Why doesn’t America have electronic medical records?

Ezra Klein poses the question:

I’ve never read a compelling explanation of why the nation’s doctors and hospitals haven’t broadly adopted electronic medical records.  It’s not as if they’re allergic to technology.  At this point, cardiovascular care employs every strategy but astral projection to keep our in rhythm.  It’s not as if it wouldn’t be cheaper and easier for them.  The man hours and costs from keeping track of files, printing out labels, finding lost manila folders, and getting sued because the nurse misread the doctor’s handwriting are enormous.  Theoretically, insurers should be pushing on this, but they seem behind the curve, too.  And it’s not as if there aren’t tested programs in use — not only does Europe do electronic records well, but the VA does them beautifully, and they’ve released their primary program, ViSTA, as open source, for free use by anybody.

I can think of four reasons. 

1. Most of the benefits are reaped by the patient, and in the long run.  Today’s suppliers don’t realize these benefits in the form of profits.

2. The United States has relatively weak data protection laws.  Many people don’t want outsiders to know their medical history, and information compilers fear lawsuits if the information leaks out or is hacked.

3. No single provider has an incentive to move first in this game.  Why computerize if no one else has?

4. I haven’t computerized my office (is Alex laughing?), I worry more about surviving until the next day.

The comments over at Ezra’s are excellent.  And if you think that electronic records are the source of vast productivity gains, just have Medicare mandate such a change.  Readers?

Addendum: Here is Arnold Kling.

What’s the social value of Microsoft?

Here is Mark Thoma and Robert Barro, here is Brad DeLong.  You may recall that Barro had claimed that the social value of the company was roughly equal to its revenue; of course many critics objected.

Imprecise questions are being thrown around.  It is fine to question Microsoft’s net contribution by asking what other companies would have done in its stead.  But then, to be consistent, we should ask what revenue those alternate-universe companies would have earned.  The correct comparison is one set of social values minus revenue (that of Microsoft) to another (hypothetical) social value minus revenue (what would have happened without Bill Gates).  Would the alternative have been more or less monopolistic, more or less stifling of innovation, more or less able to enforce copyright?  And so on.  We can speculate but of course we’ll never solve those counterfactuals. 

We can, however, assert the nonetheless profound truism that gross social benefits of Microsoft, over time, exceed the gross revenue of the company by quite some amount.  The company is a highly imperfect price discriminator and many people rip off its software.

I’ll call the comparisons in the counterfactual (different revenues, propensities to monopolize, social values, etc.) a wash and thus I believe that the correct measure of the social value of the company is much greater than its revenue. It would make more sense to compare the company to a first best if we thought there was a feasible antitrust policy to get us there, but I find that hard to believe.

In other words, Barro probably is underestimating the value of Bill Gates and Microsoft.

Tyrone’s immigration plan

Tyrone just sent me the following, I added in the link:

Tyler, you had a good point that the demand for immigrant labor is often the demand for illegal immigrant labor, but you didn’t take it far enough.  We too frequently conflate illegal labor with unskilled labor, when instead this dichotomy should be challenged.  We need to make illegal labor more highly skilled and thereby restore its good name.

Toward that end I have a modest proposal.  The federal government should allow, by default, any northern European to work in the United States illegally.  The labor would be legal in the sense that the employer would face no criminal penalties.  But the worker would collect no social security or Medicare benefits, receive no OSHA protections, and the worker would never be sure how long this grace period would last.

Hi-tech employees, especially for short projects, would receive many offers very quickly.  So would many medical professionals.

Who would come?  It is obvious — those from high marginal tax rate countries.  That means France and Sweden, etc.  In essence our government would be engaging in tax arbitrage by not paying these people benefits.  Those are the optimal illegals.

Transient communities of Swedes would congregate on the shores of the Minnesota Lakes, sharing lutefisk, waiting for rides (a lot of them come from Stockholm and thus can’t drive), and exchanging rumors about where hi-tech work is available.

