Archive for Ideas

Gun Control And Mass Shootings: Would Lives Be Saved?

An analysis of every US mass shooting over the past 30 years shows that two small policy changes, restricting high-capacity magazines and introducing stringent background checks, might have saved over 500 injuries and deaths, reducing total casualties in mass shootings by 50%.

Various proposals have been set forth since 2012’s numerous mass shootings, ranging from much stricter gun regulations to arming more individuals in public spaces. Starting from Mother Jones’ list of US mass shootings over the past 30 years, I analyzed the potential impact of two proposals in particular: would a ban on high-capacity gun magazines have reduced casualties, and would stringent background checks of gun purchasers have reduced the number of shootings? I researched the incidents surrounding each shooting to determine whether each proposal would have had any impact. The data are summarized in the table below, with the full research spreadsheet available here.

Shooting Deaths Injuries Lives Saved Injuries Prevented Weapon Legally Acquired? Notes
Totals: 459 481 250 324 Legal in 58 of 63 cases 54% of deaths and 67% of injuries might have been prevented with the policies analyzed.
Newtown, CT Sandy Hook Elementary 27 2 17 0 Yes – legal weapons in same household The shooter’s rampage was stopped by a quick police response. If the shooter had to reload 3 times as often, he would hit many less victims, as he fired on each victim multiple times.
Minneapolis, MN Sign Company 6 2 1 0 Yes The shooter reloaded at least once during the shooting, and initially struggled with victims.
Oak Creek, WI Sikh Temple 6 4 3 2 Yes In a public setting with many adults, it’s possible shooter would have been stopped while attempting to reload, or would have retreated outside more quickly if he had less capacity.
Aurora, CO Theater 12 59 12 59 Yes A lucky form of weapon capacity control prevented a larger disaster, as the shooter’s weapon jammed and he was only able to fire roughly 1/3 of the 100 round magazine. A properly integrated background check system might have stopped the incident entirely.
Seattle, WA Cafe 5 1 0 0 Yes It’s not clear that the gunman ever needed to reload, and though he had a history of mental health problems, he was never treated and never convicted of a felony.
Oakland, CA – Oikos University 7 3 7 3 Yes HCM limit would have no impact here, but the shooter was expelled from school for behavioral issues, which might have been caught if this data were submitted to a comprehensive background check system.
Atlanta, GA – Health Spa 4 0 4 0 Yes HCM limit and background check would have no impact here
Seal Beach, CA – Salon 8 1 3 0 Yes The shooter reloaded during the shooting per police reports, so lowering weapon capacity would likely have lowered casualties.
Carson City, NV – IHOP 4 7 2 3 Yes The shooter fired over 30 rounds per eyewitness accounts – lower capacity would have constrained him.
Tucson, AZ – Giffords shooting 6 13 4 9 Yes Shooter was tackled and stopped while he tried to reload – direct evidence that lower capacity would have decreased the toll.
Manchester, CT – Beer Company 8 2 4 1 Yes Shooter used two weapons and fired multiple rounds at many victims – had he been limited, he would have run out of ammunition earlier
Lakewood, WA – police officer shooting 4 0 0 0 No Capacity limits might not have helped, as the shooter fired on four victims seated at one table, and hit all of them with his initial salvo.
Ford Hood, TX – army base 13 29 9 19 Yes Shooter reloaded many times, and 30 round magazines enabled him to fire roughly 170 rounds before being shot himself by military police. Multiple soldiers attempted to charge the shooter – if he had only a 10 round magazine, it’s entirely possible that he would have been tackled and stopped upon initial reload.
Binghamton, NY – civic association 13 4 9 3 Yes Shooter fired 99 rounds in total – this would likelybeen reduced if his weapon capacity were 1/3 as large
Carthage, NC – nursing home 8 3 0 0 Yes Since shooter used multiple weapons and never reloaded, it’s unlikely capacity limits would have mattered.
Henderson, KY – Atlantis Plastics 5 1 0 0 Yes Shooter did not use a high capacity weapon
Dekalb, IL – Northern Illinois University 5 17 5 17 Yes This incident’s casualty count is quite low because the shooter first fired with a very low capacity weapon, his 6-round shotgun – enabling many students to escape the classroom. Shooter also had a long, documented mental health history.
Kirkwood, MO – City Council 6 1 0 0 Yes Shooter used low-capacity revolver initially, and took a higher capacity weapon from a victim (police officer).
Omaha, NE – Westroads Mall 8 4 5 3 No Shooter appears to have emptied one magazine and then taken his own life.
Crandon, WI – sheriff’s rampage 6 1 0 0 Yes Shooter used a service weapon, so proposed rules/limitations would have had no effect.
Blacksburg, VA – Va. Tech 32 23 32 23 Yes Shooter reloaded many times, and used multiple weapons. Mental health check would have prevented weapons acquisition.
Salt Lake City, UT – Trolley Square 5 4 5 4 Yes Shooter did not use high capacity weapons
Nickel Mines, PA – Amish School 5 5 2 2 Yes Once shooter started firing, sheriffs approached – he killed himself as they arrived, and likely would not have had a chance to reload.
Seattle, WA – Capitol Hill 6 2 6 2 Yes Shooter had a weapons-related felony charge, which was reduced to a misdemeanor.
Goleta, CA – postal shooting 6 0 6 0 Yes Shooter had a previous history of mental illness
Red Lake, MN – high school 9 5 3 2 Yes Shooter possessed a gun in his bedroom despite being treated with Prozac. Since he was an adolescent, and his parents/guardians chose to give him a gun, background checks would be ineffective. Shooter shot his grandfather who was a police officer, and took his weapons.
Brookfield, WIChurch group 7 4 2 1 Yes Shooter suffered depression, but had no mental health or criminal records.
Columbus, OH – concert 4 7 0 0 Yes No HCM used, and no medical or criminal record. Nearby police stormed the concert and shot suspect
Meridian, MS – Lockheed Martin 8 7 4 3 Yes Shooter used military-style weapon with high-capacity
Melrose Park, IL – Navistar 4 4 4 4 Yes Shooter used military-style weapon with high-capacity, and was also a convicted felon
