Miscarriages are the best-known form of spontaneous abortion, but about half of all pregnancies are terminated by spontaneous abortions, most occurring before the woman realizes she's pregnant.
Some people who do not consider an embryo a human being nevertheless oppose stem cells research believe that the use of stem cells for therapeutic purposes would be the equivalent of cloning a human being in order to create spare parts to replace a person's organs as those organs become incurably diseased or wear out. They imagine a time when, if permitted, parents will clone their child at birth and use the clone as a source of replacement organs for the child. Other people oppose embryonic stem cell research because they oppose in vitro fertilization as tampering with the natural order of things.
It is not easy to deal analytically with arguments that are based on religion or emotion rather than on pragmatic considerations. Given the number of spontaneous (not to mention deliberate) abortions and the fact that in vitro fertilization, which produces excess embryos, is lawful, it is a little mysterious what exactly is objectionable about using some of these excess embryos, which would otherwise either be destroyed or stored indefinitely with dim prospects of ever being used to produce more in vitro children, unless the objector opposes all nonspontaneous abortion. And that is an opposition founded on religious belief. Some secular people oppose abortion as encouraging promiscuity, but that concern is inapplicable to the use of embryos as a source of stem cells.
The idea of cloning a child in order to have a spare source of organs--the idea that the clone's organs would be harvested, as needed, for transplantation into the child--is fanciful. To create organs from stem cells would not require creating an entire person. Moreover, whether a person originates as a clone (which is, for example, what an identical twin is), as a product of caesarean section, or in any other nonstandard fashion, it is still a human person with all the rights that persons have, including the right not to be killed just because someone else would like his organs. (I am of course assuming that an embryo is not a person for legal purposes.)
Bush concluded his August 2001 speech by announcing that he would oppose lifting the existing ban on federal support of stem cell research except with regard to existing stem cell lines, of which there were then 60, in laboratories scattered around the globe. Many of these lines turned out to be unusable for research purposes; today only 22 are left, which are too few to satisfy research needs. In response to this deficit Congress passed, but the President has now vetoed, a statute that would have lifted the ban.
Many countries, such as the United Kingdom and Singapore, not only do not share our qualms about stem cell research but want to make such research a major focus of their thriving biotech industries. Singapore recently lured leading American stem cell researchers to its major biological research center.
There are several economic points that spring to mind about the U.S. ban. The first is its futility, and this for two reasons. Since the researchers are not tied to any particular country, the maximum effect of the U.S. ban would simply be to shift all stem cell research to other countries; it would not stop the research and save the embryos. In addition, however, U.S. law does not ban stem cell research, but only the use of federal funds for that research. The main therapeutic applications of stem cell research lie too far in the future and are too uncertain to attract much private investment, given the high discount rates that most businesses use to evaluate projects. But there is plenty of state and especially private charitable spending on medical research, and so the ban on federal funding of this one area of medical research should merely cause a reallocation of research funds. More state and private money will go to stem cell research and more federal money to areas of research that will be receiving less state and private money because more of that money will be used for stem cell research.
But if the federal ban is not affecting the amount of financial support for stem cell research, why are many of our researchers going abroad to conduct that research? Why do countries like the U.K. and Singapore think they can steal a march on us? The answer may be that the U.S. research community does not think that opposition to stem cell research will express itself only in a ban on federal support for such research. Although the Supreme Court has recognized a constitutional right to abortion, it is unlikely to recognize a constitutional right to conduct stem cell research, even if the objections to such research are the same as the objections to abortion. The fact that the objections are primarily a product of religious belief would not invalidate them, because banning stem cell research does not infringe anyone's free exercise of religion or constitute an establishment of religion. Many moral precepts embodied in laws that no one supposes unconstitutional are the product of sectarian beliefs that secular people (or indeed religious people belonging to sects that are less influential in this country) reject. However, most of the precepts themselves, such as the taboo against murder, are shared by people of different, and of no, religious faiths; you don't have to believe that Moses brought the Ten Commandments down from Mount Sinai (you don't have to believe there was a Moses) to condemn murder. In contrast, opposition to abortion and stem cell research is not widely shared by people who do not belong to a particular subset of religious sects.
The loss of leading-edge biological researchers to other countries could be costly to the United States, especially if there are complementarities between stem cell research and other areas of biological and medical research. We may wake up some day to find that foreign institutions have obtained patent protection for highly lucrative medical therapies that our population will demand the government subsidize. I predict, however, that generous state and private funding of stem cell research will stem the reverse brain drain. (And if researchers are easily lured abroad, they are easily lured back.) Moreover, as therapeutic applications of stem cell research become more imminent, the pressure to relax the ban on federal funding is bound to give way.