These people would never fully integrate with the capital stock of the United States.  But the program would attract people who already had high levels of human capital from their native Sweden.

Don’t charge them admission for a visa, that would give the gains to our rapacious and spendthrift government, rather than to the people of this fine land.

Do let them own pets.

But don’t make them legal, that just means higher wages for them and lower net gains for all right-thinking, baseball-loving Americans.

All the legal spots should be reserved for Mexicans.

Poor, poor Tyrone.  His mind never recovered from that military ambush he faced in the Congo.  That is why he talks of giving free entry to all Venezuelans, or at least the women.  He wants to set up an artificial American island just off the shores of Cuba, with lighted beacons along the way.  He wants to give "the Puerto Rico deal" to Trinidad, or indeed to any individual citizen of Trinidad who wishes to take it.  He thinks that free citizenship should be offered to any person who can score in the 80th percentile on GREs. 

Poor Tyrone has no idea of the cultural foundations of democracy.

Will you give me your secret blog address?

A loyal MR reader (and prominent game theorist) writes:

…your [no] response makes sense because you know that, averaging over the population of all people who would write to you as i did, the elasticity [of purchase] is finite, despite our claims.  However, you also realize that now, in response, the second-best solution for me to make a binding commitment never to buy the book.  (Such a commitment is no less credible than the unverifiable claims you are soliciting.)  Then you will behave as a perfect price-discriminator and give me the address.  (your marginal costs are negative.) 

But we realize that this is inefficient because it may happen that I may need to buy the book in the future and we will lose out on those gains from trade.  So in the interest of Pareto efficiency, you should tell me the address.

Oh, Pareto optimality is a such an overrated idea.  In any case the offer still stands.  You can pre-order the book (as so many others have done…thanks everyone!), write me at [email protected], and get access to the new secret blog.

Addendum: Here is Bryan Caplan, discussing the book, on whether economists (and gays) should come out of the closet.

Female tennis players and wages — politically incorrect paper of the day

Female tennis players play more conservatively and commit more
unforced errors when playing critical points.  Does this explain the
upper-echelons wage gap?

Here is the fact in more detail:

Women are significantly more likely to hit unforced errors at the most
crucial stages of the match, while men exhibit no significant variation
in performance.  Specifically, about 30% of men’s points end in unforced
errors, regardless of their placement in the distribution of the
importance variable.  For women, about 36% of points in the bottom
quartile of the importance distribution end in unforced errors, but
unforced errors rise to nearly 40% for points in the top quartile of
the importance distribution.  What is remarkable is not the difference
in the levels (men are more powerful and therefore more likely to hit
winners at any stage).  The interest lies in the differences in the way
men and women respond to increases in competitive pressure.

Here is the full article.

Betting markets in everything

BetUS.com figures the odds are 20-1 that someone will get trampled
while scrambling to snag one June 29.  The site has also put odds on how
long the batteries will last and whether the devices will be recalled.

Here is the source, and thanks to John De Palma for the pointer.  There are many other odds at the link, spontaneous combustion of the phone is listed at 150-1.

Immigration enforcement ideas

My preferred immigration plan would be to massively increase the number of visas, set a very minimal bar to meet–not a terrorist, not a criminal, not carrying a hideous contagious disease–and then auction off various tranches of visas, classed not by type but by length of stay.  Let the visas be transferrable.  Then let immigrant communities do enforcement for you, as illegal immigrants suddenly threaten to erode the price of their valuable asset: the right to stay in-country.

That is from Jane Galt

The implicit model is that once people have spent money for an asset they value that asset more than they would value their prospective income stream from living in the United States.  Jane postulates a kind of endowment effect for immigrants.  Moving away from family-based immigration also limits potential trustable allies for law-breaking. 

