Law

NZ Ministry of Health: People who donate a kidney or part of their liver can now do so knowing they can be fully compensated for lost earnings as a result of their donation surgery.

The Ministry of Health will be implementing compensation for live organ donors from 5 December. People who donate a live organ will be fully recompensed for lost earnings for up to 12 weeks while they recover. This will be paid weekly following the donation surgery. In the past donors received some assistance in the form of a benefit for this.

Former GMU student, Eric Crampton, now Senior Fellow at University of Canterbury had a role in the design.

Hat tip: Frank McCormick.

That is by by Caitlin Knowles Myers, and the full title is “The Power of Abortion Policy: Reexamining the Effects of Young Women’s Access to Reproductive Control.”  It is published in the most recent JPE, here is the abstract:

I provide new evidence on the relative “powers” of contraception and abortion policy in effecting the dramatic social transformations of the 1960s and 1970s. Trends in sexual behavior suggest that young women’s increased access to the birth control pill fueled the sexual revolution, but neither these trends nor difference-in-difference estimates support the view that this also led to substantial changes in family formation. Rather, the estimates robustly suggest that it was liberalized access to abortion that allowed large numbers of women to delay marriage and motherhood.

In other words, the pill was less influential than you might think.  And from the paper proper:

…policy environments in which abortion has legal and readily accessible by young women are estimated to have caused a 34 percent reduction in first births, a 19 percent reduction in first marriages, and a 63 percent reduction in “shotgun marriages” prior to age 19.

And:

Between the 1950 and 1955 birth cohorts, the fraction of women having sex prior to age 18 increased from 34 to 47 percent.

And:

…cohorts that experienced the most rapid changes in sexual behavior exhibited little change in fertility.

And:

Lahey (2014)…finds that the introduction of abortion restrictions in the nineteenth century increased birthrates by 4-12 percent…

I thought this was one of the most interesting papers I have read all year.  Here is an earlier, ungated copy.

Doug’s new book Clashing over Commerce: A History of US Trade Policy is the greatest book on trade policy ever written, bar none. and also a splendid work of American history more generally.  So I thought he and I should sit down to chat, now I have both the transcript and audio.

We covered how much of 19th century American growth was due to tariffs, trade policy toward China, the cultural argument against free trade, whether there is a national security argument for agricultural protectionism, TPP, how new trade agreements should be structured, the trade bureaucracy in D.C., whether free trade still brings peace, Smoot-Hawley, the American Revolution (we are spoiled brats), Dunkirk, why New Hampshire is so wealthy, Brexit, Alexander Hamilton, NAFTA, the global trade slowdown, premature deindustrialization, and the history of the Chicago School of Economics, among other topics.  Here is one excerpt:

COWEN: Here goes. The claim that 19th century American growth was driven by high tariffs. What’s your take?

IRWIN: Not really true. If you look at why the US economy performed very well, particularly relative to Britain or Germany or other countries, Steve Broadberry’s shown that a lot of the overtaking of Britain in terms of per capita income was in terms of the service sector.

The service sector was expanding rapidly. It had very high productivity growth rates. We usually don’t think as that being affected by the tariff per se. That’s one reason.

We had also very high productivity growth rates in agriculture. I’ve done some counterfactual simulations. If you remove the tariff, how much resources would we take out of manufacturing and put into services or agriculture is actually pretty small. It just doesn’t account for the success we had during this period.

COWEN: Is there any country where you would say, “Their late 19th century economic growth was driven by tariffs?” Argentina, Canada, Germany, anything, anywhere?

IRWIN: No. If you look at all those, once again, in late 19th century, they were major exporters, largely of commodities, but they did very well that way. You know that Argentina was one of the richest countries in the world in the late 19th century. It really wasn’t until they adopted more import substitution policies after World War I that they began to fall behind.

Definitely recommended, and here is Doug’s Wikipedia page.

That is the topic of my latest Bloomberg column, here is the closing bit:

Perhaps it’s not always an appetizing thought, but in many contexts wealth aids liberty, and the freedom to keep one’s wealth can limit political degeneration.

