Sunday, August 31, 2014

BCTF vs. BC Liberals: How Far Apart Are They?

Sept 2 Update: As reported by the Vancouver Sun, Peter Fassbender is saying that the parties are more than $300 million apart on compensation (wage plus non-wage benefits). The analysis below shows that the gap between their publicly stated positions is about $770 million ($401 M on wages, and about $369 M on benefits assuming they start fully in 2015-2016). This implies that they were privately willing to make concessions to bridge about half of the compensation gap, and the remaining difference is small ($300 M/5 yrs = $60 M/yr = 2% of current compensation). The real issue remains class size, composition and specialists: the government is offering almost nothing, while BCTF's demand would cost about $1 billion total if it loses the court case, and $1.6 billion PER YEAR if it wins the court case.

Based the following documents by the BCTF and the government, the math works out as follows:

Current wages and wage-related benefits: The government states that BCTF's proposal, which includes a 3.5% increase and three 1.5% increases, will cost $211.1 million in Year 5. This means that the current base is 211.1M/(1.035*1.015^3-1) = $2.566 billion.

Current total compensation: The government states that an increase of $335.8 million would correspond to a 11.2% increase. This implies a current base of $2.998 billion.

BCTF Salary Demand (Total amount above current wage)
Year 1 (2013-2014): $5,000 signing bonus = $150 M
Year 2: 3.5% = $90 M
Year 3: additional 1.5% = $130 M
Year 4: additional 1.5% = $170 M
Year 5 (2017-2018): additional 1.5% = $211 M
Total: $751 million, or $150 million per year on average + 100% economic stability dividend

Government Salary Offer (Total amount above current wage)
Year 1: 0
Year 2: 1%, and additional 2% seven months into the year = $47 M
Year 3: no increase = $77 M
Year 4: additional 1% = $104 M
Year 5: additional 0.5%, and further 1% ten months into the year = $122 M
Total: $350 million, or $70 million per year on average + 50% economic stability dividend

Difference between BCTF Salary Demands and Government Salary Offer (ignoring economic stability dividend)
Total over 5 years: $401 million
Average per year: $80 million (3.1% of wage base)
Ongoing difference at June 30, 2018: $67 million (2.6% of wage base)

Non-wage compensation: BCTF demands an increase costed at $125 M in Year 5 by the government.

Grievance fund: BCTF demands a one-time $225 M fund

Class size, composition, and specialists: Government offers a $15 M increase to the Learning Improvement Fund (LIF), from $60 M to $75 M. BCTF says that this is old money, and demands:
- a further $225 M per year until the court case is resolved, to be continued if the government wins;
- the restoration of the original 2001 language if BCTF wins, costed by the government at $1.67 B in Year 5 (if this replaces the LIF and the $225 M fund, the net cost is $1.37 B).

Difference between Total BCTF Demands and Government Offer:
Total over 5 years: $1.67 billion
Average per year: $334 million (11.1% of compensation base)
Ongoing difference at June 30, 2018: $417 million (13.9% of compensation base)

These numbers assume that:
- BCTF's non-wage compensation and class size/composition/specialists demands are to be implemented in Year 3 (2015-2016). An earlier implementation, during the current school year, would increase the total and average per year cost (but would not affect the ongoing difference in 2018).
- BCTF loses its court case. If it wins, then the total ongoing difference ballons to $1.79 billion in Year 5, or almost 60% of the current compensation base.
- The economic stability dividend is nil (it is likely to be small anyway).

Given these numbers, it's no surprise that Vince Ready declared in impasse. At the end of Year 5:
- the government's proposal costs $159 million per year ($144 M in wages and $15 M for the LIF increase);
- BCTF's proposal costs $576 million per year ($211 M in wages, $125 M in other compensation, $15 M for the LIF increase, $225 M for class size/composition/specialists) if it loses in court;
- BCTF's proposal costs $1.95 B if it wins in court.

