Month: December 2016

China insurance markets in everything

Medical insurance often becomes invalid if the customer is drunk. But during the football World Cup in 2014, Shanghai-based Zhongan Insurance turned that rule upside down by offering Chinese football fans a policy specifically for self-inflicted liver damage.

It cost less than $1 and covered sports enthusiasts against alcohol poisoning for 30 days — paying out up to Rmb2,000 ($290) for hospital fees. It soon came to be known as “watching-football-drinking-too-much” insurance.

This has not been Zhongan’s only foray into more specialist areas of China’s insurancemarket. Another of its policies, called “high heat”, reimburses customers when the temperature hits 37°C. Another insures against flight delays — and, in many cases, pays out while the customer is still waiting in the departure lounge.

But while such products might seem niche, the company behind them is anything but. From a standing start three years ago, it has sold 5.8bn policies to 460m customers. This has quickly translated into profit. Zhongan went from making a loss in 2013 to posting Rmb168m in net profit two years later. Total assets jumped more than 500 per cent between 2014 and 2015, to Rmb8bn.

That is from Don Weinland at the FT.  And this:

Zhongan is finding it has competition in the market for offbeat insurance policies. TongJuBao already sells specialist policies to cover for the cost of divorce lawyers and for search teams to look for missing children. It also sells insurance that offers income protection for people who leave their jobs to move to a different city.

Shades of Robert Shiller…

Truth, Independence, and Liberty

Jacob Levy has an excellent post on why respect for truth is a foundation for republican government:

…the great analysts of truth and speech under totalitarianism—GeorgeOrwell, Hannah Arendt, VaclavHavel—can help us recognize this kind of lie for what it is. Sometimes—often—a leader with authoritarian tendencies will lie in order to make others repeat his lie both as a way to demonstrate and strengthen his power over them.

Saying something obviously untrue, and making your subordinates repeat it with a straight face in their own voice, is a particularly startling display of power over them. It’s something that was endemic to totalitarianism. Arendt analyzed the huge lies and blatant reversals of language associated with the Holocaust. Havel documented the pervasive little lies, lies that everyone knew to be lies, of late Communism. And Orwell gave us the vivid “2+2=5.”

Being made to repeat an obvious lie makes it clear that you’re powerless; it also makes you complicit. You’re morally compromised. Your ability to stand on your own moral two feet and resist or denounce is lost. Part of this is a general tool for making people part of immoral groups.

…insisting on the difference between truth and lies is itself a part of the defense of freedom. Orwell, Arendt, and Havel teach us that the power to tell public lies and to have them repeated is evidence of, and a tool for the expansion of, a power that free people should resist and refuse.

I would put it this way: Respect for the truth is tied to individualism because any person may have truth and reason on their side. But the acceptance of the public lie signals that only the will of the collective matters.

Who needs self-driving cars?

Nike Inc. this week begins selling a pricey sneaker with self-tying laces, a high-stakes test of the company’s technology investments and efforts to sell more products directly to consumers.

Since its founding, Nike has predominantly been a wholesaler. But as shopping shifts online, Nike is moving to lessen its reliance on retailers. It wants to double its direct sales to consumers to $16 billion by 2020, particularly as rivals Adidas AG and Under Armour Inc. have become more competitive in recent years.

That is where the self-lacing $720 HyperAdapt sneakers play a role. The company is offering the shoes exclusively on its relaunched Nike+ app and at a new retail store in New York City, beginning on Thursday. The idea is to hook consumers into buying via its app or visiting Nike stores for limited-edition sneaker releases, which to date has been a near-weekly phenomenon at Foot Locker and other retailers.

You might laugh, but this is actually an advance of real value, though ideally the price could come down a bit.  Here is one article, here is the WSJ, for pointers I thank the excellencies of Daniel Lippman and Samir Varma.

The new school choice debate (a child is more than just a test score)

Since Donald Trump has picked Betsy DeVos to be education secretary, many commentators have been pulling out their anti-school choice arguments from the closet, and for the most part it isn’t a pretty sight.  To insist on a single government-run school and trash school choice, while out of the other side of one’s mouth criticizing Trump for “authoritarianism,” and other times proclaiming “Black Lives Matter” is from my point of view a pretty poor mix.