Posted by Richard Posner at 03:20 PM | Comments (56) | TrackBack
Policy toward Stem Cell Research-BECKER
I agree with Posner that President Bush should allow much greater freedom for federal financing of research on embryonic stem cells. However, I am not convinced that the restrictions he imposed will make that much difference either to world research in this area, or even to that by the United States.
In addition to federal financing of stem cell research, American funds are coming from state governments, foundations and wealthy individuals, and for-profit biotech companies. Since even the strongest supporters of stem cell research would agree that this field should take only a small fraction of the over $35 billion Federal budget for medical research, it should not be difficult to make up any federal shortfalls with monies from other sources.
Californian voters strongly supported a referendum in 2004 for the state to spend $3 billion on stem cell research. While that spending is temporarily held up by litigation, private donors in California have pledged hundreds of millions of dollars to help the state make the transition until the litigation is resolved. New Jersey, Connecticut, Illinois, and Maryland are also discussing state support for research on stem cells. A few private companies are venturing into the stem cell area, even though they concentrate on aspects of this research that could lead to patents and profits.
The aggregate of all spending on stem cell research by non-federal sources probably exceeds what the federal government would have spent in the absence of any restrictions. One useful comaprison is with Singapore, the nation considered to have perhaps the most liberal and generous policies toward research on embryonic stem cells. According to a New York Times article, Singapore has spent a total of $950 million on biotechnology since 2000, and has budgeted another $900 million to be spent over the next five years to finance development of new therapies and drugs. That this is a much larger fraction of Singapore's GDP than say is the ratio of California's approved $3 billion spending on stem cell research alone to U.S. GDP is not relevant. For it is the absolute spending level that determines the amount of research that can be done when comparing America to countries like Singapore with quite high standards of living.
A well-known result in economics is that up to a point increased federal government spending on various programs discourages private and local government spending on similar programs almost dollar for dollar. By that is meant that if other sources had been spending say $500 million on research on cancer, and if the federal government adds another $200 million to its own spending on cancer research, these other sources would reduce their spending by close to $200 million, perhaps to spend the money on other diseases. In that example, the greater federal spending had little net effect on total spending on cancer research. Only if the increase in federal sponsored cancer research greatly exceeded $500 would that make a large difference to the total amount spent on cancer research.
This analysis is directly applicable to the controversy over financing of stem cell research. The amounts budgeted by state governments, universities, and private philanthropies for research on stem cells is large relative to any additional amounts that would be spent by the federal government in this area, absent any restrictions on what the federal government can finance. So mainly what is happening is that private and more local public sources of finance are replacing the federal government, and federal monies are going instead to research on other aspects of health.
If that is the case, why it might be asked, have several prominent American stem cell researchers moved to Singapore to conduct their research? Part of the answer is that Singapore is lavishing very high salaries and generous research budgets on a small number of prominent stem cell researchers. In this way they have also attracted well-known British researchers, even though Britain has a much more liberal government policy toward stem cell research than the U.S. federal government has. This means that Singapore probably would have succeeded in attracting some prominent stem cell researchers from the U.S. even without the present federal restrictions.
Two qualifications should be made to my rather rosy view about the effects of the limited federal approach to financing stem cell work. One is that, as Posner suggests, some stem cell specialists may believe that the U.S. restrictions will grow tighter in the future than they are at present. I believe the opposite is more likely, that pressure will build to loosen them further, but that is far from certain. Another qualification is that present restrictions make it difficult for researchers supported by federal grants in other medical areas to combine that work with use of embryonic stem cells. I do not know how serious that restriction is, but scientists who call for more liberal policies on federal financing of embryonic stem cell research do not frequently raise this argument.
My final point is that it is not necessary or possible for the U.S. to take the lead in all areas of medical research. If Singapore, Great Britain, Finland, Canada, or other nations take the lead in stem cell research, the United States would be allocating more of its generous federal support of medical research toward other fields. This may well be close to an optimal allocation of monies spent on medical research among different fields and approaches, even considering U.S. interests alone.
Posted by Gary Becker at 02:45 PM | Comments (5) | TrackBack
Response on Counteracting Terrorism-BECKER
Many good comments on obviously a controversial subject. I will respond to a few of them.
Freedom is not an absolute in any society, including the most democratic. There are tradeoffs between freedom and other values, such as security. The threat of terrorism has shifted the balance. All this seems rather obvious. The main issue is how far one should go in restricting freedom. That is far more complicated, and there is room for much difference of opinion.
Yes, I am skeptical of government since government actions are typically very inefficient and heavy-handed. Yet I support public police, a public armed forces, various regulations, and so on. In many areas even inefficient government actions are better than leaving them to the private sector alone. Terrorism is one of these important areas.