Another way to took at this is through the rate of increase of ongoing costs:
- government: 1.0% per year
- BCTF: 3.6% per year if lose court case, 10.5% per year if win court case.

The government's proposal is obviously stingy: it is likely to come in below inflation, which implies a real cut, following two years of wage freezes. On the other hand, other public sector unions have settled for similar increases.

BCTF's demand that if it wins the court case, the 2001 language be restored, is obviously unrealistic, and is probably a bargaining tactic to obtain the $225 million/year fund. A 3.6% annualized increase is normally not out-of-line, but in the context of agreements signed by other unions, it is quite high.

I believe that a reasonable settlement would be along the lines of:
- 1.5% increase per year in total compensation, with no signing bonus. The parties can decide how to divide this into wage and non-wage benefits. The price tag would be $688 M over 5 years, which is slightly above below the middle of the government salary offer worth $350 M and the BCTF compensation demand worth $876 M $1.12 B (assuming that the non-wage demands are enacted in Year 3). The total increase would be 7.7%, about zero after adjusting for inflation. This is more than what other public-sector unions got, but likely less than private-sector wage increases. The final ongoing cost would be $232 M per year.
- $200 million one-time grievance fund, but only if BCTF wins in the Supreme Court.
- Increase the LIF to $150 million. This is double the government's proposal of $75 million, and half BCTF's demand of $300 million ($75 M LIF plus $225 M fund).
- Replace the LIF with $225 million annual fund if BCTF wins in the Supreme Court.

Total ongoing cost of my proposal at June 30, 2018:
- If BCTF loses: $322 million per year (compared to $159 M and $576 M)
- If BCTF wins: $397 million per year (compared to $159 M and an unrealistic $1.94 B)

The annualized increase in ongoing funding would be 2.1-2.5%, which I think is a fair outcome for our education system, and right in the middle of the 1.0-3.6% cost of current proposals. It slightly outpaces inflation, and along with a decrease in enrollment, should allow for a modest improvement in services. At the same time, it is less than provincial GDP growth, so this is definitely an affordable plan, even if BCTF wins the court case. The total risk of the court case to the taxpayer, $75 million per year plus a one-time payment of $200 million, is manageable considering that it concerns more than a decade of education funding - keep in mind that the BC government spends over $5 billion per year on K-12 education, and over $44 billion per year overall.

Wednesday, August 27, 2014

BCTF vs. BC Liberals: Whose Proposal is Best for B.C.?

The school year is supposed to start next week in BC, but the labour dispute between teachers and the government has not yet been resolved. Here are my two cents on the issue.

The parties are not too far on salaries: the government offers 6.5% over six years, while the teachers demand 8% over five years. Given that, in its latest budget, the government is forecasting inflation of 9.4% over five years (9.8% compounded), and that wages generally increase faster than inflation due to productivity gains, the teachers' salary demand is very reasonable.

However, the real difference between the parties is on the issue of class size. The BCTF points out that the Liberals have unfairly increased class size in the past by illegally removing it from the bargaining procedure. It also points out that there is evidence that a class size reduction would improve student performance, and that BC has large class sizes compared to the rest of Canada. The Liberals reply that despite the class size increase, BC students' academic performance remain among the best in Canada. Moreover, the current fiscal situation is tight.

None of these arguments, from either side, get at the real issue: is reducing class size a good investment?
- Perhaps the class size increase was achieved illegally. But if it is the right policy, it should stand, and BCTF should be compensated for past wrongs through more direct and less costly means.
- Even if class size reduction does improve student outcome, if the improvement is small, it may be cost-ineffective.
- BC's classes being larger than other provinces' does not imply that they are too large: it could well be that other provinces are wasting money because smaller classes sound good to voters.
- Even if BC students' academic performance held up (and this is disputed), this is not proof that the class size increase did not have an adverse effect: perhaps if class sizes had remained low, our students would be doing even better.
- The surplus being small and revenues growing very slowly does not mean that we can't invest in education. If the return is high enough, then borrowing is the right thing to do for BC's long-run prosperity.