There are many possible outcomes here, and it is also possible that offshore finance can make tyranny worse.  But it seems to me opinion has turned against these institutions, without much serious consideration of the political economy issues.  By the way:

The top five countries on this list, [offshore wealth] measured as a percentage of GDP, are United Arab Emirates, Venezuela, Saudi Arabia, Russia and Argentina, based on estimates from 2007.

Worth a ponder.

Sentences to ponder

by on November 29, 2017 at 2:09 pm in Data Source, Economics, Law | Permalink

Policies, such as the minimum wage, that affect the cost of marketization, have a large [negative] effect on the fertility and labor supply of high income women.

Here is the full research paper, which focuses on the flattening of the income-fertility curve, via a loyal MR reader.

Because Doug’s book is just out, we are rushing out the podcast, here is the audio, most of all about trade, trade history, and trade policy.  We covered how much of 19th century American growth was due to tariffs, trade policy toward China, the cultural argument against free trade, whether there is a national security argument for agricultural protectionism, TPP, how new trade agreements should be structured, the trade bureaucracy in D.C., whether free trade still brings peace, Smoot-Hawley, the American Revolution (we are spoiled brats), Dunkirk, why New Hampshire is so wealthy, Brexit, Alexander Hamilton, NAFTA, the global trade slowdown, premature deindustrialization, and the history of the Chicago School of Economics, among other topics.

Here you can buy Doug’s Clashing over Commerce: A History of U.S. Trade Policy.

An American citizen who teaches in Denmark, she may be charged with a crime and kicked out of the country for violating the terms of her work visa, carrying a criminal record for the rest of her life.  Her sin?  Giving a talk to Danish Parliament:

Laws barring nonpermanent Danish residents from holding side jobs, paid or unpaid, have been in effect for some time. But Harrington said public scholarship is hardly a side job for an academic. Moreover, a separate Danish law mandates that university faculty members publicly share their research. Ironically, on the day Harrington learned of her criminal charges, she was notified that she’d received an award for research dissemination from the Danish Society for Education and Business.

And no matter that Parliament invited Harrington to speak — it’s facing scrutiny, too, for being unaware of laws preventing academics from speaking outside their universities without first obtaining explicit permission to do so from the Danish Agency for International Recruitment and Integration. That permission process is lengthy, by the way; Harrington said applying for a recent one-day work permit to give lecture to a political group took 15 hours.

Here is the full story.

Sex Offender Hysteria

by on November 28, 2017 at 2:19 pm in Law | Permalink

Illinois Public Radio has an astounding story on sex offenders who have completed their sentences but are still behind bars because they can’t find a place to live. How hard can it be to find a place to live? Sex offenders in Illinois cannot live close to:

  • Elementary and High Schools
  • Day Care Centers
  • Public Parks
  • Pools
  • Libraries
  • Malls

In addition, they can’t live in a house with a minor. One convicted offender could not return to his mother’s house because his sister was 17 (his conviction did not involve the sister). Sex offenders also cannot live in houses with devices that can access the internet including computers, smartphones and televisions.

Contrary to popular belief, sex offenders have low rates of recidivism relative to many other crimes. It’s almost impossible, however, to argue against a law that is supposed to protect the public from sex offenders. What kind of monster could argue against a law preventing a convicted sex offender from living near a day care center? And who would want a pervert at the mall? Add up every semi-reasonable law, however, and the result is unreasonable and unconscionable. Many people remain in prison for years after their sentences are complete because they cannot find a place to live that satisfies all of the restrictions. Madness.

This paper examines the impact of perceived risk of street harassment on women’s human capital attainment. I assemble a unique dataset that combines information on 4,000 students at the University of Delhi from a survey that I designed and conducted, a mapping of the potential travel routes to all colleges in the students’ choice set using an algorithm I developed in Google Maps, and crowd-sourced mobile application safety data. Using a random utility framework, I estimate that women are willing to choose a college in the bottom half of the quality distribution over a college in the top quintile for a route that is perceived to be one standard deviation (SD) safer. Alternatively, women are willing to spend an additional INR 18,800 (USD 290) per year, relative to men, for a route that is one SD safer – an amount equal to double the average annual college tuition. These findings have implications for other economic decisions made by women. For example, it could help explain the puzzle of low female labor force participation in India.