Wakefield, MA 7 0 5 0 Yes Shooter used high-capacity weapon and also had a history of mental illness, but with the mental illness far in his past and no criminal record, even stringent checks might not have denied him weapons. Shooter stopped firing at an arbitrary point and sat calmly til arrested. If he had lower capacity weapons, stopping to reload multiple times might have caused him to sit and wait for arrest earlier.
Tampa, FL – hotel 5 3 5 3 Yes Shooter was arrested for assault only a few months earlier, and bought weapon at a gun dealer
Honululu, HI – Xerox 7 0 3 0 Yes Shooter acquired a large number of weapons long before mental issues began.
Fort Worth, TX – Wedgwood Baptist Church 7 7 2 2 Yes Shooter committed suicide after emptying three magazines – but he had six more loaded. Has the magazines been 1/3 smaller, that would have lowered the toll proportionally.
Atlanta, GA – Day trading 9 13 0 0 Yes The shootings happened in multiple separate incidents, making it less likely that HCM limits would have had an impact. Barton was suspected but never charged in earlier murders, so background checks would have had no impact.
Littleton, CO – Columbine High 13 21 6 10 No Shooters used a high capacity Tec-9 and standard capacity 9mm, so avg capacity is used here. Details of the shooting indicate that in many cases shooters fired at the same victim multiple times – if limited in capacity, this would have reduced their ability to fire on additional victims.
Springfield, OR – Thurston High 2 24 1 19 Yes Shooter was tackled and stopped when he first tried to reload – a clear indication that lower capacity would have further limited casualties.
Jonesboro, AR – Westside Middle School 5 10 2 3 Yes Shooters ran away after firing 30 rounds – lower capacity might have reduced total rounds fired.
Newington, CT – Lottery worker 4 0 0 0 Yes Shooter chose specific victims and fired relatively few rounds, so capacity limits make no difference here.
Orange, CA – Caltrans 4 2 3 1 Yes Shooter entered shootout with police shortly after initial incident, lower capacity might have shortened his attack
Aiken, SC – RE Phelon Co 4 3 0 0 No Standard capacity weapon (illegally acquired) used
Fort Lauderdale, FL – city employee 5 1 0 0 Yes Standard capacity weapon used
Corpus Christi, TX – Walter Rossler Co 5 0 0 0 Yes Standard capacity weapon used
Fairchild AFB, WA – hospital 5 22 5 22 Yes Shooter possessed only one 75 round drum magazine – so he would never have to reload. Military police arrived quickly and killed perpetrator.
Aurora, CO – Chuck E Cheese 5 0 0 0 No Shooter fired less than 10 times, executing each victim, usually with a single shot
Garden City, NY – LIRR 6 19 2 6 Yes Shooter emptied two 15 round magazines and was tackled while reloading with a third magazine. Total rounds fired would have been decreased by 1/3 were magazine capacity limits in place.
Fayetteville, NC – Luigi’s Restaurant 4 6 2 3 Yes Shooter used a high capacity rifle, shooting was stopped by nearby police
San Francisco, CA – 101 California St office building 8 6 4 3 Yes Shooter used a 32 round Tec-9 in the shooting, and fired hundreds of rounds
Watkins Glen, NY – office 4 0 0 0 Yes Shooter killed four intentional targets with relatively few shots, and then waited for police to arrive – perhaps less than 10 shots total fired.
Olivehurst, CA – Lindhurst High School 4 10 0 0 Yes Shooter used two weapons and fired relatively few shots, so high capacity weapon limits would have no effect here. Shooter also had no prior criminal or mental history.
Royal Oak, MI – postal 4 6 4 6 Yes Shooter had his concealed weapons permit revoked on concern of mental illness. Shooter also used high-capacity magazines with his rifle and fired scores of rounds according to police.
Iowa City, IA – Univ of Iowa 5 1 0 0 Yes Did not use a high-capacity weapon, and did not display sufficient signs of mental illness prior to shooting to warrant attention
Killeen, TX – Luby’s Cafeteria 20 24 8 10 Yes Used high capacity pistols and reloaded multiple times – capacity limits would have enabled more victims to escape, as many escaped by exiting the restaurant.
Jacksonville, FL – GMAC plant 9 4 9 4 Yes Shooter had a history of violence and convictions, and yet legally purchased multiple weapons. Used a high capacity weapon in shooting
Louisville, KY – Standard Gravure Co 8 12 8 12 Yes Shooter used high capacity weapon, emptying its magazine and committing suicide with his second weapon. Shooter also had a lengthy psychiatric history including hospitalization
Stockton, CA – schoolyard 5 29 5 29 Yes Shooter had a lengthy arrest history and had served time in jail as an accomplice to armed robbery, and yet was allowed to buy weapons.
Sunnyvale, CA – ESL Co shooting 7 4 7 4 Yes Shooter was able to purchase guns while under a court restraining order
Palm Bay, FL – shopping center 6 14 6 14 Yes Shooter used a high capacity .223 caliber rifle, and killed two police officers during the shooting – one of them as the officer was trying to reload. Perhaps if the shooter’s capacity were lower, the officer might have himself fared better. Gunman also had prior assault conviction.
Edmond, OK – USPS 14 6 0 0 Yes Shooter was in National Guard and would have had access to weapons. Though he was referred to as “Crazy Pat”, he had no history of crime or treated mental illness
San Ysidro, CA – McDonalds 21 19 14 13 Yes Shooter used a high capacity weapon, Uzi, pinning down a quick-responding officer with 30 rounds of fire before re-entering restaurant
Dallas, TX – nightclub 6 1 0 0 Yes Shooter used an unknown handgun, emptying it into crowd and then rushing out – unclear that capacity limit would have any impact here.
Miami, FL – welding shop 8 3 8 3 Yes Shooter did not use a high capacity weapon, but purchased his weapons one day after failing a psychiatric exam ordered by his employer, the school district, and after incidents in which he appeared to be a threat to students
Birchwood, WI – hunting altercation 6 2 3 1 Yes Shooter fired 20 rounds at other hunters – if he had a lower capacity, it’s likely that another hunter would have been able to respond with fire

The analysis above attempts to answer the question – what would have happened in these incidents had the proposed laws been in place? Of 459 deaths and 481 injuries in 63 shootings, I estimate that 250 deaths and 324 injuries (54% of deaths and 67% of injuries) might have been prevented with the analyzed proposals. Each proposal, its method of action, and the analysis approach is described further below.

