Sunday, 27 July 2014

Forget 'zombie towns', there's entire 'zombie districts' coming to a rural area near you

In the NZ Herald last Sunday, Bernard Hickey looks at the possibility of depopulation in New Zealand. He quotes this Royal Society of New Zealand report:
Some territorial local authorities will have increasing difficulty in maintaining service levels for an ageing and possibly dwindling population, not to mention burgeoning numbers of visitors and tourists.
Hickey says:
Councils will have to make difficult decisions to return tarseal roads to gravel, turn off town water and let parks return to bush... Anyone buying property in places such as Wanganui, Gisborne, Whangarei and Greymouth should look at their area's population projections before putting deposits on houses or office buildings.
But forget future 'zombie towns', there's entire districts that are already depopulating, and that trend is only going to increase. Consider this Treasury Guest Lecture (PDF) given by my NIDEA colleague Natalie Jackson. Between 2006 and 2013, the population of the Gisborne Region declined (all other regions increased in population), and the population of 20 of the 66 territorial authorities declined.

And this isn't a new phenomenon either. Consider these examples [*]: between 1964 and 1984, Patea (in Taranaki) declined from a population of 2,040 to 1,928; Raetihi (in the central North Island) declined from 1,390 to 1,247; Taihape (the gumboot capital of the world!) declined from 2,800 to 2,586; and Runanga (on the West Coast) declined from 1,720 to 1,264. By the 2013 Census, the populations were 1,098 for Patea, 1,002 for Raetihi, 1,512 for Taihape, and 1,023 for Runanga (excluding neighbouring Rapahoe). So, those rural towns have been in decline for a long time.

And there's more to come. Bill Cochrane and I have been working on population projections for the Waikato Region. Of the ten component territorial authorities in the region (excluding Rotorua District, of which a little bit is in the Waikato), all but Waikato District and Hamilton City are projected to peak in population and begin to decline sometime between now and 2063. Three of them are projected to experience immediate and sustained decline in population (Otorohanga, South Waikato and Waitomo Districts). Moreover, South Waikato District is projected to decline in population in even the most optimistic high scenario (the other two increase slightly in population in the highest scenario).

We saw something similar when we did projections for the Bay of Plenty region earlier in the year (see here, PDF). Of the six territorial authorities in the Bay of Plenty, only Western Bay of Plenty District and Tauranga City are projected to avoid any population decline, and three of the other four (Kawerau, Whakatane, and Opotiki Districts) are projected to experience sustained decline. See for example Kawerau:

Maybe it's not all bad news though. Population decline could just be a slow-burn version of the collapses that lead to a redistribution of towns and cities to more preferable locations. And there is lots to learn from population decline, which hasn't been investigated nearly as much as population growth. Natalie Jackson is leading a multi-disciplinary team in a Marsden-funded research project to further explore these issues, by identifying, classifying and modelling the mechanisms and thresholds of subnational decline. Bill Cochrane and I are both contributing to this project, through which we hope to be able to better project population decline and when and where it might begin.

Will that help local councils that are trying to arrest population decline and encourage more people to live in their jurisdictions? Unfortunately it's unlikely to help much - these councils are largely engaged in a zero-sum battle for future population. If one council comes up with a new 'sure-fire' attractor of new migrants, then other councils will quickly copy it. It's a Tiebout competitive race-to-the-bottom at the subnational level, that none of them can 'win'. Absent any sudden shift in economic fortunes (like the shale oil boom that has led to massive increases in population in North Dakota), future subnational population growth in New Zealand will most likely continue to be concentrated in the major cities, particularly in the golden triangle of Auckland, Hamilton and Tauranga.


[*] These figures are taken from the New Zealand Official Yearbooks for 1965 and 1985. It's pretty cool that these historical treasure troves are all freely available online.

Sunday, 20 July 2014

The opportunity cost of Gangnam Style

I'm back, and with the start of B Semester teaching and associated workload out of the way, back into blogging. I'm a bit late to this particular topic, but in a daily chart last month, The Economist laid out the opportunity cost of Gangnam Style:
THE loony music video “Gangnam Style” surpassed two billion views on YouTube this week, making it the most watched clip of all time. At 4:12 minutes, that equates to more than 140m hours, or more than 16,000 years. What other achievements were forgone in the time spent watching a sideways shuffle and air lasso? It took 50m man-hours to complete the “supercarrier” USS Gerald Ford last year. Had people not been watching PSY—the South Korean pop star who released the song in July 2012—they could have constructed three such ships.

Having just covered the concept of opportunity cost in ECON110 last week, a short discussion of this seems timely. The opportunity cost of something is defined as "its cost measured in terms of the best alternative foregone". I can see two problems with The Economist's superficial evaluation of the opportunity cost of Gangnam Style outlined above.

First is the issue of 'best alternative foregone'. For most people, I suspect that the best alternative they forewent in order to watch four minutes of K-Pop wasn't contributing to the construction of an aircraft carrier or a replica of the Burj Khalifa. Maybe their next best alternative was contributing an article or revision to Wikipedia, but that seems unlikely too. So, it's not correct to measure the opportunity cost of Gangnam Style in terms of aircraft carriers foregone, or Great Wonders foregone, since that isn't what was actually foregone. I suspect it's more correct to be measuring the opportunity cost of Gangnam Style in other-music-video-watching foregone, or even cat-video-watching foregone. I also suspect that if the opportunity cost was framed in this way, most people would care a whole lot less about it as 'wasted time'.

Second is the issue of substitutability of labour. Even if we set aside the first problem above and believe that the next best alternative foregone really was building an aircraft carrier, then in order for the opportunity cost of 140 million hours of Gangnam Style to be 2.8 aircraft carriers, then the people watching Psy instead of aircraft carrier building would have to be as equally productive as those who actually built the USS Gerald R. Ford. Given that the top demographic watching Gangnam Style is girls aged 13-17 (followed by boys of the same age), it seems unlikely that the watchers are perfect substitutes for aircraft carrier construction workers (not to mention the higher-skilled occupations involved in designing and outfitting the ship). So, the opportunity cost of Gangnam Style in terms of aircraft-carriers-foregone is likely to be substantially overstated.

On a final note, as Dylan Matthews on Vox notes, comparing consumption benefits with construction costs is "weird and incoherent" anyway. I'll give him the last word here:
Taken to an extreme, the "what a waste of time" takeaway here implies that human life is meant to be spent toiling and any time off for enjoyment is a lamentable waste, which in turn implies that we should spend our lives building things no one ever gets to enjoy. It's a bizarre, dystopian way to think about the world.
[HT: Matt Roskruge and Zerohedge]