I agree with Alex (see immediately below) that adverse selection need not undo genetic insurance of some kind.
He doesn’t mention abortion, but I view genetic insurance as a possible substitute for abortion. Say you are a young Catholic couple, and you know that you would not abort a Down’s child, even if you detected the abnormality before birth. You also would know that caring for such a child would involve a greater than average financial burden. Might you not buy insurance against this contingency? (Of course many couples simply abort.) Furthermore, couples might buy the insurance when they marry, or at least before they conceive, it would not be hard to make “not being pregnant” as a prerequisite for buying the insurance, if secret genetic tests on the embryo were a huge problem.
The Downs example raises the question of why such insurance does not exist today. More generally, Robert Shiller raises the question of why we do not have more insurance markets than we observe. I don’t think there is a single correct answer. Sometimes I think people simply do not want to face the possibility of encountering certain kinds of difficult events, and buying insurance, in their eyes, admits that possibility into their lives. This obstacle, to me, appears contingent rather than necessary, so I can imagine greater scope for insurance markets in the future. Many financial markets are in any case of recent origin, so why should the growth of markets stop at our current selection?
The Human Genome Project and its offspring, testing for genetic anomalies, have the prospect in the short-term at least of reducing human welfare. Alex is right that we are largely behind a veil of ignorance with respect to our genetic predispositions to diseases that have not yet presented themselves. Genetic testing removes that veil. No insurance market against genetic disease could survive the asymmetry of information between the insured and the insurer. I have written about this in The Human Genome Project and the Economics of Insurance: How Increased Knowledge May Decrease Human Welfare, and What Not To Do About It, 7 Annual Review of Law and Ethics 219 (1999).
Judge’s study, which controlled for gender, weight and age, found that mere inches cost thousands of dollars. Each inch in height amounted to about $789 more a year in pay, the study found. So someone who is 7 inches taller – say 6 feet versus 5 feet 5 inches – would be expected to earn $5,525 more annually, he said.
Read here for the full story. The commentary of Randall Parker argues that international competition, most of all with the Chinese, will force Americans to embrace genetic engineering for superior intelligence.
Robin Hanson frequently tries to convince me that more health care, at the margin, doesn’t make us any healthier. A well-known Rand study found that 30 percent increases in health care consumption did not make people healthier. Nor does the international cross-sectional evidence drive the point home. Once you adjust for income, greater health care spending does not appear to make people healthier.
Robin now sends me this study, which shows that greater Medicare spending doesn’t make people any healthier. Areas with high Medicare spending don’t produce extra health, and yes, this result does adjust for the relevant variables. This, of course, would make Medicare reform a good deal easier, you cut cut spending without fearing catastrophe.
Why, then, do we spend so much on health care? Robin claims we do it to “show that we care” for our relatives. I’ve suggested we
do it simply to avoid the feeling of regret, should one of our loved ones die, and we then feel we “didn’t do enough.”
By the way, here is one of Robin’s essays, “Buy Health, Not Health Care,” he suggests that your doctor should lose a lot of money when you die.
My take: I never manage to win this debate with Robin. I don’t have much evidence to cite in favor of health care spending (email me if you know some). But I am suspicious when I hear the claim that health care does not matter at the margin. Which margin? The last unit you bought? The next unit you might buy? And how big a unit? No one wants to give up penicillin. And exactly which margin are these studies measuring?
On one hand, the economist in me would be happier if I had some evidence that all the extra American health care spending was bringing a concrete return. On the other hand, I hate going to the doctor, in fact I never go. If I could tell my wife that this was rational, well, that would be better than making the economist in me happy.
I took my kids to see the dinosaurs in the Smithsonian yesterday. As I was wandering around, I came across a surprising exhibit on the ice age that noted the following:
Initiation of glacial conditions may be triggered by surprisingly rapid climate changes. Therefore, the minor global cooling trend of recent decades…is being carefully watched and studied. Already the effects on food production are severe in many parts of the world….We are now in a relatively warm period (“interglacial”) following one of several major glacial periods. It is not certain when the present interglacial period will end but…imagine the impact of another full scale glacial advance like that just a few thousand years ago!
Clearly, the Smithsonian needs to update some of its exhibits but when they do so I hope they note that the “scientific consensus” on global climate change has been much more variable than the climate.
On Taiwan, abortions have skewed the island’s demographics to the point that only two girls are born for every three boys.
For the full story, along with a Darwinian analysis, read here.
I vote for the gorilla, which in fact took first prize.
Here is Steve Landsburg’s follow-up column, from Slate.com, it includes an excellent summary of the original debate as to whether daughters cause divorces.
