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More or Less
The maths of rioting
00:27:55
In More or Less this week: riots, debt, disability benefit and when to buy a lotto ticket.
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A
Thanks for downloading the More or less podcast from BBC Radio 4. Here's Tim Harford.
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B
Hello and welcome to More or Less, a statistical water cannon that we're not afraid to use. Over the next 27 minutes, we'll try to answer one of the least pressing questions of the week.
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C
When should you buy a lottery ticket to make it more likely that you'll win than die before the draw takes place?
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B
But we'll also be dealing with the financial crisis and first of all, with the riots and looting across English cities this week. Why did they happen? Was it the cuts? Soft policing a broken society? And can a look at the numbers tell us more? Here's Harriet Harman, Labour's deputy leader.
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A
There is a sense that young people feel they're not being listened to. That is not to justify violence, but I think that when you've got the trebling of tuition fees, they should think again about that. When you've got the EMA being taken away, when you've got jobs being cut and youth unemployment rising and they're shutting the job sector in Camberwell, well, you should think again about that because this is going to cost money. This does not help. All of this does not help reduce the deficit.
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B
Okay, well, let's try to figure this out. Here's Phil Kemp. Phil, you've been hard at work on all this. What have you found?
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D
Well, Harriet Harman seemed to be suggesting that budget cuts were linked to the riots, but the journalist Toby Young, writing in his Daily Telegraph blog, rejects that argument. And he quotes figures to prove it. He says that average monthly public expenditure in the year ending June 2011 was actually higher than the year ending June 2010.
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B
So he's basically saying that there haven't been any cuts yet. Is that true?
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D
Yeah, well, basically it is true that even adjusting for CPI inflation, the government did spend more last year than Labour did the year before. So, Toby Young, Yep, he's right about that.
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B
Okay, well, I'd like to look a little closer at this. We've heard this kind of claim before and actually Toby Young cites as his source Fraser Nelson, the editor of the Spectator. We interviewed Fraser about this last series. Now, a couple of things are worth mentioning. The first is that, sure, year on year, spending was slightly higher in the most recent year, but over the past six months, there has been a distinct decline in spending. And the second thing to say is actually two big chunks of government spending. They're roughly the same size as each other. So one is departmental spending. That includes defense, the NHS police and the Other is what's called annually managed expenditure. That's interest on the national debt, pensions, unemployment benefit. Now departmental spending's being cut, Annually managed spending is rising and the two are roughly balancing each other out.
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D
Which raises the point that you can't really blame cuts in general. You want to look at specific spending which might be expected to affect the mood in inner city Manchester or Birmingham and so on.
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B
And that's exactly what Harriet Harman tried to do. So she pointed to cuts in education maintenance allowance, rise in university tuition fees and cuts to youth services as possible causes. Now, what's going on here?
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D
Well, the EMA isn't being scrapped until September and tuition fees aren't being raised until next September. So if there is an effect there, it's an anticipation of cuts that haven't happened yet. But what's happening to youth services is certainly worth paying attention to. I looked at Harringay Council, which includes Tottenham, where the trouble started. Their youth services budget has taken a cut of £1.6 million this year. That's down from just under £3 million last year and it goes down even more next year. So they'll be spending less than a million pounds. And that's a cut of around 70%. It's a massive cut.
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B
It is massive. What is it per teenager?
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D
What?
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B
I'm teasing. I'm teasing. I've looked this up already. Okay, so there are about 20,000 teenagers in Haringey roughly now. A cut of one and a half million pounds to youth services is a cut of £75 per teenager. So that might be part of the explanation. Phil, as the new boy, I should remind you of the first rule of more or less.
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D
Do not talk about more or less.
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B
No, that's the second rule. The first rule of more or less is correlation doesn't necessarily mean causation. Just because youth services have been cut in one of the areas where there have been riots doesn't prove that the cuts in youth services caused the riots. Might have done, might not have done. We need to know, for instance, the youth clubs were actually doing some good. We wouldn't have been better off, say, giving teenagers 75 pound vouchers for trainers or something. And we don't have that evidence yet.
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D
But there's another argument, which is that Britain has a class of disaffected young people and they're people with little income and no job prospects.
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B
So these are people with little to lose.
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D
Yeah, people with little to lose. And it seems reasonable to assume that, at the very least, the existence of those People makes rioting more likely. And the numbers of people who you could describe as members of this disaffected group tend to grow during years of recession. And that's pretty much the argument that London's ex mayor, Ken Livingstone made on the BBC's news channel.