The following is a back-of-the-envelope analysis on whether class size reduction is desirable in BC, given its costs. The starting point is this review of the evidence on class size reduction, by the Brookings Institute, a highly esteemed non-partisan think tank (think, not Fraser Institute or CCPA) in the US.

- The largest effect of class size reduction found in a well-designed, credible study is as follows: reducing average class size from 22 to 15 for four years (K-3) resulted in an improvement of academic performance equivalent to 3 months of extra schooling. This "STAR" study was done in Tennessee, across schools in different socio-economic settings.

- Other studies have found smaller effects, or no effects at all. Generally, class size reduction is most effective when applied in early grades (like in STAR) and in low-income settings.

So let's assume that the real effect is as measured in STAR. What would be the costs and benefits of such a policy for BC? (Note: Obviously, the class size reduction contemplated in BC is different, but in principle, both the costs and the benefits would scale.)

Cost of 4 years of class size reduction from 22 to 15 students
- Government expense: Reducing class size from 22 to 15 students requires 46.7% more teachers. According to a Statistics Canada report, the average spending per pupil in BC in 2010/2011 was $11,832, 40.5% of which was spent on educator remuneration. Assuming that this class size reduction increases educator remuneration by 46.7% (it might be a little less since educators include some non-teachers), and that no other costs change (obviously in reality, some other costs, like classrooms, would go up), the increased cost per student is $2,236. Over four years, this adds up to $8,945 per student.
- Of course, spending an extra $8,945 per student requires extra taxes (now or later), which would cause an economic loss. It is difficult to quantify such a loss, but fortunately, the Québec government has estimated it for various forms of taxation. In the long run, the most efficient way to raise taxes is via a value added tax, and the economic cost is estimated at $0.54 per dollar of revenue in Québec. The cost in BC could be lower because we start from a lower level of taxation, but it could be higher because we have an inefficient sales tax as opposed to a value added tax. Taking the $0.54 estimate as such, the additional economic cost would be $4,830 per student.
TOTAL COST: $13,775 per student

Benefit of 3 additional months of schooling
This is obviously difficult to measure, but one way to look at it is that this should equal the cost of 0.3 years of postsecondary education.
- Direct cost of education: It is not easy to disentangle teaching from research costs in our postsecondary institutions, so this can only be very approximate. A reasonable estimate is that a year of postsecondary education costs about $15,000 per student. 0.3 years = $4,500 per student.
- Opportunity cost of forgone work: Having to spend 3 extra months in school will result in foregone wages. Assuming that the average starting wage is $20/hour (it's less for high school grads, but more for university grads), this works out to 12 weeks*40 hours/week*$20/hour = $9,600 per student.
TOTAL BENEFIT: $14,100 per student

Obviously, these are very rough calculations, so the conclusion to draw is only that the costs and benefits of reducing class size in K-3 are comparable. There is no strong case for either side. Given that most studies show smaller benefits at high grade levels, it is likely that the costs of reducing class size exceed the benefits in secondary school.

Teachers may argue that reducing class size carries not only academic benefits, but also behavioural benefits. This argument certainly has merit, so the above benefits may be understated. On the other hand, these estimates of benefits are based on the most favourable credible study (at least according to Brookings). So on balance, it is not clear in which way the above numbers are biased.

Moreover, the Brookings summary referenced above mentions evidence that other forms of investment in education tend to yield higher returns than class size reductions.

Based on this evidence, my opinion is:
- I support a targeted class size reduction for elementary schools in disadvantaged areas.
- I am neutral toward a general class size reduction for K-3. Perhaps this should be given as a concession to make up for the government's past illegal actions.
- I mildly oppose a general class size reduction for grades 4-7.
- I oppose class size reductions for secondary schools.

