Month: October 2007

Markets in everything, virtual reality edition

An Indian entrepreneur has given a new twist to the concept of low-cost airlines. The passengers boarding his Airbus 300 in Delhi do not expect to go anywhere because it never takes off.

All they want is the chance to know what it is like to sit on a plane, listen to announcements and be waited on by stewardesses bustling up and down the aisle.

In a country where 99% of the population have never experienced air travel, the “virtual journeys” of Bahadur Chand Gupta, a retired Indian Airlines engineer, have proved a roaring success.

As on an ordinary aircraft, customers buckle themselves in and watch a safety demonstration. But when they look out of the windows, the landscape never changes. Even if “Captain” Gupta wanted to get off the ground, the plane would not go far: it only has one wing and a large part of the tail is missing.

None of that bothers Gupta as he sits at the controls in his cockpit. His regular announcements include, “We will soon be passing through a zone of turbulence” and “We are about to begin our descent into Delhi.”

“Some of my passengers have crossed the country to get on this plane,” says Gupta, who charges about £2 each for passengers taking the “journey”.

The plane has no lighting and the lavatories are out of order. The air-conditioning is powered by a generator. Even so, about 40 passengers turn up each Saturday to queue for boarding cards.

Here is the full story, via Kottke.  The crew of six includes Gupta’s wife.  Get this:

Jasmine, a young teacher, had been longing to go on a plane. “It is much more beautiful than I ever imagined,” she said.

Addendum: Here is fun commentary.

Fun debates

The Economist will import its highly regarded debate series into America.  The first debate is November 10, in New York City.

The debators?  Will Wilkinson and myself against Jeffrey Sachs and Betsey Stevenson.  Here are the details.  The proposition is: "America is failing at the pursuit of happiness."

I hope to see some of you there.  Can you guess which side I am on?

The economics of malaria net distribution

In 2000, a world health conference in Abuja, Nigeria, set a goal: by
2005, 60 percent of African children would be sleeping under nets.  By
2005, only 3 percent were.

It turns out that handing nets out for free works much better than branding them, marketing them, and selling them, albeit at subsidized prices.  And when there are enough insecticide-laden nets in a village, mosquitoes avoid the place altogether (after the very first net, however, the mosquitoes simply move on to another nearby hut).

The sad fact is that the best insecticide-filled nets last no more than three to five years. And is this good or bad news?

…sales of malaria pills were way down.

Here is the full and fascinating story.  Eternal vigilance is the price of foreign aid, or something like that…

More on health insurance mandates

Megan McArdle writes:

Tyler wonders what will be done
with people who are required to by health insurance, but don’t. The
answer, I think, is "they’ll get treated". The object is not to play
chicken with people; we can’t make a credible committment not to treat
people without insurance (and thank god for that.) The object, as I see
it, is to force the people who care about things like legality to get
insurance rather than rolling the dice. The people who don’t care about
such things will continue costing us some fraction of the small amount
that caring for the uninsured currently costs us now. It may only be a
slight improvement, but it’s still an improvement.

"Improvement over what?" is my query.  I prefer taking the needy (some would say more than the needy, not I) and having the government directly provide health insurance for them.  I imagine a better and no-real-role-for-the-states version of Medicaid, at the expense of Medicare (lots of old people are wealthy) if it fiscally must be.  If it’s worth forcing X to buy health insurance and then subsidizing X, it is worth giving X health insurance directly.

Avoiding the mandate keeps the private insurance market relatively "clean," as it were.  Mandating private insurance means that the government has to regulate the content of that coverage and that private insurance will likely become more cumbersome and more contested and more expensive for everyone.  It means we will never have true insurance deregulation; private plans should be free to compete, innovate, offer catastrophic-only plans, sniffles-only plans, and so on.

The benefits of the health insurance mandate are otherwise small.  Many people care about "being legal" (the parents of uninsured 20 somethings?) but those people are probably the least likely to need the insurance.  And I am leery of having a law that we know in advance we are not going to enforce.  (It’s not as if you post a 25 mph speed limit knowing you will only pull over the young people who look like criminals; in this case we’re simply deciding on no enforcement or using some dubious bureaucratic tactic of differentiation across citizens.) 

And aren’t mandates more generally a dangerous and over-used practice?