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E
This is anger and it's disaffection. Why is it suddenly happening now?
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C
We've been broadly riot free for nearly three decades.
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E
We had a huge upsurge of rioting in the early 1980s when we were going through a deep recession. We're having another set of that now.
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Ken Livingstone. Is there any firm evidence that Ken's onto something?
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D
Well, coincidentally, the economic historian Hans Joachim V. Holt has just written a working paper looking at the link between budget cuts and disorder. And he says that reductions in public spending are a very powerful predictor for
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F
unrest on average in a European country over the last 90 years. In an average year you have about one and a half incidents that we look at. So the kind of incidents we're interested in, politically motivated demonstrations, riots, assassinations, general strikes and attempts at revolutionary overthrow of the existing order. That pretty much doubles if you go to budget cuts of 3% or more of GDP. And in between it's pretty stable. We can't explain all the variation and unrest over time between different countries, but it's pretty clear that if you cut more, you're going to get more instability. And the size of the effect differs between different countries. So prior to this interview I actually went back to the data and actually looked up how strong the link is for Britain as compared to the average of our sample. And it's quite interesting. So the average in Britain is higher. Even if nothing happens, you don't have any austerity measures. There's more unrest, there's more incidents according to our measure, but then as you cut, the response is also much greater on top of that. So that suggests that Britain, according to our measure of social instability, actually on average shows more types of unrest, but it's also more responsive to the way the government conducts its budget position.
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D
That's really interesting because some people here have been arguing that actually the cuts haven't really begun to hit at all yet. This is something that people are protesting about in anticipation of what's to come.
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F
That may well be. So this is not at all unusual. The peak of some of these forms of unrest is actually before the actual implementation of some of these budget measures. You can think of it as a form of negotiation through street protests.
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B
Okay, that's really interesting. So austerity makes riots more likely, and the cuts don't need to have kicked in for it to happen.
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D
I have been looking for other explanations too, and one I thought find quite compelling is what you might call the Lord of the Flies effect. At least that's how it's described in a book called the Pinch, which was written by the Science and Universities Minister, David Willets, while he was in opposition. Now, the theory is that whenever you have a population bulge, so either lots more babies being born in a baby boom or rapid immigration, then there's the likelihood of unrest as the number of young people outnumbers the old. The American sociologist Professor Jack Goldstone started researching this to see whether demographics help make sense of world events like the Revol in France and in Russia.
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The data just started to fall into place. In each of these great revolutions, there had been a generation or two large population surge, which created a younger population, a population that was outgrowing the ability of the economy to provide jobs and services. When a society goes through a sudden surge in population and a huge increase in the number of young people, society has to adapt. And if it doesn't adapt, you get problems on multiple levels that are very difficult for governments and lead to eruptions of popular protest.
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D
But there's a problem with your theory, because we have an aging population here, don't we? So does that mean that the demographics can't be used to explain what's happened recently here?
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G
What you have in the uk, I think, is pockets within the broader society that are concentrating larger numbers of young unemployed people. That is, certain neighborhoods seem to have been targets for migrants to settle. They seem to be attracting large numbers of people compared to the general slowdown in growth. For example, I was able to look at some of the population data on the Tottenham parliamentary seat, and it turned out that that particular district had seen a population surge of almost 8% in the first half of the 2000s. That's about three times the population growth rate of the UK as a whole. And that's usually associated with a higher proportion of young people.
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B
Okay, so that's approaching an argument that actually it's nothing to do with the cuts or any other grievance, it's just population figures driving it. Now, I can understand people's desire to want to find a clear reason for what's been happening, but what if there isn't one? Phil, all due respect to you, I've been looking at this question too. With the help of Duncan Watts, mathematical sociologist, he's now the principal research scientist at Yahoo. Duncan wrote the book everything is obvious. Once you know the answer, see what you make of this.
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H
It's not a coincidence that we see riots and social violence in sort of bursts. You don't see individual people turning to violence, you see them all doing it together. The fact that other people are doing things sort of normalizes that kind of behavior. The problem with that, and we know this from decades of mathematical modeling and experiments and so on, the problem is that once you introduce this social influence into the equation, you immediately generate a huge component of unpredictability. You can have two populations that are for all intents and purposes identical. Everything that you can measure about them would look the same and one of them can remain calm and the other can tip into all out violence.
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B
If you've got these two identical populations and very, very different outcomes, what does this make us think when we hear all these different explanations of why the riots happened? I mean, should we just dismiss them?