On balance, if the choice is between BCTF's proposal and the government, I would choose the government's, as I believe that current class sizes are fine in most settings. But ideally, the two sides can come together and do the right thing, which is to focus resources on those that would benefit the most: the youngest and most disadvantaged students.

Tuesday, April 8, 2014

Québec 2014: CAQ Vote Efficiency Up From 2012

The complete preliminary results are in:
LIB - 70 (41.5%)
PQ - 30 (25.4%)
CAQ - 22 (23.1%)
QS - 3 (7.6%)
With a uniform swing from last election, the seat distribution would have been LIB 76, PQ 35, CAQ 12, QS 2. Thus, from a projection modeling standpoint, the big news of this election is that the CAQ vote got much more efficient, allowing it to win 10 extra seats.

Consider the following:
- The CAQ gained 8 of the 9 ridings where it lost by less than 8% to the PQ in 2012 and that the Liberals did not win this time. The only exception was Rousseau, where outgoing Finance Minister Marceau held on. The only other CAQ gain was Masson, next door to Legault's riding. Therefore, it's as if the CAQ gained 8% on the PQ, even though the actual swing was only 2.6% (from a 4.9% gap to a 2.3% gap).
- The 5 CAQ losses to the Liberals were exactly the 5 ridings that it won by less than 8% over the Liberals in 2012. (The only other CAQ loss was Saint-Jérôme, where star CAQ incumbent Jacques Duchesnau, who did not run, was replaced by PQ star Pierre-Karl Péladeau.) Therefore, it's as it the CAQ fell by 8% relative to the Liberals, even though the actual swing was 14.3% (from a 4.1% gap to a 18.4% gap).
Taken together, the increased efficiency of the CAQ vote was worth a whopping 6% to the party! That is, if swing were uniform, the CAQ would have had to get about 4% more, equally from the Liberals and the PQ, to achieve its seat count of 22.

The increased efficiency of the CAQ vote is evidence that people do vote strategically when they can. It was hard to do in 2012 because both the CAQ and the electoral map were new. This time, however, potential CAQ voters had some guidance as to whether it was worth voting for Legault's party. This might have made the CAQ lose votes where it is uncompetitive, and gain votes where it is the main alternative to the PQ.

Of course, one could also attribute the increased CAQ vote efficiency to the CAQ leading a more focused campaign based on data from 2012. However, the PQ also had a very focused campaign, which did not prevent them from doing poorly where it focused.

How about the Liberal/PQ vote efficiency? It basically did not change compared to 2012. The PQ to Liberal swing was 16.9%, and there were 16 ridings that the PQ won by less than 16.9% over the Liberals in 2012 and that the CAQ did not carry this time. Of those, the Liberals won 14, the only exceptions being Bonaventure and Taschereau, which were both close. The only other Liberal gain from the PQ was Roberval, the riding of Premier-elect Couillard. Thus, the basic uniform swing model would have, as is often the case, done a fantastic job predicting seat changes between the two main parties.

Sunday, April 6, 2014

Québec 2014: Last Polls, Four Scenarios, Prediction (just for fun), and Around the Web

Five firms have released polls conducted in the last week of the campaign (UPDATE: Changed the 3/31 Forum poll to the 4/3 Forum poll, released on 4/6):

Ipsos: 3/28-4/1, sample size 1012
EKOS: 3/27-4/3, sample size 1422
Léger: 4/2-3, sample size 1220
Forum: 4/3, sample size 1536
Angus Reid: 4/2-4, sample size 1410

Their numbers:

Ipsos:   LIB 37,    PQ 28,    CAQ 19,    QS 13 (committed: 40-28-18-12)
EKOS: LIB 40.0, PQ 26.3, CAQ 21.0, QS 9.6 (likely: 39.8-27.0-21.1-9.4)
Léger:  LIB 38.1, PQ 29.0, CAQ 23.4, QS 8.0
Forum: LIB 44,    PQ 24,    CAQ 23,    QS 6
Angus: LIB 39,    PQ 27,    CAQ 25,    QS 7 (likely voters only)

The big question is: will there be a "ballot box bonus," as there was in the three previous elections? If so, who gets it? In 2007, the ADQ (predecessor of the CAQ), third according to polls, finished second and almost formed the government. In 2008, the PQ unexpectedly won over 50 seats and almost prevented the Liberals from winning a majority. In 2012, the Liberals were four seats short of retaining power and ensured that the PQ was well short of the majority threshold, even though the last polls appeared to suggest a slim PQ majority.