To be sure, we’re still not sure how well vouchers work, and I would suggest continuing experimentation rather than full-on commitment.  Frankly, I find a lot of the voucher advocates unconvincing, but let’s not forget the single most overwhelming (yet neglected) empirical fact about vouchers: they improve parent satisfaction.

That result is not much contested.  For instance:

Universally, school choice parents are highly satisfied with choice schools, reporting greater discipline, more responsive staff and better educational environments than the public schools they left. That parents are satisfied with their choice schools is a valuable indicator that school choice delivers real benefits. As University of Wisconsin professor John Witte, the official evaluator of the Milwaukee choice program, recently commented on school choice research: “There’s one very consistent finding: Parental involvement is very positive, and parental satisfaction is very positive…parents are happier. The people using vouchers are mostly black and Hispanic and very poor…they deserve the same kind of options that middle-class white people have.”

Patrick J. Wolf’s survey of twelve voucher programs (pdf) supports this interpretation.  And here are strongly positive results on parental satisfaction Indiana.  I could go on, but I don’t think there is much need.

Of course parents may like school choice for reasons other than test scores.  To draw from the first link above, parents may like the academic programs, teacher skills, school discipline, safety, student respect for teachers, moral values, class size, teacher-parent relations, parental involvement, and freedom to observe religious traditions, among other facets of school choice.

Perhaps now is the time to remind you that how the buyers like the product is the fundamental standard used by economists for judging public policy?  That is not to say it is the final standard all things considered, but surely economists should at least start here and report positive parental satisfaction as a major feature of school choice programs.  In fact, I’ll say this: if you’re reading a critique of vouchers and the critic isn’t willing to tell you up front that parents typically like this form of school choice, I suspect the critic isn’t really trying to inform you.

To be sure, you still might not favor school vouchers.  You might think they cost too much, you might think they will politicize private schools too much, or you might think they weaken national unity too much, to cite a few possibilities.  (Although please, on that latter matter you can’t just say something silly like “public schools and the army made America what it is today.”  You need some actual evidence.  Won’t parents who are happy with the schooling of their children also contribute to national unity and push us away from polarization?  That effect might outweigh whatever more negative mechanism you have in mind.  Evidence please, not just sentiment.)

And as for test scores, the evidence there is still unclear.  Here are a few earlier MR posts, no cherry- or lemon-picking, please.

Scott Alexander has some excellent comments on vouchers and school choice.

Friday assorted links

1. Five books to change conservatives’ minds.

2. “McDavid is studying economics at Witten/Herdecke University in western Germany’s Ruhr region.”  By the way, he is upset about his implicit marginal tax rate.  A good piece.  [Update: better link here]

3. Mark Thoma comes around on fiscal policy.

4. “Inside the weird and calming world of farming and truck simulators.

5. “To a young person, $1,000 can be a lot of money. To us, it isn’t,” says Strachman. “We collect social geeks—1517 is a search cost.”  Link here.

The internet culture that is Cuba

El Paquete is the underground Cuban Internet; a 1tb hard disk filled with US music, films, TV shows, magazines and smartphone apps, passed around by street dealers. You can copy what you like for $8 a week. “My friends assure me, El Paquete and chill is definitely a thing” [Wil Fulton]

That is from a longer Tom Whitwell post about 26 things learned in 2016, interesting throughout.

Will “repeal and delay” work for Obamacare?

Probably not:

But here’s the problem: There would be huge real-world impact of a repeal vote, regardless of when it actually takes effect. A repeal vote would tell the insurers that sell on Obamacare’s marketplaces to get out of the marketplace as soon as possible.

“Insurers have got to put their products together this spring, and we’re right in the middle of killing Obamacare,” says Robert Laszewski, a longtime health insurance consultant. “Are they going to submit proposals to sell in 2018? Why would they stay in the pool?”

The experts I’ve talked to over the past few days argue that a repeal vote would give health insurers good reason to quit the marketplaces — and that could leave 10.4 million Obamacare marketplace enrollees in the lurch.

