Month: March 2013
Rob Reich on philanthropy and what foundations are good for
From Boston Review, you will find his stimulating essay here. Excerpt:
I believe there is a case for foundations that renders them not merely consistent with democracy but supportive of it.
First, foundations can help to diminish government orthodoxy by decentralizing the definition and distribution of public goods. Call this the pluralism argument. Second, foundations can operate on a longer time horizon than can businesses in the marketplace and elected officials in public institutions, taking risks in social policy experimentation and innovation that we should not routinely expect to see in the commercial or state sector. Call this the discovery argument.
Do note that some parts of Reich’s essay are more critical of foundations than this. Behind the main link, the column “Forum Responses” provides numerous comments on Reich, you can find mine here.
The new Candlemakers’ Petition (sentences of interest)
The MOOC champions, Mr. Cusumano said, are well-intentioned people who “think it’s a social good to distribute education for free.”
But Mr. Cusumano questions that assumption. “Free is actually very elitist,” he said. The long-term future of university education along the MOOC path, he said, could be a “few large, well-off survivors” and a wasteland of casualties.
There is more here.
*Worldly Philosopher*
The author is Jeremy Adelman and the subtitle is The Odyssey of Albert O. Hirschman. This is the book I have looked forward to most all year and so far (p.153) it does not disappoint. Here is one excerpt:
If there was one author who captured Hirschmann’s imagination, it was Michel de Montaigne. The highly personal vignettes, meditations, and moral reflections shook Hirschmann to his core. He immediately grasped the power of the essays — Montaigne questioned absolute forms of knowledge by submitting everything to the interrogating eye of the observer, starting by looking at himself, turning himself over and over to capture the multiple points of perspective or the multiple forms of the self. “We are never ‘at home’: we are always outside ourselves,” Montaigne wrote. “Whoever would do what he has to do would see that the first thing he must learn to know is what he is.”
I am pleased that this book has 740 pages and I am wishing for more. Here is a WSJ review. Here is a good UK review. Here is a review from The Economist.
Overall health inequality seems to be down
The haves are those who enjoy great health into their 90s. The have-nots are those who suffer from serious health problems and do not live to see adulthood. As we pointed out in a recent study, among those Americans who were born in 1975, the unluckiest 1 percent died in infancy, while the luckiest 1 percent can expect to live to age 105 or longer. Now let’s fast forward to those born in 2012. The bottom percentile of this cohort can expect to survive until age 18. At the other end of the spectrum, the luckiest 1 percent can expect to live to age 108. That’s a much bigger gain in life expectancy among the have-nots than among the haves. Of course, life expectancy is but one measure of health and well-being, but understanding these trends offers a more complete picture than considering income alone.
These findings run counter to headlines noting a widening gap in health outcomes between different demographic groups. For example, a study led by Jay Olshansky of the University of Illinois at Chicago recently demonstrated that the gap in life expectancy between less educated and more educated Americans has widened considerably.
While studies like these are valuable in highlighting disparities between socio-economic groups, they do not tell us much about overall health inequality. That’s because most health inequality occurs within groups. In other words, if we look at a particular demographic group, the best outcomes for people in that group are dramatically different from the worst outcomes for people in the same group. These differences overwhelm any differences in average life expectancy across demographic groups. Thus, while inequality across some demographic groups has increased, it has fallen over the entire population. Overall, therefore, the health have-nots have made progress in catching up to the health haves.
That is from Benjamin Ho and Sita Nataraj Slavov. I am open to counters on the data side, but so far this seems both a) true and b) rooftop-worthy. I am reminded of Arnold Kling’s three axes of ideology; perhaps health care inequality attracts attention only when the victims are a group (the poor) who are part of some other narrative of oppression.
