How America banned marijuana

I'm watching Ron Mann's 1999 Grass, narrated by Woody Harrelson. Some of the propaganda films depicted are astonishing - did people really believe that stuff? I don't want to hear anyone ever say again that modern America is an immature society.

And here is something I didn't know - the artful way in which marijuana possession was made a federal crime:

The Marijuana Tax Act was signed into law by President Roosevelt in 1937. The act prohibited possession of marijuana anywhere in the United States without a special tax stamp from the Treasury Department, and the Treasury Department didn't give out any stamps, effectively making marijuana illegal.

Genius. It is also telling how that such an elaborate arrangement had to be dreamt up to achieve criminalisation of marijuana: the power to ban a product was a new-found one.

Geeks on trial, mammals that lay eggs, and other strange occurences: The incredible story of Hans Reiser

The Duckbill Platypus is a mammal that lays eggs. It also plays a key role in the defence of Hans Reiser, an iconic programmer and software visionary on trial for murdering his wife.

[Reiser's defence attorney] for the second day likened his client to a duckbill platypus, a strange-looking mammal -- a "genetic mistake" -- that was projected to jurors on a large monitor.

"I just know this is one of the great screw jobs of what happened to Hans Reiser," DuBois said. "It's easy to screw a platypus."

It is a tragic story (detailed in one of the best pieces ever to appear on Wired - well worth dedicating 20 minutes to go through the whole thing) and one of the most followed and discussed across geekland. Here's another interesting excerpt from the proceedings:

[Hans Reiser explained] to jurors that, as nonscientists, they may not understand his social ineptness.

"Scientists communicate by reference to data. I cannot communicate effectively. That's not how scientists talk. We cannot throw out assertions that cannot be supportive without data points," the 44-year-old defendant testified on his 10th day on the stand. "I have a compulsive tendency to say things that I know are true that people don't want to be true. I do this by reference to the data"

Would an economist kill him? The case of Leonel Torres Herrera

I am an innocent man, and something very wrong is taking place tonight. May God bless you all. I am ready.

This is from the last statement of L T Herrera, from a long, comprehensive list of last statements preserved by the Texas Department of Criminal Justice. (via Pharyngula)

Excerpts from the opinion of the Supreme Court, delivered by Chief Justice Rehnquist, including a description of the case:

Petitioner Leonel Torres Herrera was convicted of capital murder and sentenced to death in January 1982. He unsuccessfully challenged the conviction on direct appeal and state collateral proceedings in the Texas state courts, and in a federal habeas petition. In February 1992--10 years after his conviction--he urged in a second federal habeas petition that he was "actually innocent" of the murder for which he was sentenced to death, and that the Eighth Amendment's prohibition against cruel and unusual punishment and the Fourteenth Amendment's guarantee of due process of law therefore forbid his execution. He supported this claim with affidavits tending to show that his now dead brother, rather than he, had been the perpetrator of the crime. Petitioner urges us to hold that this showing of innocence entitles him to relief in this federal habeas proceeding.[Emphasis DC] We hold that it does not.

[...] In any system of criminal justice, "innocence" or "guilt" must be determined in some sort of a judicial proceeding. Petitioner's showing of innocence, and indeed his constitutional claim for relief based upon that showing, must be evaluated in the light of the previous proceedings in this case, which have stretched over a span of 10 years.

Once a defendant has been afforded a fair trial and convicted of the offense for which he was charged, the presumption of innocence disappears. [...] ("The purpose of the trial stage from the State's point of view is to convert a criminal defendant from a person presumed innocent to one found guilty beyond a reasonable doubt"). In the eyes of the law, petitioner does not come before the Court as one who is "innocent," but on the contrary as one who has been convicted by due process of law of two brutal murders.

And excerpts from the dissent, delivered by Justice Blackmun:

We really are being asked to decide whether the Constitution forbids the execution of a person who has been validly convicted and sentenced but who, nonetheless, can prove his innocence with newly discovered evidence. Despite the State of Texas' astonishing protestation to the contrary [...] I do not see how the answer can be anything but "yes."

