Results for “age of em” 16631 found
A Bird Flu Pandemic Would Be One of the Most Foreseeable Catastrophes in History
Zeynep Tufekci writing in the NYTimes hits the nail on the head:
The H5N1 avian flu, having mutated its way across species, is raging out of control among the nation’s cattle, infecting roughly a third of the dairy herds in California alone. Farmworkers have so far avoided tragedy, as the virus has not yet acquired the genetic tools to spread among humans. But seasonal flu will vastly increase the chances of that outcome. As the colder weather drives us all indoors to our poorly ventilated houses and workplaces, we will be undertaking an extraordinary gamble that the nation is in no way prepared for.
All that would be more than bad enough, but we face these threats gravely hobbled by the Biden administration’s failure — one might even say refusal — to respond adequately to this disease or to prepare us for viral outbreaks that may follow.
…Devastating influenza pandemics arise throughout the ages because the virus is always looking for a way in, shape shifting to jump among species in ever novel forms. Flu viruses have a special trick: If two different types infect the same host — a farmworker with regular flu who also gets H5N1 from a cow — they can swap whole segments of their RNA, potentially creating an entirely new and deadly virus that has the ability to spread among humans. It’s likely that the 1918 influenza pandemic, for example, started as a flu virus of avian origin that passed through a pig in eastern Kansas. From there it likely infected its first human victim before circling the globe on a deadly journey that killed more people than World War I.
And that’s why it’s such a tragedy that the Biden administration didn’t — or couldn’t — do everything necessary to snuff out the U.S. dairy cattle infection when the outbreak was smaller and easier to address.
Will there be a large outbreak among humans? Probably not. But a 9% probabability of a bad event warrants more than a shrug. Bad doesn’t have to be on the scale of COVID-bad to warrant precaution. The 2009 H1N1 flu pandemic, while relatively mild, infected about 61 million people in the U.S., leading to 274,000 hospitalizations, 12,400 deaths, and billions of dollars in economic costs.
H5N1 will likely pass us over—but only the weak rely on luck. Strong civilizations don’t pray for mercy from microbes; they crush them. Each new outbreak should leave us not relieved, but better armed, better trained and better prepared for nature’s next assault.
Regulating Sausages
In the comments on Sunstein on DOGE many people argued that regulations were mostly about safety. Well, maybe. It’s best to think about this in the context of a real example. Here is a tiny bit of the Federal Meat Inspection Act regulating sausage production:
In the preparation of sausage, one of the following methods may be used:
Method No. 1. The meat shall be ground or chopped into pieces not exceeding three fourths of an inch in diameter. A dry-curing mixture containing not less than 3 1⁄3 pounds of salt to each hundredweight of the unstuffed sausage shall be thoroughly mixed with the ground or chopped meat. After being stuffed, sausage having a diameter not exceeding 3 1⁄2 inches, measured at the time of stuffing, shall be held in a drying room not less than 20 days at a temperature not lower than 45 °F., except that in sausage of the variety known as pepperoni, if in casings not exceeding 1 3⁄8 inches in diameter measured at the time of stuffing, the period of drying may be reduced to 15 days. In no case, however, shall the sausage be released from the drying room in less than 25 days from the time the curing materials are added, except that sausage of the variety known as pepperoni, if in casings not exceeding the size specified, may be released at the expiration of 20 days from the time the curing materials are added. Sausage in casings exceeding 3 1⁄2 inches, but not exceeding 4 inches, in diameter at the time of stuffing, shall be held in a drying room not less than 35 days at a temperature not lower than 45 °F., and in no case shall the sausage be released from the drying room in less than 40 days from the time the curing materials are added to the meat.
The act goes on like this for many, many pages. All to regulate sausages. Sausage making, once an artisan’s craft, has become a compliance exercise that perhaps only corporations can realistically manage. One can certainly see that regulations of this extensiveness lock-in production methods. Woe be to the person who wants to produce a thinner, fatter or less salty sausage let alone who tries to pioneer a new method of sausage making even if it tastes better or is safer. Is such prescriptive regulation the only way to maintain the safety of our sausages? Could not tort law, insurance, and a few simple rules substitute at lower cost and without stifling innovation?
