Month: October 2009

Mandates don’t stay modest

A tactic used by insurance companies to deny expensive behavioral
therapy to autistic children has been deemed illegal by a Los Angeles

In a preliminary ruling, Los Angeles County Superior
Court Judge James C. Chalfant found that Kaiser Permanente's refusal to
pay for a child's autism treatment because the provider was not
licensed by the state runs counter to California's Mental Health Parity
Act. That act requires insurers to cover care for mental and behavioral
problems at the same levels they do for physical illnesses.

Here is the full account.  Three different (but not unrelated) takes on this story are:

1. Whatever you think of occupational licensing, as a matter of social status it seems odd to apply it to dog doctors, or for that matter toilet and sink doctors (i.e., plumbers), but not to those who treat autistic children.

2. These treatments can cost $50,000 a year or more and there is little reliable RCT evidence that they actually work.

3. Yesterday I saw two separate television ads, on two separate channels, campaigning for the Virginia State legislature on the grounds that one's opponent had opposed mandatory insurance coverage for autism treatments.  The ads simply take it for granted that such coverage would be a good thing.  (Rest assured I do not usually watch TV, or its commercials, but the first was in a restaurant at Eden Center and as for the second it was the first day of the NBA season.)

Department of Uh-Oh, or mandates don’t stay modest

The idea is to create long-term care insurance that would be available
to anyone, including those who are already disabled. People would be
automatically enrolled, unless they chose to opt out, and would pay a
premium in exchange for the opportunity to receive cash benefits to
cover the cost of home care, adult day programs, assisted living or
nursing homes after they had been enrolled for at least five years.
Premiums and benefit levels would be set by federal health officials,
but advocates predict that the program would provide beneficiaries with
a minimal sum, around $75 a day.

The proposal has gained momentum in recent days as Democrats in both
the House and Senate cast about for cash to help finance a final health
package. Because the program would begin taking in premiums immediately
but would not start paying benefits until 2016, congressional budget
analysts have forecast that it would generate a nearly $60 billion
surplus over the next 10 years, cash that would help the larger
measure's balance on paper.

Here is the full story.  Now reread that last sentence and ask yourself how many different ways there are to do this and whether all of them will fail to pass.

Assorted links

Noah Stoffman asks me two questions

I have two pretty random questions about which I would love to see a discussion on MR:

  • What
    will applied economics research be like in 50 years? I spend a huge
    amount of time gathering, cleaning, and organizing data.  I spend a
    lot of time writing code to do analysis. Will this become unnecessary?
    Will I just be able to say to my computer "Check if this relationship
    exists in the data"? If that happens, what will be special about people
    with PhDs?

  • Suppose you were given a large amount of money (say $10
    million) and you wanted to make sure that you would remain (relatively)
    wealthy in as many future states of the world as possible. Where would
    you invest it? Remote arable land? Organizing a cult of followers?

  • The lesson, of course, is that "pretty random" questions rarely are.  Usually it is someone asking the same question twice.

    I believe with p = 0.6 that the world is in for a "great disruption."  It has come to MSM first but it will not end there.  In the longer run I am optimistic about the results of this change — computers will free up lots of human labor — but in the meantime it will have drastic implications for income redistribution, across both individuals and across economic sectors.  For a core metaphor, the internet displacing paid journalism and classified ads is a good place to start.  The value of newspapers has been sucked into Google. 

    Later, we'll be much better at measuring which research Ph.d's are contributing value and which ones are not, or at least we'll think we are.  Since academic achievements follow a Power Law, that will mean a huge ouch for many would-be academicians.  The new professor will need to be skilled in assembling collages of information, raising money, and communicating to broader public audiences.  Either that or his research should be very obviously of the top order.  The distribution of income across professors will become radically less equal as indeed the trend has been for well over a decade now.

    If you have $10 million, the safest thing to do is to diversify across currencies, buy government securities of various kinds, hold $1.5 million in gold, and otherwise not invest at all.  Oh yes, invest in some cheap hobbies.  In a real crunch remote land is worthless — transport costs — and your cult followers are as likely to betray you as not.  Trying to become a professor is no longer such a safe path.

    Once The Great Disruption becomes more evident, entertainment will be very very cheap.  Medical treatments will become either much more expensive or again very cheap.  If you get the wrong ailment, you're going to need the $10 million.