That is the excellent job market paper by Girija Borker at Brown University, this is one of the most novel and important works I have seen this job market season.

Nicholas Kozeniauskas, a job candidate from NYU, has a job market paper on that topic:

Recent research shows that entrepreneurial activity has been declining in the US in recent decades. Given the role of entrepreneurship in theories of growth, job creation and economic mobility this has generated considerable concern. This paper investigates why entrepreneurship has declined. It documents that (1) the decline in entrepreneurship has been more pronounced for higher education levels, implying that at least part of the force driving the changes is not skill-neutral, and (2) the size distribution of entrepreneur businesses has been quite stable. Together with a decline in the entrepreneurship rate the second fact implies a shift of economic activity towards non-entrepreneur firms. Guided by this evidence I evaluate explanations for the decline in entrepreneurship based on skill-biased technical change, changes in regulations increasing the fixed costs of businesses and changes in technology that have benefited large non-entrepreneur firms. I do this using a general equilibrium model of occupational choice calibrated with a rich set of moments on occupations, income distributions and firm size distributions. I find that an increase in fixed costs explains most of the decline in the aggregate entrepreneurship rate and that skill-biased technical change can fully account for the larger decrease in entrepreneurship for more educated people when combined with the other forces.

This is one of the more important papers of this job market season.

Maybe so, there is a new paper (pdf) on that question:

This paper investigates how the adoption of unilateral divorce affects the gains from marriage and who marries whom. Exploiting variation in the timing of adoption across the US states, I first show that unilateral divorce increases assortative matching among newlyweds. To explain the link between divorce laws and matching patterns, I specify an equilibrium model of household formation, labor supply, private and public consumption, and divorce over the life cycle. Matching decisions depend on the anticipated welfare from marriage and divorce. The model has two key features (consistent with the data). First, working spouses whose partners do not work accumulate relatively more human capital during their lifetime, a fact that improves their outside value of divorce. Second, divorcees cannot sustain cooperation in public goods expenditures (interpreted as children’s welfare), leading to inefficiencies that are mostly harmful to the top educated. Under unilateral divorce, the value of divorce becomes a credible threat that shifts the bargaining power in marriage, making both household production and marriage less attractive. This pushes the marriage market equilibrium towards more positive sorting in education and lower welfare, particularly for the highest educated. I estimate the model using data from households that form and live under the pre-reform mutual consent divorce regime. Using the estimates, I then introduce unilateral divorce and solve for the new equilibrium. I find sizable equilibrium effects. First, the correlation in spousal education increases and people, particularly educated females, become more likely to remain single. Second, the gains from marriage decrease for the least and the most educated. Lastly, the marital gains from acquiring a college or higher degree decreases for women and men under unilateral divorce. These results reflect previously overlooked consequences of reducing barriers to divorce.

That is from Ana Reynoso, a job candidate from Yale University.  These are my words, not hers, but I think of this as yet another way that elites selfishly have pushed for looser social and sexual and romantic norms, without much worrying about the resulting broader impact on inequality and lower earners and the less educated.

Keep in mind, I’ve favored net neutrality for most of my history as a blogger.  You really could change my mind back to that stance.  Here is what you should do:

1. Cite event study analysis showing changes in net neutrality will have significant and possibly significantly negative effects.

2. Discuss models of natural monopoly, and how those market structures may or may not distort product choice under a variety of institutional settings.

3. Start with a framework or analysis such as that of Joshua Gans and Michael Katz, and improve upon it or otherwise modify it.  Here is their abstract:

We correct and extend the results of Gans (2015) regarding the effects of net neutrality regulation on equilibrium outcomes in settings where a content provider sells its services to consumers for a fee. We examine both pricing and investment effects. We extend the earlier paper’s result that weak forms of net neutrality are ineffective and also show that even a strong form of net neutrality may be ineffective. In addition, we demonstrate that, when strong net neutrality does affect the equilibrium outcome, it may harm efficiency by distorting both ISP and content provider investment and service-quality choices.

