The taste buds of justice

What is justice? It’s a lofty question, up there in the pantheon of “What is the meaning of life?” and “Who let the dogs out?”. There is no great answer for that, but, essentially justice is about doing the right thing. What is right? That’s a good question.

There are three taste buds to justice: merit, need, and equality. When people make an argument for something being right they will draw on one or more of these taste buds. These criteria become especially important when groups decide to allocate goods through non-market institutions.

Here is a favorite example from Peyton Young’s book Equity: In Theory and Practice. At the end of World War II, the United States was demobilizing soldiers in Europe. Some had to be retained to fight Japan while others could come home. Which soldiers should come home first?

After debate, the U.S. Army decided to survey thousands of soldiers in the United States to identify relevant factors. There were four important factors: length of time in the Army, age, amount of overseas service, and number of dependents. Then troops completed a pairwise-comparison of each criteria like in the picture below.

You can see among the transitive rankings (90 percent of those surveyed satisfied transitivity) the two most important features to those surveyed in the United States was overseas service and number of dependents.

But, it turns out there was an important write-in candidate among the soldiers: exposure to combat. A large swath of soldiers mentioned that this should be an important criteria but the Army hadn’t considered it in their survey.

The Army devised another survey that attempted to develop how much different criteria should be weighted. You can see a sample question below and the resulting points system (from a series of questions like the sample question).

What matters most to the troops: exposure to combat and number of dependents. Put another way, what matters most is merit and need. The right thing to do regarding who comes home first involves consideration of whether you merit coming home (exposure to combat elevates you over others) and need (a child needs their parent).

So I do not have a precise definition of justice. But, I have noticed that when people talk about doing the right thing they often rely one one or more of merit, need, and equality.

Huge Prison Population in the U.S.

During some general reading on finance, I ran across the following two information-rich graphics from Hoya Capital on the U.S. prison population. On the first graph, the blue areas show the absolute numbers, and the green line shows the percent incarceration rate. A rate of 0.5% comes to 500 prisoners per 100,000 population.

This graph shows a huge rise in the state and federal prison population between 1980 and 2000. There seems general agreement that much of that increase in the prison population is due to mandatory sentencing laws, which require relatively long sentences. In particular, “three strikes and you’re out” laws may demand a life sentence for three felony convictions, if at least one of them is for a serious violent crime. Another factor was the increased criminalization of drug use (possession), in addition to drug dealing.

The graphic below shows the particular classes of crimes of which inmates of the state and federal prison systems have been convicted. The largest single category is violent crimes, but other types are significant, such as drug and property crimes, and “public order” crimes. Public order crimes include activities such as prostitution, gambling, alcohol, child pornography, and some drug charges. This graphic also includes the large number of people in local jails, most of whom are imprisoned awaiting trial or sentencing.

The total number of people under legal supervision in the U.S., including probation and parole, is over 6 million:

Source: Wikipedia

The U.S. has by far the largest official prison population in the world, and the highest incarceration rate. The following graph from Wikipedia depicts incarceration rates for several countries or regions as of 2009:

Most developed countries have incarceration rates of around 100-200 per 100,000, which is where the U.S. was in about 1970. The relatively high rate for Russia is attributed in large part to strict “zero tolerance” laws on drugs.

Again, the main driver for the high rates in the U.S. is the long sentences, driven by mandates. Wikipedia notes that there are other countries, including some in Europe, which have higher annual admissions to prison per capita than in the U.S. However, “The typical mandatory sentence for a first-time drug offense in federal court is five or ten years, compared to other developed countries around the world where a first time offense would warrant at most 6 months in jail… The average burglary sentence in the United States is 16 months, compared to 5 months in Canada and 7 months in England.” 

Policy debates on this topic continue. Obviously, we want to protect society from dangerous predators, but the direct and indirect costs to society for this level of incarceration are high. It seems like an area which is ripe for reform of some kind, though I do not claim to have a novel proposal.

Strange overnight switch in 2020 election betting markets

I share this tweet because it provides a good visual of a strange event last night. As results were coming in at night in the US, there was a sudden huge reversal. For months the markets had predicted a Biden win. Throughout the night there was some wild speculation in which some buyers were willing to bet Trump would win. Around the time respectable people start waking up in the US, the market flipped again. I hear some people saying on Twitter that they regret no buying during the night. Near 5am Eastern Time that Trumps chance of winning went back down under 50%. That is also when new information came in showing that Biden would likely win Wisconsin.

At the time I write this, votes are still being counted. It is expected that the ballots still to be counted will mostly give votes to Biden. The “blue wave” did not materialize in 2020. If Joe Biden wins the presidential election, it will not be with the overwhelming mandate that some expected.

