Tuesday, January 29, 2013


I've frequently cautioned readers against assuming two things are related just because they seem correlated. Therefore this week's posting may seem a rather large departure from the norm.  What I'm going to discuss may sound implausible at first (at least it did to me) but after a bit of research I've become convinced that the idea has at least some merit. So without further caveats or cautions here it is. Prepare to be skeptical.

Lead causes crime.

"What!?" You exclaim. "Not lead. Why I've known lead for years. It's been in my car battery for decades and in my gas before that! Lead would never be caught committing a misdemeanor much less a felony! Surely you mean gold, or silver, or one of those other unsavory elements like uranium."

I admit, I was as surprised as you are now. However, the research is compelling. Let's start at the beginning. If we're going to try and make the case that lead causes crime than we need to have a mechanism for that effect. We need evidence to support the hypothesis and it would be nice to have experiments designed to eliminate extraneous variables. So here it is step by step.

How does lead drive crime rates?

The mechanism of action is relatively simple. During early developmental years children exposed to even small amounts of environmental lead exhibit neurodevelopmental damage including decreased IQ, reduced hand eye coordination, decreased reaction time and lowered information processing capacity. This neurological damage early in life is compounded as the child develops and leads to poor decision making abilities later in life.  Poor decision making then leads to an increased likelihood of criminal acts during the late teens and early twenties.  

It's a simple but lengthy chain of events. If we're to believe it has any merit it's necessary to provide evidence for each link along the way. 

Therefore premise 1: children are exposed to lead.  Environmental lead exposure is universal to varying degrees. Most commonly in the United States high doses of lead are attributed to lead paint in older buildings. However, lead solder in plumbing can leach into tap water, lead from leaded gasoline persists in soil for years and occasionally foreign made toys have higher than allowed lead content. All of these factors are potential methods of exposure to lead for infants. It is important to note however that like all toxins lead does require an abnormal dose in order to cause harm. In other words although everyone is exposed to environmental lead, for most of us it's nothing to be concerned about.  Still, a mechanism for exposure of infants to lead is evident. Beyond that, blood tests have been conducted on infants and have at times found lead levels in the blood that are thought to lead to neurodevelopmental damage. 

Premise 2: Exposure to lead causes neurological damage. Numerous studies have been conducted regarding the effects of lead on both human and animal biology. Rather than speak at length regarding whether or not lead causes neurological damage, I am simply going to assure you that it does and provide sources you may investigate further if you have doubts. Sources are herehere, and here. Further studies supporting the premise are easily found online if desired.

Premise 3: Neurological damage of the type lead causes leads to an increased probability of committing crimes later in life. This is likely the weakest section of the chain. Studies have shown that lower IQ is correlated with a higher chance of committing criminal acts. However, we can not support a case for causation by utilizing another correlation which may itself not indicate causation. Hypothetically, we could assume that decreased IQ leads to fewer opportunities for adequate income which may lead to crime committed out of desperation. Ultimately I was unable to locate research sufficient to unequivocally support the idea that lowered IQ leads to an increased likelihood of criminal acts. However, the association seems likely based upon recent research.

It seems research has for the most part supported this chain of events. Lead is found in infants in rough proportion to the lead that is found in their environments. Lead is found in materials that infants commonly come in contact with. Lead is well known to cause neurological damage. Finally, studies have indicated that decreased IQ (which can be a result of the neurological damage lead causes) is correlated with a higher probability of criminal activity. Everything seems plausible, but what real world evidence is there?

Evidence for the lead/crime correlation

Before diving into this section I want to make sure due credit is given. The large majority of the following cited research is directly authored by or based upon work done by Rick Nevin. He is to the best of my knowledge the originator of the idea that lead exposure in children drove the crime increase of the 70s and 80s as well as the subsequent decrease in crime rates in the following decades.

Given the idea that environmental lead causes heightened crime rates what evidence could we look for that might give credence to our hypothesis? It seems that if higher lead levels cause more criminal acts than we simply need to look at different locations and time periods and see if those with higher lead levels also have more crime. Since we're looking at how childhood exposure effects crime later in life we'll of course need to allow time for those children to grow up and become potential criminals. Therefore we need to look at crime rates at a given time versus lead levels sixteen to twenty years ago. 

This is exactly the sort of analysis Nevin has conducted on numerous countries, locations and time periods. I encourage you to read his publications here and here which briefly summarize the breadth of his work. However, to compact it even further; he has found that decreased lead exposure due to leaded gasoline bans  and leaded paint bans has been highly correlated with decrease crime rates starting in the 90s (again with a sixteen to twenty year time lag). This correlation holds true for different nations as well as for states that implemented leaded gasoline bans earlier than the federal ban.  Additionally, areas with higher leaded paint content (mostly inner cities with older buildings) demonstrate higher crime rates.

