Month: July 2016
1. Do you have a doppelganger? The chance is higher than you might think.
2. What do scientists report as some of the main problems facing science? Hint: one of them is “not enough money.”
3. Why pharma opposes pot legalization: “…in the 17 states with a medical-marijuana law in place by 2013, prescriptions for painkillers and other classes of drugs fell sharply compared with states that did not have a medical-marijuana law. The drops were quite significant…”
6. From last year, my chat with Peter Thiel.
The NYTimes has an incredible story on a simple, paint-on liquid that stops tooth decay and prevents further cavities:
Nobody looks forward to having a cavity drilled and filled by a dentist. Now there’s an alternative: an antimicrobial liquid that can be brushed on cavities to stop tooth decay — painlessly.
The liquid is called silver diamine fluoride, or S.D.F. It’s been used for decades in Japan, but it’s been available in the United States, under the brand name Advantage Arrest, for just about a year.
The Food and Drug Administration cleared silver diamine fluoride for use as a tooth desensitizer for adults 21 and older. But studies show it can halt the progression of cavities and prevent them, and dentists are increasingly using it off-label for those purposes.
Ari Armstrong has the right reaction:
So the Japanese have been using this drill-free treatment for “decades,” yet we in the United States have had to wait until last year to get it. And the only reason we can get it now to treat cavities is that it happens to be allowed as on “off-label” use for what the FDA officially approved it for.
The NYTimes continues:
Silver diamine fluoride is already used in hundreds of dental offices. Medicaid patients in Oregon are receiving the treatment, and at least 18 dental schools have started teaching the next generation of pediatric dentists how to use it.
…The main downside is aesthetic: Silver diamine fluoride blackens the brownish decay on a tooth. That may not matter on a back molar or a baby tooth that will fall out, but some patients are likely to be deterred by the prospect of a dark spot on a visible tooth.
…[But] “S.D.F. reduces the incidence of new caries and progression of current caries by about 80 percent,” said Dr. Niederman, who is updating an evidence review of silver diamine fluoride published in 2009.
Fillings, by contrast, do not cure an oral infection.
But as Armstrong writes the craziest part of the story is this:
American dentists first started using similar silver-based treatments in the early 1900s. The FDA is literally over a century behind the times.
It seems that the future of dental treatment has been here all along but a combination of dentists wanting to be surgeons, lost knowledge, and FDA cost and delay prevented it from being distributed. Incredible.
Remember the paper that said “conservatives” were on average more likely to exhibit “psychoticism,” but then it turned out there was a statistical mistake and this should have been attributed to “liberals,” at least within the confines of the paper’s model? How did it all happen, and why did it take so long to correct? Jesse Singal has the scoop, here is one excerpt:
Hatemi is convinced that Ludeke is out to get him. In our phone conversation, he repeatedly impressed on me just how minor the error is, how few times the papers in question had been cited, and how much of an overreaction it was for anyone to care all that much. “This error is freaking tangential and minor and there’s nothing novel in the error, whether [the sign on the correlation] was plus or minus,” he told me. “There’s no story. And I wish there was — if there’s any story, it’s, Should people be allowed to honestly correct their errors, or should you lampoon them and badmouth them for everything they didn’t do because they had a real error they admit to?”
Yes it’s that kind of story. There is much more at the link, including tales of academics acting “like dicks.” Here is the conclusion of the piece:
…the social-science landscape isn’t yet as embracing as it could be — and should be — of the replicators, challengers, and other would-be nudges like Ludeke who tend to make science better and more rigorous, who make it harder for people to coast by on big names and sloppy research.
For the pointer I thank Daniel Klein.
This excellent book by June Teufel Dreyer has the subtitle Sino-Japanese Relations, Past and Present. Here is one short bit:
Moreover, the Chinese distinction between themselves as civilized and all others as barbarians was, they [the Japanese nativists] argued, absurd, given the reality that barbarians had several times conquered China and the barbarian leader was the anointed as the son of heaven. Who, then, should be considered barbarian? To nativists, the logical conclusion was the Japan had become the true Middle Kingdom. While one might reverse China’s past accomplishments, China had declined into an entity that was no longer worthy of emulation.
The book is substantive and readable throughout, essential for our time as well.
This is tentative, and I still will make further changes, so by all means please leave your suggestions in the comments. The list is long, so I am putting it under the fold…
Einav, Lira and Levin, Jonathan, “Empirical Industrial Organization: A Progress Report,” Journal of Economic Perspectives, (Spring 2010), 145-162.
Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: the 1955 Price War,” Journal of Industrial Economics, 1987, 35(4), 457-82.
Bresnahan, Timothy and Reiss, Peter C. “Entry and Competition in Concentrated Markets,” Journal of Political Economy, (1991), 99(5), 977-1009.
Berry, Steven and Reiss, Peter, “Empirical Models of Entry and Market Structure,” Handbook of Industrial Organization, vol.III, chapter 29.
Asker, John, “A Study of the Internal Organization of a Bidding Cartel,” American Economic Review, (June 2010), 724-762.
Fontanella-Khan, James and Arash Massoudi. “Megadeals for 2015 hit record high.” The Financial Times, September 18, 2015.
Whinston, Michael D., “Antitrust Policy Toward Horizontal Mergers,” Handbook of Industrial Organization, vol.III, chapter 36, see also chapter 35 by John Sutton.
“Benefits of Competition and Indicators of Market Power,” Council of Economic Advisors, April 2016.
Klein, Benjamin and Leffler, Keith. “The Role of Market Forces in Assuring Contractual Performance.” Journal of Political Economy 89 (1981): 615-641.
Breit, William. “Resale Price Maintenance: What do Economists Know and When Did They Know It?” Journal of Institutional and Theoretical Economics (1991).
Bogdan Genchev, and Julie Holland Mortimer. “Empirical Evidence on Conditional Pricing Practices.” NBER working paper 22313, June 2016.
Sproul, Michael. “Antitrust and Prices.” Journal of Political Economy (August 1993): 741-754.
McCutcheon, Barbara. “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?” Journal of Political Economy (April 1997): 336-350.
Crandall, Robert and Winston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,” Journal of Economic Perspectives (Fall 2003), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.
FTC, Bureau of Competition, website, http://www.ftc.gov/bc/index.shtml. Read about some current cases and also read the merger guidelines. You’ll also find four antitrust cases discussed at the top here: http://business.fullerton.edu/economics/rmichaels/Econ410/Econ%20410.htm
Parente, Stephen L. and Prescott, Edward. “Monopoly Rights: A Barrier to Riches.” American Economic Review 89, 5 (December 1999): 1216-1233.
Demsetz, Harold. “Why Regulate Utilities?” Journal of Law and Economics (April 1968): 347-359.
Armstrong, Mark and Sappington, David, “Recent Developments in the Theory of Regulation,” Handbook of Industrial Organization, chapter 27, also on-line.
Shleifer, Andrei. “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.
Farrell, Joseph and Klemperer, Paul, “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” Handbook of Industrial Organization, vol.III, chapter 31, also on-line.
Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=728545.
Strictly optional: Ariel Pakes and dynamic computational approaches to modeling oligopoly: http://www.economics.harvard.edu/faculty/pakes/files/Pakes-Fershtman-8-2010.pdf
Gibbons, Robert, “Four Formal(izable) Theories of the Firm,” on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=596864.
“Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information,” by George P. Baker and Thomas N. Hubbard, American Economic Review, (June 2003), 551-572.
Van den Steen, Eric, “Interpersonal Authority in a Theory of the Firm,” American Economic Review, 2010, 100:1, 466-490.
Miller, Merton, and commentators. “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.
Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.
Hansemann, Henry. “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.
Optional: Charness, Gary and Kuhn, Peter J. “Lab Labor: What Can Labor Economists Learn From the Lab?” NBER Working Paper, 15913, 2010, Lazear, Edward P. “Leadership: A Personnel Economics Approach,” NBER Working Paper 15918, 2010, Oyer, Paul and Schaefer, Scott, “Personnel Economics: Hiring and Incentives,” NBER Working Paper 15977, 2010.
Cowen, Tyler, Google lecture on prizes, on YouTube.
American Economic Review Symposium, May 2010, starts with “Why do Firms in Developing Countries Have Low Productivity?” runs pp.620-633.
Dani Rodrik, “A Surprising Convergence Result,” http://rodrik.typepad.com/dani_rodriks_weblog/2011/06/a-surprising-convergence-result.html, and his paper here http://www.hks.harvard.edu/fs/drodrik/Research%20papers/The%20Future%20of%20Economic%20Convergence%20rev2.pdf
Mandel, Michael and Houseman, Susan, “Not all Productivity Gains are the Same,” http://whatmatters.mckinseydigital.com/growth_and_productivity/not-all-productivity-gains-are-the-same-here-s-why
Michael Spence and Sandile Hlatshwayo, “The Evolving Structure of the American Economy and the Employment Challenge,” Council on Foreign Relations working paper, March 2011, http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366
Serguey Braguinsky, Lee G. Branstetter, and Andre Regateiro, “The Incredible Shrinking Portuguese Firm,” http://papers.nber.org/papers/w17265#fromrss.
