
Tim Harford and the More or Less team examine more numbers in the news. Fast.
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Tim Harford
Thank you for downloading this week's More or Less podcast. Here's Tim Harford.
Hello and welcome to More or less. If the SAS stood for the Statistical Analysis Service, I'd be Andy McNabb. This week, we look at how to cut the welfare bill. Is it really a matter of rooting out lifestyle benefit claimants? We unveil a brand new system for measuring salaries. Bird numbers are down. Are cats to blame? And why is the question so controversial? And, of course, we have to find out who won our half marathon race between the sexes and the generations. Old man David Lewis or young whippersnapper Lucy Proctor.
David Lewis
We're going to savour the atmosphere and we're going to just do our best and you're going to come second.
Tim Harford
But first, let's take a look at the ongoing political debate about the welfare budget. The Chancellor, George Osborne, recently said that while he'd continue to protect and support deserving benefit claimants, he warned that people who claimed benefits as a lifestyle choice would have to stop because the money would no longer be there. Mr. Osborne is expected to announce cuts of £4 billion from the welfare bill to go with the £11 billion reduction he announced in his emergency budget in June. He does face a colossal budget deficit, of course, and he told the House of Commons on 13 September that the welfare budget was unsustainable.
David Lewis
The welfare bill has risen by 45% in the last 10 years and almost one pound in three that the government spends goes to towards welfare. The current system is not protecting those who genuinely cannot work, nor is it helping those desperately looking for work find
Tim Harford
a new job quickly.
David Lewis
There are close to 5 million people on out of work benefits, and over half of these people have spent at least half of the last 10 years in this situation. Rather than rewarding work and supporting the vulnerable, we are wasting the life of millions of people.
Tim Harford
But there is an interesting rhetorical twist in that statement. The Chancellor began by talking about the total welfare bill, but then switched to talking about out of work. You might draw the conclusion that the welfare bill is largely out of work benefits, but it isn't. Here's Mike Brewer from the tax think tank the Institute for Fiscal Studies.
Mike Brewer
Out of work benefits are not very important in the total welfare budget. The first thing people don't realise is the state pension is the biggest single benefit. And if you take into account all the money that pensioners receive, it's just over half the total welfare budget. And from what we can learn from what Osborne has said so far, he's not very interested in cutting benefits paid to pay pensioners. In fact, he wants to make the state pension more generous. So when you've ruled out more than half of the welfare budget, you've only got about £100 billion that you're trying to make cuts in. And these main out of work benefits are just a small fraction of that. A great deal of what's left goes to people with children, or to people with disabilities, or to people who rent through housing benefit.
Tim Harford
The corollary of that is that the 45% rise, which worries the Chancellor, isn't a matter of out of work benefits either. Much of it, about two thirds, is accounted for by the growing pension bill and the introduction of tax credits which aren't out of work benefits. Still, Mr. Osborne wants to save the taxpayer another £4 billion. Will he get there by targeting people who are making a lifestyle choice? It's hard to say, because while everyone knows what he means, none of the available research tells us how many people fall into the category. But we can find out how many people leave the benefit system when governments change the rules. And making benefits less generous or more difficult to claim. Professor Jeff Grogger from the University of Chicago has been comparing different welfare systems in different states in the U.S. the
Jeff Grogger
differences across the states are really one of the key mechanisms by which we learn anything about the incentive effects of welfare programs, and they vary quite a bit. What we do is we try to use that variation in benefits to understand the relationship between benefits and welfare receipt. And so this is where we learned, for example, that a 10% increase in benefits generates roughly a 2 to 4% increase in the caseload. So there's an effect there, but the magnitude of the effect is not all that great.
Tim Harford
That suggests that if Mr. Osborne simply cut all out of work benefits by 10%, he'd cut the number of people who claim benefits by 3%. Assuming that Professor Grogger's work tells us anything about the UK, are the 3% lifestyle claimants? You could argue the toss on that one. But the trouble is that such an approach would certainly hurt all the genuine claimants too. And the Chancellor has said he doesn't want to do that. And with the total out of work benefit bill at just over 20 billion pounds last year, even that approach would only save 2.5 billion pounds. The Chancellor might have to take a different tack. Mike Brewer of the Institute for Fiscal Studies argues that the basic out of work benefits are unlikely to tempt people into a life of daytime tv. But when different overlapping benefits Interact, they can cause a real disincentive to work.