The quote from Benjamin Franklin about his reluctance to sacrifice any freedom for additional security is interesting. But I do not know of any evidence that Franklin opposed the harsh treatment given to Tories during the revolutionary war. Does any one?
Everyone "profiles" in their daily behavior since all this means is that in the absence of much information about an individual, one judges the individual in part by the groups he or she belong to. For example, anyone who sees an 80 year old female (or male) would doubt if they would rob us or commit a terrorist act.
So the issue in this discussion can only be about whether it is worth subjecting young Muslim males to special scrutiny and surveillance. My answer is yes precisely because it has been difficulty for Islamic terrorist groups to enlist others to engage in suicide attacks. Of course, all such policies deal in probabilities, not certainties. Muslim terrorists might offer compensation and use persuasion to get a few non-Muslims to be willing to commit suicide, but experience shows not many succumb. That some female Muslims or converts, etc might be persuaded to be terrorists is why everyone goes through a certain amount of security checking, and so forth, but the degree of checking will be less severe than for the primary profiled groups.
As I stated in my original post, I agree with the comment that innocent Muslim have an even greater stake in preventing terrorism since they suffer when Muslim terrorists blow up planes or engage in other terrorists. I speak from some experience since my wife was born in Baghdad and grew up in Iran. She, her brothers, and nephews and nieces have had first hand experience of profiling in entering the United States and other countries. When done in a pleasant manner they have typically accepted the necessity of the process-their main objection has been when it was heavy-handed and nasty.
I like the idea of paying those profiled for the inconvenience and time involved. Probably a manageable system could be worked out, and the pay might involve money, other forms of compensation, or both.
Posted by Gary Becker at 02:29 PM | Comments (8) | TrackBack
Response to Comments on Terrorism--Posner
Let me respond briefly to some of the comments.
I do not know on what basis Mr. Fallows in the Atlantic Monthly believes that we have broken al Qaeda's operational capacity. Granted, we have seized or killed many of bin Laden's henchmen, and his sanctuary in Pakistan is less secure than his pre-9/11 sanctuary in Afghanistan, so it is fair to surmise that we have weakened al Qaeda. But the Heathrow plot suggests (though does not prove) that al Qaeda can still orchestrate a devastating, though fortunately foiled (well, al Qaeda's 1995 plot to blow up airliners over the Pacific was also foiled, and that didn't prove that al Qaeda had been broken), attack on the United States. It makes no difference whether al Qaeda employs British Muslims or Saudi Arabians to carry out the attacks that it plans.
I disagree with the comment that says that we should spend less on antiterrorism because terrorism kills fewer people than ordinary crimes. First, it is harder to limit terrorism than to limit ordinary crime; the terrorists are more determined and less deterrable. More important, the potential threat posed by terrorists in an era of proliferation is much greater than the potential threat posed by ordinary criminals.
When I said that our current expansive conception of civil liberties dates from a time we felt safer, I didn't mean to disparage the fear of nuclear war during the Cold War. After communist subversion in the United States was defeated in the late 1940s and early 1950s, we felt pretty safe from domestic threats, the kind of threats that put pressure on civil liberties. We no longer have that feeling of safety.
Finally, I was asked about profiling. I am not an enthusiast for profiling. Apart from the resentment it causes on the part of people (American Muslims) whom we very much want to keep loyal to the United States, it can be circumvented by recruitment of terrorists who do not fit th eprofile. More and more "white" Europeans are being converted to Islam and some of them may become terrorists. On the other hand, some limited, discreet profiling is efficient and I very much agree with the commenter who said there should be a "pass" from security checks for people who have security clearances or are otherwise certifiable as safe.
Posted by Richard Posner at 11:51 AM | Comments (4) | TrackBack
August 13, 2006
Counteracting Terrorism-BECKER
The terrorist plot to blow up from 7-10 planes with liquid explosives will once again increase the fear of flying. After the 9/11 horrendous attacks, U.S. domestic air travel was down by over 10 per cent for two years, and international travel on American airlines declined much further. The magnitude of this response went far beyond what could be explained by either the increased objective risk of flying or the greater time spent going through security. For even assuming that 3 planes a year on American airlines continued to be exploded by suicide bombers, air travel would still be a lot safer than traveling by car and bus, two major alternatives to air travel.
Many people stopped flying in the aftermath of the 9/11 attack because they feared being on a plane with suicide bombers, a fear that far transcended any objective risk of flying. Since such fears are part of the makeup of human nature--presumably due to biological evolution over time--fear should be incorporated in any useful analysis of the factors that determine willingness to fly, or to engage in other activities that are vulnerable to terrorist attacks.
I anticipate that as evidence of the destructiveness and scope of this latest terrorist plot unfold, many leisure and business travelers will once again be too frightened for a while to travel by plane, especially on international flights to and from the United States. The drop in air travel will not be as great as after the 9/11 attacks because this plot was foiled before any successful missions were carried out, and because travelers are more inured to terrorist threats than they were before that defining event.
