Category: Data Source
Are Old Scientists Less Innovative?
Paul Romer is interviewed in From Poverty to Prosperity, an excellent new book from Arnold Kling and Nick Schulz. When asked about threats to progress Romer says the following:
One factor that does worry me a little is the demographic changes. Young people, I think, tend to be more innovative, more willing to take risks, more willing to do things differently and they may be very important, disproportionately important, in this innovation and growth process.
And then he gives an example of his worry in practice:
…instead of young scientists getting grant funding to go off and do whatever they want in their twenties, they're working in a lab where somebody in his forties or fifties is the principal investigator in charge of the grant. They're working as apprentices, almost, under the senior person. If we're not careful, we could let our institutions, things like tenure and hierarchical structures and peer review, slowly morph over time so that old guys control more and more of what's going on and the young people have a harder and harder time doing something really different, and that would be would be a bad thing for these processes of growth and change. I'd like to see us keep thinking about how we could tweak our institutions to give power and control and opportunity to young people.
Here is a graph from Jason Hoyt showing how much the average age of NIH grant recipients has already increased.
Hat tip for the graph to Aleks at Statistical Modeling…. Data here.
Will Medicare cost reductions stick?
The graph above, which portrays Medicare as a percentage of gdp, is from this SSA piece. In contrast, Matt Yglesias, Kevin Drum, and others have touted a new short essay as evidence for the claim that the Obama health reform plan will succeed on the cost control front, or at least offer a reasonable chance of succeeding, or at least offers some components which will not be reversed. Here is one key paragraph:
Virtually all of the Medicare cuts enacted in 1990 and 1993, which accounted for a significant portion of the savings in those large deficit-reduction packages, were implemented. And most of the savings enacted in 1997 other than the SGR cuts – nearly four-fifths – were implemented as well.
Given that Medicare spending growth slowed significantly more than was anticipated after 1997 – in 1999, for the first time ever, it was actually lower than the previous year’s level – and the budget was balanced in 1998 for the first time in 28 years, it is surprising that Congress did not scale back even more of the savings enacted in 1997. There is little likelihood that the positive budgetary outlook that encouraged some easing of the 1997 cuts will return in coming years.
See also Box 2 in the piece (which starts slowly, so skip ahead to the meat I am citing). If you're wondering about discrepancies between these numbers and the SSA graph, the latter is as a percentage of gdp.
My view is this: the aggregate data show that Medicare expenditures, as a percentage of gdp, have expanded at a healthy clip for every medium-run period you can find since 1973. I don't doubt that the future — like the past — may well show some shorter periods which look better than others but cost control has never worked in the past on anything but a temporary basis. Citing a bunch of short periods of time doesn't convince me; they didn't stick! And only one three-year batch of cost controls showed up, as a success, in the aggregate historical data at all. (Would you believe a worsening alcoholic who pointed to many days or even weeks where his rate of drinking was declining and also mentioned that he drank less for a few years starting in 1993? Or maybe this reminds you ever so slightly of the debates over recent global cooling and short vs. long-term trends? Most progressives recognize that a few years of cooling do not contradict the evidence about the long-term trend and yet here is an odd flip of emphasis on a few short-term improvements.)
In Figure D you'll also see that the savings from the 1993-1996 partially period are offset by later, more rapid increases in Medicare spending as a percentage of gdp.
Three additional points are worth consideration:
1. The period of Medicare cost savings, in the early to mid 1990s, coincides roughly with a more general period of cost savings in health care, due to managed care. This was soundly rejected by the American public, both in their roles as consumers and voters.
2. There will be more and more older voters in the years to come.
3. We should give at least some consideration to a "mean reversion" theory, by which current cost savings increase the pressure for future splurges. I don't want to push this view too hard, but the aggregate data, as I eyeball them, seem to imply "do not reject" for this hypothesis.
On the other side of the ledger, you might argue, pro-Obama, that the very act of passing the legislation represents a countervailing force against this long-run trend of rising costs.