High-Capacity Magazine Ban:

Definition: Sales of high-capacity magazines to and between private citizens would be completely banned, and imports of high-capacity magazines for private use would be banned as well. While many magazines would exist in private hands, a magazine buyback could then be used effectively, as magazines are relatively inexpensive.

Method of Action:

  1. In some instances, the shooter was disarmed by potential victims while trying to reload – smaller magazine size clearly would have limited total impact in these shootings.
  2. In some instances, potential victims fled during breaks in the shooting enabled by reloading – if a shooter has to reload 2 or 3 times as often, this effect is multiplied.
  3. In some instances, law enforcement arrived relatively quickly, and most damage in the shooting was done via the initial magazine – a smaller magazine would have limited impact in the shooting in these instances.
  4. In a few instances, victims attempted to rush the shooter immediately. If a shooter could only fire 10 shots instead of 20-50, it’s possible that he might be tackled quickly rather than be able to continue shooting.
  5. In most instances, the shooter committed suicide after doing a certain amount of shooting, but always before exhausting ammunition. Since each reloading represents a break in the act, some shooters would commit suicide after having fired fewer total rounds if they were capacity constrained.
  6. In a few instances, the shooter appeared to choose a specific weapon because of its high capacity. If high capacity magazines were not available, would the shooter still go forward with the attack?
  7. In 18 of 63 shootings, shooters fired relatively few rounds, chose a small number of specific victims, or used standard capacity weapons. In these instances the high-capacity magazine ban has no impact. 29% of actual mass shootings fell into this category.

Analysis Method: If the shooting fell into the last category above, then zero impact is noted in the analysis. Otherwise, the casualty count is reduced by the ratio of the shooter’s magazine size to standard magazine size – if the shooter used a 30 round magazine, then the casualty count is estimated at 2/3ds lower (rounded up) with a standard capacity magazine. This approach will tend to underestimate the effect of a ban in instances like 1,4, and 6 above, while providing an accurate estimate or an overestimate in instances like 2, 3, and 5 above. In aggregate, I think this approach is unbiased.

Stringent Background Checks:

Definition: Create a mandatory national database of all felons, mentally ill, and others posing threats (anti-terror lists, those who have made threats against schools or other institutions). Mandate that all firearms transactions for new and used weapons, in public and private transactions, be checked against this database, with instant results. This stands in contrast to the current background check system, which is done on paper and via telephone call, not electronically.

Method of Action:

  1. Out of 63 mass shootings over the past 30 years, only 5 have involved illegally purchased weapons. Some of the shooters had a history of mental illness or a criminal record – preventing a sale of firearms to these individuals would reduce the frequency of shootings.
  2. Many of the shooters with a history of mental illness had no criminal record – it’s unlikely that they would know how to obtain an illegal firearm.
  3. Some of the shooters purchased weapons in the days after making threats against a school or other institution – in these cases, a properly implemented stringent background check system would have prevented the weapon sales.

Analysis Method: Shootings were identified in which a shooter had a documented history of mental illness, a criminal record, or had made threats against an institution prior to buying a weapon. In these cases (17 instances total) it’s assumed that the casualty count is reduced to 0, as the shooter would have been unable to obtain a weapon. In reality a certain number of shooters would then try to acquire weapons illegally, and some might succeed. But a certain number of mentally-ill or former felons might never try to obtain a weapon if they knew they had no easy or legal means to do so, providing an offset.

Analysis of Assault Weapons Ban and Armed Civilian Presence

Two other proposals have been mentioned in the last several months – a ban on assault weapons and the placement of more armed guards or civilians in public places. On the question of assault weapons, the data from mass shootings shows that shooters preferred a range of semi-automatic weapons with high-capacity magazines. Weapon capacity makes a difference, but the type of weapon (handgun vs rifle) does not.

With regard to armed bystanders, in 9 of 63 shootings armed individuals (often police officers) were present. In several cases armed individuals became victims in the shooting, and the presence of armed individuals did not prevent the shooting from taking place. However, this analysis is by definition incomplete – this is an analysis of shootings that actually did take place, and doesn’t include data on shootings that were stopped by armed individuals. The evidence here suggests that the element of surprise may render concealed weapons somewhat ineffective, but this is not a conclusive finding.

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The Simple Arithmetic of High Capacity Gun Magazines

In the wake of yet another mass shooting tragedy today, let’s examine the costs and benefits of high capacity gun magazines. I previously examined the cost-benefit of private gun ownership in the US, and noted at that time that the extraordinarily negative cost-benefit ratio might eventually become an issue for the pro-gun lobby (the industry generates economy-wide economic losses of over $15B/year) [1].

High capacity magazines [2] seem to have become a feature of virtually every recent mass-shooting in the US [3]. How many lives might have been saved by eliminating high-capacity magazines? Let us conservatively assume 10 deaths per year might be reduced through this policy (a rounding error compared to the roughly 10,000 annual gun homicides in the US). The economic value of 10 lives can be estimated at $80 million, while the annual sales revenue of high-capacity magazines might be less than $20 million (since gun magazine sales are a tiny fraction of gun sales, and magazines can be had for as little as $15) [4].

Measuring tragedy on an economic basis might seem crass, but it helps establish a key point: not only are high capacity magazines empowering individuals in mass shootings – but they are also provably hurting America as a whole, as they subtract value from our nation! An outright ban on possession of high capacity magazines is thus a reasonable step to limit further damage to America’s citizens and economy.