Further given the United States historic lead levels which peaked between 1965 and 1975 we should find a population born during that time period which is particularly inclined towards crime. In fact that is exactly what evidence seems to indicate. From 1970 to 2003 the property crime rate was relatively static. However, the demographics of the perpetrators shifted dramatically. Youth property crime fell dramatically during the time period (nearly 50%) while crimes committed by those over 24 increased by over 50%. If not for the crimes of those born during years of high lead levels the property crime rate would have decreased dramatically.

Overall the evidence is compelling. However, one study in particular was influential. This study followed individuals from prenatal care into adulthood. Participants were initially mothers from Cincinnati who resided in areas at risk for high environmental lead levels. Their children were periodically tested for blood lead levels.  The results indicated that higher levels of blood lead were associated with higher rates of violent crime. The significance of this study lies in the fact that all of the participants were from a similar area and of similar economic status. Mitigating the effects of these extraneous variables lends a great deal to the credibility of Nevin's hypothesis. 


No one is attempting to make a case that lead exposure causes all or even most of crimes.  Higher end estimates guess that lead exposure is a factor in approximately twenty percent of criminal acts.  However, given the extreme costs of catching, trying and housing criminals even a small reduction in crime rates represents a monumental savings. This study in particular proposes that reducing blood lead levels in infants to under 1 microg/dL would result in savings of 1.2 trillion dollars. 

While I certainly understand those who are doubtful of Nevin's conclusions I'm unable to refute the growing evidence. It seems irrational given the huge potential savings to not investigate how lower blood lead levels might impact society. If a meager investment of a few million might reap rewards measured in the trillions how can we ignore such an opportunity?

If you desire further reading on lead toxicity and it's effects here are a number of articles that are relevant. Some have already been linked in the above posting.

Tuesday, January 22, 2013

Incentive Trickery

This post is going to begin with a bit of a primer for those of you who haven't taken microeconomics in the last twenty years.

Incentives are costs or benefits that motivate you in some manner.  A lower price is an incentive to buy a certain good. The threat of a higher marginal tax rate is an incentive to work less and relax more. A handgun is an incentive to give your wallet to a persuasive mugger. Pollution taxes are an incentive to avoid polluting. A pleasing feeling of helping your fellow man is an incentive to donate your time to charity. Anything that influences your decisions is likely an incentive of some sort.

Incentives can be internal, like the feeling of a job well done when completing a task, or external, like a paycheck. For the sake of this discussion we'll be discussing extrinsic incentives, or incentives which originate from outside yourself (like a paycheck).

Imagine I've asked you to perform some mundane task. For example, I would like you to sort skittles by color.  To motivate you I'm going to give you a small toy of your choice from a bucket of similar toys. You can pick any toy you want, but first you have to sort skittles for ten minutes. I'll also give you the option of working for an additional ten minutes for an additional toy.  Would you choose to work for ten or twenty minutes?

A recent experiment found that only about ten percent of people chose to work for twenty minutes (their task was transcribing text). It's not a terribly surprising result. Little toys aren't a very good incentive for adults, the task is tedious and becomes more irritating as participants hands begin to tire.  However, the study didn't end there.

Another group of participants were asked to do the same activity under the same conditions but with one important difference.  The rewards (our extrinsic incentive) were split into two groups. The rewards were the same as the first group chose from, but arbitrarily split into two groups.  If the participants worked for twenty minutes they still received two rewards but instead of picking two from one pile they selected one from each pile.

It's important to note that there is no case in which this reward is better than the first groups. To demonstrate this imagine instead of toys you were picking letters. You like letters closer to the start of the alphabet more than letters near the end. We've got all the letters from A to Z to choose from.  If you were in the first group (who could pick any two letters from one big pile) you'd of course pick letters A and B if you worked for twenty minutes (since you prefer letters close to the start of the alphabet). However, suppose you were in the second group and the letters A and B were in the same pile. Now you have to pick the letter A from the first pile and the letter C (the closest remaining letter to A) from the second pile leaving you worse off than if you'd been able to get your favorite letters, A and B.

So if the second group's reward options were at best the same as the first's and possibly worse than you'd expect less of group two to work for the twenty minute interval.  Yet over three times as many participants from group two worked for the longer time period.  Apparently the simple act of separating the rewards into arbitrary groupings greatly increased participants motivation to work.

So what causes this dramatic shift in motivation? There are a couple explanations.

Firstly, although the items in the different groups were fundamentally the same (little trinkets of little value) most people won't mentally categorize them that way.  Most individuals will feel that if they don't get something from both groups that they will have missed out on an opportunity.  The fact that what they're missing out on is a valueless trinket very similar to what they'll already have is irrelevant at the time. They only perceive that they won't have anything from the pile they're foregoing.

The second possible reason is similar but subtly different.  Generally speaking the first unit of a good is the most valuable to an individual.  For example, one steak dinner in an evening is great. Two steak dinners is still great, but most people would agree it's not twice as great as one steak dinner. In the case of this study the first group got their first trinket for working ten minutes which then immediately devalued the second trinket they would receive for working twenty minutes.  The second group however had an artificial divide between the first and second trinket. The trinket they received for the first ten minutes of work devalued all other trinkets of that pile, but the second pile's trinkets maintained full value.

