Month: May 2015

Financial Rewards for Quitting Smoking Work Well

A large study in the New England Journal of Medicine verifies that financial rewards for quitting smoking are effective. Participants were randomly offered one of a variety of incentive schemes that paid participants who successfully quit smoking (verified with saliva and urine tests). Participants were free to decline the offer.

The most interesting variation of the study was to compare a carrot model which paid up to $800 for success with a carrot-stick model in which participants lost $150 if they failed to stop smoking but gained $800 if they succeeded (i.e. $650 of reward plus refund of $150). In theory, the carrot-stick model should work better because it harnesses loss-aversion. And statistical analysis suggested that for those who would accept either the carrot or the carrot-stick model, the carrot-stick model did work better. The problem is that far fewer people who were offered the carrot-stick model chose it compared to those offered the carrot model. Overall, therefore, the carrot model was far more successful.

Smokers are costly so even a pure carrot model of $800 paid by employers would more than pay for itself:

…Finally, the finding that individual rewards of $800, as compared with usual care, nearly tripled the rate of smoking cessation among CVS Caremark employees and their friends and family confirms and extends the generalizability of our finding from a previous trial involving General Electric employees. In addition to the public health effects of such smoking reductions, these findings are important for employers. Because employing a smoker is estimated to cost $5,816 more each year than employing a nonsmoker, even an $800 payment borne entirely by employers and paid only to those who quit would be highly cost-saving.

Don’t Fear the CRISPR

I’m honored to be here guest-blogging for the week. Thanks, Alex, for the warm welcome.

I want to start with a topic recently in the news, and that I’ve written about in both fiction and non-fiction.

In April, Chinese scientists announced that they’d used the CRISPR gene editing technique to modify non-viable human embryos. The experiment focused on modifying the gene that causes the quite serious hereditary blood disease Beta-thalassemia.

You can read the paper here. Carl Zimmer has an excellent write-up here. Tyler has blogged about it here. And Alex here.

Marginal Revolution aside, the response to this experiment has been largely negative. Science and Nature, the two most prestigious scientific journals in the world, reportedly rejected the paper on ethical grounds. Francis Collins, director of the NIH, announced that NIH will not fund any CRISPR experiments that involve human embryos.

NIH will not fund any use of gene-editing technologies in human embryos. The concept of altering the human germline in embryos for clinical purposes has been debated over many years from many different perspectives, and has been viewed almost universally as a line that should not be crossed.

This is a mistake, for several reasons.

  1. The technology isn’t as mature as reported. Most responses to it are over-reactions.
  2. Parents are likely to use genetic technologies in the best interests of their children.
  3. Using gene editing to create ‘superhumans’ will be tremendously harder, riskier, and less likely to be embraced by parents than using it to prevent disease.
  4. A ban on research funding or clinical application will only worsen safety, inequality, and other concerns expressed about the research.

Today I’ll talk about the maturity of the technology. Tomorrow I’ll be back to discuss the other points. (You can read that now in Part 2: Don’t Fear Genetically Engineered Babies.)

CRISPR Babies Aren’t Near

Despite the public reaction (and the very real progress with CRISPR in other domains) we are not near a world of CRISPR gene-edited children.

First, the technique was focused on very early stage embryos made up of just a few cells. Genetically engineering an embryo at that very early stage is the only realistic way to ensure that the genetic changes reach all or most cells in the body. That limits the possible parents to those willing to go through in-vitro fertilization (IVF). It takes an average of roughly 3 IVF cycles, with numerous hormone injections and a painful egg extraction at each cycle, to produce a live birth. In some cases, it takes as many as 6 cycles. Even after 6 cycles, perhaps a third of women going through IVF will not have become pregnant (see table 3, here). IVF itself is a non-trivial deterrent to genetically engineering children.

Second, the Chinese experiment resulted in more dead embryos than successfully gene edited embryos. Of 86 original embryos, only 71 survived the process. 54 of those were tested to see if the gene had successfully inserted. Press reports have mentioned that 28 of those 54 tested embryos showed signs of CRISPR/Cas9 activity.

Yet only 4 embryos showed the intended genetic change. And even those 4 showed the new gene in only some of their cells, becoming ‘mosaics’ of multiple different genomes.

From the paper:

~80% of the embryos remained viable 48 h after injection (Fig. 2A), in agreement with low toxicity of Cas9 injection in mouse embryos  […]

ssDNA-mediated editing occurred only in 4 embryos… and the edited embryos were mosaic, similar to findings in other model systems.

