Should all patients be treated the same?
If a woman is a lawyer, or the wife of a lawyer, does she get better treatment? Lawyers seem to be regarded by doctors as especially litigious patients who should be treated with caution when it comes to risky procedures such as surgery. The rate of hysterectomy in the general population in Switzerland was 16 percent, whereas among lawyers’ wives it was only 8 percent — among female doctors it was 10 percent. In general, the less well educated a woman is and the better private insurance she has, the more likely it is that she’ll get a hysterectomy. Similarly, children in the general population had significantly more tonsillectomies than the children of physicians and lawyers. Lawyers and their children apparently get better treatment, but here, better means less.
That is from Gerd Gigerenzer’s Gut Feelings: the Intelligence of the Unconscious. It is a good microeconomics question to ponder the conditions under which a) this is efficient, and b) you would rather be the poorer patient or the non-lawyer than the lawyer.
The Romers of Berkeley, on fiscal policy
…tax increases are highly contractionary. The effects are strongly
significant, highly robust, and much larger than those obtained using
broader measures of tax changes. The large effect stems in considerable
part from a powerful negative effect of tax increases on investment. We
also find that legislated tax increases designed to reduce a persistent
budget deficit appear to have much smaller output costs than other tax
increases.
Their work is of the very highest quality, and not to be confused with many of the more dubious claims made about taxation and investment. In particular they make a point of isolating exogenous changes in the tax code. Here is the paper. Here is a non-gated version.
Taxation and fairness
1. What Greg Mankiw said
2. What Lew Frankfort said: "I don’t think it is
unreasonable…for the C.E.O. of a company to realize 3 to 5
percent of the wealth accumulation that shareholders realize.”
Background: "Mr. Frankfort, the 61-year-old Coach chief, took home $44.4 million
last year. His net worth is in the high nine figures. Yet his pay and
net worth, he notes, are small compared with the gain to shareholders
since Coach went public six years ago, with Mr. Frankfort at the helm.
The market capitalization, the value of all the shares, is nearly $18
billion, up from an initial $700 million."
3. What Matt Yglesias said: "The economy grew at a perfectly rapid clip in a broad-based manner in the 1950s and 60s."
4. What L. Ron Hubbard said: "…one of the greatest single moves which could be made to advance and vitalize a culture such as America would be to free, completely, the artist from all taxes and similar oppressions."
5. What Tyler said: "If you believe in the integrity of personal identity over time, the greatest unfairness is when people die young. Let’s start by taxing the lucky old. If you believe in the time-slice view of identity, the very old have a rough time of it. Let’s start by taxing hipsters."
What I’ve been reading
1. Vie Francaise, by Jean-Paul Dubois. He is the French Philip Roth; the bottom line is that I finished it, and not just because of the occasional mentions of Adam Smith.
2. Gut Feelings: The Intelligence of the Unconscious, by Gerd Gigerenzer. The author is a smart guy and an accomplished scholar, but despite his best efforts this book is a few years too late.
3. Endless Universe: Beyond the Big Bang, by Paul J. Steinhardt and Neil Turok. Inflation vs. cyclic theories, the latter help you stay an agnotheist by resolving the Goldilocks problem; only some of the universes through time have order as we know it. I enjoyed it, even though I am sick of popular physics books. It’s also the first time I’ve understood anything about the Higgs field debates. Recommended.
4. The Right Talk: How Conservatives Transformed the Great Society into the Economic Society, by Mark A. Smith. The main thesis is that right wingers have made America a more conservative society by framing issues in terms of economic reasoning. Maybe I am too close to the topic, but I didn’t learn anything from the book. At the very least it should interest progressives looking to mimic the successes (?) of the right wing.
5. Blankets, by Craig Thompson. This I loved and read in one sitting; it is a very good introduction to graphic novels, especially if you are not thrilled by Alan Moore.