Economists often promote using betting markets to get predictions of the future. There are lots of applications beyond politics. These high profile elections bring attention to betting markets. Maybe people will begin relying more on them in other fields. I think betting on temperature increases and rising sea levels would be interesting and useful.

Florida’s Minimum Wage Experiment

One of the more interesting results from last night’s election comes out of Florida: voters appear to have narrowly approved an increase of the minimum wage in stages to $15/hour in 2026 (Florida has a 60% requirement for ballot measures to pass, and the current vote total is just above that threshold).

Florida is not the first state to approve such an increase to $15/hour: 7 states have already done so, though no state is yet at that level. California will hit $15 first in 2022. Several US cities, such as New York and Seattle, as well as the “city-state” of Washington, DC are already at $15, but these are generally very high wage cities.

What makes Florida the most interesting of the states to try very high minimum wages is that Florida is not a high wage state. Once the minimum wage is fully phased in (in 2026), the minimum wage will be about 75% of Florida’s median wage (it was $17.23 in 2019). That’s much higher than other states: California will be the next highest at about 66%, with Oregon next around 64%. Oregon will be close to $15, but perhaps a little below, as they index their minimum wage for inflation.

(To make these estimates I am using 2019 median wage data from the BLS OES wage data and assuming 2% annual wage growth. This may not be exactly right, but it’s probably close enough.)

Also important to note in Florida: the median wage is not $17.23/hour all over the state. Several MSAs in Florida currently have a median wage at or even below $15 (Sebring, Florida is the lowest at around $14/hour). There will be some wage growth over the next 6 years in those areas, but still this means that the minimum wage will be applicable to roughly half the labor force.

That brings up another interesting legal question: will the minimum wage apply to salaried workers making less than $30,000 per year? The way the law is written, probably not, but logic would seem to dictate that it should. Otherwise, what’s to stop an employer from hiring an employee on a $2,000/month contract, equivalent to $12/hour for a full time worker?

The minimum wage debate among economists consumes a vast literature, and I am no expert on it, and will make no attempt to summarize it here. But Florida seems to be breaking new territory. My little state of Arkansas currently holds the “record” for a US state starting in 2021, with a minimum wage of $11/hour which will be about 67% of the median wage (and about 78% of the median wage in Hot Springs, Arkansas). Florida’s experiment will certainly give economists a new experiment to study.

Arin Dube, one of the leading researchers of the minimum wage and a strong advocate of raising the wage, suggested in a recent policy paper that a good minimum wage for Florida would be around $9/hour, given their wage distribution. That was in 2014 dollars, so we can roughly adjust that up to $11-$12 in 2026 dollars. Florida voters have chosen to go well beyond that recommendation.

The New Social Media Influence in the 2020 Presidential Election

Joy: I’m not an expert in elections or social media (unless having a Twitter habit counts). I asked Kate Zickel who manages political online accounts professionally to write about the current election:

It’s no secret that social media platforms like Facebook and Twitter have had a tremendous influence on political elections in America since their infancy in the mid 2000’s. While the exact impression of these platforms can be difficult to measure, it’s clear that their impact in 2020 is greater by far than in previous election cycles.

Data from SocialBankers reports that “While President Donald Trump’s use of Twitter has been widely acknowledged, and certainly had a tremendous impact on the outcome of the 2016 elections, former Vice President Joe Biden has actually surpassed the President in many key engagement metrics.” This includes the nearly 30 million American voters that comprise the largest percentage of Twitter’s user base at nearly 20%.

The New York Times’ Ben Smith recently explained how media and tech companies have evolved back into their roles as information gatekeepers leading up from the 2016 election. Twitter, for one, recently began pinning notices to the top of all U.S. Twitter users’ timelines warning about misinformation on mail-in voting while Google said it’s been pushing to make its core search products including YouTube into hubs for authoritative information about electoral processes and results.

Pre-bunking is yet another new election influencing tactic used by many news and information sources to prevent the spread of false information before it starts… at least that’s the idea.

There is, however, a direct inverse relationship between broadcast ad spends and digital ad spend since the 2018 midterms. For the first time ever, spending on digital political advertising has slightly surpassed cable. Still, advertising spent on broadcast television — mostly at the local level — reigns supreme.

And while the influence of social media at the polls isn’t exactly new, the 2020 presidential election has set a new precedent in this era of information gatekeeping.

Eli Dourado on the election today

Eli believes that it is likely (not guaranteed) we will know who won the US Presidential election tonight.

Esports Projected Growth

There is a YUGE election happening tomorrow. I don’t know if there will be an apparent winner before bedtime tomorrow night. In 2016, I stayed up watching the news until (to everyone’s great surprise) Trump gave an acceptance speech at 3am.

I don’t play video games. Whether you do or not, you’ll want to keep an eye on this important cultural and financial trend. Regardless of who wins the 2020 US election, people around the world will be playing a lot of video games. The following report is the work of Samford undergraduate student Erica Eades.  

