Category: Economics

The American Academy of Pediatrics Tells the FDA to Speed Up and Stop Endangering Patients

The American Academy of Pediatrics has written a stunning letter to the FDA:

We understand that the FDA has recently worked with Pfizer and Moderna to double the number of children ages 5-11 years included in clinical trials of their COVID-19 vaccines. While we appreciate this prudent step to gather more safety data, we urge FDA to carefully consider the impact of this decision on the timeline for authorizing a vaccine for this age group. In our view, the rise of the Delta variant changes the risk-benefit analysis for authorizing vaccines in children. The FDA should strongly consider authorizing these vaccines for children ages 5-11 years based on data from the initial enrolled cohort, which are already available, while continuing to follow safety data from the expanded cohort in the post-market setting. This approach would not slow down the time to authorization of these critically needed vaccines in the 5–11-year age group.

In addition, as FDA continues to evaluate clinical trial requirements for children under 5 years, we similarly urge FDA to carefully consider the impact of its regulatory decisions on further delays in the availability of vaccines for this age group. Based on scientific data currently available on COVID-19 vaccines, as well as on 70 years of vaccinology knowledge in the pediatric population, the Academy believes that clinical trials in these children can be safely conducted with a 2-month safety follow-up for participants. Assuming that the 2-month safety data does not raise any new safety concerns and that immunogenicity data are supportive of use, we believe that this is sufficient for authorization in this and any other age group. Waiting on a 6-month follow-up will significantly hinder the ability to reduce the spread of the hyper infectious COVID-19 Delta variant among this age group, since it would add 4 additional months before an authorization decision can be considered. Based on the evidence from the over 340 million doses of COVID-19 doses administered to adults and adolescents aged 12-17,as well as among adults 18 and older, there is no biological plausibility for serious adverse immunological or inflammatory events to occur more than two months after COVID-19 vaccine administration.

In my many years of writing about the FDA, I can’t recall a single instance in which a major medical organization told the FDA to use a smaller trial and speed up the process because FDA delay was endangering the safety of their patients. Wow.

The invisible graveyard is invisible no more.

David Beckworth on Powell and the Fed

My colleague David Beckworth has a new NYT piece, here is one bit from it:

Jerome Powell’s political skills also helped bring about a truly historic change at the Federal Reserve in 2020. Under his guidance, the Fed became the first central bank to adopt a “makeup” policy, which requires it to correct for past misses in its inflation target. Central banks actually see a mild amount of inflation as a sign of a healthy, growing modern economy. Inflation, for example, typically runs below its target during recessions and therefore needs to temporarily run above 2 percent afterward to make up for the shortfall. This, in fact, is what the Fed has been attempting over the past year by maintaining its low interest rate target and large-scale asset purchases. This new framework allows the economy to run hot after a recession and make up for lost ground. It means a quicker return to full employment and a more rapid restoration of incomes.

There is much more at the link.

Is this the correct market price?

This is totally immoral of course, but I am wondering about the elasticity of demand here:

One math lesson Prof. Edward C. Ennels taught at Baltimore City Community College was, according to prosecutors, pretty simple: $150 for a C; $250 for a B; and $500 for an A.

And in some courses, an A could go for as little as $300.

Over the course of seven months last year, Mr. Ennels, 45, solicited bribes from 112 students, and received 10 payments from nine students, totaling $2,815, the Maryland attorney general, Brian E. Frosh, said in a statement on Thursday.

In another scheme, Mr. Ennels sold online access codes that enabled students to view instructional material and complete assignments, prosecutors said. From 2013 to 2020, he sold 694 access codes for about $90 each.

Mr. Ennels, a professor at the college for 15 years who served on the faculty senate’s Ethics and Institutional Integrity Committee, pleaded guilty on Thursday in Baltimore County Circuit Court to 11 misdemeanor charges, including bribery and misconduct in office, according to prosecutors and online court records.

He was sentenced to 10 years in prison with all but one year of the term suspended and to be served in a local jail. He was also ordered to pay $60,000 in restitution and will be on probation for five years upon his release.

Mr. Frosh said in his statement that Mr. Ennels employed “an elaborate criminal scheme to take advantage of his students,” including using multiple aliases to hide his identity.

In March 2020, Mr. Ennels sent an email using one of his aliases, “Bertie Benson,” to another of his aliases, “Amanda Wilbert,” prosecutors said in a statement. In the email, “Benson” offered to complete “Wilbert’s” math assignments, guaranteeing her an A for $300, prosecutors said.

Then, as “Wilbert,” Mr. Ennels forwarded that email to 112 students enrolled in a class that he was teaching, prosecutors said. “Ennels often haggled with students regarding the amount of the bribe, and set different prices based on the course and grade desired,” according to the statement.

