Month: July 2005

Department of Uh-Oh (another continuing series)

The Medicare drug prescription benefit is in trouble:

Crucial information, like the monthly premiums and the names of covered drugs, will not be available until mid-September.  After hearing federal officials praise the program for about 45 minutes, Joan M. Jenness, 72, of Bridgton, Me., said: "I heard nothing I had not heard before. I still have lots of questions."

Everyone enrolled in Medicare is eligible for prescription drug coverage. But public opinion polls suggest that many people have not heard about the new benefit or do not understand it, and many have not decided whether to sign up for it.

The economics of the new program depend on the assumption that large numbers of relatively healthy people will enroll and pay premiums, to help defray the costs of those with high drug expenses. Insurers say the new program cannot survive if the only people who sign up are heavy users of prescription drugs.

Here is the full story.  I am willing to buy the notion that prescription drugs do people more good than most other forms of medical care.  So a Medicare program, for a given level of expenditures, should not penalize drug expenditures.  But the benefit plan we are getting is surely one of the most ill-conceived pieces of legislation in modern times.

Racist tips?

We collected data on over 1000 taxicab rides in New Haven, CT in 2001. After controlling for a host of other variables, we find two potential racial disparities in tipping: (1) African-American cab drivers were tipped approximately one-third less than white cab drivers; and (2) African-American passengers tipped approximately one-half the amount of white passengers (African-American passengers are 3.7 times more likely than white passengers to leave no tip).

Many studies have documented seller discrimination against consumers, but this study tests and finds that consumers discriminate based on the seller’s race. African-American passengers also participated in the racial discrimination. While African-American passengers generally tipped less, they also tipped black drivers approximately one-third less than they tipped white drivers.

The finding that African-American passengers tend to tip less may not be robust to including better controls for passenger social class. But it is still possible to test for the racialized inference that cab drivers (who also could not directly observe passenger income) might make. Regressions suggest that a "rational" statistical discriminator would expect African Americans to tip 56.5% less than white passengers.

I’ve read the abstract but not yet the paper.  Note the authors wish to ban tipping [NB: they call it mandatory tipping] to limit racism.  Thanks to Mitch Berkson for the pointer.

My favorite movie – evolution of a concept

That is favorite, not "best," and the years are approximate:

1965 – something like Bambi, whatever

1969 – Them!, The Blob

1971 – Frankenstein vs. the Wolfman, with a nod to Ghidrah, The Three-Headed Monster

1973 – Diamonds are Forever

1977 – Star Wars

1980 – The Empire Strikes Back

1985 – The Magic Flute (the Bergman version)

1990 – Smiles of a Summer Night

1993 – Persona

1997 – Stalker

2003 – Scenes from a Marriage

I’m not going to tag anyone, but of course you are welcome to try your hand at this…

Steve Levitt’s poker project

How much more succesful can a player be if he knows the odds? What
are the best betting strategies for getting the most money out of a
winning hand? Are there simple betting strategies that can be used to
win money even with losing hands? To what extent does position from the
button and position relative to other players matter? Does having a big
stack of chips allow a player to bully others and win more of their
money? Do people lose big after winning a big hand, or does success
follow success? These are some of the many questions we would like to

goal is to understand the factors that make players succesful at poker.
Many people have written books on poker theory, but there has yet to be
a systematic analysis using actual data on what works and what doesn’t.
University of Chicago economist Steven Levitt hopes to change this and
perform the first large scale analysis of poker.

Here is the link.  And by the way, here is Steve’s update on car seats vs. seat belts.  Furthermore most of Steve’s papers are now on-line.  Thanks to Chris F. Masse and Joseph O’Malley for the pointers.

Who eats meat without feet?

Earlier I wrote, "We will soon need a new word for people who eat meat but not animals."  Most of the suggestions I got were awful (no, not your suggestion that was great).  Seriously, thanks to everyone who wrote.  Here are a few that I thought especially interesting.

From Brock Cusick, synthetarian.   I like it but I fear that synthetic still has negative connotation and we want a word that will be adopted by those who practice it.

From Chris Rasch, Cultivore, Cultivarian or Ameglians (scroll to Dish of the Day.)

From Travis Corcoran, Soylent-atarians.  Also good but a mite obscure.

