Friday, 26 June 2009

Treasury on BERL (Updated x3)

As Eric Crampton has noted over at Offsetting Behaviour, Treasury has weighed in on the BERL report into the social costs of alcohol and drugs and they don't seem too pleased with either the BERL report or the use of it by the Law Commission. See the NBR article here.

On the Burgess and Crampton response to BERL, the Deputy Secretary of the Treasury Peter Bushnell says,
“I think the points they’re making are sound about adding the costs of production into the cost of it, and not counting any benefits. In a market if you’re selling something that people are prepared to pay for, then they’ve at least got that much benefit, otherwise they wouldn’t have bought the stuff. So if you exclude the benefits then you’re clearly only looking at one side of the story.”

“I can see the point being made in the article – it looks pretty shonky” said Dr Bushnell. “I think the fact that some work’s done that academic review says is pretty shonky is a problem by itself.
BK Drinkwater translates this into English as,
"We don't know what those dudes at BERL were smoking when they wrote this, but we're upset they've been holding out on us. If they just hand over the drugs, we at least can promise not to push fuzzy-headed economics and public policy while using them."
Bushnell goes on to say,
[...] the onus should be on the Law Commission to be rigorous Dr Bushnell said.

“Geoffrey’s reputation is reduced [if] he’s putting weight on something that actually doesn’t stack up. So the Law Commission ought to ... build in processes that give adequate QA and so on.

“What we’re saying is it’s your reputation that’s at risk here. It doesn’t reflect well on the Law Commission if it ... backs [work], that doesn’t have a sound basis.”
The interesting thing here is that this is a very strong statement coming from a very senior member of the Treasury. It is unusual to see such statements. Treasury can not be happy.

The NBR also says
Sir Geoffrey was overseas when contacted by NBR, and has declined to comment on the matter thus far.
Is he running for cover? It will be interesting to see what he says, if anything, on the matter when he returns from overseas.

Update: See Money quotes from Peter Bushnell from Offsetting Behaviour.

Update 2: Not PC notes that Treasury gives BERL’s alcohol report another smack . PC says
Meanwhile, BERL are still yet to comment on Treasury’s bollocking of their work. At this point, the last word from “BERL Chief Economist Ganesh Nana” is that “BERL stands by its report.” If that’s still the case, I’d suggest you start discounting everything they say.
Stephen Franks has made a similar point,
BERL must convincingly answer the criticims (or preferably other economists for them) if their future work is to have credence.
I think both PC and Franks are right, thus far this alcohol report has done great damage to BERL's reputation.

Update 3:
Kiwiblog notes Treasury on BERL report.

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