Most students declined to pay the bribes and Mr. Ennels “often persisted, offering to lower the amount of the bribe or offering payment plans,” according to the statement.

According to the statement, one student rebuffed the $500 solicitation for an A by saying: “Oh I don’t have that sorry. I will be sure to keep studying and pass my exam.” Mr. Ennels’s response, according to prosecutors: “How much can you afford?”

That student ultimately paid a bribe, according to prosecutors, who did not say how much that particular student paid.

I guess he was wondering about the elasticity of demand too.  Here is the full NYT story.

The FDA Is Still Much Too Strict

Here is just one bit from a superb post on the FDA by psychiatrist Scott Alexander at Astral Codex Ten.

I worry that people are going to come away from this with some conclusion like “wow, the FDA seemed really unprepared to handle COVID.” No. It’s not that specific. Every single thing the FDA does is like this. Every single hour of every single day the FDA does things exactly this stupid and destructive, and the only reason you never hear about the others is because they’re about some disease with a name like Schmoe’s Syndrome and a few hundred cases nationwide instead of something big and media-worthy like coronavirus. I am a doctor and sometimes I have to deal with the Schmoe’s Syndromes of the world and every [email protected]$king time there is some story about the FDA doing something exactly this awful and counterproductive.

A while back I learned about Infant Short Bowel Syndrome, a rare condition with only a few hundred cases nationwide. Babies cannot digest food effectively, but you can save their lives by using an IV line to direct nutrients directly into their veins. But you need to use the right nutrient fluid. The FDA approved an early draft of the nutrient fluid, but it didn’t have enough fish oil, which is necessary for development, so a lot of the babies still died or ended up with permanent neurological damage. Around the late 90s/early 00s, researchers figured out what was going on and recommended adding fish oil to the IV fluid. The FDA responded that they had only approved the non-fish-oil version, it would take them a while to approve the new version, and until they did that adding fish oil was illegal. A bunch of babies kept dying and getting permanent neurological damage, and everyone knew exactly how to stop it, but if anyone did the FDA would take away their licenses and shut them down. Around 2010, Boston Children’s Hospital found some loophole that let them add fish oil to their nutrient fluid on site, and infants with short bowel syndrome at that one hospital stopped dying or ending up permanently disabled, and the FDA grudgingly agreed to permit it but banned them from distributing their formulation or letting it cross state lines – so for a while if you wanted your baby not to die you had to have them spend their infancy in one specific hospital in Massachusetts. Around 2015 the FDA said that if your doctor applied for a special exemption, they would let you import the correct nutritional fluid from Europe (where, lacking the FDA, they had just added fish oil to the fluid as soon as researchers discovered it was necessary), but you were only able to apply after your baby had already sustained serious damage, and the FDA might just say no. Finally in 2018 the FDA got around to approving the corrected nutritional fluid and now babies with short bowel syndrome do fine, after twenty years of easily preventable state-mandated deaths. And it’s not just this and coronavirus, I CANNOT STRESS ENOUGH HOW TYPICAL THIS IS OF EVERYTHING THE FDA DOES ALL THE TIME.

Read the whole thing! I actually had to read it in several sessions, it’s not that long but bouts of anger interspersed with moments of laughter made me have to put it down momentarily to recover. There is a lot more in the post on reforms.

Best quick intro to my views on the FDA is this post (follow the links) and my paper on off-label prescribing.

Addendum: Scott updates the infant fish oil story and provides much more detail. He got some things wrong and the FDA as an agency ends up looking better but the broad outline about the FDA system looks right. I am leaving the post up for posterity but this specific part isn’t correct.

The Most Important Act of the Last Two Decades?

A good case can be made that Project Bioshield is the most important piece of legislation passed in the last twenty years. Passed under President Bush in 2004, Project Bioshield’s primary goal was to create advance market commitments to purchase countermeasures for chemical, biological, radiological or nuclear agents (CBRN). Several billion dollars have been spent in this area promoting anthrax and smallpox vaccines and various antitoxins for botulism and nuclear threats. The record on these advance market commitments is mixed with some notable failures.

The second thing the act did is to reduce some paperwork requirements on purchases and research funding. Those seem fine although the simplified procedure is itself too complex and the amounts such simplified procedures apply to are too small, e.g.

The Project Bioshield Act authorizes the HHS Secretary to use an expedited award process for grants, contracts, and cooperative agreements related to CBRN countermeasure R&D Activity, if the Secretary deems a pressing need for an expedited award exists. The authority is limited to awards of $1.5 million or less.

