Category: Law
Testing Freedom
In the latest Discourse Magazine I discuss the FDA’s long-standing fear and antipathy toward personalized medical tests and how this violates the 1st Amendment.
In 1972, the FDA confiscated thousands of home pregnancy tests, declaring that they were “drugs” meant to diagnose a “disease” and thus fell under the FDA’s regulatory dominion. The case went to the U.S. District Court for the District of New Jersey, and Judge Vincent P. Biunno ruled that the FDA had overstepped. “Pregnancy,” he said, “is a normal physiological function of all mammals and cannot be considered a disease … a test for pregnancy, then, is not a test for the diagnosis of disease. It is no more than a test for news….” As a result of Judge Biunno’s ruling, home pregnancy tests are easily available today from pharmacies, grocery stores and online shops without a prescription.
These days, debates over home pregnancy tests from the 1970s seem anachronistic and paternalistic. Yet the same paternalistic arguments appear again and again with every new testing technology. In the late 1980s, for example, the FDA simply declared that it would not approve at-home HIV tests, regardless of their safety or efficacy. As with pregnancy tests, the concern was that people could not be trusted with information about their own bodies…the first rapid at-home HIV test was developed and submitted to the FDA in 1987 [but] it took 25 years before the FDA would approve these tests. (Now, you can easily buy such a test on Amazon.)
…The FDA has a vital role in ensuring that tests are clinically accurate—tests should do what they say they do. Tests don’t need to be perfectly accurate to be useful (think of thermometers, personality tests and tire pressure gauges), but if a test advertises that it measures HDL cholesterol, it should do that within the tolerances the firm promises. The FDA has the technical knowledge to ensure that tests work, and that’s a skill that Americans value from the agency.
What Americans don’t want is to be told they can’t handle the truth. Yet when it came to at-home tests such as pregnancy tests, HIV tests and genetic tests, that’s exactly the reasoning the FDA used—and continues to use—to suppress information. The FDA should ensure that tests are safe, but “safety” means physical safety. The FDA may not declare a product unsafe because it might produce dangerous knowledge. Patients have a right to know about their own bodies. Our antibodies, ourselves. The FDA has authority over drugs and devices but not over patients.
Judge Biunno had it right back in 1972 when he said that diagnostic tests produce “news.” Test results, therefore, are a type of speech that fall under the First Amendment right to freedom of speech. The Supreme Court has repeatedly rejected restrictions on freedom of speech based on “a fear that people would make bad decisions if given truthful information”; thus, FDA restrictions on tests based on such fears are unconstitutional. The question of whether consumers will respond “safely” to test results is no more relevant to the FDA’s regulatory authority than the question of whether readers will respond safely to political news published in The New York Times. The FDA does not have the constitutional authority to regulate news.
Why did the gender wage gap stop narrowing?
During the 1980s, the wage gap between white women and white men in the US declined by approximately 1 percentage point per year. In the decades since, the rate of gender wage convergence has stalled to less than one-third of its previous value. An outstanding puzzle in economics is “why did gender wage convergence in the US stall?” Using an event study design that exploits the timing of state and federal family-leave policies, we show that the introduction of the policies can explain 94% of the reduction in the rate of gender wage convergence that is unaccounted for after controlling for changes in observable characteristics of workers. If gender wage convergence had continued at the pre-family leave rate, wage parity between white women and white men would have been achieved as early as 2017.
That is from a new NBER working paper by Peter Q. Blair and Benjamin Posmanick. Might the gender wage gap be one economics topic where a naive, mood-affiliated view on it best predicts a bunch of other bad views on totally separate topics?
How much did pre-ACA Medicaid expansions matter?
This paper examines the impact of Medicaid expansions to parents and childless adults on adult mortality. Specifically, we evaluate the long-run effects of eight state Medicaid expansions from 1994 through 2005 on all-cause, healthcare-amenable, non-healthcare-amenable, and HIV-related mortality rates using state-level data. We utilize the synthetic control method to estimate effects for each treated state separately and the generalized synthetic control method to estimate average effects across all treated states. Using a 5% significance level, we find no evidence that Medicaid expansions affect any of the outcomes in any of the treated states or all of them combined. Moreover, there is no clear pattern in the signs of the estimated treatment effects. These findings imply that evidence that pre-ACA Medicaid expansions to adults saved lives is not as clear as previously suggested.