Do Minimum Wages Reduce Job Opportunities for Blacks?
We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also other low-skill groups. We focus primarily on employment, which has been the prime concern with the minimum wage research literature. We find evidence that job loss effects from higher minimum wages are much more evident for blacks, and in contrast not very detectable for whites, and are often large enough to generate adverse effects on earnings. We supplement this work with additional analysis that distinguishes between effects of an individual’s race and the race composition of where they live. The extensive residential segregation by race in the United States raises the question of whether the more adverse effects of minimum wages on blacks are attributable to more adverse effects on black individuals, or more adverse effects on neighborhoods with large black populations. We find relatively little evidence of heterogeneity in effects across areas defined by the share black among residents.
That is from a new NBER working paper by David Neumark and Jyotsana Kala.
J. Zachary Mazlish on median wages under Biden
An excellent post, one of the best things written this year in economics. Here is part of the bottom line:
Inflation did make the median voter poorer during Biden’s term.
- In no part of the income distribution did wages grow faster while Biden was President than they did 2012-2020.
- This is true in the raw data, and even more stark after compositional adjustment.
- In particular, the change in median incomes was well below its 2012-20 run-rate.
- But, the change in median wages is not what matters; it is the median change in wages that does. And this metric was even weaker under Biden: lower than any period in the last 30 years other than the Great Recession.
- People do not feel wages, they feel total income. And median growth in total income — post taxes and transfers — was not just historically low: it collapsed and was deeply negative from 2021 onwards.
- Much of this decline is due to timing of pandemic stimulus and even less the “fault of Biden” than other things.
Here is the full post, plenty of detail and distinctions throughout.
The Health and Employment Effects of Employer Vaccination Mandates
Health care facilities considering mandating staff vaccination face a difficult tradeoff. While additional vaccination coverage will directly reduce disease transmission within the facility, the imposition of a mandate may also cause vaccine-hesitant staff to quit, which could harm patient care. To study this tradeoff, we leverage comprehensive administrative data covering virtually all US nursing homes, including payroll-based records on approximately 500 million daily nurse shifts and weekly data on COVID transmission and mortality at each facility. We use a difference-in-differences framework to estimate the impact of employer-imposed vaccine mandates at 581 nursing homes on disease spread, employment outcomes, and several patient care metrics. While mandates did slightly increase staff turnover, the effects were concentrated on staff working less than 20 hours per week, and resulted in a reduction of less than two minutes per patient-day. Furthermore, there is only limited evidence of lower levels of care at mandate facilities in typically-monitored conditions such as patient falls, pressure ulcers, or urinary tract infections. In contrast, implementing a vaccine mandate led to large increases in staff vaccinations at mandate facilities, which directly led to less transmission of and lower patient mortality from COVID. We estimate that vaccine mandates saved one patient life for every two facilities that enacted a mandate, a large effect given the typical facility has around 100 beds. Our results suggest that the health benefits of mandates far outweigh the costs in terms of reduced patient care from staff turnover.
Yup. For some of you, it is time to read it and weep. Here is the full paper by
Acemoglu interview with Times of India
Here is part of the segment on AI:
Given the potential for AI to exacerbate inequality, how can we redirect technology?
We need to actively steer technological development in a direction that benefits broader swathes of humanity. This require a pro-human approach that prioritises enhancing worker productivity and autonomy, supporting democracy and citizen empowerment, and fostering creativity and innovation.
To achieve this, we need to: a) Change the narrative around technology, emphasising societal control and a focus on human well-being. b) Build strong countervailing powers, such as labour unions and civil society organisations, to balance the power of tech companies, and c) Implement policies that level the playing field, including tax reforms that discourage automation and promote labour, data rights for individuals and creative workers, and regulations on manipulative digital advertising practices.
Here is the full interview.
Acemoglu, Johnson and Robinson Win Nobel Prize for Institutions and Prosperity
The Nobel prize goes to Daron Acemoglu, Simon Johnson and James Robinson for their work on institutions, prosperity, and economic growth. Here is a key piece summarizing their work: Institutions as a Fundamental Cause of Long-Run Growth.