It is clearly important to develop an efficient and effective system to reduce the likelihood of successful terrorism. Security will have to be continually updated and made more thorough as new information is acquired about terrorist plans. For example, the inconvenience of air travel will increase further as airport security adjusts to preventing liquid bombs from getting through security checks. Unfortunately, there is an ongoing battle between the ingenuity, dedication, and fanaticism of terrorists, and effective security measures. Terrorists continue to probe until they discover weaknesses in airport security. If they find it too difficult to mount terrorist attacks on planes, they may concentrate on other targets. Trains are an obvious example since security at train stations is generally very lax.
Still, universal security measures at airports or other sensitive points are not enough. Although civil libertarians criticize "profiling" of travelers and others, and government officials deny they engage in it, profiling is a necessary part of any reasonably effective security system. Groups that should be scrutinized carefully differ over time and among region of the world. For example, the Tamils are responsible for terrorism in Sri Lanka, and the IRA over a decade ago bombed London and other parts of England. Young Muslim males of Pakistani and Arab background have been responsible for the vast majority of recent terrorist activities in America, Britain, and continental European countries. This includes 9/11, the British 7/7 subway bombings of last year that killed over 50 people, the Spanish train bombings of the year before which killed almost 200 people, and other actual or thwarted attacks in the West. Therefore, young males from these groups should receive especially close scrutiny at airports and other public places.
Objectors to profiling of particular groups complain that this would subject many innocent members of groups being profiled to obtrusive and sometimes embarrassing searches and even harassment. No question that profiling of a group inevitably means that innocent members of that group would experience greater delays and more unpleasant encounters than would innocent members of groups not profiled. This is regrettable, but there is no effective alternative to profiling when one or a few groups pose far greater threats than do the rest of the population. To limit the discomfort and anger caused by profiling, members of the profiled groups should be treated politely and with dignity. They should also be reminded that they too are being protected from terrorist activities by a small fringe.
Those objecting to profiling potential terrorists usually want to subject everyone to the same detailed examination and inquiry. However, when potential terrorists are part of a group that constitutes only a small fraction of the population, searching everyone with the same detailed care at airports or at other venues would be needlessly costly and time consuming. This would slow down and thereby reduce air travel and other vulnerable group activities. It would also lead to loud complaints by those affected after the fear of terrorism had abated.
People in the United States and other free countries are gradually realizing that effective conduct of the war on terrorism means that it is no longer possible to have the full complement of liberties they have been accustomed to. Terrorists and suspected terrorists may be subjected to psychological pressures in order to gain vital information, pressures that would not have been acceptable in the past. In addition, government anti-terror agencies will be listening in on some phone conversations, they will inspect some emails, they will check some spending and bank accounts, they will monitor travel, and in other ways too they will intrude on traditional liberties. Of course, profiled groups, including innocent members, would be subject to more extensive surveillance than others. Unfortunately, mistakes will continue to be made, as in the detention by Britain a few months ago of some Muslim men who turned out to be innocent.
As readers of this blog and my other writings know, I have little confidence in government. Posner's discussion of mistakes by the FBI is just an additional, although important, example of this. But like it or not, government actions have to be the first line of defense against terrorism. While vigilance is required to prevent zealous public officials from overstepping their legitimate boundaries, they must have enough power to fight terrorism effectively. Clearly, some of these powers would not have been accepted in peacetime before 9/11, but since free societies are vulnerable to suicidal and other terrorists, these societies have to limit certain freedoms in order to more effectively fight terrorism. Hopefully, the vast majority of traditional freedoms can be preserved.
Posted by Richard Posner at 10:53 PM | Comments (45) | TrackBack
Terrorism-- Posner's Comment
I agree with Becker's analysis, but I draw a few additional lessons from the recent foiled plot to bring down airliners with liquid bombs, and let me explain them.
The first lesson is the shrewdness of al Qaeda and its affiliates in continuing to focus their destructive efforts on civil aviation. Death in a plane crash is one of the "dreaded" forms of death that psychologists remind us arouse far more fear than forms of death that are much more probable; this explains the extraordinary safety of air travel compared to gas heaters, which kill with a much higher probability. The concern with air safety, coupled with the fact that protection against terrorist attacks on aviation can be strengthened, though only at great cost in inconvenience to travelers, makes the recently foiled plot a merely partial failure for the terrorists. The revelation of the plot will significantly increase the costs of air travel--costs that are no less real or substantial for being largely nonpecuniary (fear, and loss of time--which, ironically, will result in some substitution of less safe forms of travel, namely automobile travel).