So the risk of destroying an embryo (~20%) was substantially higher than the likelihood of successfully inserting a gene into the embryo (~5%) and much higher than the chance of inserting the gene into all of the embryo’s cells (0%).

There were also off-target mutations. Doug Mortlock believes the off-target mutation rate was actually much lower than the scientists believed, but in general CRISPR has a significantly non-zero chance of inducing an unintended genetic change.

CRISPR is a remarkable breakthrough in gene editing, with applications to agriculture, gene therapy, pharmaceutical production, basic science, and more. But in many of those scenarios, error can be tolerated. Cells with off-target mutations can be weeded out to find the few perfectly edited ones. Getting one complete success out of tens, hundreds, or even thousands of modified cells can suffice, when that one cell can then be replicated to create a new cell line or seed line.

In human fertility, where embryos are created in single digit quantities rather than hundreds or thousands – and where we hope at least one of those embryos comes to term as a child – our tolerance for error is dramatically lower. The efficiency, survivability, and precision of CRISPR all need to rise substantially before many parents are likely to consider using it for an unborn embryo, even to prevent disease.

That is, indeed, the conclusion of the Chinese researchers, who wrote, “Our study underscores the challenges facing clinical applications of CRISPR/Cas9.”

More in part two of this post on the ethics of allowing genetic editing of the unborn, and why a ban in this area is counterproductive.

Why China is hard to figure out

It’s not just the differences of language, history, and culture.  It’s not just the (sometimes) questionable economic data, or the paucity of good Chinese academic research until very recent times.

Today’s China is sui generis.  The country has grown so quickly that every decade or so there is a very new China.  And so we cannot easily look to the past as a guide.  In economic terms, China seven years ago is equally removed from China today as the United States about thirty-five years ago is removed from the United States today, putting recent cyclical factors aside.

You could say that China’s recent past is relatively thin in terms of information.   For a more extreme example, how well would we understand an economy which went from zero to fully grown in the span of a week?  When do the diagnostics get to be run and how well would we understand its resiliency?  Arguably we also would not understand the resiliency of an economy which never grew and never changed in our sample…which raises the question of which rate of economic growth makes recent history “thickest” in terms of information and instructiveness?

Economics aside, China’s political system also has changed much more than ours, and it is less predictable than ours.

So for any question about contemporary China, it is n = 1, if that.

Ramez Naam to Guest Blog at MR!

Tyler and I are delighted to have the great Ramez Naam guest blogging for us this week. Ramez spent many years at Microsoft leading teams working on search and artificial intelligence. His first book, More Than Human: Embracing the Promise of Biological Enhancement was a thought provoking look at the science and ethics of enhancing the human mind, body, and lifespan. More recently, I enjoyed Ramez’s The Infinite Resource: The Power of Ideas on a Finite Planet, an excellent Simonesque guide to climate change, energy and innovation.

Frankly, I didn’t expect much when I bought Ramez’s science fiction novel, Nexus. Good non-fiction authors don’t necessarily make good fiction authors. I was, however, blown away. Nexus is about a near-future in which a new technology allows humans to take control of their biological operating system and communicate mind to mind. Nexus combines the rush of a great thriller, the fascination of hard science fiction and the intrigue of a realistic world of spy-craft and geo-politics. I loved Nexus and immediately bought the second in the trilogy, Crux. I finished that quickly and I am now about half-way through the just released, Apex. Thus it’s great to have Ramez guest blogging as I race towards the end of his exciting trilogy! The trilogy is highly recommended.

Please welcome Ramez to MR.

Nexus Cover

Don’t be so sure the economy will return to normal

That is my recent Upshot column for The New York Times, here is one bit from it:

…there is a much more disturbing possibility that could turn out to be more accurate: namely, that the recession was a learning experience that we haven’t fully absorbed. From this perspective, the radical and sudden changes of the financial crisis were early indicators of deep fragility and dysfunctionality.

Slowly but surely, we may be responding to these difficult revelations by scaling back our ambitions for the economy — reinforcing negative trends that were already underway. In this troubling view, we have finally begun to discover some unpleasant truths. Borrowing a phrase from the University of Toronto economist Richard Florida, it’s possible that we are experiencing a “Great Reset.”

And this:

Here is another change that might be a broader sign of a pending reset: A heavy burden of adjustment in the overall labor market is being borne by the young. Wages for the typical graduate of a four-year college have dropped more than 7 percent since 2000, and the labor force participation rate of the young has been falling. One consequence is that young people are living at home longer and receiving more aid from their parents. They also seem to be less interested in buying their own homes.