The protection of the Eighth Amendment does not end once a defendant has been validly convicted and sentenced. In Johnson v. Mississippi, 486 U.S. 578 (1988), the petitioner had been convicted of murder and sentenced to death on the basis of three aggravating circumstances. One of those circumstances was that he previously had been convicted of a violent felony in the State of New York. After Johnson had been sentenced to death, the New York Court of Appeals reversed his prior conviction. Although there was no question that the prior conviction was valid at the time of Johnson's sentencing, this Court held that the Eighth Amendment required review of the sentence because "the jury was allowed to consider evidence that has been revealed to be materially inaccurate." [...]

Just as an execution without adequate safeguards is unacceptable, so too is an execution when the condemned prisoner can prove that he is innocent. The execution of a person who can show that he is innocent comes perilously close to simple murder.

The opinion, and to a lesser extent the dissent, do a horrible job of expaining and addressing the issue at hand.

Society has a certain 'model' ('judicial proceedings') it uses to determine whether a person in guilty or innocent. The issue before the Court is really very simple: does the expected gain in the predictive power of the model as a result of utilising the previously unavailable information justify the cost - in a wide sense - of a re-trial (i.e. re-running the model)? Both the opinion and the dissent touch on this in an incoherent manner, and treat these considerations as peripheral.

Chief Justice Renquist's thesis basically consists of stating that re-trials are costly so we need to take into account the output of previous trials even when these did not utilise all available information ('once a defendant has been afforded a fair trial and convicted of the offense for which he was charged, the presumption of innocence disappears.') while Justice Blackmun is mainly concerned with asserting that utilising more information would be beneficial. In the end, there is no systematic attempt at stacking one against the other.

When will courts start thinking and arguing clearly? The wonderful lessons of economics - define a clear question, explicitly state your assumptions, reach a robust conclusion - must make their way to the hallowed halls of justice, where they will find a natural, welcoming home.

The right to have sex with a bike

From BBC News:

A man caught trying to have sex with his bicycle has been sentenced to three years on probation. Robert Stewart, 51, admitted a sexually aggravated breach of the peace by conducting himself in a disorderly manner and simulating sex. Sheriff Colin Miller also placed Stewart on the Sex Offenders Register for three years.

Mr Stewart was caught in the act with his bicycle by cleaners in his bedroom at the Aberley House Hostel in Ayr. Gail Davidson, prosecuting, told Ayr Sheriff Court: "They knocked on the door several times and there was no reply. "They used a master key to unlock the door and they then observed the accused wearing only a white t-shirt, naked from the waist down.

"The accused was holding the bike and moving his hips back and forth as if to simulate sex." Both cleaners, who were "extremely shocked", told the hostel manager who called police.

Sheriff Colin Miller told Stewart: "In almost four decades in the law I thought I had come across every perversion known to mankind, but this is a new one on me. I have never heard of a 'cycle-sexualist'."

I find this case very distrurbing. Since when is it illegal to have sex with an object in the privacy of your own home? Robert Stewart was sentented to three years on probation and put on the the Sex Offenders' Register (a list usually reserved for people raping or sexually harassing someone), when his only crime was masturbating in a way that is not to the taste of some. This is a gross miscarriage of justice, and one that has to be put right.

UPDATE: I am not alone.

Renegade Dog

Andrew Luster had it all, a multi-million dollar trust fund, good looks, and a bachelor pad just off the beach in Mussel Shoals, California. Luster, the great-grandson of cosmetics legend Max Factor, spent his days surfing and cruising the clubs.

When the first woman alleged rape, Luster claimed mutual consent but the videotapes that the police discovered when they searched his home told a different story. Eventually more than ten women came forward and Luster was convicted of twenty counts of rape and sentenced to 124 years in prison. There was only one problem. Luster could not be found.

But Luster was brought to justice - by a dog. Duane Chapman, now known by the title of his television show, Dog: The Bounty Hunter, had been tracking Luster for months.

Finally, a tip from someone who had seen Dog on television brought Dog to a small town in Mexico with great surfing. Days later Dog spotted Luster at a taco stand and made the arrest.

Unfortunately for Dog, bounty hunting is illegal in Mexico and the US authorities, who in my opinion are embarrassed by their failure to capture Luster, haven't tried to intervene with the Mexican government to let the charges drop in the interests of justice.