This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally a conflict over these social choices, ultimately resolved in favor of groups with greater political power. The distribution of political power in society is in turn determined by political institutions and the distribution of resources. Political institutions allocate de jure political power, while groups with greater economic might typically possess greater de facto political power…Economic institutions encouraging economic growth emerge when political institutions allocate power to groups with interests in broad-based property rights enforcement, when they create effective constraints on power-holders, and when there are relatively few rents to be captured by power-holders.
See this great MRU video on Institutions for a quick overview! Here from an interview with Acemoglu, is a slightly more pointed perspective. Politics keeps people poor:
Why is it that certain different types of institutions stick?….it wouldn’t make sense, in terms of economic growth, to have a set of institutions that ban private property or create private property that is highly insecure, where I can encroach on your rights. But politically, it might make a lot of sense.
If I have the political power, and I’m afraid of you becoming rich and challenging me politically, then it makes a lot of sense for me to create a set of institutions that don’t give you secure property rights. If I’m afraid of you starting new businesses and attracting my workers away from me, it makes a lot of sense for me to regulate you in such a way that it totally kills your ability to grow or undertake innovations.
So, if I am really afraid of losing political power to you, that really brings me to the politics of institutions, where the logic is not so much the economic consequences, but the political consequences. This means that, say, when considering some reform, what most politicians and powerful elites in society really care about is not whether this reform will make the population at large better off, but whether it will make it easier or harder for them to cling to power.
Those are the sort of issues that become first-order if you want to understand how these things work.
One interesting aspect of this year’s Nobel is that almost all of AJRs Nobel work is accessible to the public because it has come primarily through popular books rather than papers. The Economic Origins of Dictatorship and Democracy, Why Nations Fail, and the The Narrow Corridor all by Acemoglu and Robinson and Power and Progress by Acemoglu and Johnson are all very readable books aimed squarely at the general public. The books are in many ways deeper and more subtle than the academic work which might have triggered the broader ideas (such as the famous Settler Mortality paper). Many of the key papers such as Reversal of Fortune are also very readable.
This is not to say that the authors have not also made many technical contributions to economics, most especially Acemoglu. I think of Daron Acemoglu (GS) as the Wilt Chamberlin of economics, an absolute monster of productivity who racks up the papers and the citations at nearly unprecedented rates. According to Google Scholar he has 247,440 citations and an H-index of 175, which means 175 papers each with more than 175 citations. Pause on that for a moment. Daron got his PhD in 1992 so that’s over 5 papers per year which would be tremendous by itself–but we are talking 5 path-breaking, highly-cited papers per year plus many others! (Of course, most written with excellent co-authors). In addition, he’s the author of a massive textbook on economic growth. More than any other economist Daron has pushed the cutting-edge of technical economics and has also written books of deep scholarship still accessible to the public. In his overview of Daron’s work for the John Bates Clark medal Robert Shimer wrote “he can write faster than I can digest his research.” I believe that is true for the profession as a whole. We are all catching-up to Daron Acemoglu.
Indeed, in reading a book like Why Nations Fail and papers like The Network Origins of Aggregate Fluctuations (one of my favorite Acemoglu papers) and The Uniqueness of Solutions for Nonlinear and Mixed Complementarity Problems it’s difficult to believe they are co-authored by the same person. Acemoglu is as comfortable talking history, politics, and political economy as he is talking about the economics of recessions and abstruse mathematics.
Here are Previous MR posts on Daron Acemoglu including this post on democracy where I find the effect of democracy on growth to be ho-hum. Here is Maxwell Tabarrok on Acemoglu on AI. Here is Conversations with Tyler with Acemoglu and a separate conversation with Simon Johnson.
As noted, one of my favorite Acemoglu papers (with Carvalho, Ozdaglar, and Tahbaz-Salehi) is The Network Origins of Aggregate Fluctuations. Conventional economics models the aggregate economy as if it were a single large firm. In fact, the economy is a network. An auto plants needs steel and oil to operate so fluctuations in the steel and oil industry will influence production in the auto industry. For a long time, the network nature of production has been ignored. In part because there are some situations in which a network can be modeled as if it were a single firm and in part because it’s just much easier to do the math that way. Acemoglu et al. show that aggregate fluctuations can be generated by sector fluctuations and that organization of the network cannot be ignored. This is a modern approach to real business cycles. See also my post on Gabaix and granular fluctuations).
