Andrew Leigh

I had my first appearance on ABC News 24's The Drum yesterday evening where I was fortunate enough to be able to talk about one of my favourite topics - why Canberra is the best city in Australia. We also discussed the COAG Business Advisory Forum, the efficiency of a carbon price compared with the complexity of paying polluters, and skills training.


http://www.youtube.com/embed/JRgvZUky5s8?hl=en&fs=1

My op-ed in today's Sydney Morning Herald discusses new research about how to make better decisions.

Spoilt by choice: how data ruins decisions, Sydney Morning Herald, 13 April 2012

In a share-trading experiment, two groups of university students were pitted against one another. One team saw only share prices, while the other team could also consult experts and media reports. The result? The better-informed team ended up reacting to rumours and gossip, made too many trades, and earned half as much as their less-informed classmates.

In his book How We Decide, Jonah Lehrer discusses a host of situations in which too much information leads us to make worse decisions. Guidance counsellors who can only see test scores do a better job of predicting whether students will perform well at university than when they can also draw upon essays and a personal interview. In the case of back pain, doctors who obtain an MRI scan are more likely to misdiagnose the patient as having disc abnormalities, and more likely to erroneously prescribe intensive medical interventions. Doctors are now advised not to get scans done on patients with non-specific lower back pain.

In the standard economic model, more information is never a bad thing. Yet studies like these are forcing economists to now incorporate ‘cognitive costs’ in our models. Similarly, another set of experiments suggest that having more choices can make us worse off.

Psychologist Sheena Iyengar made her reputation with an experiment which found that a tasting booth showing 24 jam flavours drew more customer attention, but one with 6 varieties sold more jam.

In her book The Art of Choosing, Iyengar gives examples of shampoo and cat litter companies who increased sales by reducing their product range. With fewer choices, employees are more likely to sign up for matched savings plans. Iyengar even finds that 3 year-olds who are allowed to choose from among a hundred different toys are less happy than children who are told to play with a single toy.

One of the surprising findings in the literature on choice is that we tend to get more enjoyment out of expensive products. After buying an expensive caffeine drink, students did better on a test than if they had purchased the same drink at a lower price. When subjects were asked to drink samples of cabernet sauvignon in a brain scanner (which must rank as one of the most agreeable neuroscience experiments of all time), researchers found more activity in the prefrontal cortex when the bottle was labelled $45 than when it was labelled $5.

We also have a strong tendency to discount the future. In an auction of sports tickets, the sale price was twice as high when bidders could use a credit card than when they had to pay cash. Conversely, when employees are given the option of putting their next pay raise into savings (a program called ‘Save More Tomorrow’), many jump at the chance to bind their future selves.

So how can we use this research to make better choices? Lehrer maintains that for simple choices (e.g. which vegetable peeler to buy), we should be guided by our rational brain. Go for functionality and price, and damn the colour scheme. Conversely, he makes the case that for complex items (e.g. which car to buy), there are too many dimensions to the problem for our rational brain to cope with. In such instances, we shouldn’t be afraid to let our emotions choose.

As a person who has been completely blind since childhood, Iyengar has to rely on others for many of her aesthetic choices. She argues that we should do the same, recognising the limits to our uniqueness. Asked ‘How similar are you to others’, most of us say ‘not very’. Yet when the question is posed as ‘How similar are others to you?’, most of us say ‘very’.

Iyengar contends that we will make better decisions if we draw on the experiences of others. We might ask: do people who make this choice look to be happier and more satisfied? Whether it’s studying restaurant customer ratings, reading book reviews on Amazon.com, or asking the advice of workmates, the collective savvy of other consumers can help us make better choices.

So there you have it. Beware of excess information. Narrow down the number of choices. Don’t look at the price tag before judging quality. Pay cash if you’re worried about overspending. Use your rational brain for small choices and your emotional side for big decisions. And remember to get by with a little help from your friends.

Andrew Leigh is the federal member for Fraser.

I'm speaking at a few public events in the next month or so. Here are a few of them.