That is a new NBER working paper from Charles J. Courtemanche, Jordan W. Jones, Antonios M. Koumpias, and Daniela Zapata.
Here are some relevant pictures. Now, would you expect subsequent Medicaid expansions to have higher, lower, or the same marginal value?
Do pay transparency laws raise wages?
It seems not:
Labour advocates champion pay-transparency laws on the grounds that they will narrow pay disparities. But research suggests that this is achieved not by boosting the wages of lower-paid workers but by curbing the wages of higher-paid ones. A forthcoming paper by economists at the University of Toronto and Princeton University estimates that Canadian salary-disclosure laws implemented between 1996 and 2016 narrowed the gender pay gap of university professors by 20-30%. But there is also evidence that they lower salaries, on average. Another paper by professors at Chapel Hill, Cornell and Columbia University found that a Danish pay-transparency law adopted in 2006 shrank the gender pay gap by 13%, but only because it curbed the wages of male employees. Studies of Britain’s gender-pay-gap law, which was implemented in 2018, have reached similar conclusions.
Another misconception about pay-transparency laws is that they strengthen the bargaining power of workers. A recent paper by Zoe Cullen of Harvard Business School and Bobby Pakzad-Hurson of Brown University analysed the effects of 13 state laws passed between 2004 and 2016 that were designed to protect the right of workers to ask about the salaries of their co-workers. The authors found that the laws were associated with a 2% drop in wages, an outcome which the authors attribute to reduced bargaining power. “Although the idea of pay transparency is to give workers the ability to renegotiate away pay discrepancies, it actually shifts the bargaining power from the workers to the employer,” says Mr Pakzad-Hurson. “So wages are more equal,” explains Ms Cullen, “but they’re also lower.”
Here is more from The Economist.
How long does a Roman emperor last for?
Of the 69 rulers of the unified Roman Empire, from Augustus (d. 14 CE) to Theodosius (d. 395 CE), 62% suffered violent death. This has been known for a while, if not quantitatively at least qualitatively. What is not known, however, and has never been examined is the time-to-violent-death of Roman emperors. This work adopts the statistical tools of survival data analysis to an unlikely population, Roman emperors, and it examines a particular event in their rule, not unlike the focus of reliability engineering, but instead of their time-to-failure, their time-to-violent-death. We investigate the temporal signature of this seemingly haphazardous stochastic process that is the violent death of a Roman emperor, and we examine whether there is some structure underlying the randomness in this process or not. Nonparametric and parametric results show that: (i) emperors faced a significantly high risk of violent death in the first year of their rule, which is reminiscent of infant mortality in reliability engineering; (ii) their risk of violent death further increased after 12 years, which is reminiscent of wear-out period in reliability engineering; (iii) their failure rate displayed a bathtub-like curve, similar to that of a host of mechanical engineering items and electronic components. Results also showed that the stochastic process underlying the violent deaths of emperors is remarkably well captured by a (mixture) Weibull distribution.
That is from a new paper by Joseph Homer Saleh. Via Patrick Moloney. And here are new results on why Roman concrete was so much more durable than the emperors.
Beware the dangers of crypto regulation
That is the topic of my latest Bloomberg column, here is one bit:
No matter how strong the temptation, we should not overregulate.
Begin with two central facts. First, there are numerous ways for small and large investors to lose their money, including by investing in risky equities. Regulating crypto won’t end that danger. Second, despite being one of the largest financial frauds in history, FTX has not created systemic financial risk, which should be the main concern of regulators. And market forces already have made the risk from crypto much smaller: At the peak of crypto values in late 2021, crypto assets had a total value of about $2 trillion; as of this writing, that figure is about $845 billion.
And:
Crypto regulation is not easy to do well. If crypto institutions are treated like regular depository institutions, requiring heavy layers of capital and lots of legal staffing, crypto innovation is likely to dwindle. Such innovation has been more the province of eccentric geniuses than of mainstream regulated institutions. It is hard to imagine Satoshi Nakamoto or Vitalik Buterin at Goldman Sachs.
And what exactly should be the goal of crypto regulation? To make stablecoins truly stable in nominal value? Is that even possible? Or to encourage market participants to see those assets as inherently fluctuating in value?