This is Alex Tabarrok. Why am I posting this? To start with, entertainment value: a rich heir, a mysterious disappearance, a bounty hunter who won't quit and a raging international legal drama. That's the stuff that'll bring them in!

Secondly, 'to let the charges drop in the interests of justice'? Man goes to foreign country, breaks law of foreign country - and we are not talking been found holding a can of beer here - and justice is somehow served by allowing the man to walk free? Since when has American law been elevated to some sort of 'natural' law?

Thirdly, I get the opportunity to link to this thought-provoking paper by Alex and Eric Helland:

[Our] findings indicate that bond dealers and bail enforcement agents (bounty hunters) are effective at discouraging flight and at recapturing defendants. Bounty hunters, not public police, appear to be the true long arms of the law.

Being European, and putting effectiveness aside for a minute, I don't feel very comfortable with the concept of bounty hunters. At the same time, I can't think of a single reason why the institution is a bad idea. At the end of the day, we are not talking private justice here: the bounty hunters serve the simple administrative function of tracking down people already wanted by the police and handing them to the courts. Comments are open, and I would really appreciate any insight readers have to offer on this one.

Postscript: Yes, the title is a reference to Lorenzo Lamas.

F***: The economics of coarse language

Update: A couple of readers suggested I re-publish this post without the expletives. So, here it is.

A disclaimer: This post's intention is neither to offend nor to provoke, despite the fact that coarse language is often used for exactly this purpose. I believe that no subject should be off-bounds when it comes to discussion and research, and readers who may be offended are kindly advised to stop reading now.

Organizations and Markets links to an interesting article exploring the history, properties and legal implications of the word f***. You can view the abstract or download the full paper for free at the Social Science Research Network. Here's a snippet from this highly readable piece:

A trilogy of events motivated me to start this project. The first occurred during my second year of law teaching. In my Professional Responsibility course, the lesson for the day was attorney racist and sexist behavior. The case I assigned from a leading casebook was liberally sprinkled with f***, c***, s***, b**** and the like. Sensitive to the power of language, I recited the facts myself rather than ask a student as was my norm.

After the course was over, I was reviewing my student evaluations and discovered this: “I was a little disturbed by the way he seemed to delight in saying ‘c***’ and ‘f*****g b***h’ during class. I think if you’re going to say things like that in class, you should expect it to show up on the evaluation.” Now I was the one a little disturbed. How could any educated adult, much less a graduate student in a professional program, be offended by hearing these words read from a court opinion?

I've been meaning to post something on the economics of coarse language for a while now. The author of 'F***' points out that 'according to psycholinguists, its taboo status is likely due to our deep, subconscious feelings about sex' and offers a simple model explaining how the process of 'taboo-ization' operates through individual, voluntary self-censorship and the interaction with law. For the record, I tend to agree with the author's take on jurisprudence in this area and how it is often misguided and incoherent.

At the same time, I disagree with his assertion that 'word taboo is irrational' and with the taboo-isation model on offer. There are plenty of other words and expressions that convey the same meaning as 'f***', ranging from 'having sex' to 'copulating' to 'sleeping together'. Instead, I see using 'f***' as having the same rationale as wearing a tie: it is a signalling device, a means of imparting information about one's character, feelings, intentions, religious beliefs, socioeconomic class or other non-obvious characteristics.

The important fact to grasp here is that while use of the word 'f***' in a social setting can be costly to its users, in many cases it is actually beneficial. To give an example, using the word 'f***' in someone's presence is a way to show you trust that person (we tend to speak way more freely in the company of friends than in the company of strangers). To give a few more, 'f***' may be used to project power or intimidate, to signal the person uttering it is a 'simple chap' or to challenge authority.

F***, therefore, serves a useful function when it comes to social interactions, as it allows the user to communicate information about himself in an efficient manner. In that sense, it is a highly valuable word that has unsurprisingly survived centuries of use, and will continue to thrive in everyday language as long as social taboos allow it to retain its useful signalling properties.