Let me address a number of potential criticisms here:

  • Would-be mass shooters will acquire weapons and high-capacity magazines illegally, so you are only affecting law abiding citizens. Actually, 75% of weapons used in mass shootings were acquired legally, and recent shooters acquired their weapons legally. Most of these shooters had no previous criminal record, so in the event high-capacity magazines were illegal, it’s unlikely that they would even know how to find them illegally.
  • Banning high-capacity magazines would have no effect on death rates, as shooters would simply reload. In the Gabrielle Giffords shooting, the gunman was stopped in his rampage once he stopped to reload. Reducing magazine capacity to 10 rounds reduces total firing capacity – this is simple arithmetic. In both of these shootings and many other incidents, lives would have been saved. For that matter, lives might be saved in incidents like drive-by shootings where the rapid fire of multiple rounds makes victims of innocent bystanders.
  • High capacity magazines are needed for self-defense. Even the police rarely find need to fire large numbers of rounds. Is there even one documented case of self defense where the potential victim needed more than 10 rounds to deter his attackers? There are outliers in everything, but I’d be surprised to hear of such a case.
  • I have a 2nd-Amendment right to whatever capacity magazine I like. The recent Supreme Court case upholding an individual right to a firearm also upheld the right to ban American citizens’ access to fully automatic weapons, grenades, tanks, and all other manner of military weapons. Even Justice Scalia admits that there are restrictions on the 2nd Amendment. Your right to purchase whatever weapon you like has long since been curtailed, and the government retains the right to enact reasonable restrictions on access to arms.

 

[1] Using more recent numbers on the economic value of human life at $8M per life, the gun industry may actually cause annual economic losses in the US of $200B per year (8M * 30k lives lost – economic value of gun trade). I republished the more conservative estimate above to remain consistent with the original analysis that I referenced.

[2] I am defining high-capacity magazines as those holding more than 10 rounds, as defined in the original assault weapons ban.

[3] Limiting gun capacity would have reduced casualties in a number of recent tragedies:

[4] Gun sales are estimated to have reached an annual rate around 12 million this year. If separate high-capacity magazine sales are in the neighborhood of 10% of all gun sales, and magazines cost around $15, then total annual revenue from this business might be 1.2M * 15 = $18M. This is an imprecise estimate, since gun sales are not tracked, but conveys the order of magnitude, and illustrates the tiny economic benefit supplied by this particular product relative to its cost in human life.

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How High a Budget Deficit Can We Sustain?

The US can sustain a budget deficit of 5%, not 3% as commonly assumed, because 2.5% inflation and 2.5% real growth combine to keep the total debt/gdp ratio stable.

With both the financial crisis and European debt crisis having a root in excess borrowing, the American political debate has turned toward deficit reduction as well. If current budget deficits (averaging 10% of GDP since the financial crisis) are recognized as unsustainable over the long term, then what level of budget deficit is sustainable? At one extreme, politicians call for a balanced budget, and at the other extreme the budget deficit is considered a distant issue. Meanwhile, many economists set the sustainable deficit threshold at 3% of GDP, and EU rules formally set the budget deficit threshold at 3% as well. What is the basis for the idea of a “sustainable” budget deficit, and is the 3% figure too high or too low?

What is a sustainable budget?

Unlike individuals or families, a nation has an indefinite lifespan, and can therefore continually roll over its debt as long as markets deem it a worthy creditor. As long as a nation’s economy is growing, its capacity for borrowing grows as well. But if the debt grows at a rate faster than the economy, then it will eventually exceed the nation’s ability to repay it. The idea of a sustainable budget deficit is summarized by the chief economist of the Concord Seo Company Coalition, “President Obama’s fiscal commission set a goal of getting deficits down to about 3 percent of GDP within five years – 3 percent being the average annual growth rate of the US economy since World War II.”

The Real Sustainable Deficit Target

There’s just one problem with the 3% target for a sustainable budget deficit – it’s too low! While GDP growth is measured in real terms, inflation also eats away at the value of the US debt over time. For instance, assume that the US has no future economic growth, but continues to have 2% inflation. Assume that we also manage to (magically?) balance the US budget. With no economic growth, does this mean that debt/gdp stays constant? Actually, inflation would cause the numerical value of GDP to continue rising, while the debt stays constant. This would cause the debt/gdp ratio to fall by around 2% per year.

In practical terms, this means that we have to look at the rate of nominal GDP growth to determine a sustainable budget deficit level [1]. To be conservative, let’s assume 2.5% real GDP growth (less than the 3% post-war average) and 2.5% inflation (within Americans’ comfort zone, and less than the 90’s and 2000’s average). Taken together, this means that if nominal GDP grows at 5% per year, a budget deficit of 5% can be sustained long term. The difference between 3% and 5% of GDP is big, over $300 Billion in 2012. As the federal budget and spending again enter serious debate after the November elections, it’s important that politicians understand the government’s true borrowing capacity – and neither the populist “balanced budget” nor the typical economist’s 3% magic number stand up to examination.

[1] Here’s the actual nominal GDP data from the Fed: http://research.stlouisfed.org/fred2/howtobcome/data/GDP.txt

Using this data, we see that nominal GDP has grown at a compound annual rate of 6.6% over the post-war period (since 1947, when the data series begins). Over the past 30 years, nominal GDP has grown at a compound annual rate of 5.4% – and this period excludes most of the late 70’s and early 80’s inflation spike. Even over the past 20 years, which are skewed downward due to the financial crisis, the nominal GDP growth rate is 4.7%.

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Explaining the India – China Wealth Gap

As of 2011, China had a per-capita GDP (PPP) around $8400 per year while India’s per-capita GDP was  $3700. China has routinely exceeded 10% real annual GDP growth over the last two decades, and India’s GDP growth has been impressive, it has rarely exceeded 8%. China’s growth has exceeded India’s since its economic liberalization, but its turn towards capitalism also began earlier. China’s Deng Xiaoping began to liberalize China’s economy beginning in 1978, while in India P.V. Narasimha Rao and Manmohan Singh were not able to bring about serious economic reform until 1991. If India had liberalized at the same time as China, how much narrower would the wealth gap be? How much of the income gap between India and China is explained simply by timing?