The best mid-sized chunk I read today
…the fraction of Kenyans who are satisfied with their personal health is
the same as the fraction of Britons and higher than the fraction of
Americans. The US ranks 81st out of 115 countries in the fraction of
people who have confidence in their healthcare system, and has a lower
score than countries such as India, Iran, Malawi, or Sierra Leone.
While the strong relationship between life-satisfaction and income
gives some credence to the measures, the lack of such correlations for
health shows that happiness (or self-reported health) measures cannot
be regarded as useful summary indicators of human welfare in
international comparisons.
Sentences of…something or other
If those of us who profess to value public schools and the principle of democratic access they uphold cannot find the courage or the motivation to fight in their defense, we may soon wake up to find that they have been replaced by wholly owned subsidiaries of McDonald’s, Burger King, and Wal-Mart.
That is Jonathan Kozol, writing in the August 2007 issue of Harper’s. Note that while there are some good (though in my view not decisive) arguments against vouchers, Kozol instead focuses on reminding us that corporations are greedy profit-maximizers. Nor does he mention that in America’s inner cities, "democratic access" to good french fries far exceeds democratic access to good schools. And might not Louis Vuitton join Wal-Mart in educating some of our children?
Kozol does (correctly, but without explanation or analysis) describe the results of U.S. voucher experiments to date as "very mixed." You might think that means our attitude toward vouchers should be "very mixed" but alas not.
Impeach Jonathan Kozol, impeach him now.
Addendum: Believe it or not, this post isn’t Alex.
Germany fact of the day
Statisticians have been scratching their heads lately over figures
that suggest Germans, among the most barren of western Europeans, are
rediscovering the joys of procreation. In the first quarter of 2007, nearly 15 per cent more babies were born in Düsseldorf than in the same period last year.
Here is more.
Which are the books with the smallest print?
Editions of Dostoyevsky and Tolstoy often have excessively small print. Why? The major works by those authors are long. Larger print will make the volumes too long and thus too expensive. Perhaps more importantly the volumes will appear too forbidding to the average buyer.
But isn’t miniscule type for Raskolnikov hard to read? Ah…most of the people who buy the book don’t read it. If miniscule type gets them to stop reading sooner rather than later, you might even call it a Pareto improvement.
Self-help books almost always have reasonably large print or even ridiculously large print. The author doesn’t have much to say and the publisher wishes to pad the book so it looks real. Furthermore most self-help books are read (at least in part), so to keep the reader happy the print should be large.
Can you think of other generalizations?
Which books are most likely to go into "Large Print" editions?
Restoring Brad DeLong’s belief in NAFTA?
Maybe this paper will help. The more globalized parts of Mexico — most of all the north — have done extremely well since NAFTA passed. The biggest problems remain in the least globalized parts, most of all the south and big chunks of the interior. The paper has just appeared in the new NBER book on globalization and poverty.
All monies are commodity monies
Millions of Indian coins are being smuggled into neighbouring Bangladesh and turned into razor blades. And that’s creating an acute shortage of coins in many parts of India, officials say.
Police in Calcutta say that the recent arrest of a grocer highlights the extent of the problem. They seized what they said was a huge coin-melting unit which he was operating in a run-down shack…
"Our one rupee coin is in fact worth 35 rupees, because we make five to seven blades out of them," the grocer allegedly told the police.
In some cases the temporary solution is a private money:
To deal with the coin shortage, some tea gardens in the north-eastern state of Assam have resorted to issuing cardboard coin-slips to their workers.
The denomination is marked on these slips and they are used for buying and selling within the gardens.
Here is the story. The pointer is from www.geekpress.com.
Wage compression
I wrote this paragraph two days ago:
Employers also may give workers raises at a slower rate; this is called “wage compression.” If it is hard to cut wages, wait and make sure the worker really deserves a pay increase. Wages will lag productivity, but the net result is fewer situations where a direct wage cut is necessary.
