But how exactly are they cheating?

by on October 31, 2015 at 12:41 am in Current Affairs, Games, Law | Permalink

A man who sold himself a $1,000,000 winning D.C. Lottery ticket is just one of many retailers a WUSA9 investigation found winning the lottery at rates statisticians say border on impossible.

At least three retailers won the lottery around 100 times according to an analysis of D.C. Lottery records obtained under the Freedom of Information Act.

“$10,000, $5,000,” Lounes Issaad said about some of his 27 payouts that averaged $30,000 each.  “I don’t have nothing to hide.”

…Our investigation found lottery retailers make up at least three of the top five D.C. Lottery frequent winners – all with about 100 wins or more.

There is more here (the link makes some noise), via Michael Rosenwald.

Writing in Quartz, Atanu Dey and Rajesh Jain have a very interesting argument that historically slow growth and many of India’s other problems can be traced back to its extractive constitution, which was largely inherited from the British.

For nearly a century, India was under comprehensive colonial British rule. As can be rationally expected, the government that the British imposed on India was not primarily directed towards development, but rather towards extraction. That is only reasonable because wealth extraction is the rationale for colonial rule.

The British, therefore, created the institutional structures, which necessarily includes the government that controlled India through comprehensive government control of the economy. This structure administration and control was left intact when the British decided to leave India, and was taken over by the government of Independent India. Although India attained political independence from the British raj, Indians did not become free of a controlling—and extractive—government.

…The conclusion has to be that India’s problem is structural and systemic, and not idiosyncratic. If the constitution were to change, the ultimate rules of the game would change, the policies (the derived rules) will change, and thus the action on the ground (the play of the game) will change, and therefore the outcome will change.

India needs a new constitution that is consistent with a nation of free individuals living in a complex, modern, large economy. This modern constitution has to be one that guarantees economic freedom to the individual, prohibits the government from making any laws that discriminate among citizens, guarantees freedom of speech and the press, prohibits the government from entering into businesses that are properly the domain of the private sector, and so on. In other words, India needs a constitution that protects the comprehensive freedom of the individual: economic, social and political.

What would be the best form of constitution for India? Westminster or Presidential? First past the post or proportional rule?  Single-member or mixed-member districts? Plurality rule or Borda count? Federalism? Certainly. But what kind of federalism enforced in what way? A Supreme court? How appointed? And what would be the most important rights to codify in a bill of rights?

A man dubbed the Drone Slayer for shooting a miniature aircraft out of the sky has had a criminal case against him thrown out.

William Meredith drew his shotgun and took out a Phantom 3 drone after spotting it above his home in Hillview, Kentucky, this summer – landing him in jail and prompting legal proceedings.

Mr Meredith was charged with criminal mischief and wanton endangerment for destroying the $900 drone in July – but this week had both of them thrown out by a judge.

There is more here, via the excellent Mark Thorson.  And here is a previous installment in the series.

As a leader I would never institute a one-child policy, which I consider to be an immoral restriction on personal liberty.  But if we ask whether this policy had benefits for China, it absolutely did.

For instance the policy made China a more educated society more rapidly.  It is simple economics that putting a lot of money into the education of each child is easier to do with a single child than with three or for that matter seven kids.  The effects of the one-child policy are illustrated through a natural experiment of sorts.  Chinese children who ended up born into twin pairs showed significantly slower rates of schooling progress, worse grades, lower chances of college enrollment, and worse health.  These differences do not follow mainly from the lower birth weight of twins or other birth-related problems (though that is one factor), but rather they stem from the lower resources which are invested in children in larger families.

See Rosenzweig and Zhang, Review of Economic Studies 2009.

By the way, the one-child policy was not the main reason why Chinese fertility fell.  Between 1970 and 1979, before the policy was put in place, the total fertility rate fell dramatically from 5.9 to 2.9.  After the policy was introduced, the total fertility rate actually fell more gradually than during that earlier stretch, settling into 1.7 by 1995.  The best estimate we have is that the one-child policy lowered Chinese births by an average of 0.33 per woman, which is a noticeable but not drastic change.

Even in purely practical terms, it is highly likely the policy has been obsolete for some while.

See Therese Hesketh, Li Lu, and Zhu Wei Xing. “The Effect of China’s One-Child Family Policy after 25 Years.” New England Journal of Medicine, September 15, 2005, 1171-1176, and Marjorie McElroy and Dennis Tao Yang. “Carrots and Sticks: Fertility Effects of China’s Population Policies.” American Economic Review, May 2000, 389-392.

So many books on China recycle the same stories and historical anecdotes, but this one tells the story from the point of view of economic history.  It is scholarly yet readable, interesting throughout but best in the first half, runs up through contemporary times, and does not have too much overlap with any other China book.  Here is one excerpt:

The urban entrepreneurial elite in eighteenth-century England benefited from absolute and unconditional support from the state, which shielded them against resistance from below.  This support was justified by the increasingly dominant ideology of classical political economy…The dominance of this ideology can be understood against the backdrop of Europe’s interstate conflict that urged state makers to ally with capital in building up its military capacity…The entrepreneurial elite in eighteenth-century China, in contrast, enjoyed only relative and conditional support from the state.  It is true that the Qing state elite never saw the mercantile elite as their antinomies and were diligent in facilitating their business and helping them secure their property rights in merchant-merchant or merchant-official disputes…But when it came to managing conflict between entrepreneurial profits and subsistence of the poor, the state elite often favored the latter at the expense of the former.