Mike Brewer
Compared to other European countries, we don't have a very big poverty trap or unemployment trap for the simple reason that our benefits are not that generous. When most people become unemployed, they're entitled to just £65 a week, and that is going to be far less than the earnings they would get if they were to work. Other European countries might pay generous unemployment benefits related to your previous earnings. So for us, poor incentives to work arise for different reasons, and it's often due to the operation of particular benefits. People who receive housing benefit often find there is no incentive to work because we take away these housing benefits very quickly when you move into work. And sometimes people who are in work on low earnings and receiving multiple benefits find it's not worth working a bit more, because if they were to earn, say, £10 a week more, they might keep only two or three pounds of that.
Tim Harford
That's the equivalent of a 70 to 80% marginal rate of tax, by the way. So how might the Chancellor encourage people to leave the benefit system? Mike Brewer studied a particular example. The incentives offered to lone parents by the previous government to get them back into work.
Mike Brewer
If you like it, try to encourage them off benefits in nice ways rather than nasty ways. And it did this by increasing the amount of support they would get if they were to work, mostly through tax credits paid to you if you worked, but also by improving the amount of childcare available. So essentially, the idea was to encourage them to work by making work more attractive. And this method was broadly successful. The employment rate for lone parents went up by 10 percentage points over the past decade, and, roughly speaking, around half of that can be attributed to the fact that work was more financially appealing. But this is an expensive thing to do. Lone parents are not that responsive to financial incentives. And when you do increase tax credits for those in work, there's a lot of dead weight, if you like, a lot of money wasted on lone parents who would have worked anyway. And so in the final few years of the last government, it tried to tighten up the conditions on receiving benefit by making those lone parents with older children look for work as a condition of receiving benefit. That really doesn't cost the government anything, and it will get some lone parents into work.
Tim Harford
All this supposes that George Osborne should be cutting the welfare bill. It sounds sensible at a time when the deficit is high. But Jeff Grogger reckons that if you believe in the idea of stimulus spending, that implies the Chancellor should be taking a very different course of action.
Jeff Grogger
The incentive problem is actually the weakest. When the economy is itself weak, if there's no jobs to be had, then the idea that somebody is trading welfare for a job isn't that much of a problem. It's not like they would be working anyway. At the same time, that's precisely the point at which you want to be spending more in terms of macroeconomic stabilization. That's when you want the government to be boosting the economy. What I would do is I would take the benefits and I would make them rise during times when the economy is very weak. That way you're providing aid to people who need it and you're targeting that aid at a time when it's needed the most, when the economy is weak.
Tim Harford
Jeff Grogger of the University of Chicago, and before him, Mike Brewer of the Institute for Fiscal Studies. You're listening to More or Less with me, Tim Harford, in association with the Open University. If you were listening last week, you'll know that we looked at headline grabbing data on pay in the private and public sectors and concluded they were all pretty useless. In thinking about pay, however, we noticed something very exciting. A new unit of measurement. We like new units of measurement. In the past, we've pioneered the scale of whales, a handy guide for journalists, inspired by the fact that so many newsworthy things seem to happen to areas about the size of whales. And we were early adopters of celebrity ichthyometry, the measurement of celebrities using fish, and indeed of ichthyl's celebritometry, the measurement of fish using celebrities. Our newest unit of measurement is the Prime Minister's salary, which is £142,500. The last government said civil servants who took home more than the PM would have to write to their Secretary of State to make a case for why they should earn so much. In May, the coalition government published the names of Whitehall officials who earn more than the Prime Minister. And this week's Panorama programme revealed that over 9,000 public sector employees earn at least as much as David Cameron. Charlotte Macdonald has been working on our Prime Ministerial pay scale. Charlotte, how does it look?
Well, first, a few interesting facts.
Well, you say that. How interesting.