The implication of course is that low unemployment, and a stable macroeconomy, will mean that wages lag behind productivity. Here is my earlier post on wage compression.
The economics of cats
Many people have been clamoring for this topic over at the secret blog.
My views are simple: we have too few cats in the world, relative to dogs. Dogs, for reasons of temperament, can in essence precommit to being our slaves. (As long as they are not Irish Setters.) That makes us more willing to create or support an additional dog. The quantity of dogs is nearly Pareto optimal, although their emotional slavery to us raises ethical questions about the distribution of power in the relationship.
A cat cannot "promise," genetically or otherwise, that her kittens will become your (or anyone’s) slaves, if only you don’t neuter her. The kittens never come about, or they meet a cruel fate rather quickly.
If you must support the life of either a cat or a dog, choose the undervalued cat. This argument requires only that the cat gets some value out of being
alive, and that value should carry some weight in our
all-things-considered moral calculations.
More generally, you should go around helping the (undervalued) people who insult you, or the people who otherwise signal their independence from you. The craven are already being served quite a bit.
Don’t be tricked by the biases of fiction
Robin Hanson (who else?) writes:
…teen romp movies tend to portray parents and teachers as inept,
clueless, sexually repressed, but ready to help when help is wanted.
If so, teens should realize that parents and teachers probably know
more, are more sexually satisfied, but less available to help, than
teens realize. We should be able to find hundreds of other applications, such as using the standard biases of science fiction.
Repugnant markets
Tim Harford’s first radio documentary "Analysis: Repugnant Markets", will air on BBC at 8.30pm UK time (3.30pm EST) today – featuring Al Roth, Virginia Postrel, and Robin Hanson, among others. The show will go on-line here, with a transcript, sometime later today.
Auditing natural resource revenues
When my editor and I were exchanging drafts of this piece, my spam blocker wouldn’t let them through. There is too much talk of Nigeria and diamonds! Here is one excerpt:
Paul Collier, an economics professor at Oxford University,
has a new and potentially powerful idea. In his recently published
book, “The Bottom Billion: Why the Poorest Countries Are Failing and
What Can Be Done About It” (Oxford University Press), Professor Collier
favors an international charter – some widely publicized guidelines
that countries can voluntarily adopt – to give transparency in spending
wealth from natural resources. A country would pledge to have formal
audits of its revenues and their disposition. Imagine
PricewaterhouseCoopers auditing the copper revenues of Zambia and
issuing a public report.
It’s not as futile as it might sound:
Professor Collier’s proposal at first glance seems toothless; a
truly corrupt country probably wouldn’t follow the provisions of the
charter, which, after all, is voluntary. Yet citizens could pressure
their government to follow such a charter, and the idea of the charter
would create a focus for political opposition and signify international
support for concrete reform.Foreign corporations would bring
further pressures to heed the charter. Multinational companies that are
active in corrupt countries might receive bad domestic publicity.
Eventually the companies might push for adherence to the charter, even
if the charter limited their ability to bribe. In another context, De
Beers has been stung by bad publicity about “blood diamonds,” and the
company is now a force for positive change where it operates.In
the optimistic case, a few poor countries start abiding by the charter.
Those countries prosper and attract more investment and status in the
international community. The pressure to adopt the charter would then
spread. Of course, promoting the charter costs relatively little and
the potential benefits are significant. International pressures did
eventually force a change in South African apartheid. So maybe they can
improve other countries as well.
Did you know that Tony Blair was already promoting such a charter? And the Nigerian government (really) already commissioned a private sector audit and now has enacted a version of this idea into law? We’ll see how that goes, but Nigerian flirtation with rule of law ideas is one of the underreported stories of this year.
Paul Collier’s The Bottom Billion is a very exciting and important book. It is rare to read something on economic development that is true, non-trivial, and potentially useful. I recommend this book highly, it is also short and easy to read. Here is a good review of the book by Niall Ferguson.
Here is the whole column.