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H
Just because the necessary conditions are satisfied doesn't mean that it's inevitable that you're going to see riots. And it tells you virtually nothing about how frequent and how big they're going to be and precisely where they're going to happen. If you look at some of the people who have been profiled, it's sort of like, well, you know, he's 19 years old and he only learned to read three years ago and he has no sort of hope for the future and he doesn't trust the government and that's why he's doing this. That was true of this guy two years ago, a year ago, six weeks ago. It'll be true of him in a year from now and he's not rioting at all those times. Clearly there's some other very, very important factor that is responsible for the particular timing and location and that is not accounted for by the kinds of explanations that we give.
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Duncan Watts, principal research scientist at the Internet company Yahoo, and our very own Phil Kemp. You're listening to More or Less with me, Tim Harford, in association with the Open University. By the way, the Deputy Prime Minister, Nick Clegg, was in fine form on the Today programme on Thursday morning, explaining that there was plenty of slack in the police force. You cite the HMIC. The HMIC has also said that only 12% of police officers at any time are actually out on the streets and the other 88% are eating doughnuts, no doubt. Well, this is a claim we've covered before and if you'd like to hear why, it's not quite what it seems Have a listen to what we said via our website, BBC.co.uk more or less now. Last week we invited the graphic designer Nigel Holmes to re express the US national debt as a tall pile of $100 bills. A very tall pile. So $100 billion is a stack of $100 bills nearly 69 miles high, and that's where meteors are active. And it seems like a pretty big number. But let's see how much farther our pile of money has to go to reach the $14.3 trillion that make up the US national debt. The stack continues up and up. It shoots further into space. Only when it reaches 9,030 miles does the stack finally add up to $14.3 trillion. Rod Cousins was baffled by this measure. He emailed us at more or lessbc.co.uk with a more practical suggestion. Why not use the established more or less unit of area, the Wales? I calculate that the area covered by 14.3 trillion $1 bills is equivalent to 7.115 Wales. Thanks, Rod. Although I increasingly wonder how big whales would be if you took the trouble to iron out all those beautiful wrinkly bits. Rod wasn't the only one to email us about government debt. And this email from Benjamin Laski captured the spirit of several of your questions. Listening to your programme on austerity, I was wondering who all these countries owe their national debts to.
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Do they all owe money to one another?
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And if so, could this be redistributed
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to reduce interest liability?
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Hmm. Well, sadly and perhaps unsurprisingly, it's not that easy. Adam Davidson is presenter of one of my favourite radio shows, US National Public Radio's podcast, Planet Money. Planet Money's had to think a lot about debt recently, so I asked Adam to help us out.
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The way it works, just the very basics, is governments borrow money slightly differently from how we do. They basically give out IOUs. They call them bonds or notes or bills, but basically IOUs. So you say, I want to lend the US government or the UK government or the French government some money. I'll buy one of their IOUs. That's the language you use, but you're not buying something, you're lending the money. In some cases, like in the case of Japan, it's largely their own people lending money to the Japanese government. In other cases, like the us, it's an awful lot of foreigners. So in the us, we're sort of obsessed with the fact that China is our number one foreign debt holder. They have. No one knows for sure because these are all private transactions, but they have something in the order of a trillion dollars ish in US debt that we owe the Chinese.
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B
That's generally the Chinese government almost, what, 10% of. Of U.S. debt. Nearly.
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Yeah. And more importantly, the Chinese are sort of our most trustworthy customer. They just keep buying tens of billions of dollars of US bonds of US IOUs every month. And so the fear here is not so much that the Chinese will sell all the bonds they own, which would cause a lot of chaos. It's if they just buy a little bit less.
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B
I guess we're quite lazy. The way we sometimes talk about this and we talk about US owing money or the US owes money to China or Greece owes money to Germany, and actually the China case is unusual because that is basically the Chinese state or institutions that are very closely connected with the Chinese state, but it's usually private organizations.
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I
Yeah, exactly. I mean, if you're a pension fund or an insurance company, some very large institution that has tens or hundreds of billions of pounds, and you just. The main thing you want, I mean, you want to make some money, you want to earn some interest, but the main thing you want is that is to know that 30 years from now there will be cash in the till, there will still be some money there. The safest thing you could buy is U.S. government debt, U.S. treasury bonds. And so you see U.S. treasury bonds, I would say the vast majority of banks, insurance companies, pension funds, you know, almost certainly every one of your listeners in some way or other, either directly owns them through their retirement plan or indirectly, you know, the insurance company that insures their house or the bank where they deposit their money, the soundness of that institution is backed by US Treasuries. So, and that's not just for the uk. That's probably almost everybody in the world who's in the financial system, who has a bank account, an insurance policy, a credit card, is probably just one or two steps removed from an awful lot of U.S. government debt. It really is the solid foundation upon which the entire global financial architecture rests.