File under capitalist oppression is underrated.

Definitely recommended, you can buy the book here.

Mississippi will be ground zero for ObamaCare’s individual mandate to buy coverage or pay a tax penalty.

The state already is near the bottom when it comes to the percentage of the subsidy-eligible individuals who are enrolled via — just 38%. Now Mississippi’s subsidized premiums are about to jump far more than any of the 36 other states using

For 30-year-olds in Yazoo City earning about $25,000 (214% of the poverty level), the after-subsidy cost of the cheapest bronze plan will spike by $554, or 60%, in 2016.

There is more here.  To be sure that is lemon picking from the data, but in politics the people who suffer the most often end up with the biggest say.  Furthermore the reported seven percent average rate hike is not so small either, so perhaps the Mississippi story will resonate.  Here is more on the ambiguity in the numbers on reported rate increases.  Still, this is not developing in a favorable manner.

From Greek bailouts to traffic signals, Germans pride themselves on respecting the rules. But on the latter point at least, even some here believe that fixation has gone too far. All this standing and waiting by cyclists and pedestrians is killing the appeal of muscle-powered locomotion, critics say.

Germany’s radical Left Party, the biggest opposition force in parliament, now wants to do something about this obsession. In November, the party plans to introduce a motion that would end red-light fines for pedestrians and bikers.

There is more here, via Samir Varma.

China fact of the day

by on October 26, 2015 at 8:02 am in Current Affairs, Education, Law, Television | Permalink

The number of people sitting the 2015 qualification exam for broadcasters and TV hosts more than doubled from the previous year as China has tightened the ban on hosts without a certificate.

A total of 13,311 people sat the test on Sunday, compared with 5,908 in 2014. Some well-known hosts also took Sunday’s test, according to the State Administration of Press, Publication, Radio, Film and Television.

The soaring number of examinees was believed to be resulted from a circular the administration issued in June. The circular banned guest hosts in any TV shows, including news, commentary and interview panels, reiterating that all TV hosts must have vocational qualifications.

The article is here, via Adam Minter.

Romanian publish or perish

by on October 24, 2015 at 12:36 am in Books, Law | Permalink

A change in the law in 2013 allows convicts to claim 30 days off their sentences for every work they publish while in prison. This has led Romanian tycoons and politicians imprisoned on corruption charges to indulge in a frenzy of scribbling. It is a system as corrupt as they are.

…Manuscripts must be written with pen and paper. According to Romanian journalists, wealthy prisoners generally hire outside academics as “research supervisors”. They, or other ghostwriters, do the actual writing; the work is then smuggled into jail, where the prisoner copies it out by hand. A publisher is paid to print a few copies, which are presented to the parole board, which (with no guidelines or expertise) judges whether it is worthy of a reduced sentence.

Most of the work has met with derision. Mr Copos, who wrote about the matrimonial alliances of medieval Romanian rulers, was accused of plagiarism. Mr Becali produced a picture-heavy book about his relationship with Steaua Bucharest, the football team which he controls. Realini Lupsa, a pop singer, wrote about stem cells in dental medicine. No one knows how many people have taken advantage of the system. One recent report put the figure at 73, with some prisoners producing up to five books in only a few months.

The story is here, via @DoubleEph.

The title says it all.  That is the new book by Shane Greenstein of Harvard Business School, the subtitle is Innovation, Privatization, and the Birth of a New Network.  This extensive history is the best counter I know to the view that the internet as we know it was most of all a government project.  Definitely recommended.

Competition Compounded

by on October 23, 2015 at 7:28 am in Current Affairs, Economics, Law, Medicine | Permalink

ArsTechnica: Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750, now has a competitor.

Imprimis Pharmaceuticals, Inc., a specialty pharmaceutical company based in San Diego, announced today that it has made an alternative to Daraprim that costs about a buck a pill—or $99 for a 100-pill supply.

Good news. Competition is working. But I was puzzled. In Generic Drug Regulation and Pharmaceutical Price-Jacking, I argued that competition was slow because the FDA makes it expensive and time consuming to get a generic drug approved for sale in the United States. Was I wrong about the difficulty of generic entry? No.

The drug that Imprimis Pharmaceuticals is selling is not FDA-approved. A bit of background is in order. Even today some drugs need to be tailor-made. A patient, for example, might not be able to swallow a pill so a licensed pharmacist may create for a specific, individual patient a small batch of the drug in liquid form. A pharmacy that does this kind of work is called a compounding pharmacy.