The bottom line: Landsburg argues convincingly that divorce really is more common when parents have a daughter, rather than a son. Now here is Steve’s new explanation for this fact:
Suppose parents believe that inherited wealth is more important to a boy than to a girl–either because wealth gives boys a bigger advantage in the mating competition or because boys are more likely to do something entrepreneurial. Then parents of boys will try harder than parents of girls to preserve their wealth. In particular: 1) Parents of boys will avoid divorce, because divorce is costly; and 2) parents of boys will have fewer children, because extra children dilute the inheritance.
My take: I still think that most parents, especially fathers, simply prefer boys, whether they admit it or not. But like Steve, I consider myself an exception to this principle!
Some people find this objectionable but I am in favor of experimentation.
The nocebo effect arises when you expect a poor health outcome, and then get one. For obvious reasons, nocebo effects are harder to test scientifically, because researchers do not wish to create them on purpose.
Robert Ehrlich, in his Eight Preposterous Propositions, reports a few experiments. A group of hospital patients were given sugar water, and were told it would induce vomiting. Eighty percent of the patients vomited as a result.
Many Chinese and Japanese people believe that the number four is unlucky. Scientists studied a sample of 200,000 such people, living in America. On the fourth day of the month, the death rate from heart attacks was thirteen percent higher.. In California, where Asian population concentrations might reinforce superstitious beliefs, the death rate on the fourth was twenty-seven percent higher. I wonder how many of the “heat deaths” in Europe were accelerated, simply because some people thought they were supposed to be dying.
Additional notation: The machine I am working on won’t do “Cut and paste” for links, among other things, nor will it do boldface. You can track down the Ehrlich book through Amazon.com or my previous posts on placebos.
OK, a big meteorite falls through your roof and wrecks part of your house. Are you worried? Maybe. Are you rich? Well, maybe yes. Exactly this happened to one family in New Orleans.
“They’re extremely lucky,” said Rhian Jones, curator of meteorites at the Institute of Meteoritics, with a note of envy creeping into her voice. “It’s so rare and such an amazing thing to happen. They were lucky they weren’t in the house at the time, but they were lucky that it happened. It makes them very special.”
One dealer estimated that the meteorite could sell for $8 to $20 a gram, or somewhere between $108,862 and $272,156. If it had been from the moon or Mars, it would have been worth millions. The damage to the house was estimated at $10,000. The family will now take that long-awaited European vacation.
Meteorite dealing has boomed in the last decade, in part because of the Internet, and in part because of new supply extracted from the Sahara and Antarctica. Here is one reputable place to buy a meteorite. Here is an ebay listing, 759 items when I checked, although most of them are cheapies. Note that a quality meteorite collection can be worth several million dollars.
For the full story of the “victimized” family, click here. It remains to be seen whether insurance will cover the damage to the house. After all, are meteorites not the proverbial “act of God”?
Alex, in his blog post from earlier today, makes a good point about placebos. Sometimes the patient is getting better anyway, and we should not attribute this effect to a placebo.
Note, however, that the best-known “anti-placebo” study is not as strong as is commonly believed. It relies heavily on a meta-analysis of other studies. Placebos appear to be effective in relieving the sufferer of pain, if nothing else. And placebos appear more effective when the ailment is continuous rather than discrete. Furthermore it is unclear how many people in the so-called no-treatment groups in fact received no treatment at all.
Robert Ehrlich’s Eight Preposterous Propositions offers a very good survey of the placebo debates. His conclusion:
In summary, the [critical] study may have shown that the placebo is not as powerful as some observers would believe, but it certainly is far from powerless.
By the way, did you know that people can become addicted to placebos, or suffer from harmful “side effects”? I’ll try to write more on “nocebos,” or negative placebos, soon, at least provided that my mental attitude holds up.
I agree with Tyler that there is some serious evidence for placebo effects, especially although not exclusively for subjective components of disease. But the evidence is usually overstated because it is confused with the natural tendency of sick people to get better. A typical medical study, for example, will compare the results of a new drug against a placebo. The improvement in health of those on the placebo is then labeled “the placebo effect” – but this is wrong. To correctly identify the effect of the placebo one needs three randomly selected groups – a treated group, a placebo group and a non-treated group. The effect of the placebo per se is then measured by the health differences between the placebo and non-treated group. Although spontaneous healing effects are large, placebo effects when measured correctly tend to be small although not non-existent.
Placebos have been shown to be quite effective in treating skin warts, which are clearly not a subjective ailment and are caused by viruses. According to an Australian physician, F.E. Anderson, warts probably have the highest number of folk remedies of any disease, which is not surprising if they respond well to placebos.
From the excellent Eight Preposterous Propositions, by Robert Ehrlich.
Francis Bacon recommended treating warts with pig fat. Sometimes warts respond well to hypnotic suggestion, an effect which is not well understood. And this is from an author strongly opposed to pseudo-science.