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B
Well, is it so solid? I know you guys at Planet Money have been thinking a lot about the implications of this downgrade of US Debt. Just briefly explain what the downgrade actually means. Who did it to whom, and is it going to make any difference to anything?
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I
Sure. So the downgrade, we've been calling it. It's almost like a restaurant review. I mean, Standard and Poor's, the major ratings agencies, Standard and Poor's, Moody's, Fitch, they argue actually that they're like journalists that they're just giving a review of countries. They actually review all sorts of financial instruments. So they'll review what they call sovereign debt countries, they'll review company debt, et cetera. And they have a very complex rating system that tells the world their personal opinion, you know, their view of how likely a country or a company is to pay back the debts that they owe. But today, for most people who care about this sort of thing, it's just an opinion. It's literally five or maybe a dozen people at an office in New York City at this company called Standard and Poor's. They looked over some numbers, they sat around a conference table and they voted. And it's literally a vote. Everyone raises their hand. And they decided that as of last Friday, the US government no longer can have their top rating. It has their top rating but one. So from what they call AAA to double A plus, all that is is one company's opinion. It's a rather influential company, but it's not the end all, be all.
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B
And so people are still eating at the restaurant.
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I
Exactly. And in fact, what we've seen is the immediate response was people bought more treasury bills, they bought more US government debt. My colleague Robert Smith says it's. Let's say you have your favorite restaurant, you go there all the time, you know everything about it. You know, it's pretty darn good. But every now and then, you know, the meat's a little overcooked and maybe the light's a little bright or it gets noisy or whatever, you know that there's some problems with it, but you really like it. And then one day you read in the paper that it's gotten a slightly lower grade. Are you gonna stop eating there? Are you gonna think, oh, that newspaper critic, he knows a lot more than I do? Probably not. You'll probably just say, oh, well, that's that guy's opinion. I don't care.
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B
Adam Davidson, host of NPR's Planet Money. You can subscribe to their excellent podcast, but before you do, I hope you'll subscribe to ours via BBC.co.uk more or less. It means you never miss a programme. And of course, it also lets you listen to the programme on your fancy Sony Walkman, or whatever you kids are using these days. Recently, the Department for Work and Pensions published statistics about assessments of the newish Employment Support Allowance, which is replacing incapacity benefit. Here's how Radio 4 reported the government figures show just 7% of people applying for Employment Support Allowance, which replaced incapacity
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benefit three years ago are unfit for work.
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New claimants must undergo a test to
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see whether they are entitled to esa.
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B
The Daily Telegraph and the Daily Mail went a bit further. The Daily Telegraph said nine out of 10 sickness benefit claimants are judged fit to work. And the Mail, using slightly different mathematics, said the shirk in glasses, just one in 14 incapacity claimants is unfit to work. So that's the story. And yet one would expect that if these headlines were representative, the number of people claiming benefit would be dramatically falling. And yet Paul Gregg, professor of economics at Bristol University, says he's not so sure. I asked Professor Gregg to explain what
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was going on, that the 7% number is those who are found so disabled that it's highly unlikely they will ever work again for the rest of their lives. Now there is a much larger group who are found to be sick and disabled and eligible for esa, but there is a hope with effective support and engagement that they may work again. So that the 7% number is actually expanded to something like 25% when you include those people who are eligible for the benefit, but they may work again with effective support and help. And a lot of people have been appealing this new decision making process. And on appeal that 25% figure goes up to about 30%. So 30% of people are passing the test to be found eligible for ESA, but another 40% never actually get to the test. These are people who in a sense are probably just getting better. And of those that get to the test, around 50% are found disabled after the appeals process has gone through. So if you compare how many applicants, if you like, are going through to full eligibility after assessment, the difference between the two regimes is about 10%.
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B
So the difference is just to be clear, are we talking percentage points? Are we percentage of the initial applicants, percentage of the people who are are approved?
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E
The assessment process takes three months, okay, so that it used to be that it was 60% of those people in that assessment phase were there six months later and that's now about 50%. So there is a difference in the survival rate of people in the early assessment phase getting through to the full blown benefit. However, the one other thing which is offsetting that, and which means that the whole numbers are remaining exactly the same, is that the number of applicants is rising and that's almost certainly due to the recession. And that increase in the number of people applying is offsetting the effect of the fact that the test is a bit tougher than the previous one, which overall is just leading to a picture where there is no actual change in the number of claims under the ESA regime and the IB regime. There is a small difference because the test is tougher and there's an offset to that because there's a small rise in the number of claimants.