Compounding pharmacies have a long and tendentious history with the FDA. The FDA has always claimed that a new drug is a new drug, even one created only for a specific individual. Thus, the FDA has always said that it has the right to regulate compounding pharmacies just like manufacturers of new drugs. In practice, however, the FDA allowed the industry to proceed with little regulation.

In the 1990s some compounding pharmacies began to create large batches, especially of drugs in short supply, as a way of avoiding the FDA process. The FDA worried about quality control, however, and it re-evaluated its traditional hands off approach. A political battle then ensued in which Congress and the Supreme Court also had their say. In 2012, fungal meningitis outbreaks caused by poor quality control at the New England Compounding Center brought these issue to public attention and resulted in greater regulation of compounding pharmacies, albeit with clearer regulations on when a compounding pharmacy may sell large quantities.

Imprimis Pharmaceuticals did not apply for approval to sell a generic version of Daraprim. As I argued earlier, that would take years and cost millions of dollars. Instead, it is doing an old-style end-run of the FDA process by offering its alternative under the compounding pharmacy laws. That means that it can only sell to order, on a patient by patient, prescription by prescription basis. Since Daraprim is not widely used this may work. Indeed, I hope this end run works but my reading of the act is that compounders can only supply drugs in large quantities if they are on the FDA’s shortage list. Perhaps the FDA will look the other way, however, in order to send Turing and similar firms a message.


The image is from Ian Bremmer.  Here is a new and interesting Vox article, Max Fisher channeling Danny Seidemann, arguing that the Israel and Palestinians situation is in worse shape than it appears.  Hard for me to judge, but I found it stimulating reading.

Gender Gaps in Performance: Evidence from Young Lawyers

Abstract:  This paper documents and studies the gender gap in performance among associate lawyers in the United States. Unlike other high-skilled professions, the legal profession assesses performance using transparent measures that are widely used and comparable across firms: the number of hours billed to clients and the amount of new client revenue generated. We find clear evidence of a gender gap in annual performance with respect to both measures. Male lawyers bill ten percent more hours and bring in more than twice the new client revenue than do female lawyers. We demonstrate that the differential impact across genders in the presence of young children and differences in aspirations to become a law firm partner account for a large share of the difference in performance. We also show that accounting for performance has important consequences for gender gaps in lawyers’ earnings and subsequent promotion. Whereas individual and firm characteristics explain up to 50 percent of the earnings gap, the inclusion of performance measures explains a substantial share of the remainder. Performance measures also explain a sizeable share of the gender gap in promotion.

The economics of the Bronx

by on October 20, 2015 at 12:50 am in Economics, History, Law, Uncategorized | Permalink

One reason the projects planned for the edge of the South Bronx aren’t likely to spread inland, gentrifying as they go, is that the area has the highest density of public housing in the nation. The Bronx has 44,000 such units, while Brooklyn, with nearly twice the population, has 58,000. “It’s harder for high-end gentrification to happen anyplace where the density of public housing is high,” says Gecan, who headed a project that built some of the first affordable housing in the post-1970s Bronx. “They just don’t go together.”

There is this too:

“Public housing is in a state of catastrophic decline,” Torres says, “due to a perfect storm of disinvestment. In 1998, the state cut off all operating subsidies; the city did the same in 2003. If a private landlord cut off funding for the operation and maintenance of his building, there would be legal consequences.” Federal funding has been greatly reduced as well. “The New York City Housing Authority [the city’s public housing agency] has capital needs of $17 billion to bring all its housing stock into good repair over the developments’ life expectancy. It gets $300 million a year from Washington.”

Those are from Harold Meyerson’s very good piece on the Bronx.

There is a lengthy and interesting Chronicle profile by Marc Parry.  It tells the tale of how Rodrik vindicated his father-in-law, a famous general, from false charges of having led a potential coup d’etat against the Turkish government.  Here is one excerpt:

When Rodrik and his wife spoke with Cetin Dogan, though, the general told them he’d never heard of Sledgehammer. They believed him. But that only deepened the mystery. Were the coup plans genuine? Had Dogan’s name somehow been added to them? Rodrik and Pinar Dogan began to investigate the coup documents, which eventually became the centerpiece of a landmark court case that targeted hundreds of military officers. Many called it Turkey’s “trial of the century.” The two economists called it a fraud.

As a social scientist, Rodrik had always believed in the power of evidence to change people’s minds. His Sledgehammer investigation revealed the coup plans to be forgeries. The evidence was clearer than anything he had ever encountered in economics. But it didn’t matter. People clung to the story regardless.

Rodrik has written his own essay on the Sledgehammer episode (pdf). Basically he and his wife ended up playing detective for several years of their lives, and eventually Rodrik’s father-in-law was freed from prison.  Here is a bit toward the end of the piece:

“It’s very easy to read these stories, and they resonate with your own worldview as a liberal,” Rodrik says. “And you’re likely to believe it. I wouldn’t say that it turned me into a conservative. But it made me much more skeptical and much more cautious about what one might say is the standard Northeastern-Ivy League-elite-liberal-establishment narrative about how the world works.”

My recent conversation with Dani Rodrik has both transcript and video.