The plot has also revealed the importance of counterterrorist intelligence. A defense against terrorists as against other enemies of the nation must be multilayered to have a reasonable chance of being effective. One of the outer defenses is intelligence, designed to detect plots in advance so that they can be thwarted. One of the inner defenses is preventing an attack at the last minute, as by airport security screening for weapons. The inner defense would have failed in the recent episode because the equipment for scanning hand luggage does not detect liquid explosives. The outer defense succeeded. This is fortunate because airport security remains in disarray. The liquid-bomb threat had been known since a similar al Qaeda plot was foiled in 1995, but virtually nothing had been done to counter it. This is a failure of our Department of Homeland Security but also of the corresponding agencies in other countries, such as Britain's Home Office. If intelligence had failed, the attack would have succeeded.
Intelligence succeeded in thwarting the attack in part because of the work of MI5, England's domestic intelligence agency. The United States does not have a counterpart to MI5. That seems to me a very serious gap in our defenses. I have criticized it in a series of recent writings, including my book Uncertain Shield: The U.S. Intelligence System in the Throes of Reform, ch. 4 (Hoover Institution and Rowman & Littlefield Publishers, Inc., 2005). Perhaps now these criticisms will receive a more sympathetic hearing.
Primary responsibility for national-security intelligence has been confided to the FBI, a criminal-investigation agency oriented toward arrest and prosecution rather than toward patient gathering of intelligence with a view toward understanding and penetrating a terrorist network. The title of an article on the front page of today’s New York Times says it all: “Tracing Terror Plots, British Watch, Then Pounce: Experts See Different Tactics in U.S., Which Moves in Quickly.” The Bureau's tendency, consistent with its culture of arrest and prosecution, is to continue an investigation into a terrorist plot only for as long a time as is required to obtain sufficient evidence to arrest and prosecute a respectable number of plotters. Under this approach, the small fry are easily caught but any big shots who might have associated with them quickly scatter. The arrests and prosecutions warn terrorists concerning the methods of the FBI.
Bureaucratic risk aversion also plays a part; prompt arrests assure that members of the group won't escape the FBI's grasp and commit terrorist attacks. But without some risk taking, the prospect of defeating terrorism is slight.
MI5, in contrast to the FBI (and to Scotland Yard's Special Branch, with which MI5 works), has no arrest powers and no responsibilities for criminal investigation, and it has none of the institutional hangups that go with such responsibilities. Had the British authorities proceeded in the same manner in which the FBI would have been likely to proceed, rather than continuing their investigation until almost the last minute and as a result being able to roll up (with Pakistan's help) more than 40 plotters, most of the plotters might still be at large and the exact nature of and danger posed by the plot might not have been discovered.
The Times article says that the British could wait until the last minute because they have more legal scope for detaining suspects than we do. I don't think this is correct, but if it is, it is one more sign that we still do not take the threat of terrorism seriously enough to reexamine a commitment to civil liberties formed in a different and safer era.
Which brings me finally to a silver lining. It is not the fact that the plot was foiled; it was, as I said at the outset, merely a partial failure. The silver lining is that this close call may shake us out of some of our complacency. Because we have not been attacked since 2001, we are (or were until last week) beginning to feel safe. We were ostriches. An article in the current Atlantic Monthly by the usually astute journalist James Fallows proclaims victory over al Qaeda. Fallows argues that by depriving bin Laden of his Afghanistan sanctuary we defeated al Qaeda, and the only danger now is that we will overreact to a diminished terrorist threat. Bin Laden was indeed deprived of his Afghanistan sanctuary, but he promptly found another one, in Pakistan. Though the plotters of the liquid-bomb attack are British citizens, the plot in its scope and objective has al Qaeda written all over it. Al Qaeda is the high-end terrorist group. It is not content with bombing merely a subway or a train. Its hallmark is the spectacular attack, and the recent airliner plot had it succeeded would have rivaled the 9/11 attack in its impact.
Our ostrich brgade may retreat to the claim that "our" Muslims, unlike the British and Canadian Muslims, are fully integrated into American society and so pose no threat. That is false. The percentage of American Muslims who are potential terrorists is undoubtedly smaller than the corresponding percentages in either Britain or Canada. But as there are many more American Muslims than there are British or Canadian ones, and as (we now know) British (and presumably Canadian) Muslim extremists want to attack us and not just their own host nations, we cannot afford to assume that we are safe. Perhaps we shall no longer indulge that dangerous assumption.
Posted by Richard Posner at 08:00 PM | Comments (24) | TrackBack
August 06, 2006
Internet Gambling--Posner
An article in the New York Times of July 25 describes the efforts of the federal government to prevent Americans from gambling online in Internet casinos located outside the United States. The article reports that 8 million Americans engage in Internet gambling, spending a total of $6 billion a year.