I should note that in both 2007 and 2008, the "bonuses" noted above were relative to the last CROP and Léger polls, while Angus Reid actually turned out quite accurate. In 2012, Angus Reid did not publish a pre-election poll, while all four firms in the field underestimated Liberal support.

So, let's look at what each of these scenarios would imply. In all cases, I'm assuming 7% support for QS, whose result was at the lower end of the last polls in the last 3 elections. I did not build a seat projection model, so I will use the one provided by Too Close to Call, which was the best model in 2012.

1. Angus Reid is right again: LIB 39, PQ 27, CAQ 25
LIB - 70
PQ - 40
CAQ - 13
QS - 2
The CAQ saves most, but not all, of its seats. The Liberals win a moderate majority, while the PQ has its second worst showing in the last 7 elections.

2. Liberal ballot box bonus (2012 scenario, exemplified by Forum poll): LIB 44, PQ 24, CAQ 23
LIB - 87
PQ - 27
CAQ - 9
QS - 2
Best Liberal since 1989 and worst PQ result since 1985 - would be a terrible shock for the PQ.

3. PQ rebound (2008 scenario): LIB 36, PQ 32, CAQ 23
LIB - 57
PQ - 57
CAQ - 9
QS - 2
We'd be up very very late (even on the West Coast)! The efficiency of the PQ vote allows it to challenge for government status, even while the Liberals clearly win the popular vote.

4. CAQ momentum continues (2007 scenario): LIB 36, CAQ 29, PQ 26
LIB - 62
PQ - 33
CAQ - 28
QS - 2
Another scenario where we'd be up late, both to see if the Liberals win a majority, and to see who forms the official opposition. What would it mean for the PQ if it ends up as the third party for four years?

So there's an outside chance of a PQ minority, and an outside chance of a CAQ official opposition with a Liberal government. However, it is by far most likely that the Liberals will form Québec's next government, while the PQ as the official opposition. A majority appears more likely than a minority, but the latter would not be surprising.

Just for fun, here's my totally unsystematic prediction (not projection):
LIB - 67
PQ - 36 (same as 2007)
CAQ - 19 (same as 2012)
QS - 3

Here are some projections from the usual suspects around the web (UPDATE: Too Close to Call's projection is now available. UPDATE 2: Blunt Objects (Kyle) projection added, and ThreeHundredEight projection updated.):
Blunt Objects (Teddy): LIB 72 (38.2%), PQ 35 (28.0%), CAQ 14 (23.0%), QS 4 (9.2%)
Blunt Objects (Kyle): LIB 69.5 (39.8%), PQ 47.5 (29.4%), CAQ 6 (21.0%), QS 2 (7.7%)
ThreeHundredEight:     LIB 69 (40.1%), PQ 45 (26.9%), CAQ 9 (22.8%), QS 2 (7.9%)
Too Close to Call:        LIB 72 (40.2%), PQ 40 (27.4%), CAQ 11 (23.3%), QS 2 (7.4%)

Happy election watching!

