Tyrone on single-payer health insurance
"Any dummkopf can see we should value human life at replacement cost, not willingness to pay in a market setting. (If P > MC, due to monopoly, MC is the correct measure of value, especially if we can produce more of the stuff.) And what is the replacement cost required to get another baby into the world? A pittance. We should spend half as much on health care as we are doing now, perhaps less.
Let’s institute rationing, and yes nationalization of either insurance or service provision are possible means to that end. Let’s give everyone access to basic preventive care but limit or perhaps even ban all expensive life-prolonging procedures. At the same time, our other policies should be pro-natalist, and that includes a favorable environment for religion and restricted vacation time, not just dollar bonuses for kids and free public education. No good utilitarian can resist that conclusion.
Yes, that treats human lives as interchangeable, but if you don’t buy that, you have no business defending the economic approach to human life in the first place. (The Devil in Goethe’s Faust: "Warum machst Du gemeinschaft mit uns, wenn Du sie nicht durchfuehren kannst?")
By the way, let’s drive down pharmaceutical prices. Subsidizing babies is a cheaper way of producing more years of life.
Yup, it’s all about churning out those Quality-Adjusted Life Years. Current unborns may feel hypothetical or contingent to you, but I tell you, they are just as real as I am. And when those people come into existence — if they come into existence — they will be more real than I am.
At best, even assuming away the usual market failure issues, market-driven health care allows people to invest too many real resources keeping themselves alive. You can kick and scream all you want, but at the end of the day you cannot escape this obvious overinvestment. The problem is that the market works, in the sense of getting people what they want. And if government involvement can save on insurance company overhead at the same time, or alleviate adverse selection, so much the better."
Tyrone is so depressed, and so unhappy with who he is, that he comes up with drivel like this. Why did I even pass on the request? After jotting down these notes, Tyrone told me that if push ever came to shove, I should not spend more than $8000 keeping him alive. Of course I refused to agree; what would I do without him? What would my wife do without him? And what kind of person would you think I am, to sell him for mere dollars and cents?
Addendum: Here is Will Wilkinson’s health care plan.
Andrew Samwick on pension reform
Here are the gory details. Best excerpt:
"It takes a better economist than me to understand how reducing contributions by that much is going to protect benefits and put the system on a sounder footing," said Jeremy I. Bulow, an economist at Stanford University.
That’s actually funny, since there are no demonstrably better economists than Jeremy Bulow.
Opening up iPod
French parliamentarians finished drafting a law on Friday that would open up Apple’s market-leading iTunes online music store to portable music players other than its popular iPods.
The new law, now set for a vote on Tuesday, would allow consumers to
circumvent software that protects copyrighted material — known as
digital rights management (DRM) — if it is done to convert digital
content from one format to another. Using such software is currently
illegal in much of the world.
This is expected to pass, here is the article.
My take: The French are probably still at the point where the songs aren’t making money but rather serve as loss leaders for the hardware. A legally forced unbundling could induce Apple to leave the market, if only to send other governments a message.
More generally, song prices are relatively low early on to induce people to lock into the technology. If you forbid lock-in, early period song prices and indeed hardware prices will be higher than otherwise (think of market exit as the limiting case). But will forced unbundling make prices lower in the long run, due to the growing competitiveness of the market? My guess is no. Something better than iPod will come along within five or ten years, so the relevant form of future lower prices is "higher quality." Allowing monopoly profits, rather than confiscating them, is the way to get there more quickly and more decisively. By enforcing interchangeability at such an early stage in the process, the French will more likely get a lame rather than a cool version of a universal access platform. How’s that for lock-in?
The new Rand health care study
The authors offer up two main points:
1. We get only 55 percent of recommended medical attention [TC: hey, didn’t an earlier Rand study show us that more care doesn’t translate into better health care outcomes?]
2. "Those with annual family incomes over $50,000 had quality
scores that were just 3.5 percentage points higher than those with
incomes less than $15,000….insurance status had no real effect on
quality."
This should make everyone uncomfortable, but most of all those who think that access to health insurance is a panacea. Here is the press release, the piece is in The New England Journal of Medicine. Am I supposed to believe the following?:
- Overall quality scores for blacks were 3.5 percentage points higher than for whites.
- Overall quality scores for Hispanics were 3.4 percentage points higher than for whites.
- Blacks had higher scores than whites for chronic care (61 percent vs. 55 percent).