The third aspect of the act was not considered a big deal at the time but is the one that has proved to be the most important. Project Bioshield created the Emergency Use Authorization (EUA). In other words, prior to 2004 the FDA had no clear legislative authority to authorize an unapproved vaccine, drug or device. Without Project Bioshield and the EUA procedure the FDA might have eventually found some way to authorize vaccines before full approval. Britain, for example, used a temporary authorization procedure. Or the FDA might have sped up full approval but given the FDA’s lethargic record it’s easy to imagine that this would have taken months longer than the EUA process. As a result, the EUA procedure created by Project Bioshield probably saved 100,000 or more lives.

Important Addendum: It’s also worth mentioning that the EUA procedure doesn’t just apply to approvals it also allows changes in dosage and labeling. Susan Sherman, the senior attorney with the HHS Office of the General Counsel, noted in 2009 that a drug that had been approved for individual health in a non-emergency might have to be used very differently for public health in an emergency and that the EUA process could be used to adjust to these differences:

“You can change the labeling. You can change the information. You can change the dosage. You can give it to populations for which wasn’t approved.” She continued, “In some sense we had to match up in practice a public health response where you might not have the precise labeling that your physician would prescribe to you. There are a lot of variables that are necessary for the public health responders that don’t necessarily match what the approved drug would look like if you just went to your physician and got it because you had that illness.

In other words, the EUA process was made to allow for procedures such as fractional dosing. It’s too late for fractional dosing in the United States (but we should use it for boosters) but fractional dosing remains a vital tool to deal with the global shortage of vaccines.

Inequality sentence fragments to ponder

…wealth inequality varies greatly across countries, and there is no clear correlation with countries’ levels of income inequality.

Sweden for instance has reasonable income equality but very high wealth inequality.  Many of the southern European nations are the opposite.

So which is it that matters?  Is it income inequality that matters when you wish to praise Sweden over the United States, but wealth inequality that matters when you wish to argue for a wealth tax?

By the way, the distribution of housing equity is a critical factor for understanding how income variables translate into wealth variables.

That is all from Fabian T. Pfeffer and Nora Waitkus.  Via the excellent Kevin Lewis.

Olympic Charter Cities

An interesting idea from Max. It’s getting harder to find a city to host the Olympics , a Charter Olympic City might be just the ticket to get a Charter City off the ground and share costs.

A public-private partnership model for building the Olympic village would alleviate some of the budgetary pressure on governments and provide a launchpad for stakeholders to get their special jurisdiction off the ground. The current funding model for Olympic projects is that governments foot the entire upfront bill and pay for private contractors to build the stadiums and a mini-city. In exchange, they don’t share the revenue from the games themselves or the developed area after the games with anyone (except the IOC).

…An Olympic charter city provides an alternative funding model that has the potential to be more profitable for cities and private developers. As in the development of a charter city, a portion of the upfront cost of construction would be paid for by a private developer, rather than entirely from the local government. This cost sharing is mirrored after the games where the local government and a private charter city developer share political autonomy, tax revenues, and the cost of providing public services for the Olympic charter city.

Are You More Strategic than a Fifth Grader?

Isabelle Brocas and Juan Carrillo have a new paper in the JPE testing when children develop strategic (k-level) reasoning. A clever game outlined below illustrates the basic idea. Players 1,2 and 3 are asked to make (simultaneous) choices to earn prizes (money for the adults and older kids, points for toys for the younger kids). The sophisticated, rational choice becomes successively more difficult as we from from player 3 to player 1. Player 3 is simply asked to match a shape. In the case shown, for example, player 3 earns the most by choosing the red square labelled C since it matches the shape of the blue square labelled A. Player 2 earns the most by choosing the color chosen by Player 3. Of course, Player 2 doesn’t know what color Player 3 will choose and so has to reason about Player 3’s actions. What color do you choose? Player 1 earns the most by choosing the same letter as Player 2 but now must reason about Player 2 which involves reasoning about how Player 2 will reason about Player 3. What letter do you choose?What do the authors find? First, for both adults and kids either they get it or they don’t. The ones who don’t make the right choice as Player 3 but then randomly choose when playing either Player 2 or Player 1. The ones who get it, play correctly at all three levels. In other words, almost everyone who reasons correct as Player 2 (1-level reasoning) also reasons correctly as Player 1 (2-level reasoning).

Second, there is a marked increase in the ability to perform k-level thinking between ages 8 and 12 but after age 12 (fifth grade) there is shockingly little growth. Together the first and second points suggest that k-level thinking is more of a quantum leap than an evolution in reasoning ability.

Third, most adults reason correctly in this simple game but a significant fraction do not. As the authors put it “some very young players display an innate ability to play always at equilibrium while some young adults are unable to perform two steps of dominance.”

Demographic factors are mostly as expected, children interested in STEM fields perform better (n.b. this implies that contrary to some opinions the STEM set are better at social interaction), kids from better socio-economic backgrounds perform better and slightly unexpected females perform better than males, perhaps because they are more disciplined.