Esports is a competitive level of gaming that involves players winning money. Professional esports players are typically sponsored by companies affiliated with video games. Students are becoming more and more involved in esports. League of Legends World Championship was 2019’s biggest tournament by live viewership hours on Twitch and YouTube, with 105.5 million hours.

When the pandemic reached the U.S. the sports industry shifted their focus. Many leagues were able to quickly restart their competitions in a different format as esports, which quickly transitioned its in-person events to online-only games. For many months following the pandemic esports was the only option if you wanted to watch a live competitive event.

I had an interview with Noah Hankinson, a professional eSports gamer and consultant that has conducted extensive work with the NCAA, Learfield Sports, and multiple eSports properties. Noah shared perspectives on the state of eSports and demographics.

According to Noah, the most popular game is constantly changing. Although a game may be incredibly popular one week, it could be obsolete the next. To learn what game is most popular during a given time frame, simply observe the games famous Twitch players are using. Many Twitch streamers focus on only one game, but others will focus on what is most popular at the time so that they can maximize revenue from viewership. Noah informed me that the ‘traditional’ games such as Call of Duty, League of Legends, or Rocket League are growing. These games are the most popular and have the widest reach across all eSports demographics.

Depending on the game being played, there are different rules and formats each team (or individual) must adhere to. Popular games include football and soccer, where player roles or team game plans are more well known. Many eSports are based on individual talent, much like wrestling or track-and-field. Over the years, as eSports has become more of an emerging community, college organizations have started to help push the next generation of eSports competitors.

From a social standpoint, esports are more inclusive than other sports. Men and women are able to play on the same teams and teams are made up of individuals from various demographics and ages. Esports is not just a young demographic, eSports gamers ages in America range from 12 to 60 with the average age being 33 years old.  

Many predictions have been made about the growth of the industry. As teams of eSports members populate across the country, the unprecedented growth of the competitive gaming industry continues to rise. Newzoo is the leading provider of market intelligence covering the global games, esports, and mobile markets. The data from newzoo allows them to project the esports industry esports revenue stream worldwide based on sponsorship. In 2018, the global market esports revenue was $776.4 million. The global esports revenue will probably hit $973.9 million in 2020, and $1.194 billion in 2021. 

This projected growth has made it important to maintain positive relationships with current and future partners in the industry. With increased interest in esports there is a momentum for new partners to enter the industry and increase revenue. Using the data that projected the revenue and growth can be beneficial for many esports executives and the industry as whole. It will be interesting to follow and see how the industry continues once live sports are able to resume normally. After the “at home” year that brought so much to esports, observers agree that the industry’s upward trajectory is continuing.

EWED Recommends Gifts for 2020 Holidays

For the past two weeks, several of us have been describing books and items we enjoy. I’ll summarize all of these potential gifts for both adults and children here. We’ve got everything from what goes in a perfect cocktail to gifts under $20 for toddlers. Hopefully this helps you cross someone off your holiday shopping list.

Things for Adults

Lined pants for cold weather (Joy’s review)

The gift blog that has the most reader traffic to date is Jeremy’s blog on cocktail ice. The True Ice mold is going to transform your home bar.

Along the same theme, Doug suggests ingredients for an Old Fashioned.

More light will make you happier. For example the Day-Light Sky Lamp (Scott’s review)

Scott reviews camping tents. The Ozark Trails 9-Person Instant Cabin is fun and huge and easy to set up.

Books for Adults

Jeremy says Werner Troesken’s book The Pox of Liberty is a great book for understanding the current pandemic. Interestingly, it was published in 2016! We have been vulnerable to a disease outbreak for a long time.

Doug recommends The Sabbath. Doug made a great point in his review that people in quarantine might not be getting any rest even though their schedule might look empty. A quote from Doug’s review: “genuine rest — not diversion — seems necessary in the tensions of our present moment.”

Review of How the Scots Invented the Modern World. I’ll borrow from the book’s own tagline “How Western Europe’s Poorest Nation Created Our World”

Doug reviews The Ancient Christian Commentaries on Scripture (a set of books).

Undergraduate students review Tyler Cowen’s excellent The Complacent Class. Review #1 and #2.

for Kids

Joy suggests several different toys for kids. See the blog for a bike and a tablet game. A fail-safe mid-budget present for a 4-8 year-old is this remote control car ($25). For the even younger crowd (I suppose geared toward girls) is  Minnie Wooden Magnetic Dress-Up ($10).

Joy reviews several books for kids. Most recently, I have been reading The Voyage of the Dawn Treader with my elementary-aged son and I can’t recommend it highly enough. It’s important to read fiction together. We are having great talks about these vignettes on the sea voyage.