Assorted links
1. Bryan Caplan defends the marriage premium.
2. Rethinking the water fountain (there is no great stagnation).
4. Blood monitoring implant tells your smart phone when you are about to have a heart attack.
Mexico’s economy: current prospects and history
That is a new MRUniversity course, taught by University of Oklahoma Professor Robin Grier (with a small number of guest videos from me, too). It is absolutely excellent and I recommend it highly. The course outline is this:
1 An Overview of the Mexican Economy
2 Colonial Legacies: Obstacles to Growth after Independence3 Development Strategies4 Social Issues5 Land & Agriculture6 The Debt Crisis of the 1980s7 The State Retreats: Reform in the 1980s & 1990s8 The Peso Crisis9 NAFTA & the Mexican Economy
The early videos are now on-line and new videos will be appearing regularly. You can view them on your own or register sign up for email updates at the link. You can check out our other courses at the home page of MRUniversity.com.
What to look for in the Cyprus deal
1. Output on the island could easily decline by 25% or more, and I don’t think that will involve much subsequent mean-reversion. There will be a deflationary shock, an uncertainty shock, an “austerity shock,” a credit contraction shock, and a few other negative shocks as well. The Cypriot government will not be fiscally well situated to support the safety net or automatic stabilizers.
2. It’s never a good sign when a deal is structured so that no one has to vote on it. (Correction: various European legislatures may be voting on it, but no one in Cyprus.)
3. The deal itself still doesn’t cough up all the money, but rather relies on subsequent tax increases and privatizations to come up with at least another billion euros. Believe it or not, the numbers don’t add up.
4. “This was not a good weekend for Russian billionaires.”
5. I wonder if the two main banks even have the money they claim they do. Who tells the truth going into a deal like this?
6. Capital controls in Iceland are expected to remain in place at least through 2015, which would make seven years (and counting). That is a better run country with lots of fish and aluminum smelting. You can expect the same or longer from Cyprus, and that’s assuming this deal can last that long, which I doubt.
7. ELA assistance is now, all the more obviously, contingent rather than certain. Who would keep their money in the “good bank” which is being folded into Bank of Cyprus? Why would anyone do this? Given a shrinking economy, surely this bank cannot afford to pay very much to retain deposits, since rates of return on domestic assets will be negative and capital controls will limit or prevent investments in foreign assets.
8. The capital controls will have to be strict. What will the price of a Cypriot euro be, relative to a German euro? 50%? I call this Cyprus leaving the euro but keeping the word “euro” to save face. And yet they fail to reap most of the advantages of leaving the euro, such as having an independent monetary policy.
9. Given that the nation is uh…corrupt, and the account holders are very often money launderers (duh), how effectively will those capital controls be enforced? Won’t the banks end up drained, one way or another? Of course remittances will need to be sent abroad to purchase “essential services,” right? Who picks up the tab for the total collapse of all the banks? Won’t the euros that are left depart Cyprus altogether?
10. Next up may be Slovenia…
Addendum: A summary of the deal is here. And here are some very good comments. Here are more details on capital controls.
Academics on Corporate Boards Increase Profits
Francis, Hasan and Wu have produced a paper with important results!
Directors from academia served on the boards of more than one third of S&P 1,500 firms over the 1998-2006 period. This paper investigates the effects of academic directors on corporate governance and firm performance. We find that companies with directors from academia are associated with higher performance. In addition, we find that professors without administrative jobs drive the positive relation between academic directors and firm performance. We also show that professors’ educational backgrounds affect the identified relationship. For example, academic directors with business-related degrees have the most positive impacts on firm performance among all the academic fields considered in our regressions. Furthermore, we show that academic directors play an important governance role through their monitoring and advising functions. Specifically, we find that the presence of academic directors is associated with higher acquisition performance, higher number of patents, higher stock price informativeness, lower discretionary accruals, lower CEO compensation, and higher CEO turnover-performance sensitivity. Overall, our results provide supportive evidence that academic directors are effective monitors and valuable advisors, and that firms benefit from academic directors.