…Earning a lower wage in earlier years is predictive of lower wages through the rest of one’s career. While we are seeing economic problems for the relatively young, they will eventually become dominant earners in the economy and the major force behind broader statistics.

Do read the whole thing.

Saturday assorted links

Model this, the Terra Cotta Warriors of Xian

Supposedly they were built to guard the tomb of an emperor:


So what’s up?

1. The emperor had a state-dependent utility function (e.g., money is worth less when you are dead), and this was the ancient equivalent of cryonics.  If there was a chance you might be called back to life, spend a lot of resources protecting your corpse and its burial site.

2. The emperor was signaling (sorry Noah!) his ability to assemble such an impressive row of life-size figures, and of course the original had many more than what has been restored to date.

3. This was a form of fiscal policy, to stimulate the economy in slow times, by employing craftsmen.

4. The guild of said craftsmen was an influential interest group.

5. It was intended as a gift to a distant future; what else could they have done that would be of more value to us today?

6. Because the emperor could.

What else?

Minority Report for Kiwi youths?

In 2012 economists at the University of Auckland published research establishing clear correlations between family circumstances and incidents of child abuse or neglect. “No one realized we were sitting on such rich data in terms of its predictive power,” says Rhema Vaithianathan, who led the research. “We can find children who are at considerably elevated risk, and we can find them at birth.”


Using data from welfare, education, employment, and housing agencies and the courts, the government identified the most expensive welfare beneficiaries—kids who have at least one close adult relative who’s previously been reported to child safety authorities, been to prison, and spent substantial time on welfare. “There are million-dollar kids in those families,” English says. “By the time they are 10, their likelihood of incarceration is 70 percent. You’ve got to do something about that.”

Moving closer to home:

Jennie Feria, who oversees risk assessment for L.A.’s Department of Children and Family Services, says one idea is to rate families, giving them a number that could be used to identify who’s most at risk in the way lenders rely on credit scores to determine creditworthiness. “The way we may use it, it’s going to be like it’s a FICO score,” Feria says. The information, she says, could be used both to prioritize cases and to figure out who needs extra services. “It’s at the very early stages, because we don’t know how we’re going to use it yet exactly.”

It will be interesting to see how that one develops.  The article is by Josh Eidelson.

The myth of abandoned British austerity

David Smith sets us straight on this one:

One of the most enduring claims about the British economy in recent years is that the then coalition government abandoned austerity in 2012. It is a claim that gives comfort to those who see everything that has happened to the economy through the lens of fiscal policy. Only when austerity was abandoned in 2012, some argue, did the economy begin to recover. Unfortunately it does not fit the facts. It is a myth.

There are two elements to this. The first is the question of whether, in response to slower growth in the economy, or other factors, George Osborne abandoned his programme of fiscal consolidation.

The two foremost authorities on fiscal policy in Britain are the Institute for Fiscal Studies and the Office for Budget Responsibility. The IFS set out the position clearly after each budget and autumn statement during the last parliament. Chart 1.6 on p26 in its latest green budget, here, sets out the broad position. As it shows, consolidation continues through the parliament.

The IFS’s updated figures, published as part of its Election 2015 coverage, has the following sequence of numbers for the fiscal consolidation: 2010-11, 1.5% of GDP, 2011-12 2.3%, 2012-13 1.1%, 2013-14 1.5%, 2014-15 0.7%, 2015-16 0.6%, adding up to a cumulative fiscal tightening between 2009-10 and 2015-16 of 7.7% of GDP.

The OBR also addressed this, in its paper, Crisis and Consolidation in the Public Finances, here. Chapter 3 is the relevant chapter which, like the iFS, shows a programme of fiscal consolidation extending through the parliament. There was no abandonment of austerity.

There is more here, with other points of interest, hat tip goes to Chris Giles.

China errors and omissions of the day

Adding the ‘errors and omissions’ deficit to recorded net hot money outflows gives an aggregate estimate of overall hot outflows or capital flight from the mainland. By construction, this slumped to a record $209.5bn ($838bn annualised) or an eye-watering 9¼% of GDP (Chart 2). Overall, in the year to Q1, China has seen capital flight of $584bn or 5.6% of GDP.

That is from Richard Iley, cited by David Keohane at the FT.

By the way, here is the response of the Chinese government:

China has again ruled out the possibility of massive capital outflow, saying an overwhelming majority of foreign companies that pulled out their investments in the country were shell firms, The Beijing News reported on Wednesday.