About 62% interesting. OK, David Cameron's pay, 142,500 pounds could actually be almost 200,000 pounds. But Gordon Brown decided not to pay himself a quarter of the Prime Ministerial salary just before the election. And David Cameron then gave up a further 5%. Even so, the proportion of his maximum salary that he does take puts him comfortably within the top 1% of earners in Britain. As you mentioned, Panorama discovered that over 9,000 public sector workers earn more than he does. We wondered how many people, public or private, earn that much revenue? And Customs say about 274,000 people pay the top rate of tax, which means they all earn more than the PM's salary because the top rate of tax comes in at £150,000. More fun facts. If you play for Aston Villa, apparently David Cameron's favourite football team, you earn more in three weeks than he does in a year. And you don't have to be in the top flight of football or anywhere near it to eclipse the PM. The average Scunthorpe United player gets 160 grand a year, according to sportingintelligence.com which keeps a sports salaries database.
Charlotte, you're right, that was about 62%. Interesting, but you're teasing us. What about the Prime Ministerial pay Scale?
Right, we've created an index where the Prime Minister's salary is a unit of one. So by dividing by 142,500, we can place any salary on our Prime Minister's index, or, as we like to say, work out a person's pmi. For instance, the starting salary of a Royal Marine is around £14,000, so their PMI is 0.1. While Lewis Hamilton gets paid 14 million to drive Formula One cars, meaning his salary equals 100. On our scale, he's paid 100 times more than the Prime Minister.
And presumably that means that Mark Thompson, the Director general of the BBC, would have a PMI of around 6.
Correct. Here are a few more. Barack Obama has a PMI of 2. The average FTSE 100 chief executive gets about 2.1 million pounds a year, which is a PMI of 15. The film director James Cameron has a PMI of 1,000. And if you jump to a PMI of 10,000, you can get to the hedge fund manager John Paulson, which means
he earns about £1.4 billion in a year. OK, what about PMIs of less than 1?
Well, the median salary in Britain is £25,800, so that's a PMI of 0.2. An experienced train driver can expect to do quite a bit better with a PMI of 0.3. And a police superintendent has a PMI of 0.5. That's around £70,000. The Gross national income per head of Liberia is just $170, meaning a PMI of less than 0.01.
Charlotte MacDonald. Thank you. If your appetite for pay related Facts remains unsated. Despite that barrage of numbers, go to the Radio 4 website, BBC.co.uk radio4, where there's an interactive widget thing that lets you compare what you think people earn to what they actually earn. Last week, the British Trust for Ornithology published the results of its 40th annual Garden Bird Feeding survey, revealing huge falls in the numbers of some species. Blue Tits down 42% over 40 years. House Sparrows down 70%. Song Thrushes down 75%. But those weren't the statistics which caught our eye. In comments posted online, in newspaper letters pages and in the blogosphere, a villain has been identified as the, or at least a cause of plummeting bird numbers. Slink forward the house cat. A letter writer to the Scotsman put it like the numbers do not surprise me, he wrote. What does is the reluctance to mention cats. There are 7.5 million cats in the UK. Of these, approximately 10% live indoors, leaving 6.75 million to stalk and kill birds. They kill for pleasure, he writes, not for food. Cat lovers restricting their cats outdoor adventures would save millions of birds. Is he right? Academics have been trying to put a number on the extent of cat predation for decades. In 1993, Professor Stanley A. Temple from the University of Wisconsin had a go.
Stanley A. Temple
There were essentially two steps. The first was to determine how many cats were out there on the rural landscape. The second was to figure out how many birds each of those cats were killing. To determine the number of cats on the rural landscape, we did a mail survey of approximately 1% of the rural residences in Wisconsin, asking them questions about the cats that might be on their property. We got the information from the respondents and we validated those numbers by going out and doing our own independent censuses of the cats that were associated with these rural residences. The second part was determining what those cats were eating, and that required a somewhat different approach. It involved trapping, live trapping some of these cats, giving them an emetic so that we could look at their stomach contents and analyzing more cat feces than I care to recount.