• Sydney, 18 April, 7.30am - Sydney University Talented Students Program Breakfast on 'Five Science Breakthroughs That Will Change Politics' (not sure whether this one is public)


• Canberra, 19 April, 5.30pm - Speaking on foreign aid, at the launch of the ANU Development Policy Centre's annual report


• Sydney, 1 May, 5.30pm - Sydney Institute on 'Why inequality matters, and what we should do about it'


• Canberra, 16 May, 5.30pm - Radford Institute on 'The Economics and Politics of Teacher Merit Pay' (based on this paper)


• Sydney, 18 May, 12.30pm - McKell Institute on 'What do we eat after the low-hanging fruit? A brief economic history of Australia, with some lessons for the future'

And further down the track:

• Melbourne, 9 July, 3.45pm - Australian Conference of Economists on 'Tall Poppies in the Land of the Fair Go: Why has Australian Inequality Risen, and Does it Matter?'


• Canberra, 24 July, 12pm - Melbourne Institute on 'Australia: Still the Land of the Fair Go?'

Where I can, I'll post the speech texts on the blog.

Kieran Gilbert hosted Kelly O'Dwyer and me on the Sky AM Agenda program this morning. We discussed the Gillard Government's ongoing committment to deregulation and meetings with business leaders today. Other items up for debate were monetary and fiscal policy and the carbon price and its reduction of complicated requirements for business.



http://www.youtube.com/embed/WV1y9K9uWgA?hl=en&fs=1

In a recent forum at the ANU Crawford School, I joined Reframe author Eric Knight, change.org's Rebecca Wilson, Liberal MP Joshua Frydenberg and Big Ideas host Paul Barclay to discuss the topic 'Beyond Populist Politics and Policies'. A podcast of the show (from ABC Radio National) is now available.

My column in the local Chronicle newspaper is on the new R18+ rating for computer games.

Support for R18+ rating for games, The Chronicle, 3 April 2012

One of the fastest-growing pastimes in Australia is computer gaming. According to one recent survey, 95 per cent of Australian homes with children under the age of 18 had a device for playing games.

Over the past generation, we’ve moved from clunky arcade games like Pacman and Space Invaders to games like EverQuest and World of Warcraft, with slick graphics and millions of players interacting with one another. No longer are gamers just teenage boys. Today, nearly half of all gamers are women, and the typical Australian gamer is aged 32.

But while many Australians love computer games, parents also want to know that their children are playing games that are appropriate for their age. That’s where the proposed R18+ rating comes in. At present, most other nations have a video game rating of R18+, but at present the highest rating for Australian games is MA15+.

Not having an R18+ rating for games causes two problems. First, some games are refused classification, so cannot be sold in Australia. Second, some games that are only available to older people overseas can be purchased by younger people in Australia. For example, Call of Duty (a game that warns of intense violence and strong language), has an M17+ rating in the United States, but an MA15+ rating in Australia. When the Attorney-General’s Department held an inquiry into the proposal, it received over 58,000 submissions, with 98 per cent supporting an R18+ rating.

Parents understand how quickly children pick things up from their environment. A friend of mine told me about her 11-year-old boy who was watching a TV show and he said one of the characters was snorting coke. His mum asked, ‘How do you know that?’ He replied, ‘I know it from Grand Theft Auto.’

The Gillard Government is introducing an R18+ classification because it helps prevent children and teens from accessing unsuitable material. But it also lets adults make their own decisions about the computer games they play.

While some might yearn for an era when children played more backyard soccer and fewer computer games, mass usage of computer games is here to stay. Perhaps the most optimistic vision of how gaming might shape our society is a book by game designer Jane McGonigal, titled Reality Is Broken: Why Games Make Us Better and How They Can Change the World.

McGonigal proposes a variety of ways in which games can help us be happier in everyday life, stay better connected with those we care about, feel more rewarded for making our best effort and discover new ways of making a difference in the real world.  For example, a game called The Extraordinaries challenges its players to take two minutes to write a short text message of encouragement to students in Mexico, Venezuela or India, who are about to take an important exam. At their best, computer games aren’t just fun – they can help build a better world.

Andrew Leigh is the federal member for Fraser, and his website is www.andrewleigh.com.

On Sky AM Agenda today, I spoke with presenter Kieran Gilbert and my regular counterpart Kelly O'Dwyer about public service jobs, the value of foreign aid, and the importance of the presumption of innocence in our legal system.

At the Belconnen Arts Centre tonight, we launched the online version of the Mapping the Northside exercise, in which people nominated their favourite spots on the north side of Canberra. To see the results on Google Maps, click on the link below.
View Mapping the Northside in a larger map

I have an opinion piece in the Canberra Times today on the benefits of electric cars.