Over the 13 years from 1979 to 1992, India’s per capita GDP (PPP) roughly doubled from $480 to $972, at an annualized per-capita GDP growth rate of 5% for the period. China’s economy averaged 10% growth over this same period! Since 2002, India’s per-capita GDP growth has averaged 9.5% on a PPP basis [1]. If India had grown at its more recent average of 9.5% per year over that period, per capita GDP would have risen to $1562 by 1992 – and India’s economy would be over double the size that it is today [2]. Fast-forward to the present, and this earlier liberalization would have led to a current per-capita GDP of $6000 in India, almost double current levels and in the same range (of middle income nations) as China [3]. One effect experienced in China has been an acceleration of growth post-liberalization – economic growth accelerated as reforms took hold. Had this occurred earlier in India as well, it’s possible that the 90’s and 00’s in India would have benefited from 9.5% GDP growth as well. If we use a 9.5% assumption for India’s growth from 1979 to present, then we get a present-day per-capita GDP in India of $8000 – not substantially different from China [4]!

Despite their huge differences, with China as an autocratic capitalist state and India as the world’s largest democracy, the two nations’ growth paths have not really been that different. All of the differences in government, corruption, infrastructure don’t really seem to have mattered that much, as a simple head start of 13 years drowns it all out. What a difference 13 years makes! The good news: India’s development was unnecessarily delayed, but is now well underway.

[0] All of this is based on the World Bank’s purchasing-power parity GDP per-capita data, as provided by Google’s public data service via http://crosscountrymovingcompanies.biz. This is GDP divided by mid-year population and adjusted for the difference in purchasing power in each country (normalized to US prices and quoted in dollars – this gives you a sense for how poor people in these nations really are).

[1] From the Google chart, 3582/1723 = India’s economy grew 2.08 times from 2002 through 2010. This equals a compound annual rate of growth of 9.57%.

[2] Take the 9.5% growth rate post-2002, and apply it to the 13-year period starting in 1979 at $480 GDP/capita (PPP). This gives you $1562 by 1992.

[3] If we then assume that India’s economy grew exactly as it did historically from  1992 – 2011 (growing 3.8x), and multiply this by 1562 (the new starting point in 1992), then we get a 2011 GDP/capita of $5946.

[4] Now assume that India simply grew at a 9.5% rate from 1979 on – the rate that it has managed from 2002-2011 (a period which includes the financial crisis). This would 1.095 ^ 31 = 16.67x growth. From a starting point of $480 GDP/capita, this would leave India at $8000 GDP/capita (PPP) by year end 2011.

P.S. In researching this post, I noticed that India’s growth rates compare much more favorably in PPP terms than they do in exchange rate terms. This might be explained in part by the fact that the Rupee has been much more volatile than the Yuan over time. While inflation is now rising quickly in both countries, particularly in metro areas, perhaps India has remained less expensive than China over time. Comparing these two graphs shows the difference when comparing unadjusted $ GDP/capita to PPP GDP / capita. I use the PPP measure as it more accurately reflects the quality of life experienced by someone living in either country, since cost matters just as much as income.

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How High Would Soccer Scores Be With No Goalies?

I’m an American, and while following the World Cup has been interesting, I will admit freely that I mentally tinker with the game as I watch it, since it is so different from most American sports. The big three American sports (football, baseball, and basketball) have higher scoring and are chock-full of statistical record keeping, so that fans can assess their teams’ progress even when scores are low. While I am learning to appreciate the explosive joy that a goal can bring in a game with so few of them, I thought it worthwhile to ask a question: how many goals would be scored in World Cup-level soccer if there were no goalies at all?

According to FIFA, 2.2 goals have been scored per match thus far in the World Cup, though 1-0 has been the most common outcome thus far. While teams have combined for almost 28 shots per match thus far, they have managed only 10.2 shots on target per match thus far. By definition, total goals in a match would thus rise to at least 10 if matches were played without goalies.

But if there were no goalies, game play would be altered in a number of ways. Teams would be more likely to shoot, raising scoring further. Defenders would spend more time in the box as “armless goalies”, so that not all shots-on-target were converted. Even without goalies, the percentage of shots-on-target might not rise dramatically, since the presence of defensive players alters many shots. As an upper bound, assume that total shots per match doubled to around 56, with 35% of shots-on-target (same as today). This yields roughly 20 goals per match, with scores of the 12-8 or 11-9 variety quite normal.

While scores like 12-8 and 14-6 sound astronomically high to the die-hard soccer fan, these are still less than one-fourth of basketball scoring, similar to high scoring baseball games, and about double football scoring. With rules change governing the offside rule or otherwise floated as a way to increase scoring, it’s interesting to note that even a radical proposal would not turn soccer into basketball. It’s difficult to score in soccer, even if there are no goalies!

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A Better Capital Gains Tax

Taxes on long-term capital gains have fluctuated in recent years, with rates as low as 0% (for lower income groups) and as high as 28%. At the end of 2010 capital gains rates will likely revert to 20% after being at 15% for several years. While long-term term capital gains enjoy a tax break, short term capital gains (on positions held less than one year) have long been taxed at marginal income tax rates. While dividends have more recently been accorded the same tax breaks as capital gains, interest payments continue to be taxed as marginal income.

Capital gains tax breaks are designed to encourage investors to invest in the economy for the long term, thereby promoting economic growth. As currently structured, the capital gains tax break doesn’t really achieve this, as it simply rewards investors that hold a position for more than one year. The law does not distinguish between investments in startups or IPOs and in purchases of existing equity shares. With regard to real estate, the law encourages the tax-free flipping of properties via 1031 transactions, but does not reward investors who improve their properties.