Neither academic research nor market experience offers clear answers. With systemic risk currently low, perhaps it is better to wait and learn more before moving ahead with regulation. And on a purely practical level, very few members of Congress (or their staff members) have a good working knowledge of crypto and all of its current wrinkles and innovations.
There is much more of value at the link.
Lead and violence: all the evidence
Kevin Drum offers a response to a recent meta-study on the link between lead and violence, blogged by me here.
I’ll take this moment to explain why the lead-violence connection never has sat that well with me.
Let’s say we are trying to explain why 2022 America is richer than the Stone Age. We could cite “incentives, policy, and culture,” noting that any accumulated stock of wealth also came from these (and possibly other) factors. You might disagree about which policies, or which cultural features of modernity, and so on, but the answer to the question pretty clearly lies in that direction.
Now let us say we are trying to explain why America today is richer than Albania today. You would do just fine to start with “incentives, policy, and culture.” You could add in some additional factors, such as superior natural resources, but you would be on the same track as with the Stone Age comparison. You would not have to summon up an entirely new theory.
Why is Nashville richer than Chattanooga? Again, start with “incentives, policy, and culture,” noting you might need again supplementary factors.
Broadly the same theory is applying to all of these different comparisons. Across time, across space, across countries, and across cities. There is something about this broad unity that is methodologically satisfying, and it helps confirm our view that we are on the right track in our inquiries.
Now consider the lead-crime connection. Insofar as you elevate the connection as very strong, you are tossing out the chance of achieving that kind of unity.
Why was violent crime so often more frequent in earlier periods of human history? It wasn’t lead, at least not for most periods, perhaps not for any of the much earlier periods.
Why was there more peace in Ethiopia five years ago than in the last few years? Again, whatever the reasons it wasn’t a change in lead exposure.
Why is the murder rate in Haiti today much higher than during the Duvaliers? Again, no one thinks the answer has much to do with changes in lead exposure. Mainly it is because political order has collapsed, and the country is ruled by gangs rather than by an autocratic tyranny.
How about the violence rate in the very peaceful parts of Africa compared to the very violent parts? Again, lead is rarely if ever going to be the answer to that one.
So we know in the true, overall model big changes in violence can happen without lead exposure being the driving force. Very big changes. In fact those big changes in violence rates, without lead being a major factor, happen all the time.
And many of those big changes are mysterious in their causes. It really isn’t so simple to explain why different parts of Africa have different murder rates, often by very significant amounts. You can hack away at the problem (e.g, Kenya and Tanzania have very different histories), but there is no simple “go to” theory. Furthermore, since both violence and peace often feed upon themselves, in a “broken windows” increasing returns sort of way, the initial causes behind big differences in violence outcomes might sometimes be fairly slight and hard to find.
That to my mind makes “the true model” somewhat biased against lead being a major factor in changes in violence rates. In the broader scheme of things, lead exposure seems to be a supplementary factor rather than a major factor. It doesn’t rule out lead as a major factor, either logically or statistically, if you wish to explain why U.S. violence fell from the 1960s to today. But the true model has a lot of non-lead, major shifts in violence, often unexplained or hard to explain.
Addendum: I am also surprised by Kevin’s comment that there isn’t likely to be much publication bias in lead-violence studies. I take publication bias to be a default assumption, namely the desire to show a positive result to get published. That hardly seems unlikely to me at all. And in this particular case there is even a particular political reason to wish to pin a lot of the blame on lead exposure. Correctly or not, people on the Left are much more likely to elevate lead exposure as a cause of social problems.
And to repeat myself, just to be perfectly clear, it strikes me as unlikely that the effect of lead exposure on violence in zero is the last seventy years of the United States.
The EU’s carbon tariffs
That is the topic of my latest Bloomberg column. Here is one excerpt, starting with the basic idea:
Importers would have to register to receive authorization to import goods, and they would pay a tax per ton of carbon dioxide produced. These fees are intended to match those already applied within the EU, which are currently about 90 euros per ton. The policy is also intended to place EU industry on a more competitive footing and encourage foreign countries to adopt greener energy policies.
But will it work?:
But would it? Economic changes take place at the margin, and currently the EU is engaged in substitution toward coal, a very dirty energy source.
In light of that reality, consider the proposed tariffs as having (at least) two effects. First, they will push some production out of foreign nations and into the EU. Second, they will induce some foreign nations to move to greener energy sources over time, to avoid the tax.