Tell me, using something like their framework, why you think the relative preponderance of costs and benefits lies in one direction rather than another.

Consider Litan and Singer from the Progressive Policy Institute, they favor case-by-case adjudication, tell me why they are wrong.

Or read this piece by Nobel Laureate Vernon Smith, regulatory experts Bob Crandall, Alfred Kahn, and Bob Hahn, numerous internet experts, etc.:

In the authors’ shared opinion, the economic evidence does not support the regulations proposed in the Commission’s Notice of Proposed Rulemaking Regarding Preserving the Open Internet and Broadband Industry Practices (the “NPRM”). To the contrary, the economic evidence provides no support for the existence of market failure sufficient to warrant ex ante regulation of the type proposed by the Commission, and strongly suggests that the regulations, if adopted, would reduce consumer welfare in both the short and long run. To the extent the types of conduct addressed in the NPRM may, in isolated circumstances, have the potential to harm competition or consumers, the Commission and other regulatory bodies have the ability to deter or prohibit such conduct on a case-by-case basis, through the application of existing doctrines and procedures.

4. Consider and evaluate other forms of empirical evidence, preferably not just the anecdotal.

5. Don’t let emotionally laden words do the work of the argument for you.

6. Offer a rational, non-emotive discussion of why pre-2015 was such a bad starting point for the future, and why so few users seemed to mind or notice as the regulations switched several times.

7. Don’t let politics make you afraid to use your best argument, namely that anti-NN types typically develop more faith in an assortment of government regulators in this setting than they might express in a number of other contexts.  That said, don’t just use this point to attack them, live with and consistently apply whatever judgment of the regulators you decide is appropriate.

If you are wondering why I have changed my mind, it is a mix of new evidence coming in, experience over the 2014-present period, relative assessment of the arguments on each side moving against NN proponets, and the natural logic of the embedded trade-offs, whereby net neutrality typically works in a short enough short run but over enough time more pricing is needed.  Of course it is a judgment call as to when the extra pricing should kick in.

Here is what will make your arguments less persuasive to me:

1. Respond to discussions of other natural monopoly sectors and their properties by saying “the internet isn’t like that, you don’t understand the internet.”  If someone uses the water sector to make a general point about tying and natural monopoly, commit internet error #7 by responding: “the internet isn’t like water!  You don’t understand the internet!”

2. Lodge moral complaints against the cable companies or against commercial incentives more generally, or complain about the “ideology” of others.  Mention the word “Trump” or criticize the Trump administration for its failings.  Call the recent decision “anti-democratic.”

3. Cite nightmare or dystopian scenarios that are clearly illegal under other current laws and regulations.  Cite dystopian scenarios that would contradict profit-maximizing behavior on the part of the involved companies.  Assume that no future evolution of regulation could solve or address any of the problems that might arise from the recent switch.  Mention Portugal as a scare scenario, without explaining that full internet packages still are for sale there, albeit without the discounts for the partial packages.

Are you up to the challenge?

If I read say this Tim Wu Op-Ed, I think it is underwhelming, even given its newspaper setting, and the last two paragraphs are content-less, poorly done emotive manipulation.  Senpai 3:16 is himself too polemic and exaggerated, but he does make some good points against this piece, see his Twitter stream.

Net neutrality defenders, as of now you have lost this battle.  I’d like to hear more.

If a cable company really is a monopolist, still they (mostly) maximize profit by giving customers (cost-constrained) what they want.  When the de Beers cartel had a monopoly on diamonds, did they also make you buy their favorite soda brand?  No, that would lower the overall value of the package and thus lower profits.