In recent work, Acemoglu and Restrepo have created a new way of modeling production functions which divides work into tasks, some of which are better performed by capital and others by labor. Technological change is not simply about increasing the productivity of labor or capital (modeled in standard economics as making one laborer today worth two of yesterday’s) but about changing which tasks can best be done by capital and which by labor. As a task moves from labor to capital the demand for labor falls but productivity increases which generates demand for other kinds of labor. In addition, as capital replaces labor in some tasks entirely new tasks may be created for which labor has a comparative advantage. A number of interesting points come out of this including the idea that what we have to fear most is not super-robots but mediocre-robots. A super-robot replaces labor but has an immense productivity advantage which generates wealth and demand for labor elsewhere. A mediocre-robot replaces the same labor but doesn’t have a huge productivity advantage. In an empirical breakdown, Acemoglu and Restrepo suggest that what has happened in the 1990s and especially since 2000 is mediocre-robots. As a result, there has been a decline in labor on net. Thus, Acemoglu is more negative than many economists on automation, at least as it has occurred recently. Acemoglu and Restrepo is some of the best recent work going beyond the old tired debates to reformulate how we think of production and to use that reformulation to tie those reformulations to what is actually happening in the economy.
Solow thought of technical change as exogenous which is still the first-pass approach to thinking about technical change. Acemoglu in contrast focuses on price and market size. In particular, the larger the market the greater the incentive to invest in R&D to serve that market (see also my TED talk). Thus, technical change will tend to be cumulative. A sector with a productivity improvement will grow which can make that sector even more remunerative for further technical advances (depending on elasticities). This matters a lot for environmental change because it suggests that a relative small intervention today–including subsidizing research on clean technologies–can have a huge payoff in the future because by directing technical change in the right direction you make it easier to switch later on. (from this interview)
But let’s think of the logic of directed technical change with cumulative research. The less we do on green technology today, the less knowledge is accumulated in the green sector, so the bigger is the gap between fossil-fuel-based technology and energy, and the cleaner energy, so the harder it will be in the future to close that gap. With more proactive, decisive action today, we already start closing the gap, and we’re making it easier to deal with the problem in the future.
Simon Johnson has also written important books on banking and finance including and that was before the big run up in American debt! James Robinson has written widely on African development and colonialism and African development more generally.
Overall, I’d say that this is an award for political science and for popular economics in the very best sense of economics that matters. Go buy their books and read them!
The Economic Way of Thinking in a Pandemic
During the pandemic, economists often found themselves at odds with politicians, physicians, epidemiologists and others. Some politicians, for example, were worried that the pharma companies might engage in profiteering while economists worried that the pharma companies were not nearly profitable enough. Physicians focused on maximizing the health of patients while economists focused on maximizing the health of society–during the pandemic these were not the same and this led to disputes over testing, first doses first and human challenge trials. During the pandemic economists were often accused of not staying in their lane. But what is the economist’s lane?
In this talk, I discuss the economic way of thinking and how it conflicted with other ways of thinking. My talk pairs well with my recent paper also titled The Economic Way of Thinking in a Pandemic.
Incentives matter, the demand curve slopes downward, mental health edition
Since 2000, pharmaceuticals for common psychiatric conditions aged out of patent protection. After generic entry, supply increases as more sellers enter the market, leading to lower prices – about 80-85% less! Cheaper prescriptions and more treatment are the stated goal of policies to improve affordability.
…Drug prices definitely fell during this period. For the SSRI sertraline, consumer cost per month dropped from ~35 dollars in the mid-2000s to ~6 dollars by the mid 2010s. Total Medicaid spending on antidepressants peaked in 2004 ($2 billion) then declined through 2018 ($750 million). Authors of that paper note that “generic drug prices steadily decreased over time” while utilization increased. From 2013 to 2018, both out-of-pocket costs and total expenditures per prescription fill went down for antidepressants and antipsychotics. For antipsychotics, generic drug claims grew 35% from 2016 to 2021.