Nicholas Bloom, Raffaella Sadun, and John Van Reenen, “Recent Advances in the Empirics of Organizational Economics,” http://cep.lse.ac.uk/pubs/download/dp0970.pdf.
Nicholas Bloom, Raffaella Sadun, and John Van Reenen, the slides for “Americans do I.T. Better: US Multinationals and the Productivity Miracle,” http://www.people.hbs.edu/rsadun/ADITB/ADIBslides.pdf, the paper is here http://www.stanford.edu/~nbloom/ADIB.pdf but I recommend focusing on the slides.
Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. “Management as a Technology?” National Bureau of Economic Research working paper 22327, June 2016.
Syerson, Chad “What Determines Productivity?” Journal of Economic Literature, June 2011, XLIX, 2, 326-365.
New firms and an employment puzzle, http://macroblog.typepad.com/macroblog/2011/08/new-firm-employment-puzzle.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2FRUQt+%28macroblog%29
David Lagakos, “Explaining Cross-Country Productivity Differences in Retail Trade,” Journal of Political Economy, April 2016, 124, 2, 1-49.
Casselman, Ben. “Corporate America Hasn’t Been Disrupted.” FiveThirtyEight, August 8, 2014.
Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “Where Has all the Skewness Gone? The Decline in High-Growth (Young) Firms in the U.S. National Bureau of Economic Research working paper 21776, December 2015. NB: This paper and the three that follow have some repetition, so read them selectively rather than exhaustively.
Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “The Secular Business Dynamism in the U.S.” Working paper, June 2014.
Haltiwanger, John, Ian Hathaway, and Javier Miranda. “Declining Business Dynamism in the U.S. High-Technology Sector.” Ewing Marion Kauffman Foundation, February 2014.
Haltiwanger, John, Ron Jarmin and Javier Miranda. Where Have All the Young Firms Gone? Ewing Marion Kauffman Foundation, May 2012.
Song, Jae, David J. Price, Fatih Guvenen, and Nicholas Bloom. “Firming Up Inequality,” CEP discussion Paper no. 1354, May 2015.
Furman, Jason and Peter Orszag. “A Firm-Level Perspective on the Role of rents in the Rise in Inequality.” October 16, 2015.
Andrews, Dan, Chiara Criscuolo and Peter N. Gal. “Frontier firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries.” OECD working paper, 2015.
Mueller, Holger M., Paige Ouimet, and Elena Simintzi. “Wage Inequality and Firm Growth.” Centre for Economic Policy Research, working paper 2015.
Berger, David W. “Countercyclical Restructuring and Jobless Recoveries.” Yale University working paper, 2012.
Furman, Jason. ”Business Investment in the United States: Facts, Explanations, Puzzles, and Policy.” Remarks delivered at the Progressive Policy Institute, September 30, 2015, on-line at https://m.whitehouse.gov/sites/default/files/page/files/20150930_business_investment_in_the_united_states.pdf.
Scharfstein, David S. and Stein, Jeremy C. “Herd Behavior and Investment.” American Economic Review 80 (June 1990): 465-479.
Carola Frydman and Dirk Jenter, “CEO Compensation,” NBER Working Paper 16585.
Conyon, Martin J. “Executive Compensation and Incentives.” Academy of Management Perspectivse, 2006.
Kaplan, Steven N. “Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges.” Working paper, July 2012.
Robert J. Gordon and Ian Dew-Becker, “Unresolved Issues in the Rise of American Inequality,” http://www.people.fas.harvard.edu/~idew/papers/BPEA_final_ineq.pdf
Acemoglu, Daron and Autor, David, “Skills, Tasks, and Technologies: Implications for Employment and Earnings,” http://econ-www.mit.edu/files/5607
Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.” Quarterly Journal of Economics 104 (November 1989): 655-670.
Ben-David, Itzhak, and John R. Graham and Campbell R. Harvey, “Managerial Miscalibration,” NBER working paper 16215, July 2010.
Glenn Ellison, “Bounded rationality in Industrial Organization,” http://cemmap.ifs.org.uk/papers/vol2_chap5.pdf
5. Sectors: finance, health care, others
Gorton, Gary B. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1401882, published on-line in 2009.