The main exception to this argument is that the monopolist may favor its own content.  Monopolizing instances of that practice still would be regulated under standard antitrust law, and also transparency requirements, and most of the critical discussion seems to ignore this.  Furthermore, it is harder to make a profit this way than you might think.  If Comcast promotes “the stupider Comcast version of CNN,” a lot of people just won’t be interested.  Most of these websites aren’t that valuable — look at the recent revenue results for Buzzfeed.  Nor do I think Comcast can get away with denying its customers say Google or Skype, either legally or economically.  That said, advocates of removing “neutrality” need to face up to the reality that they will be relying on discretionary regulation to a greater degree in some regards.  Read p.1 of the actual proposal:

Restore the Federal Trade Commission’s ability to protect consumers online from any unfair, deceptive, and anticompetitive practices without burdensome regulations, achieving comparable benefits at lower cost.

In the current debate, there is a common presumption that paying for slots hurts “the little guy.”  During the payola debates for radio, it turned out that payola favored the independent labels over the majors; see my book In Praise of Commercial Culture.  It doesn’t have to work out that way, but refusing to price scarce resources often helps the big established players, who can invest $$ to get what they want through bigger brand names or other means.   Note:

Pai says that one of the major mistakes of Net Neutrality is its pre-emptive nature. Rather than allowing different practices to develop and then having regulators intervene when problems or harms to customer arise, Net Neutrality is prescriptive and thus likely to serve the interests of existing companies in maintaining a status quo that’s good for them.

Furthermore, are there external benefits from small web upstarts?  Or are the external benefits from the big superstar internet companies?  If you are a Progressive who loves stable jobs and decent wages, you might think the more significant externalities are from the superstar companies.  Yet when it comes to net neutrality, all of a sudden the smaller companies are glorified and we need an ecosystem to foster them.  Overall, I don’t trust the regulators to make these decisions well, so I would rather take my chances with the market, even with some monopoly power at the cable end.

As Megan McArdle points out, over the last ten years consumers have opted overwhelmingly for the non-neutral private garden of Facebook.  That’s the real “threat” to net neutrality.  Personally, both as internet writer and user, I much preferred the older, semi-open, more neutral architecture of RSS and related systems.  The masses have spoken, however, and quite decisively in favor of less open systems and apps.  Nonetheless Alex and I still can do our thing on MR and in fact the project is thriving, and I would be shocked if it did not survive the new FCC decision.  That said, people want non-neutralities and they will introduce them to internet systems one way or the other, and suppliers will have to find ways to cope or perhaps even benefit.  To believe it could be any other way is a kind of wishful thinking, yes I want those old usenet groups back too.  All things considered, “net neutrality” is a biasing term, because the 2015-2017 period was by no means neutral either.  The notion represents a kind of undeserving “victory by language,” as who would wish to favor “bias” over “neutrality”?

Perhaps this point is misused a bit to make extrapolations, but still it is worth noting:

Pai…noted that today’s proposed changes, which are expected to pass full FCC review in mid-December, return the Internet to the light-touch regulatory regime that governed it from the mid-1990s until 2015.

More generally, I don’t see anything intrinsically morally wrong with a person deciding to “buy only one third of the internet.”  How many net neutrality supporters also favor or maybe even insist upon a’la carte pricing for cable TV?  What percentage of the public library do they take home over the course of their lifetime?

Or think of the whole issue in terms of a regulatory principal-agent problem.  Let’s say the water company has “too much” market power, and the public regulator doesn’t have the will or the resources to constrain the company properly.  Said company refuses to let Perrier flow through the pipes as an alternative option to plain tap water, for fear too much of the profit would go to France.  That somewhat mirrors potential problems from net non-neutrality.  But is it likely that a zero price for water is close to the correct solution?  I do get that alternative solutions might in some ways involve greater faith in outside regulators, such as antitrust authorities, but zero price is an awfully blunt instrument for a rapidly changing setting such as data flow.  It certainly hasn’t worked well for water, in a wide range of settings.

Finally, Viking notes in the MR comments:

The real benefits of net non neutrality would be applications that require a guaranteed minimum latency. Non net neutrality would allow some market participants to pay more for reduced latency, which could benefit video conferencing, virtual reality, remote surgeries, VOIP (already part of video conferencing) and other possibly new applications, say remote monitoring and control various kinds.