In the end my choice is for VeggieTechie or VT, as in I’m a VT (also good for putting on restaurant menus).  Thus in the hopes of scoring a Google cascade:

Definition: VeggieTechie – a person who eats vegetables and synthetic meat but not meat harvested from an animal.

In the meantime AntiGravitas has another question, Is it cannibalism to eat vat-grown human meat?

The fall of Hollywood?

OK, Sith is now the tenth highest grossing film of all time, and probably headed toward number seven.  But Wall Street is bearish on film stocks; on Monday Dreamworks shares fell more than 13%.  The big fear is that DVD sales are falling, as Shrek 2 bombed in this market.  Hollywood box office has been down for nineteen weeks out of twenty, and believe me Harry Potter won’t do Johnny Depp and Tim Burton any favors.  Daniel Gross opined that Hollywood is the next Detroit.  Others see a big mystery in falling receipts.  Yet others blame blue-state bigotry.  I will offer a few more fundamental hypotheses:

1. Hollywood cannot control its marketing costs or star salaries.  The growing importance of DVDs increases the "needle in the haystack" problem for any single film and thus locks studios into more marketing, creating a vicious spiral.

2. TV is now so much better, and offers artists greater creative freedom.  Why watch movies?

3. The Internet is outcompeting cinema, whether at the multiplex or on DVD.

4. Big TV screens are keeping people at home, which lowers box office receipts.  This also hurts the long-term prospects of many DVDs.

5. The demand for DVDs has fallen because movie lovers have completed their core collections, just as the demands for classical CDs have fallen.

5. The demand for DVDs was due to fall in any case.  Forget the collectors, you buy DVDs to have a stock on hand so you don’t have to run out to the video store on short notice.  Now everyone has a stock.  Stocks must be replenished every now and then, but there is no longer a large new cohort simultaneously building up a stock from scratch.

The bottom line: These trends do not appear reversible in the short run.  It is not just that this year’s movies mostly stink.

Claims my Russian wife laughs at (a continuing series)

"You know darling, we don’t need to buy insurance for our air conditioner repairs.  We should buy insurance only for truly catastrophic events, such as might bankrupt us.  Look at it this way.  The insurance company has to make money, and of course they have overhead and processing expenses.  So the company must offer, in dollar terms, negative expected value on this insurance.  Of course we are not rich, but having to fix the air conditioner again would be a small expenditure relative to our budgets.  For all practical purposes, our marginal utility of money curve is flat across that range.  We should not waste our money insuring against such small events."

Here is a previous installment in the series.

Bounty Hunting, the sad part

The sky was dark as I drove to Baltimore to try my hand at bounty hunting; it was 5:15 am.  Fugitives from the law tend not be early-rising types so bounty hunters search homes in the morning and the streets at night.

Dennis, who has been in the business 21 years and has volunteered to show me the ropes, hands me a photo.  Our first fugitive is a surprise.  Taken a few years ago in better times, the photo is of an attractive young woman perhaps at her prom.  She has long, blond hair and bright eyes.  She is smiling. 

We drive to the house where a tip places her recently.  It’s a middle class home in a nice suburb.  Children’s toys are strewn about the garden.  I’m accompanied by Dennis and two of his co-workers, a former police officer and a former sherrif’s deputy.  One of them takes the back while Dennis knocks.  A women still in her nightclothes answers.  She does not seem surprised to have four men knocking at her door in the early morning.  She volunteers that we can search the house.  We enter and get the whole story.

"Chrissy" is her niece.  She was at the house two days ago and may return. Chrissy has had her life ruined by drugs.  Or, perhaps she has ruined her life with drugs – sometimes it’s hard to tell.  She is now a heroin addict whose boyfriend regularly beats her.  The aunt is momentarily shocked when we show her the photo.  No, she doesn’t look like that anymore – her hair is brown, her face is covered with scabs and usually bruised, she weighs maybe 85 pounds.  "Be gentle with her," the Aunt says even though "she will probably fight."

The Aunt gives us another location – Chrissy is living out of her car with her mother.  We are about to leave when the Aunt thanks us for being quiet, there’s a child in the house who was scared when the police last came.  The child is Chrissy’s son.