Andrew Leigh

Treasurer Wayne Swan recently put out a thoughtful Fabian paper about Keynesianism and Australia. Swan then flew to the US, where he gave a speech launching a paper by his former Chief of Staff Chris Barrett. Chris discusses the economics and politics of fiscal stimulus in Australia in 2008-09. My favourite two graphs from Chris's paper:



If I have one quibble with the paper, it's that it passes too quickly over the standard problems of time series analysis (what's the counterfactual growth path? which approach do you use to deal with seasonality?), and underplays the ability to learn about the  through microdata - either via studies that exploit random or quasi-random timing of spending, or those that ask households whether they spent or saved the money. Here's an op-ed and an Australian paper with more details. And this is my favourite US paper combining both micro approaches. Fortunately, the micro approach backs up Chris's finding from macrodata: fiscal stimulus was a very good deal for the Australian taxpayer.

Each year, Treasury hold an annual comedy debate. I'm delighted when I was told that this year, the topic would pick up on my 'Canberra is the Best City in Australia' speech. The debate will be held at lunchtime on 21 April. May the best team affirmative team win.

TRANSCRIPT


Mornings with Stan Thomson, ABC South East SA, 13 April 2011. Topic – thinking outside the 12-25 age group when addressing the challenges in mental health.

STAN THOMSON:        The quest for a workable mental health solution may be a mirage unless we stop breaking it down into politically-digestible bites and start looking at the problem as just one problem. Some of the thoughts of our next guest. And, again, we would like your comments on that. 87241000 is the number.

        [Unrelated items]

STAN THOMSON:        Well, no doubt, like me, you've heard about the great thinkers in the world - Socrates to Stephen Hawking. But until now, I had not heard of the use of the metaphors hedgehogs and foxes to describe the types of high level thinking that we experience. More on the fauna connection, shortly. But it's one that our next guest has used to discuss today's mental health policy. He's Andrew Leigh, who's the ALP Federal Member for Fraser. And writing in The Financial Review this week talks about the youth-centred approach to mental health, the fact that policy makers should be perhaps broadening their approach to the 35 to 44 year age group, in part because that's where the suicide rate seems to peak. Andrew Leigh, good morning and welcome to the program.

ANDREW LEIGH:        Thanks very much, Stan.

STAN THOMSON:        Now, there is a belief, is there not, that the earlier we start with educational guidance on just about any topic, the more likely a child will become a healthier adult?

ANDREW LEIGH:        That's absolutely right. So certainly in principle with any health issue, you would want to start as early as you could. So if we could head off young people from taking up smoking, then that would have gains through the life cycle. If we could start people on healthy eating at the earliest ages, then that should be great through the rest of your life.

STAN THOMSON:        So reading your article, are you not a fan of early intervention?

ANDREW LEIGH:        Look, I am. But I think it's important to recognise it's not the only game in town, that we, of course, have quit smoking programmes for people in their fifties, recognising that while we want to encourage young people not to take up smoking, we don't always succeed in that. And we have all - treatments throughout the life cycle. Intervening early is good, but we don't always solve all of the problems.

STAN THOMSON:        There are two programmes that you've been talking about in this article and that's headspace and EPPIC, is it?

ANDREW LEIGH:        EPPIC, yeah.

STAN THOMSON:        What is it about those programmes that you find - well, you are critical of?

ANDREW LEIGH:        Well, look, those programmes themselves have been successful, as I understand it. There's evaluations of both. Headspace is sort of for more moderate mental illness and EPPIC is for serious mental illnesses, such as psychotic episodes. And both of them have been effective, but they focus on an age range of 12 to 25 and…

STAN THOMSON:        And we should be starting earlier, you feel?

ANDREW LEIGH:        There is - there's certainly some emerging research suggesting that we could get gains out of programmes that start even earlier. One of the most frightening studies I came across in researching the piece was one that suggested that observations of toddlers correlated with suicide attempts when those same children were in their twenties.

STAN THOMSON:        Yes, I saw that in your article. That sort of staggered me a little bit. Where has this come from, Andrew?

ANDREW LEIGH:        So it's a study, I think, in the UK, which was following right through - I mean, obviously, very long-run follow ups but suggesting that there are little clues in the behaviour of toddlers, and we should be sensitive to that and have a system that is able to quickly respond and provide the extra assistance to toddlers that are obviously having some trouble adjusting.