Rather than subsidizing investments in existing shares and property, shouldn’t capital gains tax breaks attempt to promote new investments? This could be easily accomplished by lowering the capital gains tax rate to 0% for all new capital investments, irrespective of investment duration. A new capital investment could be defined as an investment in which the target company directly receives the proceeds of the investment. Investments in IPOs, secondary offerings, startup companies (including angels and VCs), and real property improvements would qualify, while purchasing of existing shares and real estate would not.

A 0% tax rate on new investments would incentivize real investment in the economy, rather than encouraging simple tax-related shuffling of existing investments. In order to offset deficit impacts, traditional capital gains tax breaks could be reduced or eliminated. Moving to a system in which new investment is incentivized would tip American finance away from the casino mentality of recent years, and back towards its original purpose: investing in promising companies for profit.

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Fuel Efficiency: Modes of Transportation Ranked By MPG

Building on a previous post on the energy efficiency of various foods, I decided to create a list of transportation modes by fuel efficiency.  In order to compare vehicles with different passenger capacities and average utilization, I included both average efficiency and maximum efficiency, at average and maximum passenger loads.

The calculations and source data are explained in detail in the footnotes. For human-powered activities, the mpg ratings might appear high, but many calculations omit the fact that a human’s baseline calorie consumption must be subtracted to find the efficiency of human-powered transportation. I have subtracted out baseline metabolism, showing the true efficiencies for walking, running, and biking.

For vehicles like trucks and large ships which primarily carry cargo, I count 4000 pounds of cargo as equivalent to one person. This is roughly the weight of an average American automobile (cars, minivans, SUVs, and trucks).

The pmpg ratings of cars, trucks, and motorcycles are also higher than traditional mpg estimates, since pmpg accounts for the average number of occupants in a vehicle, which according to the Bureau of Transportation Statistics is 1.58 for cars, 1.73 for SUVs, minivans, and trucks, and 1.27 for motorcycles.

List of Transportation Modes By Person-Miles Per Gallon (PMPG)

Transport Average PMPG Max PMPG
Bicycle [3] 984 984
Walking [1] 700 700
Freight Ship [10] 340 570
Running [2] 315 315
Freight Train [7] 190.5 190.5
Plugin Hybrid [5] 110.6 350
Motorcycle [4] 71.8 113
Passenger Train [7] 71.6 189.7
Airplane [9] 42.6 53.6
Bus [8] 38.3 330
Car [4] 35.7 113
18-Wheeler (Truck) [5] 32.2 64.4
Light Truck, SUV, Minivan [4] 31.4 91

[0] I used these conversion factors for all calculations.

[1] Walking: A typical person expends roughly 75 calories to walk a mile in 20 minutes. An American burns about 30 calories just to exist for 20 minutes, so the net expenditure for walking is 45 calories per mile. One gallon of gasoline contains roughly 31,500 kcal, so 45 calories is 0.0014 gallons of gas. Thus the average American has a walking efficiency of 700mpg. This estimate is higher than that given elsewhere – the crucial difference is that you have to subtract out baseline metabolism, since an American consumes over 2100 calories a day just to stay alive.

[2] Running: The calculation is similar to [1]. Here we assume a 6 minute/mile pace, which burns 1088 calories per hour, or 109 calories per mile, and 100 net calories per mile. 100 calories is 0.003 gallons of gas, for a fuel efficiency of 315mpg.

[3] Bicycles: Bicycling at 10mph requires 408 calories per hour, or 40.8 calories per mile, which is 32 net calories per mile. This yield an mpg rating of 984, higher even than walking!

[4] Automobiles: The Bureau of Transportation Statistics has done the heavy lifting for us, calculating BTU per passenger-mile for cars, light trucks, and motorcycles. For cars, the latest (2008) data point is 3501 BTU / passenger-mile, or 0.028 gallons per passenger-mile, which equals 35.7 pmpg (BTS assumes 1.58 passengers on average, so this equates to 22.6 mpg). Using the same BTS data, average pmpg for light trucks is 31.4, and for motorcycles is 71.76. For max pmpg, we use a max passengers of 5 for cars and trucks, and 2 for motorcycles. To do this calculation from the BTS data, we first divide the avg. pmpg by the avg. passenger count, and then multiply by the max in each case.

[5] 18-Wheelers: For 18-wheel rigs, BTS data shows an average diesel mpg of 5.1. This equates to a gasoline mpg of 4.6, using 125,000 btu / 138,700 btu as the gas / diesel energy ratio. The weight limit for trucks on most roads is 80,000 lbs, of which 55,000 might be the max load given a truck weight of 25,000 lbs. To convert load to passengers, I assume 4000 lbs per passenger, since that’s roughly the weight of a passenger vehicle. A 50% (average) loaded truck counts for roughly 7 passengers, and a full load counts for 14. Using these factors, average pmpg is 32.2 and max pmpg is 64.4.

[6] Plugin-Hybrids: With the exception of the Prius Hymotion conversion, plugin hybrids like the Chevy Volt have yet to reach market, and have not yet had a final mpg designation. Consumer Reports achieved 67 mpg with the Hymotion Prius, though Hymotion and many owners claim 100 mpg is possible. Using 70 mpg, and adjusting this by the 1.58 average passenger count, the Hymotion Prius has an average pmpg of 110.6, and a maximum pmpg of 350.

[7] Trains: While all trains have similar underlying efficiencies, passenger trains in the US are much less efficient in practice because of poor utilization. BTS calculates Amtrak efficiency at 1745 BTU per passenger-mile, which equates to 71.6 pmpg. Amtrak traveled 267 million car-miles in 2007, which equals to 16 billion potential passenger miles if the average car holds 60 passengers. In 2007 Amtrak consumed 10.5 trillion BTU of fuel, or 659 BTU per available passenger mile. Amtrak’s max pmpg is therefore 189.7 (if somebody would just ride it).

Freight trains consume 328 BTU to move a ton one mile. Using 4000 lbs of freight equals one passenger, this equals 656 BTU per passenger-mile, or 190.5 pmpg.