Tim Harford
You've gone to an extraordinary amount of effort to conduct this study. I mean, it's, it's an amazing sort of performance, the whole thing.
Stanley A. Temple
It was a fairly large study, but I would have to say not an unusual study for wildlife biologists.
Tim Harford
And what did you find?
Stanley A. Temple
Our studies suggest that there were at least 1.4 million free ranging cats associated with the rural residences in Wisconsin. We also found, based on our surveys, that the typical free ranging cat in Wisconsin killed at least 5.6 birds per year. If we simply multiply those two numbers together, you come up with the number of at least 7.8 million birds killed per year, just in rural Wisconsin, it turns out.
Tim Harford
And who knew that this is a highly contentious issue? Professor Temple says he hadn't suggested what should be done about cat predation, although elsewhere remedies, including culling feral cats, have been proposed. He was, he says, just trying to put a number on it all the same. And astonishingly, almost 20 years after he began his research, Professor Temple is still targeted by some who take their admiration for our feline friends just a little too far.
Stanley A. Temple
We got responses even before we had collected a single piece of data. The proposal that we had submitted to the U.S. department of Agriculture to do this study attracted some media attention. Even at that point, we got a very negative response from people who are our cat advocates. There was a letter to the governor of Wisconsin complaining that this person's tax dollars were being used to pay the salary of someone who was obviously a cat hater and who was simply out to justify persecuting cats. But it certainly escalated after our results came out. I was completely caught off guard by it. I had no idea that I was wading into such a controversial issue. And it really has escalated in recent years.
Tim Harford
Are we talking about people being mean about you on the Internet or something more serious?
Stanley A. Temple
Well, they were certainly mean to me. There's no question about that. But, no, it got much more serious than that. I received multiple death threats, some of which escalated to the point where there are now convicted felons as a result of their overzealous desire to somehow get even with me.
Tim Harford
Professor Stanley A. Temple. More recent research supports the idea that cats kill large numbers of birds. A 2003 mammal society report followed 986 cats over six months. Between them, the cats brought home nearly 15,000 items of prey. A quarter of the animals killed were birds. That led the Mammal Society to suggest that British cats kill about 55 million birds a year. Pro cat critics dispute these and Professor Temple's numbers on the grounds that it's very hard to know how many cats there are and that we can't tell if prey brought home by a cat was killed by that cat or dead when the cat found it. And that extrapolating from a small sample to get to a figure for all cats is inherently problematic, which, of course, it is. However, there's clearly a basic logic here. If your typical cat kills any birds at all, then because there are a lot of cats we can be confident that between them they kill a lot of birds. So arguing about the odd million here and there might be to miss the point. Perhaps a more pertinent question is, does it matter? Here's Dr. Will Peach, a biologist for the RSPB, the Royal Society for the Protection of Birds. No, cat lobbyists. They the clue's in the title.
Will Peach
Cats in the UK almost certainly are taking large numbers of birds and mammals. Those numbers are not necessarily large enough to have an impact on the population dynamics of the birds themselves. There are vast numbers of birds out there which will die naturally of starvation or cold or whatever, and it may be that they meet their fate slightly earlier in the jaws of a moggy, rather than starve in mid winter. So the fact that large numbers are being taken doesn't necessarily mean we would expect to see an impact on population levels. Clearly, predation by cats has been one of the many theories that have been proposed to explain the house sparrow decline. And just to illustrate that, we reckon There are about 6 million pairs of house sparrows in the UK currently, and each of those will produce, on average about five fledged young each summer. So that's giving us approximately 30 million fledged young. Now, maybe there are 10 million cats in the U.K. now, even if every cat takes one or two sparrows, the estimates vary, but the average is about one sparrow per year across the cat studies that have been done then, that still only one in three of the available fledglings are being taken by cats. And for the house sparrow's population to sustain itself, we actually only need probably 6 million of those 30 million fledglings to survive.
Tim Harford
Dr. Peach and the RSPB have run major experimental studies to try to figure out why house sparrow numbers have fallen so dramatically. His best guess, that a decline in the number of insects and invertebrates I.e. sparrow food is behind it. And in researching all this, Dr. Peach might have come across hard evidence that the humble cat shouldn't take the blame.