Driving a clean, green future, Canberra Times, 3 April 2012


Last month another charge spot was added to Canberra’s growing charge network. In addition to their charge locations at the Belconnen Markets, National Convention Centre, and Crowne Plaza, Better Place opened a new spot at the Novotel Hotel on Northbourne Avenue. Across the ACT there are now 14 charge spot locations.

Electric cars have the potential to benefit Australia’s economy, health and environment. With global oil prices steadily creeping upwards (due to growing demand in China and other emerging economies), average Australians are now paying over $1.40 per litre for unleaded petrol.

Petrol-consuming passenger vehicles account for nearly half of Australia’s liquid fuel consumption. Hybrid and electric cars offer the chance to reduce our dependence on the global oil market.

Using current national electricity generation methods, producing electricity for travel in hybrid and electric cars releases less greenhouse gas emissions than combustion in petrol cars. This is true even if the electricity is produced using ‘dirty’ technology. For example, an electric car powered by electricity from a coal fired power station emits less greenhouse gas than a petrol car.

If the electricity comes from renewables, we can do even better. In 2010, Australia generated 15,000 gigawatt hours of renewable energy, sufficient to supply a fleet of five million electric cars without any ‘well to wheel’ greenhouse gas emissions. The Australian government is committed to generating 20 per cent of Australia’s electricity from renewable sources by 2020, which equates to 45,000 gigawatt hours of renewable energy annually. That’s enough to supply an entire national electric car fleet with zero greenhouse gas emissions.

The health benefits of electric cars are also significant. Unlike petrol vehicles, electric cars have no tailpipe emissions, only pre-combustion emissions. Unlike those from petrol vehicles, these include virtually no carbon monoxide, hydrocarbons or particulate matter emissions and only a quarter of the nitrogen oxides released by petrol vehicles. The total reduction of air pollutants in electric vehicles’ emissions compared to petrol vehicles’ emissions ranges between 10 and 20 grams per kilometre.

Electric vehicles also require less maintenance, as they have 70 per cent fewer moving and consumable parts. This is estimated to halve maintenance costs over a ten year period.

Research from RMIT finds that electric cars require 20 per cent less lifecycle energy and associated greenhouse gas emissions than petrol vehicles. Indeed, because they’re so cheap to run and maintain, the only risk that I can see being posed by electric cars is that they could encourage more people to commute by car, thereby increasing traffic congestion.

One of the great advantages of electric cars comes because the wholesale cost of electricity varies dramatically over the course of a day. Electric cars can take advantage of this by charging when electricity is cheapest (and putting power back into the grid when it is most expensive). This minimises the impact of electric cars on the energy infrastructure and allows them to collect and store up to seven kilowatts of energy, generated in times of low electricity demand, which would otherwise be wasted. A car can then later return any surplus energy to the grid in periods of high demand to power the community or other cars that require immediate charging, greatly reducing the demand for additional energy generation.

By capturing, saving and returning excess energy to the grid, electric cars are a neat complement to energy production sources like wind generation. On one estimate, each electric car could enable the retention of 43 megawatt hours of renewable wind energy annually. Because each electric vehicle would require only 2.7 megawatt hours of electricity to recharge over a year, this means that each car is effectively saving 40 megawatt hours of energy that would otherwise be lost. This means that a fleet of one million electric vehicles would allow us to achieve the 45,000 gigawatt hours of renewable energy required by the national Renewable Energy Target.

With the charging network now in operation, having more electric cars in Canberra offers us an opportunity to save money, increase the health of our community, and decrease car maintenance costs. By reducing Australia’s greenhouse gas emissions, we have the opportunity to charge towards a new cleaner, healthier and more sustainable future. Now that’s the kind of change we’re driving towards.

Andrew Leigh is the Federal Member for Fraser, and his website is www.andrewleigh.com.

I had the pleasure of identifying local junior sporting champions to receive $500 (individuals) or $3000 (teams) grants towards their competing in state and national competions outside of the ACT. Bronson Harrison from the Canberra Raiders assisted me and commented on the high standard of local junior athletes.


http://www.youtube.com/embed/rq6uz7x1HdA?hl=en&fs=1