STAN THOMSON:        The problem is, I suppose, as parents anyway, we don't have the skills to detect that sort of behaviour, do we?

ANDREW LEIGH:        That's right. And so the early childhood professionals say, well, all families come in contact, say, for example, with a community nurse system, most come in contact with day care and certainly then with preschool. And those workers need to be trained to pick up problems early on and make sure that the experts are dealing with them quickly, with, you know, appropriate treatments. We're not talking about drugging little kids, but simply just, you know, making sure that they're in counselling, and if there's other issues going on, like family violence, that that's brought up as early as possible.

STAN THOMSON:        Now, they may be slowly improving in regional areas, in terms of mental health services, but it's often felt that not enough is available for the younger person. And it comes in a little bit to what you're talking about here, particularly the under 12s. You know, what do you do if you're in what could be considered an isolated area and your under 12 is showing signs?

ANDREW LEIGH:        Well, certainly the Lifeline number is one that people should be calling if they need immediate counselling assistance. That's 131114. And Lifeline is a good service that also then passes people on to other contacts. There's websites such as the BeyondBlue website or the SANE website and they have information about those counselling services and ways of dealing with anxieties.

STAN THOMSON:        Are there signs, do you think, of the suicide rate falling?

ANDREW LEIGH:        Yes, there are. I mean, this is the best news out of mental health, that our suicide rate is now lower than at any time since World War Two. And so, we're winning that battle, to some extent, but of course while there are still young people taking their own lives and older people taking their own lives, we haven't gotten there yet.

STAN THOMSON:        And, Andrew, how much of a role does disadvantage play in the state of our mental health?

ANDREW LEIGH:        Look, I think it's a really important part of it, there. I mean, certainly people's feeling of not being part of a society, often having experienced job loss or family breakdown, some sort of a stressful event - these things are often correlated with mental health issues. And so it's important the more we can deal with those root issues of disadvantage, the better we can do, in terms of addressing mental health overall.

        We won't do it perfectly, and that's why we'll need mental health services to pick up the pieces.

STAN THOMSON:        I'm talking to Andrew Leigh, this morning, who is the Federal Member for Fraser. And, certainly, you are a politician and you represent the current sitting Government. But I was just attracted by some of the comments in this article in The Financial Review. And if people would like to check it out for themselves, it was Tuesday's, Tuesday April 12. You can grab a copy of it.

        Let's talk about this metaphor, the hedgehog and the fox. Where did you get that from and what is it?

ANDREW LEIGH:        So this is a wonderful metaphor by Sir Isaiah Berlin, who was one of the sort of great - well, I think the greatest philosopher of the twentieth century. And he has a notion of hedgehogs, who view the world through one single, defining idea. So, you know, he thinks of people like Plato or Nietzsche. And then foxes who draw on a whole lot of experience, who basically build up a picture, bit by bit, and are kind of distrustful of grand theories. And so, you know, you think of - classic foxes are people like Shakespeare or Joyce, people who regard the world as being more of a patchwork than being driven by one idea.

STAN THOMSON:        They know many little things, as you say.

ANDREW LEIGH:        Exactly, yes.

STAN THOMSON:        And a hedgehog?

ANDREW LEIGH:        And so then the hedgehog knows one grand thing. And so, you know, I think the great innovators, as you said in your introduction, people like Stephen Hawking or our own Howard Florey, who was crucial in discovering penicillin, they're people who are very much hedgehogs. You've got to have that single-minded focus if you're going to make a world-changing breakthrough. But it doesn't necessarily mean that that's the way to build policy. Policy is always trying to do lots of things in different contexts. So, you know, something like climate change, we're trying to help the environment, but also make sure people aren't disadvantaged. Mental health, we're trying to ensure that money is spent well across the country and that we're also helping people across the age range.

STAN THOMSON:        So how would you describe your Government - foxes or hedgehogs?

ANDREW LEIGH:        Look, Stan - I mean, think any government really needs to be foxes in some sense. You can't see Australia through one single idea. There's just too much going on. There's too many different needs to address to boil that down to a single idea. And very much in mental health, that's how I'd view it. There         are important ideas in the youth space, but we don't want to forget toddlers and we don't want to forget people in middle age.

STAN THOMSON:        It's a big job, isn't it?

ANDREW LEIGH:        It certainly is, yeah, yeah.

STAN THOMSON:        Thanks very much for joining us.

ANDREW LEIGH:        My pleasure.