    Robin Hanson believes we are headed back toward a Malthusian equilibrium; in contrast I believe that machines will never outcompete humans across the board and so the scenario will more closely resemble Baumol and Bowen's "cost disease."  The variance of real wages will continue to rise.

    I predict the equity premium will go up.

    Customers offer their suggestions for how to make products better or more useful.

    Many of the entries are pleas that firms give up some market power, such as people wishing for more transparent prices and people wishing that Windows wasn't bundled with PC purchases.  Some people don't like trialware.

    Other people wish for standardized power cables for laptops.

    Why don't they just ask for checks in the mail?

    I thank Melody Hildebrandt for the pointer.

    Markets in everything, Jesus vs. germs edition

    A company called Purity Communion Solutions
    was founded in 2007 to market "germ-free products that take the worry
    out of contracting germs while receiving communion, and ultimately
    increasing communion participation and church attendance." Purity
    Communion Solutions already has 375,000 client churches, church supply
    houses and the like, and its Web site features all sorts of information
    about the H1N1 virus, as well as products that aim to keep you in
    church, and keep you healthy. They include an automated host dispenser
    in gold, silver, or white, as well as wafers infused with wine:
    "Improved taste and texture" and "eliminates germs, spills &

    And if you don't already know:

    Christians [sic] not only gather together for worship at least weekly, but
    they also dip their fingers in common fonts of holy water, pass baskets
    up and down the pews to collect donations, exchange handshakes and hugs
    at the sign of peace, and — in varying formats — share bread and wine
    at communion, sometimes drinking from a single chalice or picking from
    a loaf of bread. Those churches in which a priest or minister gives out
    individual wafers of consecrated bread aren't much better off, studies
    show, especially if the minister is dipping the Host in a chalice or
    placing it on each communicant's tongue.

    Here is the full story and I thank The Browser for the pointer.

    Addendum: Here is a related article.

    Exit decisions: no more Big Mac for Iceland

    Iceland’s McDonald’s Corp.
    restaurants will be closed at the end of the month after the
    collapse of the krona eroded profits at the fast-food chain,
    McDonald’s franchise holder Lyst ehf said.

    Here is the full story and how about that name "Lyst ehf"?  (It does check out.)  Is it silly for me to say I find this story just a wee bit scary?

    I thank Jason Brennan and Daniel Lippman for the pointers.

    China rule of the day

    Salute every passing car on your way to and from school.

    That's only in one town.  There's also this one:

    Another county in Guizhou Province in southern China compelled state workers last year to help inflate the number of tourists visiting the ruins of an ancient village. Every government office was ordered to organize field trips to the site so the county could report 5,000 visitors within two months.

    The involuntary visitors had to take several buses to get to a village 20 miles from the county seat. From there, they hired motorcycles to carry them another nine miles down dirt roads, the newspaper Guangzhou Daily reported.

    The Guizhou Commercial News reported that some government offices were left unattended while state employees served as tourists.

    The resurrection of the public plan?

    Have I seen twenty MSM articles on this theme in the last five days?  Yet the betting odds are only slightly above their minimum point.  Right now the contract is running at about twenty rather than eighteen or so a few days ago. 

    I don't follow the ins and outs of the trenches (try Ezra Klein), but as an outsider I don't understand why in strategic terms the Democrats are resurrecting this idea.  It's their most likely path to failure, namely that they can't pass a public plan and can't easily go back to a bill without a public plan either.  Any bill that is passed will be revised repeatedly in any case, so there's plenty of time to try to get a public plan in the future anyway.

    Interview with Denise Shull

    She is using neurobiology to better understand traders' behavior and also to advise traders.  Here is one bit:

    StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?

    Denise: Learn how to process your emotions in real time. so that the emotion is not “acted out” in trade entries or exits.

    Here is a recent article on Denise Shull.  Unlike many contemporary researchers in her field, she still has a real attachment to Freud.  "Emotional intelligence" for traders is perhaps a good summary of her core message.  I wonder how many professions (bloggers? no) are lucrative enough to afford paid emotional intelligence consultants.

    Via Daniel Hawes, here is a piece on how length-ratios of second and fourth digits predict success among high-frequency stock traders.  I can't say I'm convinced that "prenatal androgen exposure may affect a trader by sensitizing his subsequent trading performance to changes in circulating testosterone" but it's worth a read.