- Blacks had higher scores for treatment than whites (64 percent vs. 56 percent).
- Hispanics were more likely to receive screening than whites (56 percent vs. 52 percent).
The authors say yes this really is true. Previous studies usually focused on expensive and invasive one-time procedures, such as bypass operations, where whites do have a (narrowing) advantage. If nothing else, this piece should convince us how little we understand the health care sector.
John Rawls, anti-capitalist
This is from his correspondence:
The large open market including all of Europe is aim of the large banks and the capitalist business class whose main goal is simply larger profit. The idea of economic growth, with no specific end in sight, fits this class perfectly. If they speak about distribution, it is most always in terms of trickle down. The long-term result of this – which we already have in the United States – is a civil society awash in a meaningless consumerism of some kind. I can’t believe that is what you want.
So you see that I am not happy about globalization as the banks and business class are pushing it. I accept Mill‘s idea of the stationary state as described by him in Bk. IV, Ch. 6 of his Principles of Political Economy (1848). (I am adding a footnote in §15 to say this, in case the reader hadn‘t noticed it). I am under no illusion that its time will ever come – certainly not soon – but it is possible, and hence it has a place in what I call the idea of realistic utopia.
For more see CrookedTimber. The real question is how much this should cause us to downgrade his moral philosophy. I say "a lot." I used to think there was some deep argument of consilience behind "maximin," but now I am ready to classify it as a simple mistake, akin to a person who doesn’t understand what drove the flow of traffic across the Berlin Wall in one direction and not the other.
Philosophical implications of inflationary cosmology
Recent developments in cosmology indicate that every history having a nonzero probability is realized in infinitely many distinct regions of spacetime. Thus, it appears that the universe contains infinitely many civilizations exactly like our own, as well as infinitely many civilizations that differ from our own in any way permitted by physical laws. We explore the implications of this conclusion for ethical theory and for the doomsday argument. In the infinite universe, we find that the doomsday argument applies only to effects which change the average lifetime of all civilizations, and not those which affect our civilization alone.
Got that? Here is the paper. Here is brief background.
It seems if you count all possible universes (or call them parts of our multiverse, whatever) as normatively relevant, none of your actions matter in consequentialist terms.
As to how our world, and our decisions, matter at the margin, we delve into the murky waters of infinite expected values. With an infinity of alternatives out there, our little add-on doesn’t seem to make any difference for the grand total. Why should even you raise the average outcome across universes? (TC yesterday: "No, Bryan, we are not leaping up Cantorian levels of infinity, it is just one version of you getting another Klondike bar.")
One option is that only our universe, or some other "in-group," matters. The other universes cannot count for less, rather they must count for nothing. I recoil at such a thought, but it does avoid the mess of infinities. Alternatively, we might embrace some version of Buddhism.
On the bright side, philosophic talk about modality is no longer so problematic but rather refers to facts about other existing universes. Since that problem threatened to bring morality to its knees anyway ("what do you mean, you "could" have done something different? You did what you had to do."), maybe I don’t feel so bad after all. And who should care if I do feel bad? The other me feels fine. Infinity has its benefits, and there are many worse problems.
You should lower your probability that God exists, since the Anthropic Argument will dispense with the Argument from Design. Only the ordered pockets of the multiverse can wonder about why we are here and why things seem to run so smoothly.
That’s a lot to swallow in one day, but it seems the probability of all those propositions just went up.
Addendum: Have I mentioned that inflationary cosmology and its implications fit my crude, pathetic intuitions? Since we have a universe, I feel it must somehow be a kind of cosmic "free lunch." And once you open the door for free lunches, why stop at just one? There is no good reason to rely on our locally-evolved common sense intuitions when doing philosophic cosmology.
Fluctuating inflation field
This is cosmology, not monetary policy. Guth’s theory of inflation has just received a big boost from the data. Here is Andrei Linde’s portrayal of how an inflationary field fluctuates. Here is a slower version with higher resolution. Here is Linde’s home page, which has many other time wasters.
Addendum: Best sentence I read today: "Galaxies are nothing but quantum mechanics writ large across the sky," by Brian Greene.
Dubai market falling
…the Dubai Financial Market Index shed 81.18 points or 11.7 percent to
close at 611.86 points. It has so far dropped 40 percent from its
end-2005 close and down 57 percent from its all-time high.