It's a silly but potent distinction. It's unlikely it would persist for many more divisions (especially if trinkets were allocated every ten minutes instead of all at once at the end) but it's still an important tool for the creation of effective incentive systems.

Suppose you were an employer attempting to attract the finest talent at the cheapest cost.  Fundamentally, you can offer very limited rewards to your employees. Your rewards break down into three categories: a rewarding job, a pleasant environment, and money.  Only so much can be done to make a job rewarding, digging ditches is digging ditches no matter how you frame it.  The environment can be changed a great deal to suit your employees. However, money is where you can really influence decisions.  Clearly everyone expects to receive a paycheck.  But if you had to choose between an employer that paid $75,000 annually and one that paid $65,000 and offered more vacation, a company car, more comprehensive retirement planning and offered miscellaneous perks like take home dinners twice a week and health club compensation which would you choose? The fact is the $65,000 plus the perks may actually cost a company less than the $75,000 but it certainly sounds like a lot more.

Ultimately it's all money in different forms. However, the artificial divisions make it seem as if foregoing option two would be missing out on a lot more than just some additional cash.  It's cases like this that make comparing incentives in an equivalent currency (such as dollars) a particularly powerful tool in decision making.

This phenomenon is not limited to incentives others provide either.  Next time you're thinking about breaking your recent New Year's resolution to lose weight consider promising yourself a couple small treats instead of a half gallon of ice cream.  You may find it more effective per calorie consumed.

My apologies to anyone who missed the updates over the holidays. Hopefully you and yours had a Merry Christmas and Happy New Year.

Wednesday, January 2, 2013

Latitude and Affluence

Everyone has their favorite part of the holiday season. For some delicious homemade dinners best exemplify what the holidays mean. Others enjoy the shower of gifts being given and received.  However, I find that the extra time to relax and converse with family and friends to be the most enjoyable.

These conversations are often quirky, usually interesting and sometimes exasperating but I generally find myself reflecting on them for weeks later as I consider the different viewpoints presented.  The flood of different perspectives undoubtedly diversifies my own opinions as well as helping me to understand the opposing sides of many economic debates.  Occasionally these discussions even inspire me to investigate a subject in more depth.

This year while around the Christmas dinner table topics wandered from politics to watermelon theft. At one point someone mentioned that the average Canadian was better off than the average American.  It turns out that particular statistic is rather open to debate (per capita GDP is about 8000 dollars higher for Americans than Canadians) it did make me wonder if countries further from the equator had a higher level of affluence simply because being very poor would be generally more difficult in a colder climate.

As any good economist would do I immediately set out to find some data sources.  I found a list of per capita GDP and a list of countries latitude dropped them into a spreadsheet and created a scatter plot.  Sadly it doesn't seem like I've stumbled upon any remarkable insights.  Although there does seem to be some weak correlation between latitude and affluence it definitely isn't a major factor.  There are many very poor countries at high latitudes (mostly former Soviet nations) and some very rich countries at low latitudes (mostly oil rich middle eastern nations). Even if we removed the nations that derive their wealth primarily from the resources under their territory we still find nations such as Singapore with very wealthy individuals nearly on the equator.

Still, one of my favorite exercises in mental gymnastics is attempting to make something incorrect seem plausible.  So let's forget for a moment that I've already told you that my hypothesis seems unlikely. Instead consider these completely true facts.

1. The area between the tropics of Cancer and Capricorn represents approximately 40% of the earth's surface area. Given the extreme climates of the far northern and southern poles it represents an even larger proportion of the livable surface area. Yet of the top twenty nation states ranked by GDP per capita only five can be said to lie within this area. Further of these five nations Brunei and the UAE derive over 85% of their GDP from petroleum and natural gas extraction. If there was no correlation between latitude and affluence we would expect 40% of the world's surface area to contain roughly 40% of the world's top 20 nations ranked by affluence, not 25% with 10% of them being wealthy essentially due to a lucky location.

2.  All of the most Northern nations (Canada, USA, Denmark (Greenland), Norway, Finland) rank within the top twenty of all nations based on per capita GDP.

3. The majority of nations along the equator have GDP per capita values below the world average.

It's a pretty compelling argument for moving towards a polar region if you want to get rich quick.  However, a closer look at the data shows that these facts are attributable to reasons not innately associated with latitude. The top twenty nations by per capita GDP are nearly all western Europe and North America, areas that aren't terribly near the equator.  The most northern nations are very wealthy but the next most northern nation (Russia) is not and the most southern nations generally aren't. It's true that most equatorial nations are below the world average but that's because most of them are traditionally undeveloped African countries.

So while it was interesting to investigate the end result is only a conclusion that you should evaluate data yourself rather than accepting media sound bites or journalist's summaries.