Tim Worstall is spot on

Tim Worstall has excellent commentary on the Insane Sir Salman Rushdie post of the day (courtesy of the UK Daily Pundit). Here's the UKDP:

Maybe someone should set up a petition insisting that supporters of Rushdie pay for his 24 hour police protection. Although I suspect that's one bandwagon Pinko Finko and the chatterati won't be so quick to jump on.

And here's Tim's outstanding reply:

The first duty of the State is to protect its citizens from violence from abroad. You know, keep Johnny Foreigner at bay. The second to protect them from violence at home. 

That's why we have the damned institution, dipstick.

I would not have made the distinction between 'violence from abroad' and 'at home', and I would have probably used somewhat longer words. But any elaboration would have spoiled it. 'That's why we have the damned institution, dipstick' sums up my thoughts perfectly.

Postscript: For those who haven't been following the story, BBC News has the background (here and here)

Supranational law revisited: A reply to Tim and Dave

There were a couple of interesting points raised in response to a previous post on supranational law. Here is Tim Worstall:

The German Constitutional Court (whatever it's called) has, I think, stated that where EU law calls for a breach of the German constitutional law, then it is the EU law that must be changed, not the German constitution.

On the basis that EU law is imposed by treaty, whereas the constitution is more basic than that perhaps?

Or another way of looking at it, that a treaty cannot be used to impose a breach of constitutional law: very much the problem over the Extradition Act with the US. Americans' cannot be extradited to the UK on the same basis that UKites can be to the US because the US courts take the view that said treaty violates basic constitutional protections and therefore cannot be used in the US.

I'm well aware that EU law does over ride domestic law and the question I was trying to raise is, will a UK Constitution lead to something like the German or US situation?

Any UK constitution, if there ever is one, will take its rightful place above UK law and below EU law and other international treaties the UK has signed. The German constitution is no different: Germany may try and argue against instituting a certain piece of EU legislation that goes against the German constitution or, if that's not possible, it may choose to ignore that specific piece of legislation and face the consequences of breaking EU law. There are many examples of EU countries consistently refusing to enforce certain pieces of EU legislation, and they duly pay the resulting fines as specified by the EU. An individual may choose to pay parking fines rather than use public transport, but this does not mean he is above parking law.

As for the UK-US Extradition treaty, keep in mind that it was only recently ratified by the US, while the UK unilaterally chose to enforce it earlier than the Americans did. At any rate, my understanding is that the US is not flouting the treaty: it just made sure that the requirements imposed on it were in line with its constitution. If it were indeed the case that its constitution did not allow it to enforce the treaty, it would be the UK's right to refuse to honour its part of the deal too, and the treaty would no longer have any legal force.

Approaching the issue from a different angle, Dave also makes an interesting remark:

Surely no EU law is actually law in the proper sense because there is no means of enforcement, given the sovereignty of nations. Therefore, when we talk about EU law, it is in rather optimistic terms (just as we do about the UN). Surely national law precedes international treatises, just as natural law precedes national.

The EU has a variety of means of enforcement, ranging from fines to expulsion from the union itself. Of course, at any point in time any country can choose to renege on a treaty/law, but then it would have to face the consequences, whatever these are. This is also the case for lower-level authorities or individuals who may choose to break national law. From a moral point of view, you may be right: any entity can flout a law it is subject to following its own morality or, in the case of countries, legal system. But from a legal perspective, my point still stands: it is absolutely impossible for a lower-level entity to legislate in contradiction to a higher-level law.

One more quick point is in order before leaving this post. While it may seem that I am eager to pick on Tim Worstall, I have to make clear his blog is great, and I am one of his most loyal readers. I don't always agree with everything he says, but in most cases he has a good point - and a unique way of expressing it. Furthermore, his ability to maintain a high level of quality while being probably the most prolific econ-blogger around never ceases to amaze me. Tim, keep up the good work - and I will keep trying to get to the bottom of your arguments.

The prosecutor's fallacy

Mark Buchanan, via Andrew Gelman, provides another example of ignorance breeding evil (O Socrates, were you ever wrong?):

Later this month – or it could be next month – a group of three judicial “wise men” in the Netherlands should finally settle the fate of a very unlucky woman named Lucia de Berk. A 45-year-old nurse, de Berk is currently in a Dutch prison, serving a life sentence for murder and attempted murder. The “wise men” – an advisory judicial committee known formally as the Posthumus II Commission – are reconsidering the legitimacy of her conviction four years ago.