In the short run, the first effect dominates: The tariffs will lead to more coal use and a dirtier energy supply.
Be suspicious of green energy policies which at first make the problem worse. However promising the longer-run promises may sound, there is always the risk that bureaucratic inertia will intervene and the short-run policy effects will dominate.
The rationale for the beneficial long-run effects of the tariffs is that foreign nations, including some relatively poor nations such as India, will move toward greener energy at a more rapid pace. That might happen. But look at the EU itself over the past year. Its energy prices went up, due to the Russian attack on Ukraine, but the EU did not move toward greener energy, such as more nuclear or wind power. It moved toward dirtier energy, in part because domestic interest groups opposed the more beneficial adjustments.
So, despite about as strong an incentive as possible — a war — the EU made the harmful rather than the beneficial adjustment. Now it is expecting that much poorer nations, often with worse governance structures, to do better. Not only is this naïve, but it is also protectionist.
And this:
Even the positive long-run effects are up for grabs. On one hand, the tariff hike provides an incentive to move toward greener energy. On the other, it makes the exporting nations poorer than they otherwise would be. Poorer nations tend to be less interested in improving their environments, as clean environments are largely a luxury good. And extreme poverty worsens other global problems, including issues stemming from migration. Should EU policy make it more difficult for Africa to industrialize?
One also has to wonder whether the promise of lower tariffs in return for greener energy is credible. Once protectionist measures are in place, they are hard to reverse. The EU would be reaping tariff revenue, and domestic EU industries would be receiving trade protection. Any reclassification of the imports as fundamentally “greener” would require an investigation across borders and clearance through multiple levels of bureaucracy. Such changes will not be easy to accomplish, especially in an era increasingly enamored of trade restrictions.
Worth a ponder. EU coal consumption has been up over the last two years. And what is relevant here is energy supply at the margin.
Combination Rapid Tests
Once again, the US is behind on at-home rapid antigen tests–this time on combination tests that let you test for COVID, Influenza, and RSV all at once. These tests are widely available in Europe but have not been approved by the FDA. Rapid flu tests especially are potentially very useful in assigning appropriate treatment and reducing the overuse of antibiotics.
Does reducing lead exposure limit crime?
These results seem a bit underwhelming, and furthermore there seems to be publication bias, this is all from a recent meta-study on lead and crime. Here goes:
Does lead pollution increase crime? We perform the first meta-analysis of the effect of lead on crime by pooling 529 estimates from 24 studies. We find evidence of publication bias across a range of tests. This publication bias means that the effect of lead is overstated in the literature. We perform over 1 million meta-regression specifications, controlling for this bias, and conditioning on observable between-study heterogeneity. When we restrict our analysis to only high-quality studies that address endogeneity the estimated mean effect size is close to zero. When we use the full sample, the mean effect size is a partial correlation coefficient of 0.11, over ten times larger than the high-quality sample. We calculate a plausible elasticity range of 0.22-0.02 for the full sample and 0.03-0.00 for the high-quality sample. Back-ofenvelope calculations suggest that the fall in lead over recent decades is responsible for between 36%-0% of the fall in homicide in the US. Our results suggest lead does not explain the majority of the large fall in crime observed in some countries, and additional explanations are needed.
Here is one image from the paper:
The authors on the paper are Anthony Higney, Nick Hanley, and Mirko Moroa. I have long been agnostic about the lead-crime hypothesis, simply because I never had the time to look into it, rather than for any particular substantive reason. (I suppose I did have some worries that the time series and cross-national estimates seemed strongly at variance.) I can report that my belief in it is weakening…
Does more construction raise rents?
Matt Yglesias has a long post on that question, recommended albeit gated. Matt’s take is hard to summarize, so I will provide a somewhat different view, though one that is still pro-YIMBY though with a different slant.
Without loss of generality, we can assume that sometimes “more building” raises rents and other times lowers them, or rents stay the same.
Let’s say there are no big “ideas externalities” from a new NYC apartment building, and as we put more of those buildings in, the rents fall somewhat. Furthermore, say we keep on building until those rents in NYC equal those in Nashville. There is gain on the inframarginal units of construction, but at the final margin the new building in NYC has about the same social value as the new building in Nashville. The inframarginal gains are the relevant ones.