As the authors conclude:

Adolescents are particularly exposed to situations in which strategic sophistication is crucial to avoid wrong decisions. Examples include engaging in risky activities, such as accepting drugs from peers or engaging in unprotected sex. Also, with the development of the internet, naive users are often preyed upon, asked to provide personal information, or tricked into making harmful decisions. Information deliberately intended to deceive young minds also circulates through social media. Making correct decisions in such environments requires understanding the intentions of others and anticipating the consequences of following their advice or opinions. More generally, children and adolescents are gradually discovering the dangers hiding behind social interactions and need to come equipped to detect them, assess them, and navigate around them. We conjecture that failures in these abilities are closely related to underdeveloped logical abilities, and we predict that the level of sophistication of an individual detected through a simple task matches their behavior in social settings.

The incentives for Mexican hotel Covid testing

Yes you need a negative result on the test to return to the United States, but you never know the sensitivity of the test you are taking.  It should be from an “approved provider,” but what does that mean?  No authority from the United States can readily verify how good the test is.

Let us say you are a hotel owner, which kind of testing service do you wish to commission to send around to your rooms to test your American guests?  A highly sensitive test that will yield periodic false positives, or a not very sensitive test that won’t generate false positives and might even result in some false negatives?  And say some of your guests truly will be Covid-positive — do you wish to keep them in their rooms for another week or two, with all the attendant risks, or do you wish to send them along their way?

You don’t even have to imagine that the hotel owners are entirely cynical.  They themselves can’t judge the accuracy of the tests, so a service that yielded a fair number of Covid positives could be seen as “they make too many mistakes and won’t let our guests leave, we don’t want them.”  If the Delta variant is outracing publicity about the Delta variant, as was the case for a while in Tulum, such a hotelier reaction might be all the more likely.

I did in fact test negative.  And the testers were very nice to me.

What should I ask Claudia Goldin?

I will be doing a Conversation with her, so what should I ask?

Here is part of her Wikipedia page, which perhaps ought to have emphasized economic history more?:

Claudia Goldin…is the Henry Lee Professor of Economics at Harvard University and director of the Development of the American Economy program at the National Bureau of Economic Research. Goldin was the president of the American Economic Association in the 2013–14 academic year. In 1990, she became the first woman to be tenured at the Harvard economics department. Her research includes topics such as female labor force, income inequality, education, and the economic gender gap.

Here are her pieces on scholar.google.com.  And I will take this chance to plug her new, forthcoming book Career and Family: Women’s Century-Long Journey Toward Equity.

*Home in the World: A Memoir*

That is the new Amartya Sen autobiography, and it is well…a biography.  You learn that he loves Sichuan duck and “hilsha fish” (if done properly with the mustard), his thoughts of enduring military service, Sen’s study of Sanskrit, his self-description as a hypochondriac, his bout with mouth cancer at a young age, and that Calcutta (!) is a great walking city, at least when Sen lived there in the 1950s, among other matters.  The readers definitely gets his or her “biography money’s worth.”

But should you care?

The name “Tagore” appears so many times in the text that it takes up 3/4 of a page in the index.  This is very much a Bengali memoir.

I learned that Sen’s family lived for a few years with him in Burma, he is sympathetic to Buddhism, he was ten at the time of the Great Famine and it had a major impact on his thinking, and that Sen was greatly influenced by Maurice Dobb and thought Marx was unjustly excluded from the economics curriculum.  Piero Sraffa was his Director of Studies at Cambridge, and introduced Sen to the wonders of ristretto.  Sen also stresses the import of Sraffa for converting the early Wittgenstein into the later Wittgenstein.  He has great praise for P.T. Bauer, both as a thinker and as an instructor.  He describes Buchanan as a “…very agreeable but rather conservative economist” who got him thinking about whether the notion of collective preference made sense at all.

This doesn’t have enough coherence to be a great book, but there is enough in here of interest to satisfy anyone curious about Sen.

You can pre-order here, I got my copy from the UK.

The vaccine lottery is a worthwhile investment

Conditional cash lotteries (CCLs) provide people with opportunities to win monetary prizes only if they make specific behavioral changes. We conduct a case study of Ohio’s Vax-A-Million initiative, the first CCL targeting COVID-19 vaccinations. Forming a synthetic control from other states, we find that Ohio’s incentive scheme increases the vaccinated share of state population by 1.5 percent (0.7 pp), costing sixty-eight dollars per person persuaded to vaccinate. We show this causes significant reductions in COVID-19, preventing at least one infection for every six vaccinations that the lottery had successfully encouraged. These findings are promising for similar CCL public health initiatives.

That is from a new paper by Andrew Barber and Jeremy West.