Erel, Isil, Nadault, Taylor D., and Stulz, Rene M., “Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?” NBER Working Paper 17269, August 2011.
Gompers, Paul and Lerner, Josh. “The Venture Capital Revolution.” Journal of Economic Perspectives (Spring 2001): 145-168.
Paul Graham, essays, http://www.paulgraham.com/articles.html, and on Google itself, http://www.slate.com/blogs/blogs/thewrongstuff/archive/2010/08/03/error-message-google-research-director-peter-norvig-on-being-wrong.aspx
Strictly optional but recommended for the serious: Ponder reading some books on competitive strategy, for MBA students. Here is one list of recommendations: http://www.linkedin.com/answers/product-management/positioning/PRM_PST/20259-135826
Kotchen, Matthew J. and Moon, Jon Jungbien, “Corporate Social Responsibility for Irresponsibility,” NBER working paper 17254, July 2011.
Healy, Kieran. “The Persistence of the Old Regime.” Crooked Timber blog, August 6, 2014.
The explosive growth of a mass market for chocolate from the 1880s transformed the world cocoa economy more radically than at any other time in history. The consumption of chocolate increased more rapidly than that of either coffee or tea in the West, and prices held up better…World imports of cocoa beans grew ninefold between 1870 and 1897, whereas those of tea doubled, and those of coffee rose only by about half…Consumption of cocoa per head rose by a factor of nearly six in Britain between 1870 and 1910, while that o f tea did not even double, and that of coffee actually fell by half.
That is William G. Clarence-Smith in the new, excellent, and self-recommending The Economics of Chocolate, edited by Mara P. Squicciarini and Johan Swinnen.
3. The PR culture that is Faroe (warning: violent images at the link).
4. Howard Raiffa has passed away (NYT).
6. Radley Balko on the Roland Fryer study, very good piece.
Here is my deliberately short review: It is a good book.
Here is David Brooks’s NYT review, he notes “The book is interesting on nearly every page.”
I am well aware of Lehrer’s previous failings, but today I am evaluating only this book. Paul Celan went so far as to try to kill his wife, but still he is one of my favorite poets of the twentieth century. I also can walk through a museum without much worrying about my knowledge of artistic biographies — for the living and the dead — and no one seems to think that is weird or an uncalled for way to look at the art.
I have read the Jennifer Senior NYT “take down” review, but I don’t think she scores many points. While many criticisms of “pop psychology” books about love can be made, and with considerable validity, in those regards Lehrer’s book is well above average for the genre.
A Timbro study by Alexander Fritz Englund showed that E.U. membership for the 28 countries resulted in a statistically significant increase in economic freedom in all of the sub-categories in The Economic Freedom of the World index. The biggest improvement comes in the year of membership, but it increases afterwards as well.
For some time now I have had mixed feelings about the move to electronic medical records, here is another reason why:
On the dark web, medical records draw a far higher price than credit cards. Hackers are well aware that it’s simple enough to cancel a credit card, but to change a social security number is no easy feat. Banks have taken some major steps to crack down on identity theft. But hospitals, which have only transitioned en masse from paper-based to digital systems in the past decade, have far fewer security protections in place.
…These records can sell for as much as (the bitcoin equivalent) of $60 apiece, whereas social security numbers are a mere $15. Stolen credit cards sell for just $1 to $3. During the tour, we spotted one hacker who claimed to have a treasure trove of just shy of 1 million full health records up for grabs.
As IBM’s Kuhn explained in a follow-up interview, these medical records can be leveraged for a wide variety of nefarious purposes. In some cases, it’s about stealing a person’s identity and billing them for a surgery or a prescription, and in others it’s about opening a new line of credit. Security researcher Avi Rubin told Fast Company in an recent interview that he suspects hacked medical records are often routinely used for blackmail and extortion.
Such hacking is indeed a trend:
More than 113 million medical records were hacked in 2015 alone, according to data compiled by the Health and Human Services. A newly released report from the Institute for Critical Infrastructure Technology, a cybersecurity think tank, found that some 47% of Americans have had their medical record hacked in the past 12 months.
That is from Christina Farr.