That is from Sarah Kliff at Vox.

Best movies of 2016

45 Years, British drama about a creaky marriage.

The Boy & the World.  A Brazilian animated movie, it actually fits the cliche “unlike any movie you’ve seen before.”  Preview here, other links here, good for niños but not only.  Excellent soundtrack by Nana Vasconcelos.

The Second Mother.  A Brazilian comedy of manners about social and economic inequality, as reflected in the relations between a maid, her visiting daughter, and the maid’s employer family.  Now, to my and maybe your ears that sounds like poison, because “X is about inequality” correlates strongly with “X is not very good,” I am sorry to say.  This movie is the exception, subtle throughout, and you can watch and enjoy it from any political point of view.  It helps to know a bit about Brazil, and it takes about twenty minutes for the core plot to get off the ground.  Links here.

Cemetery of Splendor, Thai movie by Apichatpong Weerasethakul, here is a good review.

City of Gold, a documentary with Jonathan Gold doing the ethnic food thing in Los Angeles.

Hunt for the Wilderpeople is an original movie, mostly about race, full of cinematic allusions (LOTR, First Blood, Smash Palace, classic Westerns, Butch Cassidy, Thelma and Louise, so many more) and Kiwi finery as well.  None of the reviews I read seem to get it and I don’t want to send you to any of them.

The Innocents, how did those Polish nuns get pregnant?

Maggie’s Plan, a fun comedy, not at the top of this list but intelligent comedies are a dwindling species.

Hell or High Water

Ixcanul, a Mayan movie from Guatemala, might this story of an unwanted pregnancy be this year’s best movie?  Here is one useful review.

Sausage Party, beyond politically incorrect, I kept on thinking I would get sick of the stupid animation and yet I never did.  I remain surprised they let this one play in mainstream theaters.

Sully.  He should have turned the plane around immediately under any plausible calculus, and he didn’t, so you have to give this movie the Straussian reading.

Weiner is a splendid movie with many subtle points, including in the philosophical direction.  In another life, Huma Abedin could have been a movie star.  She has exactly the right mix of distance and involvement, and she dominates every scene she is in, even when just sitting quietly in the background.  Um…I guess she is a movie star.  Starlet.  Whatever.

Difret, an Ethiopian legal drama.

Andrei Tarkovsky, Ivan’s Childhood (reissue).  This is one of Tarkovsky’s worst movies, and yet one of the best movies in virtually any year.

American Honey

Sky Ladder

The Handmaiden, by Park Chan-wook.  Imperfectly eroticized violence, but beautiful nonetheless.

Arrival

Elle, by Paul Verhoeven.

Nocturnal Animals, by Tom Ford.

The bottom line

My top picks are Ixcanul, American Honey, Hunt for the Wilderpeople, Cemetery of Splendor, and Sky Ladder, with Arrival being the best mainstream Hollywood movie.

The effects of public unions on compensation

I can’t say I followed this debate very closely, still this paper may settle some of the outstanding questions about public sector unions and wages and bargaining power.

The Effects of Public Unions on Compensation: Evidence from Wisconsin (Job Market Paper)

This paper seeks identify the effect that public sector unions have on compensation. Specifically, I look at the compensation premium associated with teachers’ unions in Wisconsin. In 2011, Wisconsin passed a landmark law (Act 10) which significantly lowered the bargaining power of all public sector unions in the state. Using an event study framework, I exploit plausibly exogenous timing differences based on contract renewal dates, which caused districts to be first exposed to the new regulations in different years. I find that the reduction in union power associated with Act 10 reduced total teacher compensation by 8%, or $6,500. Roughly two-thirds of this decline is driven through reduced fringe benefits. The analysis shows that the most experienced and highest paid teachers benefit most from unionization. I supplement the event study approach with synthetic control and regression discontinuity methods to find that regulatory limits on contract terms, rather than other mechanisms such as state financial aid cuts or union decertification, are driving the results.

That is from Andrew Littten, job market candidate at the University of Michigan (p.s.: Michigan, your job market candidate web site is the very hardest to use and browse, please improve it!)

