Bad arguments in favour of good ideas are a pernicious issue.
So many arguments for so many things come across our radars that objecting to an argument in favour of a conclusion we support seems a waste of breath — no matter how silly it may be.
I’d not intervene, for example, if I heard someone argue that voting for Donald Trump is a bad idea because he is Illuminati. Whatever. Fine.
But the cost argument against the same-sex marriage plebiscite offers a wonderful opportunity to stir us from this complacent state and say “no”. Even though a same-sex marriage plebiscite is a bad idea and would involve all sorts of costs, these iffy calculations from PwC ought not stand.
For context, PwC (the professional services brand formerly known as accounting firms Price Waterhouse and Coopers & Lybrand) this week released modelling showing it would be very expensive to hold a standalone national plebiscite to determine if Australia should permit same-sex marriage.
The firm added up the following to arrive at “total economic costs” of $525 million:
- $158 million to facilitate the vote;
- $66 million for the community to fund the “for” and “against” campaigns;
- $281 million in lost productivity as people take time out to vote; and
- At least $20 million in costs associated with the impact on the mental health and wellbeing of Australian citizens.
I’m not saying there’s anything bad about this particular analysis. PwC even acknowledges at the end of the report that aspects were left out. It’s just the same approaches are used whenever a social issue comes up for economic analysis — providing the illusion of precision where none is possible.
Here are the main problems.
- Arbitrary selection of modelled costs. What gets bundled in is what PwC can a) think of, and b) measure in a way that is, if not accurate, at least defensible.
- Counting some economic activity as costs and others as benefits. In this case, government expenditure on polling places and money spent on advertising firms are counted as a cost to society. In other cost-benefit analyses, that sort of expenditure would count on the benefit side, as “stimulating economic activity”.
- Adding cash costs and non-cash costs. These exercises routinely add up the opportunity costs of not doing something and money changing hands. Doing so relies on economic models of marginal cost being appropriate.
For example, PwC models the cost of voting at $17 an hour, based on the minimum wage. The reasoning comes from economics: the minimum payment you will accept to give up leisure for work must equal the marginal value of your leisure time.
The question of the opportunity cost of voting is an especially fascinating little walnut to crack open.
Applying conventional economic theory, it follows naturally that if the minimum wage is $17 an hour, voting costs at least $17 an hour (presumably voting is costless for the retired and really dear for the rich).
But then, if you apply conventional economic theory, voting makes little sense at all. The risk-weighted probability of your vote mattering is close enough to zero that there is no instrumental justification for voting. So the only reason to vote is to avoid a fine. You wouldn’t even enrol in the first place.
So if you assume “voting is like work”, you can’t really explain why people vote. So that assumption is questionable. Instead, some of the best contemporary economic theories of voting suggest voting is expressive, i.e. something we want to do. PwC ignores that.
Of course, cost-benefit analyses have their place. But it is in those parts of the community that are substantially market-based. If you are a firm planning to build a new factory, do the analysis. If you want to build a toll road, yes, perhaps a cost-benefit analysis will shed some light onto the process. But the further we stray from the realm of the purely economic, the more we should be suspect of their use.
To summarise: we should vote to endorse same-sex marriage in Parliament because it’s a human right that’s rather overdue. We should not believe reports that generate “total economic costs”. And we should be especially suspicious of their application in fields where markets are not at play.
As economic cost estimates go, this was actually one of the more lucid, and at least half of it was real money, so better than most.
It sure beats the hell out of BCA and other analyses that having a public holiday on a Tuesday or a Thursday will lose multiple billions of dollars as people actually have a well deserved break.
But yes, it’s all bullshit. I look forward to more reporting on these fictitious exercises.
The opportunity cost concept may be dodgy but what they’re, presumably, trying to tell us that a lot of time, effort and energy is being wasted in addition to the bucks.
Actually the logical conclusion of the PwC analysis argument for analysing the cost of voting as being too expensive – inconvenient economically to hold stand alone elections – We should abolish Local government elections, State government elections,Commonwealth Government elections.
PwC must be making too much profit to waste time publishing such crap. They must have a lot of underemployed staff to fund such stand alone analysis. If I were the corporations using them I would scrutinise the invoices PwC sent the company to ask them to reduce the charges if they spare fat to undertake useless economic analysis. Unless the staff did it on their lunch breaks.
Besides
The Plebiscite – it will allow the STRIDENT MINORITY for to be pitted against the SILENT MINORITY [ OR MAJORITY] – for once the real Australians will be polled – great work , a novel idea , ask the people.
What does a general election cost? Perhaps we should do away with them too.
Why do so many politicians love plebiscites? Because it isn’t their money to chuck around in futile quests.
Our, admittedly fifth rate, politicians, were not able to decide the issue themselves. Now, at a time when the voter deserves to become informed, he/she is being fed a non-stop commentary on Gay issues. After all Australia’s third worst PM doesn’t want a light to be on matters connected to the USA, capitulation to the Nationals or the hog-wash drama of rightard Catholic conservatives leading him around as if he had a ring through his nose.