You can still argue for the bill on this basis: "Congress will increase future spending on Medicare as much as it can. Any other expenditures in the meantime serve a "stuff the beast" function and slow down the future rate of growth on Medicare expenditure. We'd rather spend the money on extra coverage now, realizing that the threat of future fiscal crisis will force later Medicare cuts."
That's not my point of view, but it's what I think the debate on cost control boils down to. The best case scenario for the bill is that it won't much help cost control, may not hurt it, but by pre-emption will result in more money spent on coverage and less money spent on old people.
FRED on your home page
The FRED database at the St.Louis Federal Reserve is an indispensable tool for quickly finding macro data and generating graphs. Now a FRED gadget is available which automatically updates graphs every time you visit your home page. If you have an iGoogle account just click on add stuff and search FredGraphs.
Hat tip to Mike Fladlien.
Dubai fact of the day
Dubai now has the tallest building in the world, and 11 skyscrapers that are taller than any European building.
That's from Ed Glaeser, who offers a more general take on the city-state.
What is the unhappiest day of the week?
It is Sunday, at least according to one study conducted in Germany, by Swedes. Could it be because there is much less to buy? Because the cities empty out? Because walking in nature is overrated? Because you are supposed to go to church or are supposed to spend more time with family? Indeed the effect is stronger for married people. For former East Germans there is not a significant Sunday effect.
When I lived in Germany, Sunday was my least favorite day, as it was in Wellington, New Zealand, although that is not the case living in the United States.
For the pointer I thank Bruce Bartlett.
Who buys cosmetic surgery?
Not just the rich:
…cosmetic surgery is now primarily consumed not by the rich, but by the
working and lower-middle classes, sometimes even by the poor.
According to the American Society for Aesthetic Plastic Surgery (ASAPS),
about 1/3 of cosmetic surgery is consumed by people who make less than
$30,000 a year. About 70% of it is consumed by people who make less
than $60,000 a year. It is mostly women (90%) and mostly white,
middle-aged women (80% and between 35-55 years old).
Here is a more complete account. In the Reid bill there is a tax on cosmetic surgery. In my view cosmetic surgery is not just a zero-sum game but rather it leads to better matches, more matches, and more people who are happy with their looks or with the looks of their partner(s). It also leads to higher levels of trust. And it's a sector that has, overall, lowered costs over time.
For the pointer I thank Coates Bateman.
Giovanni Peri’s latest on immigration and productivity
Here is the abstract and it has to do with a Smithian theme, namely division of labor:
Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technological change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.
The paper is here.
Alberta fact of the day
Edmonton and Calgary are among the few metropolitan areas in the developed world that are not connected to comprehensive motorway systems.
Here is much more, on highways in Canada or rather the relative lack thereof. I am not convinced by his argument that a "bigger and better" highway system is what Canada needs, but I found this interesting reading nonetheless, mostly because it shows how few highways Canada has.
NASA FAQ 2012
NASA scientists are frequently being asked questions concerning 2012 and for this reason they have created a
Q: Is there a planet or brown dwarf called Nibiru or Planet X or Eris that is approaching the Earth and threatening our planet with widespread destruction?
A: Nibiru and other stories about wayward planets are an Internet hoax. There is no factual basis for these claims. If Nibiru or Planet X were real and headed for an encounter with the Earth in 2012, astronomers would have been tracking it for at least the past decade, and it would be visible by now to the naked eye. Obviously, it does not exist. Eris is real, but it is a dwarf planet similar to Pluto that will remain in the outer solar system; the closest it can come to Earth is about 4 billion miles.
Sigh…. I too fear for our planet.
Unemployment Breakdown
The NYTimes has a nice interactive graphic on unemployment rates and changes over time by demographic characteristic. I am in the category–white men ages 25-44 with a college degree– with almost the very lowest unemployment rate (3.9%). Just to compare, as pointed out in the comments, black males 15-24 without a high school degree have an unemployment rate of 48.5%. Check it out.
Hat tip to FlowingData.
Do cellphones outnumber light bulbs in Uganda?