Gambling outside specific, authorized venues, such as Nevada (the state that has the fewest restrictions on gambling), Indian casinos, riverboat casinos, parimutuel betting at racetracks, and state lotteries, is illegal. Illegal gambling is a standard example of a radically underenforced, "victimless" crime ("victimless" in the sense of being a voluntary transaction, as distinct from a coerced transaction such as theft. The gambling laws are underenforced largely because gambling is victimless, which makes detection difficult and also reduces the public’s willingness to devote resources to preventing it. The argument for criminalization is that gambling is an unproductive and often an addictive activity that, by virtue of its addictive character, drives the gambling addicts to bankruptcy.
In fact gambling is productive in an economic sense because it increases the expected utility of the gamblers; otherwise there wouldn't be gambling. It is as productive as any other leisure-time activity that does not involve the acquisition of useful skills or knowledge. Granted, the attraction of gambling is a little mysterious from a rational-choice perspective. Because of the need of the casino or other gambling establishment to cover its costs, the gambles that are offered are bad in the sense that the net expected monetary payoff is negative. The state lotteries derive significant revenues (an average of 2.3 percent in the 40 states that have state lotteries) from the sale of lottery tickets precisely by offering particularly bad odds: on average, of every $1 dollar in revenue from the sale of lottery tickets, only 50¢ is paid out in winnings.
So only risk preferrers should derive net expected utility from gambling. Yet most gamblers probably have health, homeowners', and other forms of insurance and thus demonstrate risk aversion. For just as only a risk preferrer will accept bad gambles, so only a risk averter would buy insurance, since the insurance company’s loading fee makes the net expected monetary payoff from insurance negative.
Some people believe irrationally that they are inherently "lucky," not realizing that "luck" is something observed ex post; no one has an asset called "luck" that enables him to beat the odds. Other people are so desperate or miserable that their marginal utility of money is very low, which truncates the downside risk of a gamble. Suppose, to take an extreme case, that you have only $1 left in the world. There isn't much you can do with $1, so, even if if you were risk averse, your most sensible move might be to buy a lottery ticket, on the theory that it is really costless. (Thus, welfare programs encourage gambling by reducing the cost of gambling away one’s financial resources.) The principle that this example illustrates is that if marginal utility is increasing in income, the benefit of winning a bet and thus increasing one’s income will confer more utility than an equal loss will confer disutility.
And finally, there is an inherent human fascination with uncertainty and randomness, and these features of our environment and experience can be observed with particular clarity in gambling. In this respect, gambling is a consumption good rather than an investment good.
It is true that some people become addicted to gambling and go broke. A 2000 study by the economists John Barron, Michael Staten, and Stephanie Wilshusen estimated that an abolition of casino gambling would reduce personal bankruptcies by 1.4 percent nationwide and by 8 percent in counties in which or near which casionos were located. However, given the enormous number of people who gamble, the percentage who go broke as a consequence of their gambling must be very small. This raises a serious question whether the harmless activity of a vast number of people should be curtailed to protect the small fraction who become addicted to it and as a result engage in self-destructive behavior.
If gambling addiction is considered a genuine mental disorder rather than a preference, it perhaps could be controlled by "suitability rules" (a weak "perhaps"—the costs of enforcement might well be prohibitive) that would limit the percentage of a person's income or assets that he could spend on gambling. This would be a counterpart to the suitability rules that forbid securities brokers to buy highly risky securities for people for whom such investments are "unsuitable" by virtue of their financial situation.
Addiction to gambling is more costly the more difficult it is to declare bankruptcy and thus wipe out one's debts. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 did just that: made it more difficult to declare nonbusiness bankruptcies. It will be interesting to see whether the Act reduces the amount of gambling and gambling-related bankruptcies.
The addiction argument is pressed in the legislative arena by the casinos and the other legal gambling establishments in support of restricting other gambling. The establishments argue that they try to prevent their customers from bankrupting themselves. But as far as I know, this is true only in the sense that they make sure that their customers can pay their losses.
Internet gambling poses a strong competitive threat to the conventional legal gambling establishments, including state lotteries. Those establishments have high overhead expenses--large staffs, expensive equipment (one-arm bandits, casino buildings, casino boats)--with the exception of the state lotteries, but the states, as I have noted, depend upon them as a revenue source, in lieu of taxes, which are unpopular. (The purchase of a state lottery ticket is a voluntary tax payment of one half the ticket price.) Moreover, except for the lotteries, legal gambling imposes substantial time costs on the gamblers, who have to travel to the casino or the racetrack to place a bet. It is because of the overhead expenses and the states' revenue hunger that the odds offered the gambler are so bad (they are even worse, when the time cost of the gambler is added). There may also be monopoly rents further worsening the odds, since competition in the gambling industry is so restricted in most states, a factor in the recent Abramoff scandal involving efforts to prevent competition with Indian casinos.