Saturday, February 1, 2014

Elections Canada Publishes Official Transposition of Votes

Yesterday, Elections Canada published the official transposition of the 2011 General Election results onto the new electoral map. The seat changes by province are as follows:

Reconfiguration of Existing Seats
- NL: Liberals lose Avalon to Conservatives
- QC: Bloc loses Ahuntsic (now Ahuntsic--Cartierville) to Liberals, NDP loses Gaspésie--Îles-de-la-Madeleine (now Gaspésie--Les Îles-de-la-Madeleine) to Bloc
- ON: Conservatives lose Don Valley East and Nipissing--Timiskaming to Liberals
- MB: Liberals lose Winnipeg North to NDP
- SK: Conservatives lose two ridings to NDP due to former urban-rural ridings being reorganized into separate urban and rural ridings
- BC: NDP loses British Columbia Southern Interior (now South Okanagan--West Kootenay) and Burnaby--Douglas (now Burnaby North--Seymour) to Conservatives
- PE, NS, NB, AB: no resulting party change
Net: LIB +1, CON -1

New Seats
- QC: NDP +3
- ON: CON +12, NDP +2, LIB +1
- AB: CON +6
- BC: CON +5, NDP +1
Total (new): CON +23, NDP +6, LIB +1

Although ten seats changed hands due to reconfiguration, the net effect was minimal. Virtually all the action comes from the allocation of new seats, which would have heavily favoured the Conservatives in 2011. This is unsurprising: most of the seats were added in Alberta, suburban Vancouver, and especially suburban Toronto, three areas that the Tories virtually swept in 2011. However, if the Liberals keep their current strength into the 2015 elections, many of those suburban Toronto and Vancouver seats could instead fall into their hands, so the redistribution will not necessarily heavily favour Conservatives going forward. However, since the Tories win an overwhelming majority of the new seats when they do well, we can conclude that while the new seats may not make Conservative governments that much more likely, they do make Conservative majorities much more likely.

I have not been tracking polls lately, and likely won't until closer to the election. However, using ThreeHundredEight's current polling averages and applying uniform regional swings yields:
LIB - 133 (+97 from transposed 2011 results)
CON - 122 (-66)
NDP - 78 (-31)
BQ - 4
IND - 1

The fact that the Liberals manage only an 11-seat edge with a 5.9% lead is bad news for them: their vote appears to be distributed very inefficiently. (Consider that the Tories won by 63 seats with a 9.0% advantage.) This is true both in Québec and Ontario, where 4-to-5-point leads only give them virtual ties in the seat count (with the NDP and the Tories, respectively). Still, a gain of almost 100 seats is nothing to sneeze at. More importantly, Liberal support is up so strongly that its current distribution, even within each region, may differ significantly from its 2011 distribution.

Sunday, January 12, 2014

Trashing the Metropolitan Division Is so... 2013

As recently as last month, Metropolitan division teams had won only about 35% of their games against the West and 45% of their games against the Atlantic. But they have been on a good run lately, and as of today, have won 45% of their games against the West and 51% of their games against the Atlantic. Suddenly, the Metropolitan division has a similar record (in fact, marginally better as of this post's writing) as the Atlantic division.

In fact, the whole "West is so much stronger than East" thing is less and less true. Again, as of early December (or was it late November?), Eastern teams had won only about 36% of their games against the West. Now, it's 45%, meaning the in the past few weeks, the East has actually had a winning record against the West.

I wonder when the hockey commentators will catch on to the new reality. (Or maybe they don't need to, if the Metropolitan/East goes back to sucking in the coming weeks.) All this is masked by the fact that the West still has 9 of the top 13 teams in the league (and the Metropolitan has only one), but if the current trend continues, that'll change.

As a Habs fan, I have to point out that the Leafs have just two regulation wins in their past 25 games - yes, 2/25. I blame this for the Metropolitan catching up to the Atlantic. On second thought, nah, just keep doing what you've doing, Leafs - I like you this way.

Thursday, September 26, 2013

Redistribution 2012: How Many Seats Each Province Should Have Gotten

Redistribution 2012, which gave 15 new seats to Ontario, 6 to Alberta, 6 to BC and 3 to Quebec, was based on Statistics Canada's population estimates for July 2011, as of December 2011. However, those estimates were based on the 2006 Census and subsequent birth/death/migration statistics.