[8] Buses: At average passenger loads, buses achieve 3262 BTU per passenger-mile, or 38.3 pmpg. Per BTS data, buses average 6.1 diesel mpg, or 5.5 gas mpg. With a full load of roughly 60 passengers, a max pmpg of 330 is possible. The huge difference in average and max pmpg implies that buses are usually almost empty – perhaps smaller mini-buses should be used by more fleets.

[9] Airplanes: Airplanes flying domestic routes average 2931 BTU per passenger-mile, or 42.6 pmpg. The overall domestic load factor in 2008 was 79.6%, so at max capacity a plane might achieve 53.6 pmpg.

[10] Ships: In a previous post I found that shipping over water (by barge) costs one-third of shipping by rail. This implies that water based shipping is also roughly triple the efficiency in energy terms, since energy is one of the key cost drivers in transportation. This provides a rough estimate of 570 pmpg. According to this post, the world’s largest container ship travels 28 feet on a gallon of residual fuel oil (149,690 BTU or 1.2 gallons of gas). This equals 0.004 mpg. Per Wikipedia, the ship can carry 11,000 14-ton containers, or 77,000 passenger-equivalents using our 4000 lb conversion rate. Thus pmpg is 340 for this ship.

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The ROI Payback of Tossing Incandescents For CFLs

After moving into my current home, I discovered that the previous owners had left dozens of light bulbs for the various fixtures in the house. I was happy to know that I wouldn’t have to restock for a while. In the interim, compact fluorescent light bulbs have become inexpensive, and LED bulbs have begun to become economical as well. While I have realized for some time that CFLs are a good investment with a short payback period, I have yet to replace my bulbs. At some level, it feels wrong to throw out all those light bulbs. What is the real return on throwing out a working bulb and replacing it with a CFL?

I calculated the payback period in days when replacing a 60W bulb with a CFL, assuming $0.1 per kWh electricity and $0.97 per CFL, which is what I paid at Home Depot last weekend [1]. I performed the calculation for a variety of usage assumptions, and this graph shows the results:

CFL Payback Period In Days

The payback on moving to CFLs is quite fast, a few weeks for high usage bulbs, and several months for bulbs used only one hour per day.

The first graph begs the question – how frequently does a light bulb need to be used to justify replacing it with an incandescent? Assuming that a 10% return on investment is desired, that the CFL will last 5 years [2], and that electricity costs $0.10 per kWh, I calculate that you should replace any bulb used more than 9 minutes per day [3].

That’s a pretty low bar, lower than I expected. As CFL prices have dropped, and light quality has improved [4], there aren’t many arguments left for sticking with incandescents. And for the lazy, switching to CFLs will decrease the frequency of light bulb changes, resulting in lower effort as well.

Conclusion: Throw out your light bulbs and replace them with CFLs today. The quality of CFL light output is now pretty close to incandescent, and you are burning money every day you wait!

I replaced roughly 40 light bulbs last weekend, in the middle of writing this post. For the most part it’s worked out – the light quality is decent, but the CFLs still take some time to get to full intensity, and I may have to replace a few that flicker due to dimmers on the switches.

Here is my calculations spreadsheet on Google Docs.

[1] While this was a sale price, CFL prices have been falling steadily and the standard price at HomeDepot.com is still only $1.25 per bulb (see the 12 pack of 60W-equivalent TCP brand bulbs available at this writing).

[2] Many CFLs are warrantied for 7-9 years, and claim 8000-12,000 hours of working life. Five years is thus a conservative estimate, but takes into account the fact that CFL quality control is still an issue, so that some percentage of bulbs will be defective.

[3] The calculations in my spreadsheet are linear with respect to purchase price – if you pay $2 for a CFL instead of $1, then you should replace all bulbs used for more than 18 minutes a day, and so on.

[4] That CFL light quality has improved is my personal opinion – look around on the web, and you will find hundreds of articles disparaging CFL light quality. I think they’ve come a long way, however, and the soft-white (2700K) bulbs available now do an acceptable job imitating incandescent soft-white bulbs.

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List of Foods By Environmental Impact and Energy Efficiency

Which foods have the smallest (and largest) energy footprint, thereby having the most environmental impact? While most people probably realize that meat products have a larger energy and environmental impact, the degree of difference isn’t immediately clear. How much difference does it make if you’re a vegetarian, or if you’re almost entirely carnivorous? The following list provides a rough estimate of the energy required to produce different kinds of foods, in order from least to most energy intensive. Forever body transformation is a source for many of the numbers below:

Table 1: List of Foods By Energy Required to Produce One Pound

Food Energy (kWh) to Produce 1 Lb
Corn [1] 0.43
Milk [2] 0.75
Apples [3] 1.67
Eggs [4] 4
Chicken [5] 4.4
Cheese [2] 6.75
Pork [6] 12.6
Beef [7] 31.5

Table 2: Energy Efficiency of Various Foods (Measured as Food Calories / Energy Used in Production) [8]

Food Calories / Lb Energy Efficiency
Corn 390 102%
Milk 291 45%
Cheese 1824 31%
Eggs 650 19%
Apples 216 15%
Chicken 573 15%
Pork 480 8.5%
Beef 1176 4.3%

The data above indicate the huge difference in energy required from one end of the food spectrum to the other. Roughly twenty-five times more energy is required to produce one calorie of beef than to produce one calorie of corn for human consumption. Dairy products are actually fairly energy efficient, as they are very dense in calories. Vegans may indeed be able to boast that their diets use 90% less energy than the average American’s, and even those who eat only eggs and dairy can lay claim to significant energy efficiency.

At the same time, food production and consumption amounts to only about 10% of first-world energy consumption, so even the most parsimonious eater can reduce their total energy footprint by around 9% through diet alone. The big culprits remain transportation, heating, and cooling, and while diet modification can help, energy conservation efforts should focus most heavily on these areas.