Lucia is in prison, it seems, mostly because of human susceptibility to mathematical error – and our collective weakness for rushing to conclusions as a single-minded herd.

When a court first convicted her, the evidence seemed compelling. Following a tip-off from hospital administrators, investigators looked into a series of “suspicious” deaths or near deaths in hospital wards where de Berk had worked from 1999 to 2001, and they found that Lucia had been physically present when many of them took place. A statistical expert calculated that the odds were only 1 in 342 million that it could have been mere coincidence.

Open and shut case, right? Maybe not. A number of Dutch scientists now argue convincingly that the figure cited was incorrect and, worse, irrelevant to the proceedings, which were in addition plagued by numerous other problems.

For one, it seems that the investigators weren’t as careful as they might have been in collecting their data. When they went back, sifting through hospital records looking for suspicious cases, they classified at least some events as suspicious only after they realized that Lucia had been present. So the numbers that emerged were naturally stacked against her.

Mathematician Richard Gill of the University of Leiden, in the Netherlands, and others who have redone the statistical analysis to sort out this problem and others suggest that a more accurate number is something like 1 in 50, and that it could be as low as 1 in 5.

More seriously still – and here’s where the human mind really begins to struggle – the court, and pretty much everyone else involved in the case, appears to have committed a serious but subtle error of logic known as the prosecutor’s fallacy.

The big number reported to the court was an estimate (possibly greatly inflated) of the chance that so many suspicious events could have occured with Lucia present if she was in fact innocent. Mathematically speaking, however, this just isn’t at all the same as the chance that Lucia is innocent, given the evidence, which is what the court really wants to know.

To see why, suppose that police pick up a suspect and match his or her DNA to evidence collected at a crime scene. Suppose that the likelihood of a match, purely by chance, is only 1 in 10,000. Is this also the chance that they are innocent? It’s easy to make this leap, but you shouldn’t.

Here’s why. Suppose the city in which the person lives has 500,000 adult inhabitants. Given the 1 in 10,000 likelihood of a random DNA match, you’d expect that about 50 people in the city would have DNA that also matches the sample. So the suspect is only 1 of 50 people who could have been at the crime scene. Based on the DNA evidence only, the person is almost certainly innocent, not certainly guilty.

This kind of error is so subtle that the untrained human mind doesn’t deal with it very well, and worse yet, usually cannot even recognize its own inability to do so. Unfortunately, this leads to serious consequences, as the case of Lucia de Berk illustrates. Worse yet, our strong illusion of certainty in such matters can also lead to the systematic suppression of doubt, another shortcoming of the de Berk case.

Of course, the de Berk case is hardly an isolated example of statistical error in the courtroom. In a famous case in the United Kingdom a few years ago, Sally Clark was found guilty of killing her two infants, largely on the basis of testimony given by Roy Meadows, a physician who told the court that the chance that the two both could have died from Sudden Infant Death Syndrome (SIDS) was only 1 in 73 million. Meadows arrived at this number by squaring the estimated probability for one such death, which is an elementary mistake. Because SIDS may well have genetic links, the chance that a mother who already had one child die from SIDS would have a second one may be considerably higher.

Here, too, the prosecutor’s fallacy seems to have loomed large, as the likelihood of two SIDS deaths, whatever the number, is not the chance that the mother is guilty, though the court may have interpreted it as such.

Even our powerful intuitive belief that “common sense” is a reliable guide can be extremely dangerous. In Sally Clark’s first appeal, statistician Philip Dawid of University College London was called as an expert witness, but judges and lawyers ultimately decided not to take his advice, as the statistical matters in question were not, they decided, “rocket science.” The conviction was upheld on this appeal (although it was subsequently overturned).In ordinary usage, “common sense” is taken to be something of value. Albert Einstein had a less charitable view. “Common sense,” he wrote, “is nothing more than a deposit of prejudices laid down by the mind before you reach age 18.”

