Results for “prizes” 225 found
What should we do instead of the Obama health reform bill?
A lot of people think you have no right to criticize a bill unless you propose a better bill. I don't agree (if the aforementioned bill is bad on net), but in any case I will give this a try. These are not my first best reforms or even my second best reforms. They're my "attempt to work with some of the same moving pieces which are currently on the table" set of reforms. I would trade away the Obama bill for these in a heart beat. Keep in mind people, with a "no insurance" penalty of only $750, the current bill isn't going to work (and that's ignoring the massive implicit marginal tax rates on many individuals and families, or the "crowding out" of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.
Here goes:
1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the "second stimulus" while you're at it. It's better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.
2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net. Do you people like the idea of a public plan? We already have one!
2b. Make any "Medicare to Medicaid" $$ trade-offs you can, while recognizing this may end up being zero for political reasons.
3. Boost subsidies to medical R&D by more than the Obama plan will do. Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.
4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.
5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis. Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.
6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services. This can be done.
7. Preserve current HSAs. The Obama plan will tank them, yet HSAs, while sometimes overrated, do boost spending discipline. They also keep open some path of getting to the Singapore system in the future.
8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It's fine to say "Obama is already working on this issue" but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.
9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.
10. Enforce current laws against fraudulent rescission. If these cases are so clear cut and so obviously in the wrong, let's act on it. We can strengthen the legal penalties if need be.
11. Realize that you cannot tack "universal coverage" (which by the way it isn't) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways. If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage. But don't bet on that ever happening.
Separate issues:
12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it's not clear what the rest of that deal looks like. The original tax break makes no economic sense but you don't want to end up with a big tax increase and a lot more people on the public books with little in return.
13. If the current bill were voted down, you can imagine some version of the above happening, although not necessarily all at once in one big bill.
14. Commission a study of how much the Obama plan is spending per QALY saved. I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase. I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty. In any case, do the study, scream the number from the rooftops, and reread points 1-11. Enact.
That's my recipe. It's better than what we are doing now. You don't have to adhere to any extreme form of economistic or free market ideology to buy it. It might even be politically easier than the current path, as it "sounds less socialistic."
Assorted links
1. Can complex financial assets be booby-trapped?
2. Jon Chait makes the case against prizes.
3. Bruce Bartlett opposes cutting the payroll tax.
4. Which countries produce the most beef? (put the cursor on the balloons)
5. Metaphors: people mostly describe their lives in terms of a "journey"; is this just our tendency to impose false or misleading narrative on events? Poorer people, however, are more likely than richer people to describe their lives as a "battle."
6. John Nye on inequality and positional goods (read the whole symposium).
Paul Dirac on economics
This was from his 1933 Nobel acceptance speech (!):
I should like to suggest to you that the
cause of all the economic troubles is that we have an economic
system which tries to maintain an equality of value between two
things, which it would be better to recognise from the beginning
as of unequal value. These two things are the receipt of a
certain single payment (say 100 crowns) and the receipt of a
regular income (say 3 crowns a year) through all eternity. The
course of events is continually showing that the second of these
is more highly valued than the first. The shortage of buyers,
which the world is suffering from, is readily understood, not as
due to people not wishing to obtain possession of goods, but as
people being unwilling to part with something which might earn a
regular income in exchange for those goods. May I ask you to
trace out for yourselves how all the obscurities become clear, if
one assumes from the beginning that a regular income is worth
incomparably more, in fact infinitely more, in the mathematical
sense, than any single payment? In doing so I think you would
then get a better insight into the way in which a physical theory
is fitted in with the facts than you could get from studying
popular books on physics.
I thank Eric R. Weinstein (Twitter!) for the pointer.
Of course you can read this paragraph as offering differing (better?) microfoundations for a liquidity trap argument. The problem is not expectations of unfavorable interest rate changes (no one buys bonds with cash), but rather no one parts with bonds to receive goods and services. Is it a behavioral argument, namely that no one wants to give up the feeling of "forever" for the feeling of getting something which is only "temporary." Or is it a maximizing argument, namely that a kind of zero discount rate hyper-rationality takes over the people who won't spend? Does the argument require that consols are the dominant form of bonds?
Assorted links
1. Economics art gallery, at Cornell.
2. Contribution to Economist Roundtable on European banking regulation.
3. Paint can block wireless signals.
4. Interview with Tony Judt; excellent throughout, especially on Russia.
Will there be another Milton Friedman?
Dan Klein, guest-blogging at AustrianEconomists, poses the question and says no, there will not be a classical liberal advocate of comparable stature. At least not anytime soon:
With
the postwar re-awakenings, bold thinkers defied the cultural ruts of
their times. They rediscovered pieces of the liberal understanding.
Mises, Hayek, Friedman, Buchanan, Tullock, Rothbard, Kirzner, Alchian,
Sowell, Coase, Bauer, Simon and Demsetz developed new statements of
parts of liberal wisdom. Because it had been dead and buried, it now
seemed fresh and original. They earned status as epic figures by fresh
pioneering and academic kudos. But what they formulated and taught to
all of us was the low-hanging fruit of all that had been forgotten. I’m
not saying that everything they teach had been taught 150 years prior.