STAN THOMSON:        Andrew Leigh, who is the Federal Member for Fraser, which is a Canberra-based seat.

Last Sunday, I laid a wreath on behalf of the Prime Minister at the Rats of Tobruk memorial on Anzac Parade, at a service marking the 70th anniversary of the siege.

Seated next to me is Peter Collins, who was a morse code signaller in Tobruk. He was one of the youngest soldiers there, and is now 90 year old.

I blogged in early-April about Tony Abbott's 'work for the headline' policy, pointing out that the only study done on the efficacy of Work for the Dole - commissioned by the Howard Government - found that it reduced the prospects of jobseekers moving off welfare.

Now Jeff Borland, the author of that study, has written a piece for The Conversation about his findings, and the implications they have for Mr Abbott's proposals. Key quotes:

Tony Abbott’s recently unveiled welfare reform package advocating a range of tough policies to push people into work has been described by Prime Minister Julia Gillard as ‘reheated'.

You might expect that part of reheating would involve throwing out those parts of the menu that hadn’t worked.

In this case that doesn’t seem to have happened. The proposed Coalition approach for improving outcomes for the unemployed reinstates the Work for the Dole program to centre stage.

Yet the only independent research study undertaken of this program found that – far from improving outcomes for the unemployed – Work for the Dole caused participants to spend longer amounts of time on welfare payments. ...

Work for the Dole participants were still substantially more likely to remain unemployed. A consequence of Work for the Dole participants moving off payments more slowly was that they spent a longer average amount of time in receipt of payments. By 12 months after commencing participation they had been in receipt of payments on average for 2.2 fortnights longer than those who did not participate in Work for the Dole.

Why might Work for the Dole participants spend a longer time unemployed? We believe that the main potential explanation is that participation in Work for the Dole may cause or allow reduced job search effort.

There is growing international evidence of a ‘lock-in’ or ‘attachment’ effect during program participation. For example, an evaluation of the Community Work Program in New Zealand found that many participants viewed their work experience placements as ‘work’ and therefore did not engage in job search activity.

A lock-in effect would explain why the rate of exit from welfare payments was so much slower for Work for Dole participants during the time when they were doing Work for the Dole, but reversed thereafter so that their rate of exit was quicker than for non-participants.

Unemployed who have done Work for the Dole however never completely caught up to others in the likelihood of moving off welfare payments. One possibility to explain this absence of catch-up is that there is a permanent ‘scarring’ effect on Work for the Dole participants. ...

Having policies to improve labour market outcomes for the unemployed should be a major policy objective for any government. ...

On the evidence available, however, Work for the Dole cannot be part of achieving the objective. Suggesting that it might seems to be more about creating the impression that all the unemployed need to get back to work is a good kick in the bum.

My former ANU colleague Chikako Yamauchi draws my attention to a worthy fund for young people affected by the recent Japanese earthquakes.

My name is Chikako Yamauchi. I am an adjunct professor at ANU and an assistant professor in Economics at Graduate Institute of Policy Studies (GRIPS). I am now located in Tokyo, and experienced the earthquake on the 11th of March. I was not severely affected, but as you may already know, many people in the northern region lost loved ones, livelihoods and assets. Among those affected are youth who would attend universities and vocational schools if the disaster had not happened.

In order to financially assist those young individuals to pursue higher education, my colleague at GRIPS has founded Scholarship Fund for the Youth in Areas Affected by the Tohoku-Kanto Earthquake in Japan. If you are interested in helping her, please take a look at the following:

http://members3.jcom.home.ne.jp/tohoku_earthquake_support/TES/English.html

Thank you very much for your consideration.

Chika

I posted a link last month to the Late Night Live program that Phillip Adams did with Rod Cavalier, John Faulkner, Dierdre Grusovin and myself.

ABC TV's Big Ideas now also have a video up on their website, and will be showing a one-hour version of the program on ABC News 24 this Saturday 16 April at 1pm.

My AFR column today is on mental health, arguing that while there are some good youth programs, we shouldn't ignore the potential for mental health interventions before age 12 and after age 25.

Narrow Mental Health Focus, Australian Financial Review, 12 April 2011

An essential characteristic of great innovators is their single-minded focus. Imagine how much poorer the world would be if the Wright Brothers had been part-time trainspotters, if Bill Gates had spent half his childhood studying archaeology, or if Howard Florey had split his time equally between economics and medical research.