Will Peach
Where we were working in London, we actually went to quite a lot of trouble of measuring cat densities across these 70 odd sparrow colonies. And what I can tell you after five years of studying those colonies is there was no suggestion that the birds were breeding less well or the adult populations were doing less well in areas of high cat density compared to low cat dens.
Tim Harford
Dr. Will Peach of the RSPB. And thanks too to Professor Temple of the University of Wisconsin. Please, please don't send him or us death threats. You may remember that last week we were dealing with a grudge match between two keen Runners on the BBC current affairs staff David Lewis and Lucy Proctor. The two of them were racing at the Great North Run last weekend. Lucy protested that she was just a girl. David complained that he was an old man while Lucy was in the prime of life. So how do you make allowances for such things? We spoke to Alan Jones, a retired engineer who's been thinking about these issues for many years and he told us that according to his calculations, the 28 year old Lucy had to beat the 52 year old David by 3 minutes and 30 seconds to be regarded as having outperformed for her age class. That was Lucy's challenge and the odds were against her because David's personal best was already faster than hers. So what happened?
Lucy Proctor
We're here in Newcastle, it's drizzling a tiny little bit but luckily not raining. It's really, really busy and we're about to start running. I don't think anybody else is probably thinking quite the same as you and I are thinking at the moment. This weird maths problem that's going around in my head where I'm thinking about a time but I'm also thinking about the three and a half minutes that I need to be doing as well as on top of your time.
David Lewis
I think just go for it Lucy, just go for it. Let's, you know, we're going to savour the atmosphere and we're going to just, you know, do our best and you're going to come second.
Lucy Proctor
So if you are ready to start your race and get in position you
Tim Harford
can go via the slip road on either side of the bridge so that's to your right.
Lucy Proctor
Been passed yet? Has David been passed yet? Good news. Apparently David hasn't been passed here yet. So I'm at four miles, quite tired but feeling okay because I've just run up a hill kind of on course. I think it's really, really busy so it's hard to run as fast as you want to run but it's brilliant. Great atmosphere. I'm going to run and hope that David's three and a half minutes behind me. Bye.
David Lewis
I'm just behind her. I'll catch her up in a sec. There's a bloke in front of me, he was wearing a nappy and he's certainly not going to be in front of me.
Lucy Proctor
Okay Stacy, I'm at eight miles, I'm knackered now. I think the folly of youth might be mundo I expect David has run a slower race so he's just behind me uncovered in blood because men don't like being overtaken by girls. So one stopped me tripped up in the road, got blood coming down my arm. So if I lose, that's my excuse. Right, I'm going to run to the end. This is the worst four miles. Hopefully David is still behind me.
David Lewis
Is Lucy in front? She's got three minutes to get on me, so I better get on pace is good.
Lucy Proctor
Okay, Lucy, I finished. It's the most beautiful place I've ever finished a race. It's on the seaside, beautiful cliffs, it's amazing. More importantly, no sign yet of my competitor David, which I'm quite pleased about. That either means he's finished, but he's faffing around doing something or I may have won the challenge. Right, we've met up, I found David, so we're gonna swap the all important times. I'm just gonna add a little caveat to this. I didn't stop my clock when I spoke to our producer here, did you?
David Lewis
I stopped my clock as soon as I went across the finishing line.
Lucy Proctor
But you didn't stop it while you were talking to our listeners?
David Lewis
No, no.
Lucy Proctor
So we'll just leave that then. So My time is 37:25.
David Lewis
Mine is 14022.
Lucy Proctor
So you're still the winner. Three minutes, three and a half minutes.
David Lewis
I am the winner.
Lucy Proctor
You're the winner and I'm sure you
David Lewis
said, lucy, you're going to buy all the drinks.
Lucy Proctor
I think the drinks are on me, David. Yeah.
Tim Harford
Well, when the official times were in, Lucy ran the race in 1 hour, 37 minutes and 19 seconds. Slightly quicker than her stopwatch. David's stopwatch. His official time, 01:40:23. We sent these times off to Alan Jones and according to Alan, adjusting for age and sex, David is a better runner than Lucy, even though Lucy ran a faster race. Lucy, you're here. Commiserations.