So I say no, let’s not do it.  It might be better than doing nothing, but doing nothing is not the only alternative before us.  Doing nothing is not even the likely alternative at this point.  The mandates limit chances for better long-run reforms, though Matt and Brad will tell you this is single-payer, I will look toward insurance market deregulation.  Only one of us has to be right.

Addendum: Here is Ezra Klein on same.

Why is American food getting spicier?

Here is one hypothesis:

…some food scientists and market researchers think there is a more surprising reason for the broad nationwide shift toward bolder flavors: The baby boomers, that huge, youth-chasing, all-important demographic, are getting old. As they age, they are losing their ability to taste – and turning to spicier, higher-flavor foods to overcome their dulled senses.  Chiefly because of degenerating olfactory nerves, most aging people experience a diminished sense of taste, whether they realize it or not. But unlike previous generations, the nation’s 80 million boomers have broad appetites, a full set of teeth, and the spending power to shape the entire food market.

I’d be surprised if that explained more than five percent of what is going on.  Younger people are also preferring spicier food.  Western Europe has an older population, but I don’t see them (UK aside) falling for spicy food at a comparable rate as are Americans.  Nor does Naples, Florida have much spicy food outside of its Haitian community.  Instead America has more immigrants, and more restaurants run by immigrants.  Spicy foods are addictive.  Most importantly, spicy ethnic food is often better than what we had before, which indeed was usually horrible.  Sometimes the best explanation is the simplest one.

I might add that what is eaten is hardly very spicy at all, at least not to my palate.

Thanks to Michael Makowsky, a loyal MR reader, for the pointer.

Me on NPR on Radiohead

Here is the link.  Over the last week I went back and listened to their major works again; I’m not that impressed.  Try Christopher O’Riley’s album of piano arrangements, and you will see just how thin and unmemorable their compositions are.  Admittedly not all great music would transfer well to the piano, but the Radiohead "sound" isn’t that original either, at least not compared to the frontiers of electronica or for that matter punk.  This morning I put on Boris’s Pink; it is hardly my favorite album but it was a welcome relief.

Do health sciences professors really prefer George Bush?

The topic of academic bias has been done to death in the blogosphere, nonetheless I was startled by this recent result.  When it comes to the 2004 election, polled health sciences professors were 48.1% for Kerry, 51.9% for Bush, at least according to one poll.  The social science professors were more than 87% for Kerry, and the physical and biological science professors were more than 77% for Kerry.   Even business professors were more than 65% for Kerry.

What is going on in the health sciences?  They don’t sound especially conservative to me.  On p.28 the authors note that in their sample this is mostly professors of nursing.

Note that the linked article contains some interesting remarks by Larry Summers on the topic of academic bias.

Nanny State

The government really doesn’t have the right to tell you what to do, provided you are respecting the rights of others.  Yes maybe public order is at stake and restriction leads to greater liberty, such as when we pay taxes for public goods.  Or maybe the line between liberty and fraudulent behavior is hard to define and we should err on the side of restriction to limit criminal activity.  Or maybe you can imagine a paternalism so "soft" (brussels sprouts in the SEC cafeteria?) that no one could rightfully call it coercion.

But in the majority of cases, government really doesn’t have the right to tell you what to do. 

You can huff and puff and tell me all about socially constructed individuals and the moral arbitrariness of the market’s bargaining solution.  But the more you chip away at the rights of the individual, the more you are weakening the case for the morality of state authority as well.  On a day-to-day basis states are made up of acting individuals.  Bureaucracy can, if used properly, be an enabler of individual autonomy.  But the case for bureaucracy, when indeed that case holds, relies on the intrinsic and instrumental values of individual autonomy.

Knocking down the moral status of me — the victim — does not elevate the moral status of the guy who works at the Department of Agriculture.  Should reading Rawls raise your opinion of The Ministry of Silly Walks?

I want my non-pasteurized, not-aged-for-six-months cheese!

If you agree with the sentiments expressed in this post, you should read David Harsanyi’s new and forceful Nanny State: How Food Fascists, Teetotaling Do-Gooders, Priggish Moralists, and Other Boneheaded Bureaucrats are Turning American into a Nation of Children.

Resume normal programming

I’m now done with my week guest blogging.  The week has flown by.