Thursday assorted links

1. The Paris Review archives are now on-line.

2. Should Facebook enter China?  And China vows to dig more coal (NYT).  And first but not last Chinese Hugo award.  And were China’s “missing girls” simply unregistered?

3. The punishment culture that is Canada.

4. Hacking your home by ultrasound.  And can you make any car a driverless car with a hack?

5. Hedgehog wins UK favorite mammal in a landslide.

New Zealand to Compensate Organ Donors

New Zealand will now compensate live organ donors for all lost income:

Today’s unanimous cross-party support for the Compensation for Live Organ Donors Bill represents a critical step in reducing the burgeoning waiting list for kidney donations, according to Kidney Health New Zealand chief executive Max Reid.

“The Bill effectively removes what is known to be one of the single greatest barriers to live organ donation in NZ,” Mr Reid says. “Until now the level of financial assistance (based on the sickness benefit) has been insufficient to cover even an average mortgage repayment, and the process required to access that support both cumbersome and demeaning. The two major changes that this legislation introduces – increasing compensation to 100% of lost income, and transferring responsibility for the management of that financial assistance being moved from WINZ to the Ministry of Health – will unquestionably remove two major disincentives that exist within the current regime.”

Eric Crampton (former GMU student, now NZ economist who supported the bill) notes that a key move in generating political support was that New Zealand MP Chris Bishop framed the bill as compensating donors for lost wages rather than paying them. A decrease in the disincentive to donate–an increase in the incentive to donate. To an economist, potato, potato. But for people whose kidneys fail in New Zealand, the right framing may have been the difference between life and death.

This is also a good time to remind readers of Held, McCormick, Ojo and Roberts, A Cost-Benefit Analysis of Government Compensation of Kidney Donors published in the American Journal of Transplantation.

From 5000 to 10 000 kidney patients die prematurely in the United States each year, and about 100 000 more suffer the debilitating effects of dialysis, because of a shortage of transplant kidneys. To reduce this shortage, many advocate having the government compensate kidney donors. This paper presents a comprehensive cost-benefit analysis of such a change. It considers not only the substantial savings to society because kidney recipients would no longer need expensive dialysis treatments—$1.45 million per kidney recipient—but also estimates the monetary value of the longer and healthier lives that kidney recipients enjoy—about $1.3 million per recipient. These numbers dwarf the proposed $45 000-per-kidney compensation that might be needed to end the kidney shortage and eliminate the kidney transplant waiting list. From the viewpoint of society, the net benefit from saving thousands of lives each year and reducing the suffering of 100 000 more receiving dialysis would be about $46 billion per year, with the benefits exceeding the costs by a factor of 3. In addition, it would save taxpayers about $12 billion each year.

Why the Death of Shotgun Marriage Has Been Greatly Exaggerated

That is the paper’s subtitle, the title is “Midpregnancy marriage and divorce,” and the authors are Christina M. Gibson-Davis, Elizabeth O. Ananat, and Anna Gassman-Pines.  Here is the abstract:

Conventional wisdom holds that births following the colloquially termed “shotgun marriage”—that is, births to parents who married between conception and the birth—are nearing obsolescence. To investigate trends in shotgun marriage, we matched North Carolina administrative data on nearly 800,000 first births among white and black mothers to marriage and divorce records. We found that among married births, midpregnancy-married births (our preferred term for shotgun-married births) have been relatively stable at about 10 % over the past quarter-century while increasing substantially for vulnerable population subgroups. In 2012, among black and white less-educated and younger women, midpregnancy-married births accounted for approximately 20 % to 25 % of married first births. The increasing representation of midpregnancy-married births among married births raises concerns about well-being among at-risk families because midpregnancy marriages may be quite fragile. Our analysis revealed, however, that midpregnancy marriages were more likely to dissolve only among more advantaged groups. Of those groups considered to be most at risk of divorce—namely, black women with lower levels of education and who were younger—midpregnancy marriages had the same or lower likelihood of divorce as preconception marriages. Our results suggest an overlooked resiliency in a type of marriage that has only increased in salience.

That is via Kevin Lewis and Anecdotal.