Get your Flu Shot!
We do not respond to risks rationally. We are scared of Ebola, pesticides, nuclear radiation and terrorists but the flu? Who cares about the flu? You should. In an average year, the flu kills almost as many people as die in auto accidents (36,000 for the flu, 42, 815 for highway accidents in 2002) and this year experts expect some 50-70 thousand flu deaths. True, those over 65 years of age and older are most at risk but thousands of younger people die from the flu every year. A flu shot reduces your chances of death by 50 percent. (Here is more flu info from the CDC.)
Buy, Eye in the Sky
For those who have nearly everything and can afford more, you can now buy your own space mission (on Ebay naturally). The offer, from SpaceDev, a real firm that sells micro-satellites, does not appear to be a hoax. Although, like space tourism, this is obviously in the early stages and something of publicity stunt it is also another important step towards the private exploration of space. For more on the offer see this item in Wired News.
More on Private Schooling in India
The Centre for British Teachers has an interesting report by James Tooley and Pauline Dixon on private schools in India. See also my earlier post on this subject and Tooley’s chapter in The Voluntary City.
Subgame perfect equilibrium
My favourite example: We will beat any competitor’s advertised price or your tires are free!
Cadaveric vs Live Organ Donation
The basic point is simple – financial incentives for cadaveric donation of organs would save lives and would also reduce the demand for live donation, a costly and difficult procedure. (See my previous posts on this issue here and here). Tyler’s post obscures the basic point by introducing a debate about “a truly free market in organs” by which he means allowing payment for live donors. I won’t be drawn into that debate today, not because it isn’t an interesting issue, but because it is not germane to the issue of financial incentives for cadaveric donation. We should have the latter regardless of our position on the former. Note also that for obvious reasons live donation primarily affects kidneys only and doesn’t reach the issue of how to save the lives of transplant patients who needs hearts, lungs and other organs.
Hollywood Heavies
While Hollywood lobbies Congress for protection in the more gentile manner (see Tyler’s post today) the Teamsters have taken direct action. Axium International planned to hold a symposium in LA on the Canadian Tax Credit Incentive for film production. The Teamsters threatened to bring hundreds of supporters and 30-50 trucks to shut the hotel down where the symposium was to be held. Axium backed down, cancelled the lectures and wrote a craven letter to Arnie in Daily Variety – “please exert your utmost through the California legislature, the Governor’s office or the federal government to enact legislation ensuring that the entertainment production business remains, for now and ever, in California.”
Note that I have a bias on this issue – see the post below.
Movie IPOs
An investment firm is raising money to finance movie projects by letting film buffs buy a piece of Ethan Hawke, or at least a share in a project he’s involved with, and trade that as a stock.
This isn’t a pretend Internet stock exchange based on the rise and fall of Hollywood stars. Chicago-based brokerage Civilian Capital is letting investors buy actual shares in a film.
(More here.) Why not? You can own stock in the Green Bay Packers and bonds backed by the music of David Bowie. This is a method of generating buzz, a natural audience, and capital. Thanks for the link go to my brother Nic Tabarrok, a movie producer in Toronto. I once invested in one of his films. I lost money but a lot less than in Webvan – I’d do it again.
Sleazeball lawyer in a low-cut dress
I am speaking of Erin Brockovich. Sure, I liked the movie but the true story on which it was based was a lie. There was no cancer cluster in Hinkley, no scientific theory of harm, no coverup at the water office (see here for links). Having had one success in Hollywood, Brockovich is now after another this time by fanning hysteria that the kids at Beverly Hills High School (yes, 90210) are getting cancer from a nearby oil well. I smell a movie in the works.
Tax Incentives for Organ Donation
It looks like Wisconsin will soon let organ donors take up to a $10,000 tax deduction to cover travel expenses, lodging, and lost income. I have mixed feelings. I am in favor of compensating donors or their families for organ donation but the net tax break is quite small. More importantly, one of the costs of the current system is that we rely on live donors far too much. Although I encourage, respect and admire donors, we should not kid ourselves, donation is not easy and not riskless. It can take a month or more to recover from the operation. We rely on live donors to an increasing extent only because of the shortage of cadaveric donors. All else being equal, therefore, I would prefer to see financial compensation for cadaveric donation or for signing your organ donor card.
Private Schooling in India
The NYTimes reports on “an educational revolution” in India where the government schools are so bad that private schooling is exploding among the very poorest of the poor. Already over 17 percent of all kindergarten, primary and secondary schools are in the private sector and in the big cities the proportion is much higher. Jean Dreze, an economist who helped write a national assessment predicts “within 10 to 15 years, government schools will be almost wiped out.”
A description of a public and private school next door to one another explains why a farmer earning $22 a month will spend nearly a fifth of his income ($4) sending his child to a private school.
In the government school, only two of the three teachers assigned for 273 students were present on a recent day. Around 50 children sat on the floor in a gloomy classroom, while 40 more sat on the grass outside, as their classroom had been under repair since August. One teacher did paperwork, while the other floated between the two groups, not actually teaching either.
At the private school next door, where the teacher-student ratio is 1 to 25, a group of smartly uniformed children stood outside counting loudly in English under their teacher’s watchful eye. They then marched in orderly single file into a classroom with blackboard and benches.