The great Oxford philosopher Isaiah Berlin once divided thinkers into hedgehogs, who know one big thing – and foxes, who know many little things. Using this metaphor, most scientific breakthroughs are performed by hedgehogs, whose unwavering focus on a single goal is what cracks the nut. By contrast, policymakers often need to be foxes, recognising that the world’s problems are complex, and that most challenges cannot be boiled down into a single idea.

In mental health policy today, considerable attention has been given to a pair of youth-focused approaches: headspace (for moderate mental ill-health) and EPPIC (for serious mental illness). Both strategies have shown promising results, with evaluations using matched treatment groups suggesting that headspace and EPPIC are effective.

While these results are impressive – and the work has been noted internationally – it is critical to keep the success of youth-based programs in perspective. The age range of 12 to 25 is undoubtedly an important one, but it is far from clear that this is the only point at which policymakers can intervene.

In lifecycle terms, most measures of mental illness peak are highest in the age range 35-44. According to the Australian Bureau of Statistics’ most recent National Survey of Mental Health and Wellbeing, this is the peak age range for affective disorders (such as depressive episodes) and anxiety disorders (such as post-traumatic stress disorder). The suicide rate also peaks in the age range 35-44. The average age of a suicide victim in Australia is 44, well above the eligibility age for headspace and EPPIC.

Like many physical health problems, mental disorders often have a long history – sometimes stretching back to adolescence. But it does not automatically follow that youth services will prevent problems from arising later in life. The Royal Australian and New Zealand College of Psychiatrists has noted that intervening prematurely could lead to patients being inappropriately labelled and medicated. As an analogy, we know that obesity and smoking can have their roots in the teenage years – yet it would be a mistake to think that either could be solved by a youth-only approach.

A whole-of-life approach to mental health requires a primary health care system that is better integrated, and in which doctors and nurses are trained to deal with mental disorders. It also involves investing in perinatal depression, direct suicide prevention, and crisis intervention (such as after the Victorian bushfires or the Queensland floods).

The other feature of the youth model is that it misses the potential for interventions before age 12. In one study, expert observations of toddlers correlated with suicide attempts in adulthood. Improving mental wellbeing at young ages requires high quality childcare, skilled teachers, and a system in which educators and medical workers are adept at managing minor problems and referring more serious issues.

Yet despite the evidence, Tony Abbott’s current mental health policy has just one approach: boost youth services. This is like having an education policy that focuses only on high schools, and dismisses the potential to improve skills through early childhood programs, apprenticeships or on-the-job training. And because Mr Abbott’s policy cuts back on other aspects of health care (such as electronic patient records), there is a risk that his plan would make the primary health care system even less adept at dealing with mental illness.

The good news in mental health is that the Australian suicide rate has steadily fallen over the past decade, and is now lower than at any time since the end of World War II. Funding has also increased, with federal mental health spending in 2010-14 nearly triple what it was in 2004-08.

But the bad news is that mental health still imposes a major burden on sufferers and their families. Australians with mental illnesses are overrepresented in our jail cells and on our park benches. Anyone who is passionate about reducing disadvantage – as I am – must be serious about addressing mental illness. And as any fox knows, you don’t solve a complex problem with simple solutions.

Andrew Leigh is the federal member for Fraser.

My friend and coauthor Joshua Gans has an article in the Drum about the benefits of pricing carbon over the Opposition's grab-bag of mandates and subsidies. He concludes:

The point is that this game could go on and on with very little impact and possibly negative impact on total emissions. And there is example after example of this. Think of the taxes required to employ all the inspectors and personnel to ensure that regulations are doing what you wanted without unintended consequences. Sure, it can be done but you will need a government that would make Lenin blush to make it happen.

Contrast that with a carbon price - by tax or trade. That requires none of this because it hits directly on the problem: emissions create external costs so we need everyone to build that cost into their decision-making. The problem is, as right-wing economist Frederick Hayek pointed out, that no-one has the information required to plan out what individuals might do themselves. By placing the decisions of environmental management in the hands of the people, you can let things work themselves out in a way the heavy-handed Government involvement cannot.

It is ironic that on climate change policy, politics are in the bizarro-world where the supposedly anti-market Greens side with Hayek while the supposedly pro-market Coalition sides with Lenin. The economic evidence strongly suggests that the Greens policies match their goals while the reverse is true for the Coalition. I can’t parse the dual hypotheses that either the Coalition just deny economic evidence or that they actually want more emissions and handouts to business. Perhaps one of their number can enlighten us.