But a lot of it had, and the basic verities pretty much all had….
I don’t think that a clone of Milton Friedman could today become Milton Friedman. To get on in Econ he’d have to do a lot more math, and identify with “normal scientists.” Back in the day, Hayek, Coase, and Buchanan could eschew math and still end up with Nobel prizes. Not today.
Normal scientists won’t embrace you academically if you don’t seem like their
kind. You would have to become their kind. You wouldn’t develop liberal
vision and motivation. Or, if you did you wouldn’t become first among
your peers at a top department (even, that is, if you had the
endowments of a Milton Friedman).
The culture generally is becoming more fragmented, because of technology. But technology is making the academic discipline more integrated and monolithic, even at the international level. There is no “freshwater” vs.
“saltwater” and so on. It is like the baseball player market, one big
pyramid. The top departments are alike and the rest strive to maintain
their standing in the pyramid.
Regardless of academic standing, how is the modern clone of Milton Friedman to cut
a figure? The low-hanging fruit has been plucked and digested by the
liberal movement. A new young brilliant dynamo could write a nice book
like Free to Choose or Road to Serfdom, but who would care? It’s all available in another dozen books that have appeared since 1960.
There is more at the link and of course you can see the link to David Hume's ideas about the posts of honour being filled. I agree with Dan.
Assorted links
1. Markets in everything: The Twitter Opera, from Covent Garden.
2. IP norms and stand-up comedy, and a comment.
3. Book covers that were not meant to be.
4. The importance of the NYC subway.
5. Chris Masse sends me a long McKinsey study on the economics of prizes.
Priorities for the New FDA Commissioner
The Manhattan Institute asked a number of experts in health care policy to provide brief words of advice to the new FDA commissioner. Here is one bit from yours truly:
The most difficult but valuable pharmaceutical policy for the new administration will be to resist the temptation to impose price controls. Price controls promise lower prices but the cost is fewer new drugs and diminished medical progress. Moreover, the promise is illusory. Since new drugs typically lower total health care costs (by reducing time in hospital) price controls will raise total health care costs. Prizes and patent buyouts, two innovative ways of reducing pharmaceutical prices while maintaining incentives to develop new drugs, should be investigated and tested.
Henry Miller, Paul Rubin and Mary Woolley also comment.
Paul Krugman’s Nobel lecture and slides
More book awards: high standards in Iran
Yes, it’s that time of year again: they named the winners of the Sacred Defense Book of the Year awards in Iran…
Yet in ten major categories, including "Fiction," no books were deemed worthy of the honor. The category "Children’s War Poetry" was left open as well. Here is further information. Here is a photo of the event, plus a list of the books that were honored. Numerous second prizes were given even though no first prizes were awarded.
The best criticism of me I read today
The fallacies of Cowen and Krugman are of the most basic sort — errors
only made possible by men captured by a deeply false conception of
"science", and hence a pseudo-scientific capital-free, causally impossible, aggregate "modeling" approach to the macroeconomy, rather than a causally real relative price / heterogeneous capital ordering process approach, just as Hayek explained in his Nobel Prize lecture.
Here is the full article. I thank Bryan Caplan for the pointer.
Addendum: Angus comments.
Against Intellectual Monopoly
Against Intellectual Monopoly is a relentless, pounding, take no prisoners attack on patent and copyright law. It joins Lessig’s Free Culture and Heller’s The Gridlock Economy as an instant classic and a must-read on these issues.
Many people argue that the patent system has gone wrong in recent years, Boldrin and Levine argue that the patent system was rotten from the start. James Watt they say was a "scoundrel" who with his politically-connected partner Matthew Boulton used the patent system to crush their innovative opposition and delay the industrial revolution.
During the period of Watt’s patents, the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt’s patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt’s patent; however between 1810 and 1835 it is estimated to have increased by a factor of five.
Will books be published without copyright? Boldrin and Levine point out that the 9-11 Commission Report was profitably published by Norton despite being available free for download. Not to mention the fact that most of the great works of literature were published without copyright. Boldrin and Levine are top-notch theorists but AIM is widely accessible and it succeeds best with its many historical discussions and contemporary anecdotes.
AIM does suffer in places from a lack of a lack of nuance and a surprising ability to ignore trade-offs. Boldrin and Levine argue, for example, that among the reasons we don’t need patents are a) because ideas aren’t copied immediately, they take time to diffuse, b) first movers have significant advantages and c) trade secrecy is often a more effective "means of appropriating returns" than patents.
Quite right on all three counts but each of these reasons also explains why patents are less costly than one might at first imagine. After all, what Boldrin and Levine are really saying is that intellectual monopoly would exist even without intellectual property law.
