Loren Adler and Adam Rosenberg report:

…the disproportionate role played by prescription drug spending (or Part D) has seemingly escaped notice. Despite constituting barely more than 10 percent of Medicare spending, our analysis shows that Part D has accounted for over 60 percent of the slowdown in Medicare benefits since 2011 (beyond the sequestration contained in the 2011 Budget Control Act).

Through April of this year, the last time the Congressional Budget Office (CBO) released detailed estimates of Medicare spending, CBO has lowered its projections of total spending on Medicare benefits from 2012 through 2021 by $370 billion, excluding sequestration savings. The $225 billion of that decline accounted for by Part D represents an astounding 24 percent of Part D spending. (By starting in 2011, this analysis excludes the direct impact of various spending reductions in the Affordable Care Act (ACA), although it could still reflect some ACA savings to the extent that the Medicare reforms have controlled costs better than originally anticipated.) Additionally, sequestration is responsible for $75 billion of reduced spending, and increased recoveries of improper payments amount to $85 billion, bringing the total ten-year Medicare savings to $530 billion.

The full piece is here, via Arnold Kling.

Assorted links

by on October 25, 2014 at 1:12 pm in Uncategorized | Permalink

1. The Danish nudge.

2. Clone your dog in Korea for 100k.

3. China’s strangest buildings.

4. There is no great stagnation, unbundling your breakfast edition.

5. Kevin Drum health update, we all wish him well.

6. I agree with David Denby, *Fury* is one of the best war movies ever made, see it on the big screen.

7. Brad DeLong on profits and investment.  And Paul Krugman on whether QE boosted inequality.

Carlsen or Anand?

by on October 25, 2014 at 7:32 am in Games, Uncategorized | Permalink

The rematch starts in November, but it is by no means obvious that the champion Carlsen is favored.  Anand is separated from his Indian well-wishers and relatives (which helps him), he has been playing well lately, and he feels he has nothing to lose at this point.  It is often easier to win a rematch than to defend a championship.

Carlsen’s play has been listless as of late.  Yet he has two factors going for him.  First, he is a better player than Anand, a factor which is obviously important, and second he is younger and has better stamina.

Carlsen suffers from having to play in Sochi, which is basically a KGB village with extreme surveillance.  Any chess innovation which he speaks to his seconds in his hotel room or leaves on his hard drive will end up being distributed to the camp of his opponent.  That also will hurt his morale and make it hard for him to concentrate on the match.  Like many others, I was surprised he agreed to play in Sochi in the first place.  I think he also suffers from this match coming so quickly after the first.  He feels he hasn’t had enough time to enjoy the promised benefits of the world championship, not all of those benefits were delivered, and in a sense the first match still isn’t over but rather has been extended.

Chess often brings surprises, I am forecasting Carlsen to fall behind in the match early on, but successfully defend his title at the end.

China fact of the day

by on October 25, 2014 at 2:39 am in Current Affairs | Permalink

This year China is set to pay an interest bill of about $1.7tn, an amount not far short of India’s entire GDP last year ($1.87tn) but larger than the economies of South Korea, Mexico and Indonesia.

That is from James Kynge at the FT, there is more here.

So says one new paper on PubMed, by de Ridder D, Kroese F, Adriaanse M, Evers C.:

Three experimental studies examined the counterintuitive hypothesis that hunger improves strategic decision making, arguing that people in a hot state are better able to make favorable decisions involving uncertain outcomes. Studies 1 and 2 demonstrated that participants with more hunger or greater appetite made more advantageous choices in the Iowa Gambling Task compared to sated participants or participants with a smaller appetite. Study 3 revealed that hungry participants were better able to appreciate future big rewards in a delay discounting task; and that, in spite of their perception of increased rewarding value of both food and monetary objects, hungry participants were not more inclined to take risks to get the object of their desire. Together, these studies for the first time provide evidence that hot states improve decision making under uncertain conditions, challenging the conventional conception of the detrimental role of impulsivity in decision making.

The link is here, via Neuroskeptic.  Also from his Twitter feed we learn that rats may be Bayesians.

Via Samir Varma, here is a piece on whether Tylenol can ease the pain of decision-making, I say probably not.

Ebola plush toys have been selling so fast in response to this year’s outbreak that a Connecticut manufacturer, Giantmicrobes Inc., can’t keep them in stock.

The company, which was founded a decade ago, makes stuffed toys based on the appearance of microbes like Ebola, Chicken pox, bed bugs, and even non-harmful microscopic organisms things like brain and red blood cells.

The items are meant to be educational tools for young children, Laura Sullivan, vice president of operations, told CBS News.

There is more here, and for the pointer I thank James Lynch.  Via Tim Harford, here is GiveWell on whether you should donate to Ebola response causes.  Here is how Nigeria and Senegal beat back Ebola, let’s hope we can do the same.  It is a good example of how developing economies can innovate based on cheap labor costs and lots of available labor resources.

Assorted links

by on October 24, 2014 at 11:49 am in Uncategorized | Permalink

1. Where is the missing right of center media?

2. There is no great stagnation (juvenile, skip it).

3. Unemployment and the minimum wage in China.

4. Do hedge funds get there first?

5. Did Thor Heyerdahl have a point after all?

6. Why not make your car a cathedral?

7. Ferns.

Digital Non-Cash

by on October 24, 2014 at 7:29 am in Current Affairs, Economics | Permalink

In the United States we are using advanced technology like fingerprint scans to pay for goods. In Venezuela they are using advanced technology like fingerprint scans to ration goods. Here is the WSJ:

Amid worsening shortages, Venezuela recently reached a milestone of dubious distinction: It has joined the ranks of North Korea and Cuba in rationing food for its citizens.