Today, Statistics Canada published revised population estimates that incorporate data from the 2011 Census. Using the revised population estimates for July 2011 and applying the legislated formula, we see that:
- Ontario and BC should each have gotten one fewer seat;
- Alberta and Québec should each have gotten one additional seat.

Even though, as explained above, the number of ridings in each province was based on the 2006 Census, the new districts were drawn based on the 2011 Census. The reason is that boundaries are adjusted based on actual census counts, available soon after the census, while each province's number of seats depends on population estimates, which take into account census undercounting and take over 2 years to produce.

By the way, the use of population estimates for redistribution is new: under the old law, actual census counts were also used to determine each province's seat allocation.

At some point in the coming months, Elections Canada will publish the results of the 2011 election transposed onto the new districts. I'm hoping to resume posting seat projections after this information becomes available. (Transposition has already been done by others, but since I'm quite busy with work these days anyway, I'll wait for the official numbers.)

Monday, June 10, 2013

It's the Economy, Stupid! (and why the NDP should stop defending its 1990s economic record)

Much has been written about the gap between the last BC election polls and the actual results. But that was only half of the stunning BC Liberal comeback. The remainder happened in plain view during the campaign, when the NDP lead in the polls shrank from 20% to single digits. This change was likely caused by several factors, including:

1. Adrian Dix's flip flop on Kinder Morgan
2. The Liberal campaign (clear focus on economy and negative campaigning)
3. Christy Clark's charisma and optimism
4. The BC Conservatives' collapse

I would argue, however, that the underlying cause is simply BC's economic experience in the past 20 years. Without the experience of the 1990s, Dix's flip flop would not have ignited much concern about economic development under the NDP. The Liberal focus on the economy would not have resonated. Christy Clark's hopeful message on the economy would have fallen on deaf ears. And social conservatives might not have decided to pinch their noses and vote Liberal once more to keep the NDP out.

If you're a reader of the Vancouver left-wing media (e.g. Georgia Straight, the Tyee, etc.), you may be under the impression that BC's superior economic performance under the Liberals is a myth, or even a falsehood perpetuated by a right-wing media conspiracy. Indeed, according to BC Stats, BC's real GDP grew by an average of 2.8% per year during 1991-2001, compared to 2.5% during 2001-2010. However, this is not what people felt because:

- BC's population grew more quickly in the 1990s due to a wave of immigration related to Hong Kong's handover to China. Per capita, real GDP grew by 0.8% per year in 1991-2001, compared to 1.3% per year in 2001-2010. That's 60% faster per capita growth under the BC Liberals.

- The latter period, of course, included the sharp 2008-2009 recession, while the former included the tech boom. In Canada as a whole, real GDP per capita grew by 2.3% per year in 1991-2001, compared to 0.8% per year in 2001-2010. So under the NDP, BC fell behind Canada by 1.5% per year. Under the Liberals, BC outpaced Canada by 0.5% per year. That's a difference of 2% per year, or 20% over a decade.

- In the long run, higher GDP leads to higher disposable income. But over shorter periods, disposable income may be impacted by fluctuations in relative prices, taxes, the amount of corporate profits reinvested rather than distributed, etc. Of course, not only did the BC Liberals cut taxes, they were lucky enough that the federal government also cut taxes during their years in power. As a result, in 1991-2001, real disposable income per capita grew by 0.1% per year in BC (0.8% in Canada); in 2001-2010, it was 2.2% per year (2.1% in Canada). This is the kicker: in BC, real disposable income per person grew TWENTY-TWO TIMES FASTER under the Liberals (up to 2010) than under the NDP!