Is Ski Dubai like buying corporate naming rights to a sports arena, namely a sign of trouble? Here is the link, check out the blog, and thanks to jck for the pointer. Try this post on whether psychologists are better market speculators than economists.
Caught my eye
1. Incentive pay to make the buses run on time in Chile. Addendum: See also this paper.
2. A review of the new Judith Harris book.
3. Markets in everything: a torso goes for $3,000.
4. James Surowiecki defends pricing neutrality for the Internet.
5. $1000 prize for repressed memory evidence before 1800. Or was it all just made up?
6. The Dutch show a movie of naked women and homosexuality (tulips too) to potential Muslim immigrants, to make sure they understand the Netherlands is about tolerance. In Iran only a censored version of the movie — without nudity and homosexuality – is shown.
7. Europe’s free riders, and why the Euro may be headed for trouble.
Could Steve Levitt get into a top Ph.d. program today?
Read the debate. Steve says U. Chicago would nix him for lack of undergraduate mathematics classes. He believes that Harvard or MIT "might still take a chance on me today."
I am a strong believer in having at least one top school — Chicago once played this role — which accepts virtually everybody and lets competition sort them out in brutal fashion. I am also a strong believer in having more graduate students at top schools know economic history than real analysis. I don’t expect either of these wishes to come true anytime soon.
Male reproductive rights?
With the suit, NCM hopes to establish that a man who unintentionally
fathers a child has the right to decline financial responsibility for
that child, a right based on the same principles laid out in the 1973
case that made abortion legal…
The NCM has been looking for an appropriate plaintiff for this case
for more than 10 years. It finally found one in Matt Dubay…who claims he and
his ex-girlfriend did not use birth control because of her assurances
that she could not get pregnant due to a medical condition. But the
couple, who Dubay told Salon were together for about three months, did
conceive, and Dubay’s ex elected to keep the child, for whom he now
pays $500 a month in child support, despite his contention that he was
always clear about not wanting the child.
Save your moralizing, let’s do tax incidence theory. If you were a woman and wanted an unwilling father, or at least wasn’t trying too hard to avoid one, what kind of guy would you pick? Smart, not a criminal, tall, high-earning, and possibly nerdy. You also would pick a flexible, mild-mannered guy, on the grounds that he might grow to like the idea of parenthood (there is some chance you will decide to keep him in the picture).
If financial responsibility could be repudiated, these guys would find it harder to get quality sex. This is a simple economic principal: change the terms at one end of a deal, and they shift back at the other end. The ex-cons, who will take off in any case and are known to have this quality, would not be penalized. They might get even more sex.
Now which of the nerdy guys will suffer the most from holding greater "reproductive rights"? The risk-loving, sex-crazed nerds who like to sleep with strange women and are willing to chance paternity (just rolls off the tongue, doesn’t it?). And the nerds who know they are sterile or vasectomized. Did I mention the nerd who doesn’t much mind a bit of financial (and other kinds of) servitude? No longer will these guys be viewed as potential appealing "victims."
Who will mind this change the least? The local dullard — you went to high school with him but hoped you never had to marry him — who wants to settle down with a wife and family, but otherwise faced competition from the smarter nerd tricked or lured into siring a kid.
The bottom line: This change would be a tax on male nerd sex. It would boost male nerd autonomy, but which of these do nerds need more?
No, one data point does not test a theory, especially when that data point is selected for purposes of national image. Nonetheless here is a photo of Matt Dubay, computer technician. Here is a video of Matt. Prior to the paternity suit, Matt had owned his dream car, a 1998 Trans Am.
Assorted links
1. The Tyrone meme spreads to Liam, and also to my favorite movie critic. (Tyrone wants to "do Prudie," by the way, but I told him to go start his own blog.)
2. I speculate how Battlestar Galactica should end; dig into about comment #50 or so.
3. Orin Kerr, a mainstay of Volokh Conspiracy, has his own legal blog now.
4. Eric Rasmusen on living standards: "As far as [household] appliances go, it seems that the inflation adjustment is off by at least 100%.
5. From Ben Muse land, wealthy parents prefer popular rather than strict teachers for their students, and here is a new blog about the economic marvel of Mauritius.
Why don’t more businesses use prediction markets?
Last week in The New York Times (TimesSelect), Joseph Nocera quoted Robin Hanson as saying private businesses had not made a breakthrough with the use of idea futures. It seems natural to let your employees bet on future business conditions, the success of product lines, or broader questions of corporate strategy. Microsoft and Google and a few other companies have played with the idea, but it does not (yet?) seem to be taking off. Why not?