Who else would be up to speed on this but Kevin Lewis? He sends me this article:
Why do states claim limited, moderate, or expansive jurisdiction over the waters adjacent to their coasts? I argue that because of the unique role of the maritime hegemon in shaping the law of the sea to conform to its interests, the primary variable determining a state’s positions on coastal state jurisdiction is the nature of its relationship to the maritime hegemon — allied, adversarial, or neutral. Other variables that exert important influence on the state’s claim include its perceptions of threat from regional maritime powers and its own capability to project power to other states’ coasts. This theory not only enables deductive prediction of states’ maritime jurisdictional claims, but also provides insights into the process of hegemonic order-building in international relations. After developing this theory, I test it with initial plausibility probes, including an analysis of the contemporary maritime claims of the United States as the maritime hegemon, as well as two controlled comparisons of the current maritime claims of Japan and China, ally and adversary of the United States, and Chile and Peru, states with neutral relationships to the maritime hegemon. The theory’s explanatory variables accurately correlate with the outcomes in these studies, with the United States claiming limited jurisdiction over the activities of foreign militaries in its exclusive economic zone, Japan and Chile claiming limited jurisdiction (with caveats), China claiming moderate jurisdiction, and Peru claiming expansive jurisdiction.
That is by Rachel Esplin Odell.
4. Could Brexit take six years or longer? And: “Beneath the surface, he saw an angry, lost society in which the centuries-old pillars of Britishness — empire, church, navy, class — were crumbling.” (NYT)
7. William H. McNeill has passed away, author of The Rise of the West (NYT).
I am not expecting a market in kidneys anytime soon but ever more sophisticated barter is slowly improving kidney allocation. Most recently, UCLA has started a program where a kidney donation may be swapped for a kidney gift certificate good for a kidney transplant at a time of the recipient’s choosing.
The program allows for living donors to donate a kidney in advance of when a friend or family member might require a kidney transplant.
…“It’s the brainchild of a grandfather who wanted to donate a kidney to his grandson nearing dialysis dependency, but the grandfather felt he would be too old to donate in a few years when his grandson would likely need a transplant.”
Nine other transplant centers across the U.S. have agreed to offer the gift certificate program, under the umbrella of the National Kidney Registry’s advanced donation program. Veale anticipates that more living donors will come forward to donate kidneys, which could trigger chains of transplants. Then, when a patient redeems his or her gift certificate, the last donor in the chain could donate a kidney to that recipient.
Improving allocation is important but the real constraint today is supply. This program may help with that on the margin, however, because altruistic donors could donate and keep a gift certificate as insurance in case any of their family members one day needed an transplant. More fundamentally, however, increasing supply will require some form of compensation or incentive such as no-give, no-take.
Also in The Sun on Sunday, May argued that outside of the EU, “we’ll be able to do lots of common-sense things, like cut back on red tape and let local councils buy British.” She went further in her speech launching her leadership campaign saying, “A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain.”
Here is more. I would say that puts her one for three. I’ve also heard talk of May embracing a “worker codetermination” model for the UK, similar to that used in Germany. It works less well for services, and besides Gorton and Schmid estimated it cost German firms about 26% of shareholder value (pdf)).
So that puts her at one for four, and it seems she was the best of the plausible candidates. The perceptive Janan Ganesh put it this way:
But if Tory history pits the spirit of freedom against the claims of social order, the one periodically dominating the other before giving way, she might herald the latter’s resurgence.
As he clutched his second Wimbledon trophy on Sunday, Andy Murray saluted David Cameron, the outgoing prime minister, as the doer of an “impossible job”. Ms May has only won the right to choose whose hearts to break. Free-marketeers, gird yourselves.
I am not surprised that Brexit is working out badly, but I am surprised how quickly it is becoming obvious that Brexit will not mean more individual liberty for the Brits. Here is Richard Tuck making the left-wing case for Brexit.
A Chinese man was recently in the news for not only winning millions of yuan in a lottery, but also for the bizarre costume he wore while collecting his prize. The man, believed to be about 40 years old, was so worried about revealing his identity that he actually turned up dressed as the popular Disney character Baymax!
Speaking to reporters, the man revealed that he had won 170 million yuan (approximately $27 million) even though he rarely buys lottery tickets. As for the strange costume, the man revealed that his wife forced him into wearing it, fearing that old friends and long-lost relatives might suddenly show up expecting a small share of the prize. But no costume can actually help him evade the mandatory 20 percent tax on lottery winnings, which means he will have to cough up about 34 million yuan to give back to the state.
As it turns out, this man isn’t the first lottery winner to adopt the eccentric practice of accepting winnings in disguise. Lots of Chinese winners tend to be very cautious about protecting their identity, to dodge thieves and relatives. So they turn up wearing superhero masks or costumes. In fact the tradition dates back to about 25 years or so.