Clearly, the difficulties of the 1990s were not all the NDP's fault, and nobody would credit the BC Liberals for the myriad federal tax cuts in the late Chrétien/Martin/early Harper administrations. We can argue at length about whether the difference between NDP and Liberal policies contributed to BC's change of fortune. But given that people felt their income go up 22 times faster under the Liberals than under the NDP, when the NDP pretends that its economic record was as good as the Liberals', it just sounds out of touch. Statistics correspond to reality. The NDP can argue about statistics, but if its argument diverges too much from people's experiences, people won't listen.

Usually, when you've been out of power for 12 years, people forget what happened last time around, and your opponents bringing it up won't hurt you much. But when what happened was a decade of stagnating pocketbooks, people do remember, especially when the latter decade has been much better. People also understand that parties can change in 12 years. But people will conclude that you haven't changed if you insist that there's nothing wrong with your record. And they will further conclude, perhaps unjustly given the different economic circumstances, that the same stagnation will occur if you are back in power.

If, in response to Liberal attacks, the NDP had actually repudiated its 1990s record and explained how its economic vision has evolved, Adrian Dix might be Premier today.

Saturday, May 18, 2013

2013 BC Election and the Pollsters

The dust is slowly settling after the surprising results of the 40th BC general election. The geographical divide between BC's different regions was very stark - even more so than in 2009:

Note: Updated to reflect changes due to the final count.
Island, Coast and Northwest: 15 NDP, 2 LIB, 1 GRN (14-4-0 in 2009)
Vancouver, Burnaby and New Westminster: 11 NDP, 5 LIB (8-8 in 2009)
Rest of Metro Vancouver: 19 LIB, 5 NDP, 1 IND (16-8-1 in 2009)
Fraser Valley and Interior: 23 LIB, 3 NDP (21-5 in 2009)
TOTAL: 49 LIB, 34 NDP, 1 GRN, 1 IND (49-35-0-1 in 2009)

But the salient feature of these results was, of course, its unexpectedness. Why did all the polls miss the boat? This seems to be a recurring theme in recent Canadian elections, but as we saw last fall, polls in the United States have remained quite accurate. Why are American pollsters doing so much better than their Canadian counterparts? Here are a few potential explanations, and how I feel about them.

1. Live Phone vs IVR vs Internet Polling
There is no evidence that traditional polls fare better than non-traditional ones in the United States or other countries. Some traditional Canadian pollsters suggest that new methodologies are behind the erratic polling in this country, but it's unclear why Canada would be different.

2. Resources for Data Analysis (Likely Voter Screen)
That said, methodology probably does matter, but at the stage of data analysis. Some US media organizations, unlike Canadian ones, actually pay substantial sums for their polls. This enables polling firms to do proper research and develop, for example, a reliable likely voter model. The availability of extensive exit polling data in the United States also helps.

3. Polarization and Undecided Voters
As we all know, the differences between Democrats and Republicans are stark, and even a month before the vote, there remain very few undecideds in a US presidential election, and in most US Senate elections. In Canada, the fraction of undecided voters is typically much higher. This produces a potential for sudden shifts that are hard for pollsters to capture.

4. Local Candidates
In the US, polls (except for "generic Congressional ballot" polls, which tend to be inaccurate) state the names that will actually appear on the ballot. In Canada, they typically only state the name of the party. A popular Canadian incumbent from an unpopular party may therefore enjoy more support than pollsters imply.

Hopefully, the Canadian pollsters figure things out before 2015, or the projections for the next federal election could be dead wrong...

Tuesday, January 1, 2013

Happy New Year!

Happy 2013!

Ironic tidbit: the PQ fulfilled its promise to raise taxes on rich Quebecers only partially so that the top tax rate would remain below 50%. However, with the expiration of the Bush tax cuts on high income Americans and the increased Medicare tax, individuals with federal taxable income above $400,000 and married couples with federal taxable income above $450,000 will be paying a marginal rate above 50% in California, New York City, Oregon and Hawaii. Those four jurisdictions have more than 50 million residents! It looks like Québec wouldn't have been so out of whack after all...