The children next door wrestled, and watched.
Amartya Sen complains that “no developed” country educates itself using private schools. Yet, the private schools of India have much in common with the private schools of nineteenth century England, Wales and America. Contrary to common belief, attendance and literacy rates in England and Wales, for example, were 90 percent or above before any major state involvment in schools. James Mill (father of John Stuart) illustrated the parallel with modern India when he wrote in 1813, “We have met with families in which, for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school. (Quoted in E.G. West’s classic Education and the State).
Furthermore, India is not alone in relying on private schools in the wake of the failure of government. Private schools are even more common in Colombia, Brazil, Argentina, Indonesia and elsewhere.
For more see James Tooley’s chapter, from which I have drawn, in The Voluntary City (I am one of the editors.)
The Mutual Fund Scandal – much ado about nothinig
Let’s take it for granted that insiders have used the peculiar pricing practices of the mutual fund industry to transfer some profits from buyers. According to some accounts, hundreds of millions of dollars have been transferred in this way (see Tyler’s posts here and here). But remember mutual fund buyers get quarterly statements showing their returns net of all chicanery. Is it so hard to believe that buyers make their decisions based upon their actual returns? A mutual fund that performs poorly is a mutual fund that performs poorly regardless of whether this was due to bad investment decisions, high expense ratios, or a slick transfering of funds. A few investors might buy and then accept any return as a matter of luck but the marginal investor can and does move funds around easily (what market is more contestable?) – not to mention the institutional investors. As a result, it makes little difference whether the managers get their return through the above-board expense ratio or the under-handed exploitation of stale pricing.
Sure, there may be some exploitation at the margin but this is akin to banks that charge fees for “free checking” or restaurants that include a gratuity in their bill. It’s annoying and the occasional consumer may be dunned but once consumer and competitor responses are taken into account the net transfer is small.
If you doubt the above, assume that we eliminate all under-handed practices. Do you think that consumers will now earn higher returns? Or, do you think, that other fees will rise to make up the difference? I predict the latter. The only danger is that in their haste to make political hay the politicians will end up passing some dumb law that makes everyone worse off.
End Phase 3
Harvard neurologist Peter Lansbury argues in the WP that we should end mandatory Phase 3 clinical trials for new pharmaceuticals. Aside from the expense of Phase 3 trials (hundres of millions of dollars) and years of delay he writes that:
There are also scientific reasons to replace Phase 3. The reasoning behind the Phase 3 requirement — that the average efficacy of a drug is relevant to an individual patient — flies in the face of what we now know about drug responsiveness. Very few drugs are effective in all individuals. In fact, most are not effective in large portions of the population, for reasons that we are just beginning to understand.
It’s much easier to get approval for drugs that are marginally effective in, say, half the population than drugs that are very effective in a small fraction of patients. This statistical barrier discourages the pharmaceutical industry from even beginning to attack diseases, such as Parkinson’s, that are likely to have several subtypes, each of which may respond to a different drug. These drugs are the underappreciated casualties of the Phase 3 requirement; they will never be developed because the risk of failure at Phase 3 is simply too great.
Lansbury also recognizes the importance of off-label prescribing and how it flies in the face of FDA power.
Once the FDA has approved a drug based on its effectiveness against one condition, it can be prescribed for any other condition. This practice recognizes that your physician is best equipped to evaluate all the available information and advise whether you could benefit from a particular drug. About 40 to 50 percent of all drug use is for such unapproved, or “off-label,” uses. Some drugs that “failed” in Phase 3 trials for one condition, but were approved for another, are still widely prescribed for the first because physicians agree that the evidence shows they can be effective.
I agree with Lansbury’s analysis and so do a lot of physicians. See my papers Assessing the FDA via the Anomaly of Off-Label Drug Prescriptions and Do Off-Label Drug Practices Argue Against FDA Efficacy Requirements? Testing an Argument by Stuctured Conversations with Experts.
Road Pricing
Adrian Moore of the Reason Foundation writes:
A new report from Deloitte Research is one of the best overviews of the current state of the art of road pricing that I’ve seen. It provides an in-depth assessment of London’s 2003 area-pricing scheme, as well as up-to-date discussions of corridor pricing (e.g., California’s 91 Express Lanes), national schemes (like Germany’s forthcoming GPS-based tolling of all heavy trucks), and future integrated schemes (in which pricing would become the predominant means of paying for surface transportation).
Vuelos Baratos
Not sure what the headline means? Then you won’t be able to get the cheap flights. A little known, but standard means of price discrimination among airlines is to advertise different prices in different languages and in particular to sell blocks of cheap seats to discounters who specialize in serving poorer immigrant communities.
Worrying Survey on Democracy
An article in Sunday’s Washington Post drew encouragement from a World Values Survey that found over 60 percent of people in Arab countries agree that “Democracy is the best form of Government.” It passed over without comment, however, the finding from the same survey that less than 40 percent of people in the U.S., Canada, Australia and New Zealand agreed. What were the other 60 percent thinking? Can this survey be accurate? The figure is not in the online WP article and I couldn’t verify it’s accuracy from the source but this United Nations report has the same figure (figure 1).