Internet gambling establishments have very low expenses, enabling them to offer an approximation to fair odds, and do not require any travel by the gambler. One would think fair odds an enormously attractive feature of Internet gambling to gamblers. At fair odds, which is to say with no loading expense (a gamblers' nirvana that Internet gambling, if allowed to operate without threat of criminal prosecution--which obviously drives up its costs--might approximate), the net utility of gambling soars because there is no longer a net expected financial loss.
So the legal casinos are correct that they offer a measure of control over gambling: by offering only bad odds, they reduce the demand for their product. (The analogy is to the monopolistic provision of a product, which by reducing demand reduces the amount of pollution generated by the manufacture of the product.) It is doubtful, however, that this effect justifies the elaborate legal restrictions on the gambling industry.
Posted by Richard Posner at 04:42 PM | Comments (27) | TrackBack
On Internet Gambling-BECKER
Gambling through lotteries, stocks, casinos, and in other ways is common throughout the world. Economists explain this by both process and outcomes. By "process" I mean that many people enjoy the thrill of the risk involved in gambling-this is sometimes called "the utility from gambling". This enjoyment of gambling is the dominant factor behind the many small gambles that people take while playing poker, cards, slot machines, blackjack, craps, and other games. Gambling is also attractive when, as with lotteries, it offers a small probability of winning a lot, and thereby changing significantly one's economic situation, even when combined with a large probability of losing a little. Economists explain this by assuming the marginal utility of income in rising in some income intervals.
Put in this context, the popularity of online gambling is not at all surprising. It offers highly convenient access to gaming situations from one's home or office that includes also flexibility as to amount wagered, many different types of gambles, and relatively good odds. Nor is it surprising, however, that the American government and the governments of most other countries are unhappy about internet gambling, and try to either prevent or tax it.
The approach to gambling by state and local governments of the United States is fairly typical of what happens elsewhere. Gambling was long officially banned in all states except Nevada, but it persisted illegally in the form of numbers, bookies, card games, and in other ways. The hit musical of several decades ago "Guys and Dolls" based on a story by Damon Runyan centers around a floating game of craps in New York hosted in different venues to avoid police. Eventually, state governments saw the tax revenue potential of state-run lotteries when combined with continued prohibitions on private lotteries. Lotteries then spread from state to state. Many states now also license casinos and tax them heavily, and the federal government got into the gambling picture by the strange method of giving Indian tribes special advantages in running casinos.
Governments are concerned about online gambling primarily, I believe, because it threatens the revenue and other political advantages they get from taxing and tightly regulating various forms of gambling. Internet gambling is very hard to regulate and tax because online companies can set up in remote places and make gambling available to practically anyone who has access to the Internet. In fact, many online gambling companies are located either in ships at sea, or in very small countries that allow them to operate in return for a cut of the profits. For example, the big online betting company, BetOnSports, currently being prosecuted in federal court, has its headquarters in Costa Rica, and has other offices on the island of Antigua.
The House of Representatives by a large majority passed a bill in July that attempts to curb online poker games, sports betting, and other Internet-based wagering. Among other things, the bill would bar the use of electronic payments, such as credit-card transactions, in online wagering. This bill came six years after a similar measure was defeated. Many attribute the change in the House's vote to the Jack Abramoff scandal. That may have been the precipitating factor, but the main reason is the rapid growth in online gambling during the past six years to about $12 billion per year worldwide, with about half of that in the United States. Online gambling is fast becoming a major threat to government revenue from gambling, and to its control over how and where gambling takes place.
Supporters of this bill argue that easy access to online gambling is dangerous because it encourages and strengthens gambling addictions. The fact is, however, that gambling is even less addicted than drinking, and is not nearly as addicted as smoking. Moreover, gambling addicts can already find many ways to gamble. The vast majority of online gamblers bet modest sums for pleasure, such as the estimated 23 million Americans who now play online poker (the Pokers Players Alliance, which claims more than 25,000 members, opposed the bill).
Other supporters of a ban on online gambling claim that it is used to launder money obtained from drugs and other illegal activities. The laundering argument against gambling is largely irrelevant, given the many other ways to launder money.
I favor allowing online gambling, given the weak arguments against it, the common human desire to gamble, and also that addictive aspects of gambling are greatly exaggerated. Indeed, I also believe it should remain tax free, along with purchases of other services through the Internet. For tax-free online gambling would put pressure on governments to reduce taxes and various restrictions on lotteries and other forms of gambling. Lower taxes and fewer regulations would give individuals cheaper access to ways to satisfy the mainly harmless desire to play games for money, and to bet on sporting and other events, including lotteries.