Are the defenders of net neutrality considering those opportunity costs in their assessments?  I don’t see it.

To be sure, net neutrality really might be better.  You might have a high opinion of the net neutrality regulator and a low opinion of all the other regulators of unjust or inefficient conduct.  You might think bandwidth won’t become scarce anytime soon, and that new, alternative uses for greater bandwidth just aren’t that promising.  You might think that access auctions disadvantage “the little guy,” and furthermore the positive externalities are on the side of the little guy, and thus we should stifle price-based access auctions.  You might think that rationing on a quantity/access basis will be more fair or efficient than rationing by price.  All that is possible.  But it seems hard to know those claims might be true.  Instead, those comparisons would seem to suggest a fair degree of agnosticism.  But when I read proponents of net neutrality, I am more likely to see a harsh excoriation of commercial incentives, or cable companies, than a balanced weighing of those considerations.

Neutrality ain’t neutral, it’s time to get over that myth.

Here is Tom Hazlett on the topic, here is my earlier column.

That is the title and topic of my latest Bloomberg column.

Once a drug has been approved for some use it may be legally prescribed for any use. New uses for old drugs are discovered quite often so off-label uses can be very different from FDA approved uses. Mitomycin, for example, was approved to treat stomach and pancreatic cancer but is used off-label in laser-eye surgery. Drugs prescribed off-label have not been through FDA-approved efficacy trials for the off-label use. In Assessing the FDA via the Anomaly of Off-Label Drug Prescribing I pointed out that off-label prescribing, therefore, gives us a window onto a world with much less FDA regulation.

Since off-label prescribing is common and in rapidly progressing areas of medicine often the gold-standard, I argued that the behavior of physicians validated off-label prescribing and demonstrated that physicians were willing and able to draw upon non-FDA sources of information to make rational prescribing decisions. Dan Klein and I also showed that physicians are supportive of off-label prescribing saying, for example, that it would be “crazy” to require FDA approval for off-label uses.

The support of physicians for off-label prescribing is telling but not dispositive. Perhaps physicians make hubristic mistakes in prescribing off-label. A new paper by Ladanie et al. (including John Ioannidis) provides important information. The authors search the literature for all the RCTs when an off-label drug was pitted against an on-label drug. They conclude:

Our meta-epidemiological analysis of 25 different treatment indications for off-label drug use
provides no empirical evidence supporting any assumption of generally inferior treatment
effects associated with off-label use. On the contrary, the summary effect estimates across all
indications would even be compatible with more favorable effects, on average, of the off-label
treatment. However, the heterogeneity is substantial and the on-label comparators are not
necessarily the best approved treatment option in all 25 topics. While some off-label
treatments are clearly better, others are clearly not.

The finding is especially impressive because although off-label treatments are sometimes the gold standard they are also often used when standard treatments have failed. Thus, in an RCT, off-label treatments could be worse on average and yet still provide a very useful weapon in the medical armory.

One might argue that if off-label treatments are as good as FDA-approved treatments then the FDA should have higher standards. FDA required clinical trials, however, already cost hundreds of millions of dollars and years of effort, creating drug lag and drug loss. Rather than condemning the FDA, what these results indicate is that the medical system–physicians, hospitals, insurers, scientists–does a good job at evaluating new uses for old drugs. As Dan Klein and I noted in our precis on off-label prescribing:

The off-label experience testifies to the fact that much knowledge
about efficacy and safety is produced outside the FDA regulatory
apparatus. The Pharmacopoeia’s recognition of off-label
indications years ahead of the FDA demonstrates that physicians
and scientists have certified thousands of drug indications quite
independently of the FDA, even when those indications are not
very closely related to the original indications. In addition to the
Pharmacopoeia, there are several other forms of professional certification,
including the American Hospital Formulary Service Drug
Information, HMO formularies, and a wide
array of specialist professional periodicals
and information services. NIH studies,
clinical results and determinations
from other countries, and other professional,
science-based judgments are
examples of nongovernmental, non-mandatory
certification.

Hat tip: Michelle Dawson.