CEO’s of large firms interested in increasing their profits should click here (and ignore the bit about lower CEO compensation).
Hat tip: Professor Bainbridge.
Are driverless cars illegal?
Here is a long, 99-page article (pdf) by Bryant Walker Smith suggesting the answer might be “yes.”
My argument is less subtle than those in the footnotes of the paper. Try running a driverless car in Fairfax City, or Alabama for that matter, while sleeping in the back seat with your feet up. See what happens when you drive by an alert policeman. (By the way, if you are asleep will your driverless car respond to the police siren and pull over?)
Let’s say you sit at the wheel while the software drives, you still are pulled over, and given a ticket for “reckless driving.” You show up in court and the judge asks you what regulatory inspection or safety process your equipment has been through. I am not saying you will always lose the case or indeed always will be pulled over, but your vehicle is no longer a reliable source of hassle-free transportation, no matter what statutory arguments you may make on your behalf.
There are different notions of the word “legal,” but from a practical point of view what the police will let you get away with is surely relevant. It seems to me that your protected sphere here is quite small.
For the pointer I thank Jerry Brito.
The evolution of Russian holiday mobility
Recently Ms Loftus has seen more requests like the last one – clients with, as she puts it, “jurisdictional issues”. For a small but growing number of elite Russians, travel opportunities are increasingly limited. The trend was epitomised by the US Magnitsky act, which late last year imposed a US visa blacklist and asset freezes on roughly 60 Russians suspected of human rights violations. Its open-ended wording leaves open the possibility that the list of names will lengthen. The EU looks set to eventually pass similar legislation.
Meanwhile, the uncertain fate of Cyprus, once the favourite playground of Russia’s wealthy for its unbeatable combination of sea, sand and flexible approach to financial services regulation, may yet strike another holiday destination off the list.
In Soviet times, only the elite could travel. Today, it is the reverse: almost anyone in Russia can afford a week or two in Turkey or Egypt, but in some cases the foreign holiday dreams of the rich and powerful have been clipped, leaving them with few options.
And:
Then, there was the mysterious caller who asked for “a holiday in a non-Interpol country” on behalf of his boss, who he would not name.
I wonder how good a trip that could be? (I very much enjoyed Taiwan, but have never visited Kiribati.) The full FT story is here.
Assorted links
Russian markets in everything
According to this story in Canada’s National Post, cops in Moscow have been ordered to inspect ambulances after learning that VIP commuters are riding around in “ambulance taxis” that cost as much as $200 per hour.
These aren’t just ordinary ambulances, either. They’ve been cleverly fitted with fancy and luxurious interiors so their passengers can eat caviar and sip champagne while they blow through traffic with lights and sirens blazing.
What is required of a successful human cannonball?
While Hentoff-Killian is not opposed to taking longer flights in the future, once she gets more comfortable with the cannon, she’s not sure if she’ll ever want to fly while in flames. “You have to hold your breath when you’re on fire,” she says, “and I like to breathe.”
And this:
The Human Cannonball doesn’t usually remember much about each flight, aside from a quick impression of soaring through the air. On the other hand, she has just been shot out of a 24-foot-long air-compression cannon and travels between 75 and 100 feet at a force of 7 g. That’s greater force than a roller coaster, greater than a Formula One racecar, greater than the space shuttle. A force powerful enough to have caused some human cannonballs to pass out midflight. This has never happened to Elliana Grace in more than 100 shots since she took the job last October. Still, she’s in the air approximately three seconds. How much would you remember?
Here is much more, very interesting throughout. Some human cannonballs keep the job for as many as seventeen years. By the way, Hentoff-Killian, the featured individual in the story, is the granddaughter of Nat Hentoff.
Hat tip goes to @RobertCottrell.
From David Sinky on subsidies for science, by email
Since it seems that the supply of talented researchers in any specific area is likely fairly inelastic in the short term, to what extent do you see cash funding (as opposed to supply of talent) as a major constraint to specific scientific research in either the short and medium terms?