I suspect that auction-based proposals will result in too few legal unskilled immigrants, and also more illegal immigration of the unskilled, but I would not rule out this idea just yet.  I’m still waiting for someone to write down an impossibility theorem for a good immigration policy, noting that much of the domestic demand is for immigrant traits (e.g., cheapness and immediate readiness to work) which are strongly correlated with illegality.  That is some employers want (explicitly or implicitly) to deny some of their workers the benefits of integrating with the U.S. capital stock.  Has anyone analyzed immigration policy in terms of finding optimal price discrimination on the side of a country-sized monopsonistic buyer…?

The marginal product of capital, and policy irrelevance

The May 2007 Quarterly Journal of Economics offers up a fun piece on the marginal product of capital, earlier version here.  The bottom line is startling, though it requires only a simple model:

Whether or not the marginal product of capital (MPK) differs across countries is a question that keeps coming up in discussions of comparative economic development and patterns of capital flows.  Attempts to provide an empirical answer to this question have so far been mostly indirect and based on heroic assumptions.  The first contribution of this paper is to present new estimates of the cross-country dispersion of marginal products.  We find that the MPK is much higher on average in poor countries.  However, the financial rate of return from investing in physical capital is not much higher in poor countries, so heterogeneity in MPKs is not principally due to financial market frictions.  Instead, the main culprit is the relatively high cost of investment goods in developing countries.  One implication of our findings is that increased aid flows to developing countries will not significantly increase these countries’ incomes.

The rough equality of MPKs [correction: financial rates of return] means that capital can flow to where it is most productive.  That means if a country receives some aid, and converts that aid into useful capital goods, less capital flows into your country.  A version of neutrality holds.  Of course there is no reason to focus on aid in this argument.  Most one-off improvements (or destructions) wash out in the longer run, due to subsequent adjustments in the capital stock.  The one-off improvements matter only if liquidity and credit imperfections hinder the international mobility of capital; such imperfections would mean that transfers could bring about a permanently higher level of capital.

No, I’m not ready to "press the yes button" on this model (should I be?), but it is a good example of how open economy considerations can overturn our expectations, or how easily economics can generate a counterintuitive conclusion.  You also may have noticed Borjas and Rodrik using a version of this model lately, attempting a Brad DeLong Smackdown.  I am suspicious.  It’s not a model they believe in, or if they do I am waiting for Borjas to stop warning us about capital destruction costs more generally… 

Grave Matters

Over time, the typical ten-acre swatch of cemetery ground, for example, contains enough coffin wood to construct more than forty houses, nine hundred-plus tons of casket steel, and another twenty thousand tons of vault concrete.  To that add a volume of formallin sufficient to fill a small backyard swimming pool and untold gallons of pesticide and weed killer to keep the gravehard preternaturally green.

That is from the really quite interesting Grave Matters: A Journey Through the Modern Funeral Industry to a Natural Way of Burial, by Mark Harris.  As you may have guessed, the book is a plea for eco-friendly burials.  As for me, I would like my body to be disposed of at a profit, though I doubt if we will have seen enough sectoral deregulation by then…

Will Facebook take over the world?

…a few weeks ago, Facebook pulled a MySpace-like maneuver.  The site tore down its walls and opened its pages to outside developers.  A new tool kit called Facebook Platform
allows any programmer–a bored student or a multimillion-dollar
corporation–to peel back the site’s breastplate, poke around, and
rearrange the innards.  None of the nearly 900 (and counting) programs
released so far are particularly life-changing–among the most popular
add-ons are a "Graffiti" program (downloaded by more than 3.3 million
people as of this writing) that lets you doodle other people’s profiles
and an "Honesty Box" that lets your friends say, anonymously, what they
really think of you [TC: uh-oh].  Collectively, though, these programs are hugely
significant.  If the site figures out a smart way to deploy these mini
applications, it will be more than just a social network.  Facebook will
turn into a do-everything site with the potential to devour the whole
Internet.

Here is the article.  I’ve now filled out my profile, and even put a picture on it, with Yana’s aid of course.  Since I don’t have the slightest idea what to do with it (will I ever?), I suppose I am not qualified to comment on this interesting hypothesis.  By the way there is also a Facebook group for MarginalRevolution, not set up by me I might add.