By the way, Statistical Modeling, Causal Inference and Social Science is one of the best blogs around and a personal favourite. An absolute treasure chest of knowledge and insightful commentary, it is highly recommended to anyone with more than a passing interest in statistics and econometrics.

Supranational law: A common misunderstanding

Tim Worstall, a top British blogger and frequent visitor here, makes a mistake:

There's also an interesting thought: given that EU law takes precendence over UK law, just what use is such a constitution [i.e. a written constitution for the UK]? I think it is only Germany which has said that, actually, no, whatever the EU might think, the German Constitution is the primary law in that country and where there is a conflict, the EU law loses. Would we do the same?

The answer is no. No European Union country would - including the Germans - and the reason is simple: they can't. If it was possible for a country to flout supra-national (in this case EU) law at will, what would be the point of talking about supranational law in the first place?

This principle is well understood in almost every other context where it applies. The City of London has no power to repeal income tax legislation imposed by the national government. If it could, having a national government would be redundant: any local authority or individual who didn't like a particular law would institute their own. A 'law' that's worth the name has to be binding for all the parties it applies to, and so it's impossible for state law to take precedence over federal law, local law to supercede national law and so on.

The extent to which this seemingly simple point is misunderstood in the context of the European Union is a source of constant astonishment for me. I don't think a similar misunderstanding arises in the US regarding state and federal law - and my American readers can correct me on this.

The moral of the story? The European Union is a continuing communications disaster; and European citizens are not particularly bothered advocating mathematical impossibilities.

The Queen and I: a story about change

The New York Times (thanks to Greg Mankiw for the link) have a story on the row that erupted after a chinese restaurant refused to accept payment in pennies. Here's a snippet:

It was about 11:30 p.m. on April 23 when Wayne Jones stopped at the Great Wall Chinese Restaurant in the Soundview section. Mr. Jones, 47, a lieutenant with the Fire Department’s Emergency Medical Service, ordered four fried chicken wings to go. The total was $2.75.

Mr. Jones placed his money on the counter: two $1 bills, two quarters, one dime, one nickel — and 10 pennies.

“The lady behind the counter started yelling, ‘No pennies, no pennies,’ ” Mr. Jones said. The woman told him she would take 3 or 4 pennies, he said, but not 10.

The tale of the 10 pennies unfolded yesterday in a sort of sidewalk circus. It was a melodrama of pocket-change proportions, part political stagecraft, part whodunit and, perhaps, part slow news day. Reporters descended upon the cramped, seatless lobby of Great Wall as customers elbowed their way inside to order food. A Bronx lawmaker stood outside alongside Mr. Jones, vowing to take up the issue in Albany.

I've had the exact opposite problem in the past. The fare for the bus I used to ride to University cost 60p and, while I am an avid coin collector, I don't tend to carry the stuff around with me. That created a bit of a problem: the bus drivers had an almost religious antipathy to handing out change.

At first I accepted this as a fact of life, and settled with walking to university through the (frequently torrential) rain. After spending a big chunk of my first year in bed, coughing and taking temperature, I knew I had to find a way to get on that bus. By mid-year, I had discovered the killer answer to all these heartless drivers.

The bus would stop and I would walk inside, trying my best to project an aura of aristocratic righteousness and superiority (a bit difficult to pull when you are a hair-all-over-the-place, worn-out-jacket-clad student, but nevertheless I tried). The driver would take a look of disgust at my £1 coin or, even worse, £5 note and command me off the bus.

And that was the moment I would go legal on him: 'It's got the Queen's face on it, you are obliged to accept it as payment'. Most of the times, he would frown a little and reluctantly let me in - for free. The few brave souls that resisted the argument were faced with my polite request for their name, so that the police could be invited to settle the matter. No-one ever took the challenge, and I would happily take my seat inside the, oh so warm and cosy, bus.

The funniest thing? I don't even know if this requirement is actually enshrined in law. But as I've found out, alleging lack of respect to the monarch sure makes for a persuading argument.

For those fascinated by this stuff, here is a link to one of my previous posts on why you can't get change in Italy.

Sentencing according to probability of guilt

Two murder trials take place within weeks of each other. The first one is almost purely a procedural matter: there is overwhelming evidence that the accused is guilty and no reasonable man could argue otherwise. Not so in the second case, where while the evidence point towards a reasonably high probability of guilt, some jurors and members of the public still have their doubts (reasonable or otherwise).