The average investment scale of those firms is relatively small, and 20 percent of them entered China less than five years ago, said the newspaper citing Tang Wenhong, head of the Department of Foreign Investment Administration of the Commerce Ministry.

Judge for yourself…a better response would have been “this outflow is a natural process of investment diversification, as China liberalizes its capital markets gradually over time.”  That doesn’t account for everything that is going on, but at least it makes potential sense.

By the way, if you ask some Chinese about India, they will mention Buddhism and people riding on the top of trains.

Friday assorted links

The Grasping Hand: Kelo v. City of New London

The Grasping Hand, written by our GMU-law colleague, Ilya Somin, is an excellent read and the definitive treatment of eminent domain and the Kelo case. As you might expect, Somin discusses the legal issues with aplomb. So much so that the book is endorsed by both of Kelo’s opposing counsel! In addition to the law and economics, Somin offers what for me was an eye-opening investigation of the history behind many of the major cases.

graspingIn the famous Poletown case, for example, GM and the cities of Detroit and Hamtramck used eminent domain to forcibly remove 4,200 people, 1300-1,400 homes, 140-600 businesses, 6 churches and one hospital in order to build a factory. The primary argument for the expropriation was the economic benefits that GM and the mayor promised would flow from the creation of at least 6,000 GM jobs.

Even though the entire case hung on the number of jobs to be created this number was simply cheap talk. In the marketplace, if GM says that this 100 tons of aluminium is worth more building cars than it is building airplanes they have to demonstrate their belief by outbidding Boeing and all the other users of aluminium. In politics GM need only voice an assertion and with the right lobbying the political system will make the transfer for them. Neither GM nor the city were under any requirement to guarantee new jobs but the majority judges simply accepted the numbers as given to them.

…many judges may have an unjustified faith in the efficacy of the political process and thus may be willing to allow the executive and legislative branches of government to control oversight of development projects. For example, the Poletown majority emphasized that courts should defer to legislative judgments of “public purpose.” Whatever the general merits of such confidence in the political process, it is misplaced in situations in which politically powerful interest groups can employ the powers of government at the expense of the relatively weak.

So what happened?

The GM plant opened two years late; and by 1988— seven years after the Poletown condemnations— it employed no more than 2,500 workers.

Moreover, as Somin continues, it gets much worse because not only were the benefits overstated the costs weren’t stated at all.

An especially striking aspect of the Poletown decision was the majority’s failure to even mention the costs imposed by condemnation on the people of Poletown or the city of Detroit as a whole.

According to estimates prepared at the time, “public cost of preparing a site agreeable to . . . General Motors [was] over $200 million,” yet GM paid the city only $8 million to acquire the property. Eventually, public expenditures on the condemnation rose to some $250 million. In addition, we must add to the costs borne by the city’s taxpayers, the economic damage inflicted by the destruction of up to six hundred businesses and fourteen hundred residential properties. Although we have no reliable statistics on the number of people employed by the businesses destroyed as a result of the Poletown condemnation, it is quite possible
that more workers lost than gained jobs as a result of the decision.

The new RCT results on poverty reduction

Declan Butler reports:

Giving some of the world’s poorest people a two-year aid package — including cash, food, health-care services, skills training and advice — improves their livelihoods for at least a year after the support is cut off, according to the results of an experiment involving more than 10,000 households in six countries.

The poverty intervention had already been trialled successfully in Bangladesh, and the study’s researchers say it shows the approach works in other cultures too. “We finally have truly credible evidence that a programme for the poorest of the poor can really help them meaningfully reduce their poverty,” says Dean Karlan, an economist at Yale University in New Haven, Connecticut, and a co-author of the study, reported today in Science. “Until now, we haven’t really been able to go to a government outside Bangladesh and say, we’re confident this works.”

Ethiopia, one of the countries that was in the trial, is planning to continue and scale up the intervention to cover around 3 million people, says Karlan, and Pakistan and India are considering scaling up interventions, too.

Banerjee and Duflo are involved in the work as well, and this is sometimes called the “graduation model,” because the aim is to graduate people out of poverty.  Note this:

The intervention is not cheap. Costs per household ranged from $1,455 in India to $5,962 in Pakistan, although they were offset by positive returns on investment ranging from 133% in Ghana to 433% in India. The researchers hope to cut costs in future by scaling back the experiment’s more expensive components, such as training.

And while the model worked in many places, it failed in rural southern India and Honduras, in part due to…problems with chickens.  Nonetheless this is big, big news.  The link to the original research is here.

For pointers I thank Kevin Lewis and Michelle Dawson.