1. Prediction markets threaten the hierarchical control of top managers. It would become too obvious that most managers are idiots, unable to predict the future.
2. Prediction markets make a big chunk of the bettors into "losers." Yet within a company morale is all-important. Businesses proceed by soliciting feedback, and by reshaping their plans to pretend that everyone is on board and has an ego stake in the final outcome. Prediction markets make this coordination more difficult. Once people make bets, they start rooting for their bet to win and for the other bet to lose. They move away from maximizing the value of the firm and develop an oppositional mentality vis-a-vis other employees. Furthermore it is disruptive to have a running tally on who are the winners and losers each day.
3. No matter what they pretend, businesses are not much interested in forecasting many future variables. Successful businesses find product markets they can control for long periods of time. They do a few things really well, and let a surprisingly large number of tasks slide.
4. We already have implicit betting markets in the form of resource prices. When the information contained in those prices is sufficiently important, institutions will be organized in terms of "markets," rather than "firms." Or firms can look at resource prices in outside markets for the information they need.
5. Most employees have no rational basis on which to bet. If someone knows the truth, but is otherwise locked out from credibly signaling that knowledge to management, something is wrong with the organization of the company. The small prizes from corporate prediction markets won’t be enough to elicit that knowledge from him in any case.
6. The corporate beast is far more constrained than most outsiders imagine. Interest groups must be courted, coordinated, and sometimes fought every step of the way. When it comes to choice, there are fewer degrees of freedom than one might think. The real question is not what to do, but rather having the will and effectiveness to do it. A bit like international free trade, no? Prediction markets don’t help much in this regard.
7. When reward systems are created, employees view them as a means to distribute further privileges to insiders and favorites. Prediction markets would be viewed the same way and in fact this might be true. Who else is going to win all those bets? Do corporations really need more insider favoritism?
Your thoughts? Here are five open questions about prediction markets.
My favorite things Virginia
It feels like an eon since I have traveled, plus I have been at home with the sniffles and a nasty cough. So here goes:
1. Music: Right off the bat we are in trouble. Ella Fitzgerald was born in Newport News but she is overrated (overly mannered and too self-consciously pandering to the crowd). We do have Patsy Cline and Maybelle Carter, the latter was an awesome guitar player and a precursor of John Fahey, not to mention the mother of June Carter.
2. Writer: There is Willa Cather, William Styron, and the new Thomas Wolfe. Cather moved at age ten to Nebraska. Some of you might sneak Poe into the Virginia category, but in my mind he is too closely linked to Baltimore. If you count non-fiction, add Booker T. Washington to the list.
3. Deaf, Dumb, and Blind Person: I have to go with Helen Keller. If you choose her for "20 Questions," no one will hit upon her category.
4. Movie, set in. The first part of Silence of the Lambs is set in Quantico, Virginia. No Way Out, starring Gene Hackman and Kevin Costner, is set in DC and around the Pentagon.
5. Artist: Help! Can you do better than Sam Snead? George Caleb Bingham was born here, but I identify him with Missouri.
6. The Presidents. I’ll pick Washington as the best, simply because he had a successor, and Madison as the best political theorist. Jefferson’s writings bore me and Woodrow Wilson was one of the worst Presidents we have had.
The bottom line: Maybe you are impressed by the Presidents, but for a state so old, it makes a pretty thin showing. It has lacked a strong blues tradition, a major city, and has remained caught up in ideals of nobility and Confederacy.
Economic costs and benefits of the Iraq War
I’ve read through the new Davis, Murphy, and Topel paper on the Iraq War. They conclude that if you account for the future dangers of a Saddam-led Iraq, the war might make sense in cost-benefit terms, and yes that does count dead Iraqis. Most of all, this paper takes seriously the costs of future containment efforts that might have been needed against Saddam.
This is serious work and it deserves more attention than it will likely receive at this point. On one side, I very much doubt their assumption that a Saddam-led Iraq "raises the probability of a major terrorist attack by 4 percentage points in any given year…" On the other side, perhaps the current civil war might have occurred, sooner or later, if we had stayed out. It is also hard to estimate the costs from skepticism about U.S. WMD intelligence the next time around. As you might expect, the most important variables are the most difficult to quantify. File this one under The Policy Will be Judged by its Absolute, Not Relative, Consequences.