According to the DEA, total dispensing of stimulants jumped 58% from 2012 to 2022; note how this follows the generic entry of long-acting Ritalin (methylphenidate) and Adderall (amphetamine) products. More recently, stimulant prices shot up amid shortages.
And:
By the mid 2010s, people with psychiatric conditions were better able to afford mental health care. Young adults, now on their parents insurance, saw declining out of pocket costs for behavioral health in particular. For people aged 18-25, “mental health treatment increased by 5.3 percentage points relative to a comparison group of similar people ages 26–35.” Even for employer plans, in-network prices and cost-sharing decreased from 2007 to 2017…
Here is the full essay by AffectiveMedicine. It has numerous other points of interest.
Carrying costs > liquidity premium, and not only pandas have a fertility crisis
A zoo in Finland has agreed with Chinese authorities to return two loaned giant pandas to China more than eight years ahead of schedule because they have become too expensive for the facility to maintain amid declining visitors.
The private Ähtäri Zoo in central Finland some 330 kilometers (205 miles) north of Helsinki said Wednesday on its Facebook page that the female panda Lumi, Finnish for “snow,” and the male panda Pyry, meaning “snowfall,” will return “prematurely” to China later this year.
The panda pair was China’s gift to mark the Nordic nation’s 100 years of independence in 2017, and they were supposed to be on loan until 2033.
But since then the zoo has experienced a number of challenges, including a decline in visitors due to the 2020 coronavirus pandemic and the conflict between Russia and Ukraine, as well as an increase in inflation and interest rates, the facility said in a statement.
Here is the full NPR story.
*Emancipation*
The author is Peter Kolchin, and the subtitle is The Abolition and Aftermath of American Slavery and Russian Serfdom. Here is one interesting excerpt of many:
Despite the surge in schools and teachers after 1880, Russian peasant children were considerably less likely to receive schooling than were African American children, especially if they were girls. As the statement about not needing literacy in order to make cabbage soup indicated, the subordination of females that characterized Russian society in general was as evident in peasant education as in any other sphere of life. Statistics on school attendance by sex indicates that, in contrast to former slaves in the Southern United States, for whom serfs in Russia rarely sent their daughters to school during the 1860s and 1870s, regarding it as a waste of time that would fill their heads with needless knowledge and make them less fit for their feminine duties. The evidence is consistent and overwhelming. Among African Americans in the Southern United States, girls were at least as likely as boys to attend school: the Freedmen’s Bureau Consolidated Monthly School Report for June 1867, for example, listed 45,855 male and 52,981 female pupils in the schools that it monitored throughout the South; in almost every state, female pupils outnumbered male pupils and there were slightly more males than females. The decennial census returns showed a similar pattern between 1870 and 1910: school enrollment rates in the United States for Black children aged five to nineteen (the great majority of whom lived in the South) were fairly evenly balanced between the sexes, with female rates slightly higher than male in four of the five census years. (The male rate was slightly higher than the female in 1880.)
You can buy the book here.
On the price of Ozempic
That is the topic of my latest Bloomberg column, here is one excerpt:
As for consumer prices for the current obesity drugs, they are not as high as is often reported, once the various ways to get a discount are taken into account. Despite reports that the drugs cost $1,000 per month, the reality is more favorable. Even putting aside insurance coverage, readily available discounts can cut that price in half. Eli Lilly & Co. recently introduced online sales of Zepbound vials for $399 a month.
Lurking in the background are “compounded” versions of these drugs, which are pharmacy-produced copies, permitted by law when there is a shortage of the core drugs. These compounds do not undergo the same inspection processes as the brand names, and their safety and efficacy has been questioned. But they are easy to get and relatively cheap. This is an example of competition, however imperfect and in need of oversight, lowering prices — and in a less clumsy manner than a government price control.
Are we right now getting anything close to optimal price discrimination, or not?
“four percent of humanity subscribes to OnlyFans” (from my email)
Andrew Cedotal writes me:
This issue came up with the post where someone claimed that N% of Americans were active OnlyFans content creators, here it is again!
For software services, total accounts ever created is a vanity metric. It’s not used by serious operators or investors of consumer-tech companies (the fact that it shows up in public financial reports so often thus has interesting implications).