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Paul Gregg from the University of Bristol. You're listening to More or Less with
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me, Tim Harford and me, Charlotte MacDonald.
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Charlotte, hello. Have you got something for us before we go?
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Well, I have, actually. Before the series started, I came across a very interesting letter in the Times from a Malcolm Oliver. I'll let Mr. Oliver himself explain.
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J
I wrote a letter to the Times a few weeks ago based on some comments that I remember when I was working an insurance company and one of the actors there, who was quite competent but also a little bit pedantic, mentioned that he'd done a few calculations and had decided that he was going to buy a lottery ticket because he liked the idea of winning 15 million quid or whatever. But he was never going to buy it before 7 o' clock on the Saturday because he worked out that after that time his chances of dying before the draw was made were slightly lower than his chances of winning the jackpot and being able to claim it.
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A
And so are you interested to know whether that is in fact true, whether he got his sums right?
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Well, it'd be good to get it checked out. You know, obviously, people's life expectations vary considerably depending on what they do and what their age is. I did some rough calculations at the time and tested out his assumptions and they seemed to stack up. But if you can get a current top actuary to redo the calculations, I'd be very interested to hear what he's got to say.
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So I, like Mr. Oliver, wondered whether his friend was right.
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B
This sounds like a job for more or less.
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That's what I thought. I called Ronnie Bowie. He's the former president of the Institute and Faculty of Actuaries.
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B
Yes, Ronnie, he would know.
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Exactly. Ronnie very kindly agreed to work out the answer for us. And here's what he.
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C
The chances of winning the lottery are tiny. They're 14 million to one. Now, my experience is people find big numbers and tiny numbers equally difficult to fathom. But what people do have a sense. So let's translate 14 million to 1 into time. 14 million to 1 is the equivalent of trying to pick one single minute out of 27 years worth of minutes. In fact, the odds of winning the lottery are as tiny as the odds of dying in the period between buying the ticket and the lottery draw itself. Hence the reason for the letter in the times. So when should you buy your ticket to make it more likely that you'll win than die before the draw takes place? I'm 57, so statistically I shouldn't buy a ticket until about five minutes before the draw because I've got the same 1 in 14 million chance of winning as I have a 1 in 14 million chance of dying in those five minutes. And the problem is the ticket sales close at 7 o', clock, so I should never buy a ticket at all. The draw is made at 8 o'. Clock. Only men below age 19 and women below age 37 are statistically more likely to win the draw than die in the hour between buying the ticket at seven and the draw at eight. And in fact even a woman aged 16, the youngest age that you can buy a lottery ticket and has statistically the lowest chance of dying, shouldn't buy their ticket until around 4:30 on the Saturday afternoon before the draw. Now what about the bonus ball because you've got six times more chances of winning five plus the bonus ball than the big draw itself. When should people buy their tickets if they're focusing on five plus the bonus ball? Well, remember our 16 year old female, instead of 4:30 on the Saturday afternoon, she can now buy her ticket just after 11 o' clock on the night before the draw, 18 hours earlier. But her 16 year old twin brother, and this is the effect of gender, her 16 year old twin brother be wise to sleep on it and buy his ticket around 9 o' clock on the morning of the draw. Just before five o', clock, a manual worker in his early 30s, he buys a ticket and seconds later a 55 year old female executive. And as we approach at seven o', clock, the closing time for buying tickets, a wealthy 65 year old man rushes into the booth, buys his ticket at 7:40 after the booth has closed, a young man from Glasgow, who may have been suffering from ill health, regrets that he didn't buy a ticket. And at one minute to eight the 95 year old man says, oh shucks, I should have bought a ticket after all. So what's the actuarial view on all of this? Well, firstly, good luck to all of you who are playing the lottery this weekend. I hope that some of you are big winners, but please don't be disappointed if you're not. The silver lining is that you'll almost certainly be around to play again next week.
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B
Ronny Bowie and of course Charlotte Macdonald. That's all we have time for this week, I'm afraid. But do Please keep your suggestions coming in via Twitter or more or lessbc.co.uk, our website is BBC Co UK./more or Less and we'll be back next week. Until then, goodbye.
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More or Less was presented by Tim Harford, the Financial Times undercover economist. The producer was Richard Knight. The program was made in association with the Open University.