Both men are convicted - and sentenced to the same number of years in prison.

Repeat this same scenario a few thousand times, and the defendants that fall in the second category will have served a lot more 'undeserved' years in prison than those in the first. In fact, given that 'society' determines its optimal sentencing policy by taking into account the probability a miscarriage of justice takes place, those that are indeed guilty will enjoy a more lenient sentence than they would have been awarded in a world with perfect information.

This is a classic example of the inefficiency arising by awarding an average (rather than probability weighed) performance payout to all agents under conditions of uncertainty. I take it as given that society prefers someone who is undeservedly in jail to at least be freed sooner rather than later. In so far as the balance of opinion within a jury is correlated with probability of guilt (and it better be, because otherwise we should discard the notion of a 'fair trial' all together) our approach to sentencing is grossly inefficient and unfair.

Postscript: I am ignoring potential issues arising from strategic interactions amongst jury members here, however these should not affect the basic thrust of the argument.

Murdoch makes an offer you can't refuse

Here's the story:

DOW Jones could face a flood of shareholder lawsuits if it rejects a buyout bid from News Corporation and its shares tumble, legal and governance experts said overnight.

Dow Jones, publisher of the Wall Street Journal, has said it is evaluating the $US5 billion ($6 billion) takeover bid from Murdoch's News Corp (nws.ASX:Quote,News), a proposal that triggered a nearly 55 percent jump in its stock price on Tuesday.

But a representative of the publisher's controlling shareholders, the Bancroft family, said they would oppose it.

If the board ultimately rejects the offer, and no comparable bids emerge, lawsuits almost surely will be filed accusing the directors for failing to look after investors' interests, said Thomas Dewey, a partner at law firm Dewey Pegno & Kramarsky.

55% jump in the share price upon publication of the offer? If I was a shareholder, I'd sue too.

Who said that the rise of litigation culture is a bad thing?

The trouble with women - part 2

For background, read part 1.

Now, picture two companies competing with each other. They are identical in every respect, other than the gender of their staff. The first one (Girl Co.) employs only women, while the other prefers men (predictably, the founders went for Guy Co.)

When joining their respective companies' graduate schemes, guys and girls have equivalent levels of IQ, education and charisma. Guy Co. and Girl Co. are reputable, law abiding companies, so they pay the same salary for the same job. Being identical in every respect, they have the same costs of production. Competition is stiff.

A few years pass. The guys get married to the girls and they decide to have children. Guy Co. barely notices: its employees go away for a few weeks after each child is born, and perhaps have the odd day off every once in a while thereafter to cater for measles, chickenpox and the like.

At Girl Co., however, things look decisively bleak. One by one, its employees give birth and go away for months on end, while Girl Co. still has an obligation to pay them a large fraction of their salary. Temporary replacements are hired, causing the company's payroll and training costs to go up dramatically.

But that's the least of Girl Co.'s worries. Many of its star employees never come back, choosing instead to stay at home or look for a less onerous job. Those that do return tend to leave earlier than they used to, and showing up for that crucial meeting depends on whether the antibiotics they gave to their baby the night before proved to be as effective as it said on the package.

To cut a long story short, Girl Co. goes bust while Guy Co. ends up dominating the market. From the point of view of the employer, hiring a girl is that much riskier than getting a guy with similar qualifications, training her or promoting her to a business-critical position that will allow her to eventually reach the top even more so.

The real trouble with women is that they have a visible characteristic (their gender) that is negatively correlated with life-time productivity. It's not that there aren't many women that are as career oriented as the most driven of men. On average, however, women tend to not be as good an investment for an employer as men are - and it's impossible to tell who the 'committed' ones will turn out to be. By the time it all becomes clear, most female high-flyers will have lost valuable time in second-rate jobs, without the experience and contacts that will secure them a job running the world and a fat pay package to go with it. Add to that the calculus of household welfare maximisation, and there you have it.

Unfortunately, the saying that a woman has to be twice as good as a man to succeed is all too true. Blame culture, history and the tax system - but keep in mind that these would account to nothing were it not for your less eager sisters.