The social impact/business value of a software service is about flow (e.g. monthly active users and monthly revenue), not stock. 100 real human signups means many, many fewer actual monthly active users (MAU) at any point, because users churn out. Even the best-retaining services around (e.g. Snap) only have 90% yearly retention, which then compounds downward.
Then there’s the issue that for any public software service, many accounts are bots, throwaways, people who forgot their password, etc.
Rather than make a truly wild guesstimate, let’s look at a frontier based on the report of $6.6B gross payments made by users in 2023 (so average revenue / month is $0.55B). All of the following are possible points on the frontier of paying MAU (paying monthly active users) vs. monthtly APPPU (monthly payments per paying user):
* 10 million paying MAU, $55 monthly APPPU
* 30 million paying MAU, $18.33 monthly APPPU
* 50 million paying MAU, $11 monthly APPPU
* 100 million paying MAU, $5.5 monthly APPPU(Industry standard is to look at ARPPU–average revenue per paying user–and not average payments, but I think here we’re more interested in determining how much money users are putting into it and ignoring platform take rate, not a financial analysis of the company.)
Now, OnlyFans might have ~300M total signups ever, but let’s assume half of those are dupes and bots. So 150M real human signups. It’s unlikely that more than 20% of people who have ever created an account have ever entered a credit card, so that’s 300 * 0.5 * .2 = 30M as a cap on people who have ever paid. Take into account userbase churn, and a guess is ~12M monthly paying accounts right now (0.15% of humanity, not 4%), which would put them at $45.83 monthly APPPU or a yearly APPPU of ~$550. About the annual cost of a gym membership in the U.S.
Should we keep the wealthy non-diversified? (from my email)
Byrne Hobart writes to me:
One of the purposes of inheritance taxes is to avoid compounding intergenerational wealth. But The Missing Billionaires points out that if all of America’s millionaires had put their money in broad market indices in 1900, their heirs would number 16,000 billionaires, even accounting for taxes, splitting estates among multiple children, etc.
So one of the forces that prevents compounding inequality is that rich people tend to have less diversified portfolios than the rest of us—they own a lot of whatever it is that made them rich! If we give them an incentive to stay undiversified, and to do so even when they’re quite old and thus not in a great position to monitor or manage their assets well, they’ll end up with suboptimal portfolios that are much more likely to lose most/all of their value than the average retirement account is. Given how much volatility can cut into returns (witness the 3x levered Microstrategy ETF that has lost 82% of its value in a year when Microstrategy itself doubled), it’s possible that the cost basis step-up actually contributes more to intergenerational economic mobility than the money collected by the estate tax itself, by encouraging them to white-knuckle their way through the last years of their life with all their eggs in one basket.
I’m not personally a fan of the estate tax or the step-up, for various reasons, but I found this argument fun nonetheless.
Speculative but interesting…
Peer Approval to Address Drug Shortages
Reuters: Mark Cuban’s Cost Plus Drug Company said…that it is working with the U.S. Food and Drug Administration to import and distribute penicillin in the country temporarily….Cuban’s Cost Plus will import Lentocilin brand penicillin powder marketed by Portugal-based Laboratórios Atral S.A.
There are two remarkable items in the above passage. First, there is a shortage of penicillin in the United States! Crazy. The second remarkable item is that the FDA has authorized the temporary importation of penicillin from Portugal. In other words, the FDA will accept the EMA’s authorization of penicillin as equivalent to its own, at least for the purposes of alleviating the shortage. That’s good. What is needed, however, is a more permanent form of peer-approval.
I have long advocated for peer approval or reciprocity for any drug or device approved in a peer country but notice that this form of peer approval is only for drugs already approved in the United States. Thus, the approval is really only for labeling and manufacturing, a pretty small ask.
Peer approval for imports would also help to discipline domestic firms who sometimes take advantage of monopoly power to jack up prices. Indeed, you may recall Martin Shkreli and the massive price increases for Daraprim (Pyrimethamine) to $750 a pill when the same pill was available in Europe for $1 or less and in India for 10 cents. Importation would have solved that problem entirely.