My final observations are about econo-blogging:

  1. It has been fun. Thanks for listening.
  2. The intertubes can be an interesting and challenging place for discussing ideas and economics.  This might be obvious to you, but for many of us in the ivory tower, the seminar room and the printed page remain our primary fora.  Not coincidentally, they are also where the strongest career incentives lie.
  3. I’ve loved being welcomed and challenged by the Pareto Optimists here at MR.
  4. I’ve been amazed by how much work blogging can be.  More than anything else, this past week has simply increased my admiration for the work that Alex and Tyler put into this site and our community.

I’m still thinking about how my experiences this week will shape my own future views about the who/what/when/where/why of both doing economics and communicating findings.  I’ll be sure to report back if I figure out how one should deal with the (many) alternatives.

So, let me end on a personal note, albeit quoting:

I’m walkin’ down that long, lonesome road, babe
Where I’m bound, I can’t tell
But goodbye’s too good a word, gal
So I’ll just say fare thee well

The Divorce Myth: What is Really Happening?

I began my week guest blogging by noting a widely under-appreciated point: that divorce is falling (here, continued here).  Those posts led a bunch of folks, in the comments and elsewhere, to ask about recent trends, to question the possible confounding influence of changes in marriage rates, and for requests to actually show, rather than summarize the data.

Good news: Despite blogging all week, Betsey Stevenson and I have managed to put together a shortish paper describing the trends in marital stability over recent decades, drawing on most available data sources.  Read away here.  The paper is largely pictures and tables, so should provide useful grist for discussion.  And of course, we are open to any useful suggestions.

Dylan movie. Sort of.

The new Dylan biopic,  starring Christian Bale, Cate Blanchett, Marcus Carl Franklin, Richard Gere, Heath Ledger and Ben Whishaw – all as Bob Dylan – is starting to get some coverage.  As a lifelong Dylan fan, I’m excited to see the movie.  The film is currently doing the rounds of the film festivals, and is going into wider release slowly from September through March (depending on your country).

Early reports only whet my appetite:

  1. A slew of trailers (both official and unofficial) on YouTube [HT: Cass Sunstein]
  2. This is Not a Bob Dylan Movie: a beautifully-written essay in today’s NY Times magazine
  3. A wrap-up of other reviews, from filmmaker Todd Haynes
  4. Some extremely high variance early reviews.

An aside: From many hallway conversations, I can report that Dylan is a surprisingly popular artist among the econ gliterati.

An economist at the movies

Reason magazine, November issue (p.8), asked me to pick the three "best" and "most libertarian" movies of all time.  (Exactly how do those values get weighed against each other?  Like a good economist I sidestepped the aggregation issue and picked what I wanted to.)  My third selection was:

Battle Royale: Why do so few people know this 2000 Japanese cult classic?  The underlying political theme is that totalitarianism can end only in a war of all against all.  This classic of resistance and liberation shows how tyrannous circumstances degrade mankind.

Can you guess my other selections, including my fourth dark horse pick?

Credit Rationing

Utah payday lenders began refusing Monday to make loans to members of
the military rather than give them much lower rates mandated by a new
federal law.

That new law, which took effect Monday, caps the annual interest on
payday, car title or tax refund anticipation loans at 36 percent
annually for members of the military and their families….

"At 36 percent annual percent rate, the total fees we could charge are
$1.38 per $100 for a two-week loan. That is less than 10 cents a day,"
Walker said.

"Payroll advance lenders could not even meet employee payroll at that
rate, let alone cover other fixed expenses and make a profit," he said.

I’m surprised that it is constitutional for the government to require firms to lower prices for certain groups.  I’m not surprised that the law has unintended consequences – but perhaps the consequences were not unintended.

"The protection the regulation offers is not a wall preventing a
service member from getting assistance, rather it is more like a
flashing sign pointing out danger and directing the borrower to a safer
way of satisfying immediate financial need," said Leslye A. Arsht,
deputy undersecretary of defense for military community and family

He said financial help for members of the military is available through
a member’s chain of command, legal assistance office or military aid

So the military doesn’t pay you enough to pay your bills and then they reduce your borrowing options while suggesting that you can borrow more from them.  Hmmm… reminds me of a company town.

More on the story here and a hat tip to Overlawyered and Bob M.