A standard model used to explain why patents might be useful implicitly
assumes that ideas are transmitted instantly at zero cost. Boldrin
and Levine smash the premise of this argument but the premise is sufficient for the conclusion not
necessary. Indeed, once you acknowledge that the slow diffusion of ideas helps entrepreneurs to appropriate the returns to their innovations it becomes an open question of how slow is best? When is the appropriability of returns strong and when is it weak? Doesn’t it differ for different goods? Shouldn’t intellectual property law recognize these differences? It’s clear, for example, that ideas are diffusing more quickly than ever before. On Boldrin and Levine’s argument, faster diffusion of ideas implies lower appropriability and thus a stronger argument for intellectual property law. Needless to say Boldrin and Levine are too busy using
a "mallet to smash shiny myths" to make this argument. (To be fair, they are more nuanced in
the conclusion.).
Similarly, Boldrin and Levine argue that the larger the market the less patent protection is needed, hence globalization implies less patent protection. Again, quite right (see also my paper, Patent Theory versus Patent Law, on this point). But you won’t see Boldrin and Levine drawing the corollary conclusion that more intellectual property rights are optimal the smaller the market, despite the fact that we have a very successful example where increased patent rights for smaller markets generated considerably more innovation, namely the Orphan Drug Act.
For economists, it’s also surprising how little marginal analysis you find in AIM. For example, Boldrin and Levine ask, Did Rowling really need a billion dollars to write Harry Potter? Surely, a few million would have been enough. But that’s like saying that taxing lottery winnings won’t reduce the number of buyers because the winner will still get a huge return on her dollar of investment.
The bottom line is that that there is a Laffer curve for innovation – more appropriability increases innovation at first but innovation declines when appropriability extends too far. I agree with Boldrin and Levine that rent-seeking has put us on the wrong side of the Laffer curve for innovation. We need to reduce intellectual monopoly with patent reform, less copyright protection, and a greater use of patent substitutes like prizes. But unfortunately, when it comes to innovation there is no invisible hand theorem which moves us automatically to the top of the curve.
Seven Days in the Art World
Asher has no dealer; his work is not generally for sale. When I ask the artist whether he resists the art market, he says dryly: "I don’t avoid commodity forms. In 1966 I made these plastic bubbles. They were shaped like paint blisters that came an inch off the wall. I sold one of those."
That is from the very fun Seven Days in the Art World, by Sarah Thornton. Here is Felix Salmon on the book. How about this part?:
The artist Keith Tyson admits that he had a gambling problem when he was a nominee in 2002. "I had an intellectual interest in chance as well as a fantasy of beating the laws of mathematics," he said. "The Turner Prize was my first opportunity to bet when I could have an effect. My odds were seven to two. In a four-horse race, that is an insult. I had absolutely no choice. I’m sure it is solely because of the bets I put on myself that I went from being the underdog to the favorite. I won’t say how much I took home, but won more from betting than I did from winning what was then a twenty-thousand pound prize."
In other words, prizes, plus a betting market on the prize winner, create especially strong incentives.
X Prize News
The X Prize Foundation has received $7m in new funding to develop more X prizes and The Aeronautics and Cosmonautics Romanian Association (?!) says they will try to land a robot on the moon within the next 3 months.
The Cowles Foundation Monographs in Economics
You’ll find them here, free and on-line, courtesy of Division of Labor and Michael Greinecker. The most famous is Kenneth Arrow’s Social Choice and Individual Values but there are many classics in the series; in fact the hit rate is remarkably high even if they are not all recommended for the general reader. Here is Wikipedia on the Cowles Commission, and by the way it is pronounced "coals." Here is much more background, including links to photos. Here is the current home page of an institution which is no longer distinctive precisely because it triumphed. How is this for a casual sentence:
Several Cowles associates have won Nobel prizes for research done while at the Cowles
Commission. These include Tjalling Koopmans,
Kenneth Arrow, Gerard Debreu,
James Tobin, Franco Modigliani, Herbert Simon,
Lawrence Klein, Trygve Haavelmo and Harry Markowitz.
Leonid Hurwicz, Eric Maskin, and Roger Myerson
Win the Nobel Prize in Economics. That’s funny, because this is precisely the kind of work which is going out of style in the broader profession. These guys are smart, smart, smart, and Hurwicz is probably the best known of the three. They are all high-powered theorists, doing incentives, mechanism design, and social choice theory. None of them are easy to explain to your grandmother.
Here is the scientific overview.
No doubt mechanism design, and the general problem of inducing truth-telling, will be with us forever. But how practical are these general results? Or have the theorists simply provided us with cautionary notes and left the real applications to the context-specific world of practice? Did these guys get at the real reasons why we don’t organize the entire economy as a second-price auction?
Part of me thinks: "Hey, let’s say Natasha wants Yana to tell her the truth about when she will clean her room. This stuff isn’t useful!"
Another part of me thinks: "It is most important to get theory right. These guys are brilliant. Only the philistines demand that all scientific contributions have immediate applications."
Some of you might argue: "These guys have already had a big impact on real world auctions and incentive schemes." In terms of the induced improvement in human welfare, I find that a difficult case to make. The important progress has come from recognizing much simpler truths about incentives.