Now who gets those inframarginal gains? If land is the truly scarce factor, as NIMBY critics suggest, landlords get a lot of them! Nothing against that, I love landlords. Still, that is a slightly different story from what you hear from the YIMBYs. Landlords don’t get all of those gains, because the land scarcity constraint is precisely what is being relaxed. But the available evidence seems to indicate you need to build a lot before rents fall much. So landlords probably receive a healthy share of those new gains. Rents may fall, but not by that much. And so the gains for new urban entrants (who did not wish to migrate at the old rent levels) are correspondingly meh.
Again, let me repeat I love YIMBY and I love landlords. You should too.
Alternatively, say you keep on building and the new residents bring lots of information externalities to the urban area — ever been to Seoul? They have built like crazy and it is still quite expensive, all the more so in fact. By building more, they made the land more valuable. Good for them. (NB: The biggest beneficiaries may be the rest of Korea, and K-Pop consumers around the world, not Seoul residents.)
Now who do you think reaps most of those gains? Under standard NIMBY assumptions, I would think it is mainly the landlords. Which is not to deny the residents receive some gains from increased product diversity in Seoul (good Thai food there now, etc.), and other non-primary effects.
It’s not all the landlords. But still, the knowledge externalities make land in Seoul, in economic terms, more scarce. The landlords will do really well.
When I read or hear YIMBYs, I often feel they have a public choice model of politics, slanted toward recognizing the influence of the landlords and homeowners, but not a comparable model of factor price incidence to boot. They somehow want the lower rents and the positive information externalities both at the same time. That to me seems unlikely. And so it is harder to redistribute income away from landlords than you might think.
I again would stress that all the YIMBY changes are Pareto improvements here. But the extreme remedies suggested by the Georgists, which to be clear I do not favor, are quite explicable to me.
The best dialogue or podcast I’ve heard this year
Martin Shkreli on how the criminal justice system will treat SBF….interviewer Laura Shin…
I Still Hate Flexible Spending Accounts
According to a new report in Money workers lost billions in so-called flexible savings accounts:
…44% of workers with FSAs in 2019 forfeited money. On average, the amount lost totals $339 per person.
…With reliable data on how often workers forfeit, how much they forfeit and how many FSAs workers hold, we can now reasonably estimate that workers forfeited approximately $3 billion in 2019 and $4.2 billion in 2020.
As I said in my post from 2017 (no indent), I hate “flexible” spending accounts, i.e. those accounts where you put say $1000 in tax-free but you then must submit a bunch of health or education receipts to claim the money–and the “benefits manager” tells you half of the receipts you submitted are no good so you have to trawl through your files to find more–or lose the money. The whole process is demeaning. My hatred of this process, however, pales in comparison to that of Scott Sumner who gives a correct analogy:
Imagine a government that took 10% of each person’s income, and put in in a wooden box. The box was placed at the end of a 10-mile gravel road. Each citizen was given a knife, and told they could crawl on their hands and knees down the road, and then use the knife to cut a hole in the box, and retrieve their money.
Scott’s point is twofold. First, there is a lot of waste in crawling down the road. Second, taken in isolation, it looks like the plan at least offers people an option and so, in isolation, flex accounts and their ilk appear to benefit taxpayers. In the big picture, however, the total amount taken in taxes is somewhat fixed by politics and economics so if we got rid of the spending accounts, taxes would probably fall in other ways that are difficult to predict but nonetheless real.
Some want to crawl down the gravel road, fearing that if they abolish the program the government will not reduce their tax rates, instead the money in the box will be diverted to welfare for the poor, or higher salaries for teachers. I can’t deny that this might occur, but if we don’t even TRY to build a good country, how can we possibly succeed? Isn’t it better to try and fail, rather than not even try?
I agree with Scott. If I am going to be forced to pay taxes I’d like to hand over my cash standing like a man and not be given the option of crawling to recoup some bills the tax collector magnanimously throws on the floor.
The FDA’s Lab-Test Power Grab
The FDA is trying to gain authority over laboratory developed tests (LDTs). It’s a bad idea. Writing in the WSJ, Brian Harrison, who served as chief of staff at the U.S. Department of Health and Human Services, 2019-2021 and Bob Charrow, who served as HHS general counsel, 2018-2021, write:
We both were involved in preparing the federal Covid-19 public-health emergency declaration. When it was signed on Jan. 31, 2020, the intent was to cut red tape and maximize regulatory flexibility to allow a nimble response to an emerging pandemic.