Why I'm not allowed to smash plates anymore

This is an issue close to my heart, and a testament to how the rise of 'litigation culture' is threatening to wipe out our civilisation (well, maybe I'm exaggerating here, but fun levels are certainly taking the plunge).

Thanks to the excellent Overlawyered for the pointer. The Daily Telegraph story is here.

The trouble with women - part 1

The Harvard Crimson has an interesting piece on Harvard Prof. Claudia Goldin (thanks to Greg Mankiw for the pointer). Goldin, who has dedicated a significant part of her research career on documenting and explaining gender wage differentials, makes some interesting observations:

Equivalent men and women, who go to the same college, graduate from the same law school, get the same job after graduation—we see them ten years later, the guy’s making a gazillion and the woman is in a small practice making maybe 60 percent as much.

Why is that the case? Most likely, she made a conscious decision to shift into a smaller practice that didn’t have 80-hour work weeks to combine family with career and to do it in a way that was satisfying. Now, why not her husband?

An important factor behind this oft-observed pattern could be path dependence, the same reason we are stuck with the inefficient QWERTY keyboard. There was a time when sheer physical strength was the most important determinant of productivity. In order to maximise household welfare and in line with the principle of comparative advantage, men became the bread-winners: hunting, ploughing the land, trading along dangerous routes. Women adopted the less physically demanding job of raising the children and taking care of the household.

In modern economies, brains have replaced brawn as the primary means towards making a living; the comparative advantage of old has disappeared. Shouldn't then women be equally represented in the workplace and command the same wage for the same job? Note that 'equivalent men and women, who go to the same college, graduate from the same law school, get the same job after graduation' also tend to get married to each other - if my friends and acquaintances are anything to go by, couples almost always share a similar level of education and earning potential.

In such a household, an efficient allocation of resources would be achieved regardless of whether the husband or the wife stayed at home to look after the kids. Enter cultural norms: societal expectations tip the balance in favour of women taking more time off work and suffering the biggest hit on their lifetime earnings. Add to that the poisoned chalice of superior benefits offered to mothers (maternity leave is longer than paternity leave, and less frowned upon by bosses) and labour force participation as well as wage differentials can be fully explained without having to assume women have a stronger preference for taking care of the kids than men do.

Here's Goldin again:

There are still discrimination cases that we find in the newspapers that outrage us. That women working for some accounting firm are doing the same job and being paid less. I think it’s less so now than it was, possibly because we became, as a nation, far more aware that this is not just wrong but it is illegal.

While path dependence is almost certainly part of the answer to the puzzle, I believe the historical development of cultural norms is actually much less important than another, more fundamental economic reason.

Hold on tight, the second part follows after a short break.

Is tax loopholing wrong?

Robin Hanson thinks so.

In the movie Bubble, a woman visiting a man's room waits until he goes to the bathroom, and then searches for cash, which she finds and keeps. Abstractly I understand why someone might do this, but I would feel completely ashamed to do it. It is not just that such theft is uncommon or illegal, or that I had a connection to the victim; I would feel ashamed even if it were legal, if most everyone did it, or if the victim were a stranger. And I suspect most people feel this way.

I feel the same strong sense of shame about tax loopholing - the act of working to find a way to present myself on my tax form so that I pay less taxes. The very idea revolts me, and I just can't bring myself to do it. But here I seem to be unusual - most people I know seem proud to find better tax loopholes.

Judge Learned Hand (arguably the bearer of the coolest name in legal history) was of a different opinion:

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes[. . . . ]

I will concede the point that the practice of tax loopholing is socially wasteful, however this in itself is not enough to make it morally repugnant. Driving your car during rush-hour is socially wasteful too, as is playing defensive (and thus boring) football in order to wrestle victory from a superior opponent. In free, democratic societies you are allowed, and expected, to pursue your personal interest in so far as you 'play by the rules' - and that's the way it should be. In my opinion, there's nothing natural or moral about paying more to the government than your fair share, as defined by tax law.

To take the argument a step further, does Robin think that those who opposed the Bush tax-cut and didn't donate their rebate to the government are morally bankrupt?