Hat tip goes to the always-impressive Rachel Strohm.
Fifty Years of Economic History in one Figure
David Beckworth sums up a lot of recent economic history in one figure.
A few thoughts: I wish Arnold Kling were correct that inflation is around the corner. We could use some inflation to get back on track. Nominal wages are simply not flexible enough to get the job done in short order and there is much to fear from populist backlash.
See also the link above for a remarkably similar figure for the OECD which illustrates the US's role of monetary hegemon.
“The GDP Mirage”
The story, by Michael Mandel, is here. Excerpt:
While the statistics don't account for it, there's good reason to
suspect intangible investments are falling. Companies are under
pressure to cut costs by reducing R&D expenditures and deferring
other crucial intangibles, notes Hulten. "Because these are expensed,
it looks like a pure win," he says. "You are not seeing the benefits of
the intangibles in the financial statements–only the costs."
There is much more of interest in this article.
Norway Tax Data Now!
It's the moment nosy Norwegian neighbors have been waiting for — the release of official records showing the annual income and overall wealth of nearly every taxpayer in the Scandinavian country.
In a move that would be unthinkable elsewhere, tax authorities in Norway have issued the ''skatteliste,'' or ''tax list,'' for 2008 to the media under a law designed to uphold the country's tradition of transparency…
Many media outlets use the tax records to produce their own searchable online databases. In the database of national broadcaster NRK, you can type a subject's name, hit search and within moments get information on what that person made last year, what was paid in taxes and total wealth….
The information had been available to media until 2004, when a more
conservative government banned the publication of tax records. Three
years later, a new, more liberal government reversed the legislation
and also made it possible for media to obtain tax information digitally
and disseminate it online.
There has got to be more than one dissertation here. Aside from the obvious issues of studying the distribution of wealth over time and cross-sectionally the three year break raises possibilities such as testing whether making salary and wealth information public encourages people to work more or less and whether public information about income increases or decreases inequality.
Perhaps most interesting–does conspicuous consumption fall and efficiency increase in a society in which income is conspicuous?
Health Data Now!
It's well known that medical spending is highly variable but so are medical outcomes. Here is Begley and Interlandi in Newsweek:
After we interviewed dozens of oncologists, pored over published papers, and obtained outcomes data that cancer centers have never before made public, it became clear that for these cancers there are indeed significant outcome differences depending where you are treated.
Five years after surgery for prostate cancer, for instance, 72 percent of men treated at leading hospitals are alive, compared with 62 percent of those treated elsewhere. Scrutinizing data from specific cancer centers reveals even greater gaps. Five-year survival for stage IV prostate cancer is 71 percent at Fox Chase, for instance, but 38 percent nationally. For stage IV breast cancer, the respective figures are 28 percent and 19 percent–an almost 50 percent edge. For stage IV cervical cancer, five-year survival is 33 percent at the Cleveland Clinic vs. 16 percent nationally.
Some of this is probably due to differences in patient characteristics but it could go either way – the better hospitals often get the hardest to treat cases.
Many hospitals hide this data (or "fail" to collect it which amounts to much the same thing) but there are some good rules of thumb such as looking for hospitals that specialize in certain procedures and thus perform many of them (there are large economies of scale in quality). Patients can also find information about which hospitals closely follow best practices (kudos to Medicare for this data and see here for a mashup with Google maps) although the measures used are probably the ones that are easiest to collect and not the ones that correlate best with mortality.
Nevertheless, providing information does seem to drive change if only from the shame that a hospital receives when it is found not to be following best practices. It's true that report cards can cause problems when the drive to get a better score causes hospitals to be more reluctant to treat sicker patients but better data on patient characteristics (stage of cancer etc.) and better process/treatment information can alleviate this problem. In fact, all hospitals should be required to provide standardized information for all patients on patient characteristics, treatments and outcomes. Only by making outcome information public will hospitals have the incentive and researchers have the ability to develop more accurate report cards. In short, I cannot think of a simpler change that would improve health care to as great an extent as freeing the data.