Unknown to us, the next day the FDA went in the opposite direction: It issued a new requirement that labs stop testing for Covid-19 and first apply for FDA authorization. At that time, LDTs were the only Covid tests the U.S. had, and many were available and ready to be used in labs around the country. But since the process for emergency-use authorization was extremely burdensome and slow—and because, as we and others in department leadership learned, it couldn’t process applications quickly—many labs stopped trying to win authorization, and some pleaded for regulatory relief so they could test.
Through this new requirement the FDA effectively outlawed all Covid-19 testing for the first month of the pandemic when detection was most critical. One test got through—the one developed by the Centers for Disease Control and Prevention—but it proved to be one of the highest-profile testing failures in history because the entire nation was relying on the test to work as designed, and it didn’t.
When we became aware of the FDA’s action, one of us (Mr. Harrison) demanded an immediate review of the agency’s legal authority to regulate these tests, and the other (Mr. Charrow) conducted the review. Based on the assessment, a determination was made by department leadership that the FDA shouldn’t be regulating LDTs.
Congress has never expressly given the FDA authority to regulate the tests. Further, in 1992 the secretary of health and human services issued a regulation stating that these tests fell under the jurisdiction of the Centers for Medicare and Medicaid Services, not the FDA. Bureaucrats at the FDA have tried to ignore this rule even though the Supreme Court in Berkovitz v. U.S. (1988) specifically admonished the agency for ignoring federal regulations.
Loyal readers will recall that I covered this issue earlier in Clement and Tribe Predicted the FDA Catastrophe. Clement, the former US Solicitor General under George W. Bush and Tribe, a leading liberal constitutional lawyer, rejected the FDA claims of regulatory authority over laboratory developed tests on historical, statutory, and legal grounds but they also argued that letting the FDA regulate laboratory tests was a dangerous idea. In a remarkably prescient passage, Clement and Tribe (2015, p. 18) warned:
The FDA approval process is protracted and not designed for the rapid clearance of tests. Many clinical laboratories track world trends regarding infectious diseases ranging from SARS to H1N1 and Avian Influenza. In these fast-moving, life-or-death situations, awaiting the development of manufactured test kits and the completion of FDA’s clearance procedures could entail potentially catastrophic delays, with disastrous consequences for patient care.
Clement and Tribe nailed it. Catastrophic delays, with disastrous consequences for patient care is exactly what happened. Thus, Harrison and Charrow are correct, giving the FDA power over laboratory derived tests has had and will have significant costs.
The Birx Plan for Early Vaccination of the Nursing Homes
In Covid in the nursing homes: the US experience, Markus Bjoerkheim and I show that the Great Barrington “focused protection” plan was unlikely to have worked. I covered this last week. But there was one strategy which could have saved tens of thousands of lives–early vaccination. If the vaccine trials had been completed just 5 weeks earlier, for example, we could have saved 14 thousand lives in the nursing homes alone. But put aside the possibility of completing the trials earlier. There was another realistic possibility under our noses. We had could have offered nursing home residents the vaccine on a compassionate use basis, i.e. even before all the clinical trials were completed. An early vaccination option was neither unprecedented nor a question of 20-20 hindsight, early vaccination was discussed at the time:
Deborah Birx, the coordinator of the White House Coronavirus Task Force, forcefully advocated that nursing home residents should be given the option of being vaccinated earlier under a compassionate use authorization (Borrell, 2022). Many other treatments, such as convalescent plasma, were authorized under compassionate use procedures and there was more than enough vaccine available to vaccinate all nursing home residents. As a first approximation we find the Birx plan would have prevented in the order of 200,000 nursing home cases and 40,000 nursing home deaths. To put that in perspective, it amounts to reducing overall nursing home Covid deaths by over 26 per cent (using all CMS reported resident nursing home deaths as of 5 December 2021, and estimates of underreported deaths from Shen et al. (2021)).
The lesson is not primarily about the past. It’s about the central importance of vaccines in any plan to protect the vulnerable and about how we should be bolder and braver the next time.
Addendum: See also Tyler’s tremendous post (further below) on focused protection.