Lucy Proctor
It was really, really close. According to Alan Jones, my time gives me a performance score of 67.65%. David's performance score is 67.86%. So it's really, really, really close. Alan is a little. He's not annoyed, but he's got some more work to do, actually, because the winner of the Great North Run was Haile Gabriel Selassie.
Tim Harford
Yeah, I wanted to know. So Heidi Gabbrosilassi won the race, but I want to know who got the best performance.
Lucy Proctor
Well, he got an amazing performance. He's 37 years old now, remember? So he ended up with a performance score of 101.26%.
Tim Harford
Right.
Lucy Proctor
Okay.
Tim Harford
So it certainly makes a nonsense of Alan's tables, doesn't it?
Lucy Proctor
No, it doesn't make a nonsense of them. It just means he has a rule that if anybody ever gets over 100%, he has to change his tables, change his curve, and make sure that that then becomes the best possible anybody can do. So he's going to get to work doing that.
Tim Harford
Okay, well, thanks very much, Lucy, and to David Lewis. Congratulations. Just hold on a moment. You know, I'm not at all sure that David Lewis really did beat you. Lucy, you said in the piece that neither of you stopped the clock when you paused to record your updates along the way. Now, I've timed them. You stopped and you gave us a lovely view of how things were going on the Great North Run and you spoke for a total of 47 seconds. Now, here's David's update. At the first stop, I'm just behind her.
David Lewis
I'll catch her up in a sec. There's a bloke in front of me who's wearing a nappy and he's certainly not going to be in front of me.
Tim Harford
He seems to be a man of few words. Perhaps he was more expansive at his second stop.
David Lewis
Is Lucy in front? She's got three minutes to get on me, so I better get on pace Is good.
Tim Harford
That was it.
Lucy Proctor
Unbelievable.
Tim Harford
David stopped and spoke for a total, a total of 11 seconds. You spoke for 47 seconds. I think you could legitimately knock 36 seconds off your time, Lucy, and that means that on an age and sex adjusted basis, you beat David. Congratulations. Thank you very much. That's all we have time for this week, but we'll be back at the same time next week for the last programme in the current series. Until then, our website, BBC.co.uk more or less, is the place to find out more, to subscribe to the podcast, to listen to archive episodes of the show, or to send us your questions and suggestions. We look forward to hearing from you. Goodbye.
More or Less was presented by Tim Harford, the FT's undercover economist.
Lucy Proctor
The producer was Richard Knight and the
Tim Harford
editor was Richard Varden.
Lucy Proctor
It was made in association with the Open University.
Date: September 24, 2010
Host: Tim Harford
This episode of More or Less explores the mechanics, myths, and realities behind the UK's welfare bill, how political rhetoric matches actual statistics, and what academic research tells us about benefit incentives and outcomes. Additional segments include a whimsical look at measuring salaries with a new "Prime Minister's pay scale," an investigation into whether domestic cats are to blame for declining UK bird populations, and a mathematically adjudicated running race between staffers David Lewis and Lucy Proctor.
Main Theme:
The political debate around cutting the UK welfare bill often focuses on rooting out "lifestyle claimants"—those supposedly abusing or choosing a life on benefits—as a route to large savings. But does this match the reality of where welfare money goes and who receives it?
Political Context
Welfare Bill Misconceptions
Where the Money Goes
What's Driven Welfare Increases?
Research on Cutting Benefits
Implications for UK Policy
Incentives in the UK System
Making Work More Attractive
Limitations
Introduction of a Playful Metric
Comparisons and Facts
Tone:
Dry wit and playful analysis, mocking the media's love of quirky units.
Background
Research Findings
UK Data
Does It Matter for Populations?
Memorable Moments:
The Challenge:
Race Antics and Outcome:
Quibble Over Timing:
Memorable Moments:
Witty, evidence-focused, and keen to debunk common myths, the episode blends data-driven analysis with playful segments and human interest.
For additional details, resources, or to try out the interactive salary tool, visit the More or Less website.