>Even if we believe that this funding will lead to a proportional increase in clean-tech research, I suspect that returns may be quite low since the impacts of this funding would seem to be:
1. Pulling smart people from their private sector efforts into publicly funded research
2. Funding marginal projects by lower quality researchers where returns are likely to be significantly lower than average returns to research funding (which may be quite low already)
3. Increasing the funds available to established, high-status labs and researchers. If a large percentage of a lab’s output is due to the abnormally high human capital of its lead researchers, the binding constraint is their time and mental resources rather than cash so the returns on additional cash would not be very high.
4. Allowing institutions that were already going to fund this sort of research to direct additional funds to other priorities such as undergraduate academics (stem or otherwise), student amenities or other unrelated research initiatives.
I suspect much of this logic also applies to donations to “cancer research charities” which I believe may be one of the single least efficient use of charitable dollars.
In general, I am disappointed that neither the right nor the left seems interested in trying to estimate the return to marginal government spending on research (either in aggregate or for specific programs).
The points above lead me to suspect it is quite low in aggregate but I’m open to being convinced otherwise if you think there is good evidence to do so.
Sarah Constantin replies on MetaMed
Not long ago I linked to this Robin Hanson blog post on MetaMed. I was sent this reply, which I will put under the fold:
I noticed you linked Robin Hanson’s article on MetaMed on Marginal Revolution. I’m the VP of research at MetaMed, and I just wanted to tell you a little bit more about us, because if all you know about us is the Overcoming Bias article you might get some misleading impressions.
Medical practice is basically a mass-produced product. Professional and regulatory bodies (like the AMA) put out guidelines for treatment. At their best, these guidelines follow the standards of evidence-based medicine, which means that on average they will produce the best health outcomes in the general population. (Of course, in practice they often fall short of that standard. For example, checklists are overwhelmingly beneficial by an evidence-based medicine standard, and yet are not universally used.)
But even at their best, the guidelines that are best from a population-health standpoint need not be optimal for an individual patient. If you have the interest and the willingness to pay, investigating your condition in depth, in the context of your entire medical history, genetic data, and personal priorities, may well turn up opportunities to do better than the standardized medical guidelines which at best maximize average health outcomes.
That’s basically MetaMed’s raison d’etre. And it’s a pretty conservative hypothesis, in fact. We may harbor a few grander ambitions (for example, I come from a mathematical background and I’m working on some longer-term projects related to algorithmically automating parts of the diagnostic process, and using machine learning principles on biochemical networks in novel ways) but fundamentally the thing we claim to be able to do is give you finer-grained information than your doctor will. We’re, of course, as yet unproven in the sense that we haven’t had enough clients to provide empirical evidence of how we improve health outcomes, but we’re not making extraordinary claims.
Robin Hanson seems to be implying that MetaMed is claiming to be useful only because we’re members of the “rationalist community.” This isn’t true. We think we’re useful because we give our clients personalized attention, because we’re more statistically literate than most doctors, because we don’t have some of the misaligned incentives that the medical profession does (e.g. we don’t have an incentive to talk up the benefits of procedures/drugs that are reimbursable by insurance), because we have a variety of experts and specialists on our team, etc.
The “rationalist” sensibility is important, to some degree, because, for instance, we’re willing to tell clients that incomplete evidence is evidence in the Bayesian sense, whereas the evidence-based medicine paradigm says that anything that yet hasn’t been tested in clinical trials and found a 5% p-value is completely unknown. For instance, we’re willing to count reasoning from chemical mechanisms as (weak) evidence. There’s a difference in philosophy between “minimize risk of saying a falsehood” and “be as close to accurate as possible”; we strive to do the latter. So there’s a sense in which our epistemic culture allows us to be more flexible and pragmatic. But we certainly aren’t basing our business model on a blanket claim of being better than the establishment just because we come from the rationalist community.