[1] It’s possible to estimate the energy involved in corn production very accurately, since corn energy intensity has been closely scrutinized by both proponents and critics of the corn ethanol industry. This Berkeley study compares energy intensity estimates from two sources, one pro and one anti-ethanol. Using an average of the two studies’ data yields an estimate of 30,000 BTU energy consumed per gallon of ethanol produced. From the same study, about 2.75 gallons of ethanol are produced per bushel of corn, which means that one bushel of corn required 82,500 BTU. One bushel of corn is 56 pounds of corn kernels, so one pound of corn kernels requires 1473 BTU for production. This is equivalent to 0.43 kWh.

[2] For milk, the estimates provided in Without The Hot Air Chapter 13 are utilized, with this conversion used for fluid ounces of milk to weight. The estimates for cheese are also taken from the above chapter, with the numbers simply proportionally adjusted from kg to pounds.

[3] From Table 3 in this study in Nature, we see that the annual energy input for a hectare of apple trees is 500,000 MJ, or 56,230 kWh at 3.6 MJ per kWh and 2.47 acres per hectare. According to this article, 800 bushels of apples per acre appears normal, which is 33600 lb of apples at 42 lb of apples per bushel. This equals 1.67 kWh per pound of apples.

[4] Here are the estimates for eggs, taken from Without The Hot Air page 77. Using a standard of eight eggs to a pound, convert from metric to English measures and arrive at the 4kWh estimate.

[5] Chicken is examined in detail on Without The Hot Air page 79, and I use that estimate, converted to kWh per pound.

[6] For Pork, I use McKay’s estimates from page 77, and convert them for each animal. McKay estimates that a 65kg human burns 3kWh per day, or 0.0462 kWh / kg / day = 0.021 kWh / pound / day. McKay uses a pig lifespan of 400 days, and thus notes that if you want to eat a pound of pork every day, 400 lb of pig must be alive at any given time (one pound for each day, so that the rate of pig production matches the rate of consumption). McKay further estimates that only two-thirds of an animal can be used for meat, so we actually need 600 lb of pig to generate one pound of meat per day. 600lb * 1 day * 0.021 kWh / pound /day = 12.6 kWh for a pound of pork.

[7] Beef is calculated exactly as for Pork above, except that a cow lives for 1000 days instead of 400 days. 1000 lb / 0.66 (wastage factor) * 1 day * 0.021 kWh / pound / day = 31.5 kWh for a pound of beef.

[8] Calorie data was taken from caloriecount.about.com, and kcal (food calories) were converted to kWh for energy efficiency calcs. We simply convert the calories in one pound of each food into kWh, and then divide that number by the energy required for production of one pound of that food.

[9] How can corn have an energy efficiency higher than 100%? This means that the energy that human beings put into the process of growing, distributing, and eating corn is less than theenergy provided to the human body by the corn. The hidden factor here is sunlight – corn plants are drawing energy from the sun for free, and storing that energy, which humans later consume.

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How Do We Limit Bank Risk?

President Obama recently proposed a tax on some of major banks’ liabilities to pay for TARP-related (bank bailout) losses, and to reduce risk taking by big banks. While the proposed tax might accomplish the former goal, analysts have opined that it is unlikely to decrease financial risk-taking. Regulation might decrease risk-taking, but it doesn’t resolve the issue of paying for past losses, nor does it establish a reserve for any future risks. Is there a better way to reduce risk taking while simultaneously paying for losses past, present, and future?

Why not consider a financial leverage tax on all corporations? The US has historically encouraged debt, which helped fuel the recent credit crisis. A tax on leverage would help penalize excess risk taking by taxing the very fuel that feeds the fire. While it’s perfectly acceptable for any company to gamble with their own equity, systemic risks are created when institutions bet in the trillions by borrowing dozens of times their own capital. That’s precisely what Lehman Brothers and other investment banks did during the boom years, with leverage ratios well over 40 times their own capital. A tax on financial leverage that increases taxation as a function of leverage would allow companies to take on risk while penalizing the Lehmans that took excessive risk with borrowed money.

How would a financial leverage tax work? The tax rate would be based on the debt-equity leverage of the company, so that the tax rate would rise with leverage. The tax might not apply to the first billion dollars in liabilities, so that it would affect only larger corporations. Assume the base tax rate is 0.03% of liabilities. A large non-financial company with $10B in debt and a debt-equity ratio of 1 would have to pay $3 million in taxes [1]. A bank with $10B in liabilities and $1B in equity would have to pay ten times that amount as a result of its 10x leverage, resulting in a tax bill of $30 million. If the bank lends out 10 Billion with a 3% interest margin, it would earn $300 million in net interest. For this bank, the leverage tax would effectively be 10% of net interest income [2].  On the other extreme, under this tax regime a company like Lehman would have had to pay 1.2% of its gross liabilities, which were in the neighborhood of $700 Billion. This would amount to $8B per year, double Lehman’s 4B net income in 2007 [3]!

The financial leverage tax would make it impossible for banks, corporations, and hedge funds to create the kind of credit bubble they created in the mid 2000s. Funds raised by such a tax could be used to pay off the TARP bailout, and also to fund the SEC and other enforcement agencies. The benefit of this approach is that it could be applied across the economy in a uniform way. Current proposals don’t apply to hedge funds and other highly leveraged non-bank institutions, leaving pockets of risk to grow. Excess financial leverage has fueled almost every major financial collapse in history, and a tax on leverage would directly address this issue.

[1] 0.03% of $10 Billion is 10 Billion * 0.0003, or $3,000,000. In the case of the bank with 10x leverage, this figure goes up by a factor of 10, to $30 million

[2] The St. Louis Fed tracks net interest margins of US banks, and they have been above 3% over the last 30 years, making this a very conservative estimate. A leverage tax of $30 Million would be 10% of the bank’s net interest of $300 Million.

[3] At 40x leverage, the leverage tax in the example given would be 1.2% of gross liabilities. With net interest margins around 3.5%, a 1.2% tax would consume about 1/3 of a bank’s interest. Since a bank’s operating expenses and loan losses often consume more than 50% of net interest, this tax rate would likely cause a bank with this kind of leverage to be unprofitable – which is precisely the point.

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