…Under the system in place here, basic price-controlled items—including milk, rice, coffee, toothpaste, chicken and detergent—are rationed, with the fingerprinting machine used to ensure that a shopper doesn’t return over and over to stock up.

The stark contrast between our advanced technology and our primitive ethics has often been noted. Our advanced technology also stands in stark contrast to our primitive economics. Sadly, the problem is not only in Venezuela. Here is the WSJ (!) “explaining” the shortages:

Venezuela is turning to rationing because of shortages caused by what economists call a toxic mix of unproductive local industry—hamstrung by nationalizations and government intervention—and a complex currency regime that is unable to provide the dollars importers need to pay for basics.

No, no, no, a thousand times no! (And I very much doubt that is what the economists told the reporter.) Nationalizations, the currency regime, unproductive industry, Venezuela has many problems but shortages are caused by price controls.

Check out this wonderful photograph and the face of the customer.

Venezuela

A party can deviate only so far from its core voters:

Cutting federal health and retirement spending has long been at the top of the GOP agenda. But with Republicans in striking distance of winning the Senate, they are suddenly blasting the idea of trimming Social Security benefits.

The latest attack came in Georgia, where the National Republican Campaign Committee posted an ad last week accusing Rep. John Barrow (D) of “leaving Georgia seniors behind” by supporting “a plan that would raise the retirement age to 69 while cutting Social Security benefits.”

Crossroads GPS, the conservative nonprofit group founded by GOP strategist Karl Rove, has run similar ads against North Carolina Sen. Kay Hagan (D), Arkansas Sen. Mark Pryor (D) and Rep. Scott Peters (D-Calif.). Crossroads accused Hagan of supporting a “controversial plan” that “raises the retirement age.”

There is more here, from Lori Montgomery.

Matt Yglesias on publishing and ebooks

by on October 24, 2014 at 1:04 am in Books, Economics | Permalink

It is undeniably true that Amazon has a very large share of the market for e-books. What is not true is that Amazon faces a lack of competition in the digital book market. Barnes & Noble — a company that knows something about books — sells e-books, and does so in partnership with a small outfit called Microsoft. Apple sells e-books and so does Google.

These are not obscure companies. It is not inconvenient for customers to access their products. And since these are companies that are actually much bigger and more profitable than Amazon, there is absolutely no way Jeff Bezos can drive them out of business with predatory pricing.

Amazon’s e-book product is much more popular than its rivals because Amazon got there first, and the competition has not succeeded in producing anything better. But consumers who prefer to buy a digital book from a non-Amazon outlet have several easy options available, and thus a book publisher who chooses to eschew Amazon will not actually be unable to reach customers.

There is more here, a good rant.

Heilman, the expert in Hasidic succession, told me that one reason so many dynastic fights emerged in the past decade is that the grand rabbis are living longer, sometimes too long to have the vigor to conclusively determine whom their successors will be or so long that their increasingly entrenched institutional court refuses to cede power.  In Hasidic Europe before World War II, a contender to the throne unhappy with a chosen successor could set up his seat in a neighboring village, Heilman said.  But since the war, with the consolidation of Hasidim into relatively few sects, each sect’s brand name has been enshrined so that successors want to become, say, the Satmar Rebbe, not the Kiryas Joel Rebbe.

That is from the new Joseph Berger book, The Pious Ones: The World of Hasidim and Their Battles with America.

Assorted links

by on October 23, 2014 at 12:22 pm in Uncategorized | Permalink

1. Chess piece survival rates.

2. How much do driverless cars depend on extensive and periodically revised mapping?

3. The French economy in eight charts.

4. How musical taste correlates with SAT scores.

5. Feeding McNuggets to food critics.

6. Robots vs. Ebola?

A Real Life Milgram Experiment

by on October 23, 2014 at 7:30 am in Education, Film, Science | Permalink

This amazing video, introduced by Philip Zimbardo, discusses a real world Milgram “experiment” in which people obeyed an authority figure to an astounding degree, even when the authority figure was just on the telephone.

The video comes from the Heroic Imagination Project which hopes to use the results of social psychology to help people to take effective action in challenging situations. More videos on obedience to authority, including from Milgram’s experiment, can be found in the resource section along with other social psychology videos and other interesting materials.

Here is one more, this time a little lighter, an experiment in which people find themselves unexpectedly married:

From The Daily Beast:

Greg and Jill Henderson, founders of Hendo, have developed a real hoverboard. Yes, the flying skateboard that millions of moviegoers have wished were real since Back to the Future Part II premiered back in 1989 may become the must-have Christmas gift for 2015. Using “hover engines” that create frictionless magnetic fields, the hoverboard only appears to hover an inch or two off a metallic floor. It’s not exactly ready for, or usable on, concrete but everything has to start somewhere.

There is more here.  It needs something like a copper sheet below it.  There are different accounts here, with varying degrees of enthusiasm or lack thereof, I found this one useful.  Still, this is more progress than we were seeing a year ago.

China fact of the day

by on October 23, 2014 at 6:38 am in Current Affairs, Economics | Permalink

In 2002 Chinese investors spent just $2.7bn on acquisitions and greenfield projects abroad but by 2013 the total had increased 40-fold to $108bn.

From Jamil Anderlini at the FT, there is more here.