As with many other laws, restrictions on gambling mainly impact the poor and middle classes since wealthier individuals can and do gamble through equities, derivatives, housing, and in many other ways that are not readily available to families with modest incomes. There are many ways to spend money in ways that others do not approve. Why single out families with modest incomes who may enjoy the excitement of gambling, or the dreams gambling provide about striking it rich?
Posted by Gary Becker at 03:03 PM | Comments (19) | TrackBack
August 05, 2006
Response on Big Boxes in Chicago-BECKER
Shortly after our commentary on the Chicago ordinance raising wages for big box employees, Target announced that it would not go ahead with plans for a store in a depressed neighborhood on Chicago's South Side unless the mayor vetoed the City Council's ordinance. This would just be the first of a series of responses by big retail stores to this ordinance if it is allowed to take effect.
I do not believe the ordinance would violate ERISA by requiring a minimal amount of fringe benefits. After all, companies on their own sometimes raise their fringe benefits to much higher levels than those required by any law.
I like the observation that big retailers in Chicago would be induced to outsource some activities that are now found in these store, such as greater use of temps. I should have mentioned that as one of the clear predicted effects of the ordinance.
No, a rise in minimum wages does not automatically lead to greater inflation. It depends how the Fed reacts, if it reacts at all. Since even national minimum wage laws cover only a small fraction of the labor force, the Fed will surely not respond to a higher minimum imposed on large retailers in Chicago. The effect will initially be to raise unemployment of low skilled workers, and ultimately to reduce wages of low skilled workers employed at other than large retailers.
I am impressed by how often errors in economic analysis made by some commentators (including by me!) are caught in other comments. One example is the posted statement that my claim that the ordinance would encourage large retailers to substitute labor for capital is wrong because they have already made all the feasible substitutions. Another post correctly points out that a government-imposed higher wage would encourage more of these substitutions because that raises further the cost of labor relative to capital.
The crucial difference between the situations of large governments and large retailers, like Target or Wal Mart, is that retailers face very stiff competition, while large government units have considerable monopoly power. Some large retailers make big profits, but they do that usually in highly competitive markets, such as the retailing market in a big city like Chicago.
Of course, I agree that smaller stores in Chicago favor all ordinances that discriminate against large retailers. I stated that in my post.
Let me respond to the important question of how can we reduce gentrification that replaces lower income housing by middle and upper income housing. I believe in allowing supply and demand in the housing market to determine land use. Unfortunately, the balance is frequently artificially tilted in favor of gentrification by the use of eminent domain to take land away from housing low income families, and by giving tax breaks to developers who use property for gentrification purposes.
Posted by Gary Becker at 05:47 PM | Comments (8) | TrackBack
Response on Gender Gap in enrollments- BECKER
Let me return to our discussion a few weeks ago of the gender gap in college enrollments, and respond to a few of the many interesting comments. The gap in male-female median earnings is indeed less than in mean earnings because the distribution of male earnings is more skewed to the right. The greater skewness in male earnings is due to their greater variance in "skills", and to an interaction between skills and market demand. For a model of this kind (but not applied to male-female earnings differences), see my Human Capital.
To clarify my position on affirmative action for men and for various other groups, I am not claiming that non-hispanic whites do not have any desire to have African American, Latinos, and other minorities in their classes. Surely, many of them do, but I do claim that the desire of women to have a significant fraction of male students in the colleges they attend, and visa versa for men, is on the whole greater than the desire to have many members of these minority groups.
For reasons given in previous posts, I am against all government-enforced affirmative action admission-programs. Still, colleges should be free to choose their admission policies in the competitive higher education market of the United States. This includes the freedom to bring in more male students to balance a majority of female students. It also very definitely includes freedom of schools to show preference for minority students. We can argue about whether colleges should want to do this, but I leave that up to them to decide. However, it is unwise for governments to force such actions on colleges, as long as there is sufficient competition among colleges. There is enough competition in American higher education (but not in higher education in many other countries).
The war on drugs is certainly a factor, indeed I believe an important factor, in the low rate of high school completion among African-American males, and also in the higher education of African American females. The comment posted gives a good discussion of the reasons why. While there are many other forces involved, such as unstable families, the war on drugs is in principle the easiest to correct simply by legalizing drugs.
Part of the source in the gender gap in earnings during the past couple of decades is that many males who would be at the low end of the earnings distribution have dropped out of the labor force. However, there is still a sizeable gender gap in earnings even after correcting for the high male drop out rates. Moreover, the same type of selectivity applies to women since college educated women are more likely to work than women with lesser education.
Some of you in effect argue that colleges should take account of the greater variability in performance of men as well as their lower average performance. I agree and stated that in my post.
Posted by Gary Becker at 05:29 PM | Comments (3) | TrackBack
