The idea of the “food desert” is fading
Poor neighborhoods, Dr. Lee found, had nearly twice as many fast food restaurants and convenience stores as wealthier ones, and they had more than three times as many corner stores per square mile. But they also had nearly twice as many supermarkets and large-scale grocers per square mile. Her study, financed by the institute, was published in the March issue of Social Science and Medicine.
From another paper:
Dr. Sturm found no relationship between what type of food students said they ate, what they weighed, and the type of food within a mile and a half of their homes.
Here is much more.
The Matt Yglesias take on restaurant decline
Matt writes:
Imagine some diners are, by temperament, venturesome while others are regulars. Over the long term, the best business strategy is to appeal to regulars since they offer a stable client base. But when a restaurant is new, it by definition lacks regulars and needs to appeal to venturesome diners both to get an initial wave of customers and also to attract “buzz” and get the temperamental regulars in the door. Over time, a successful restaurant will attempt to switch and become more a place for regulars, which means that venturesome diners will come to like it less. At the same time, alienating venturesome foodies is very low cost because being venturesome they would perceive their own growing familiarity with the food as declining quality one way or the other.
This is not at all far from my basic theory, though Matt seems to imply it is. In An Economist Gets Lunch I stress how the cycle of “ceasing to appeal to the informed diners” has very much accelerated with the internet. Good reviews arrive rapidly, perhaps too rapidly. If there is a new place you quite like — especially if it is trendy — go many times now, because it will decline in quality more rapidly than such places used to. Once the place is established, it can get by more on momentum and on its value as a focal venue for socializing. You can take the presence of a lot of beautiful women as one sign that a place has crossed into this territory.
Don’t think of the model as “what happens to a restaurant when there is an exogenous increase in the beauty of its women” (recall Scott Sumner — “don’t reason from a beautiful women [price] change!” ). Think of the model as “what does lots of beautiful women predict about the place of a restaurant in its product life cycle?”
Restaurants with beautiful women are still better than average, relative to the population of restaurants as a whole, for obvious reasons related to wealth and demographics. They’re just not likely to be the very best of the good restaurants, especially for the price.
Arguably it is a different case when a restaurant has beautiful women, but most mainstream male patrons would regard those women as “ineligible,” or “unapproachable,” perhaps for reason of a different religion or ethnicity. At those restaurants you can enjoy both great food for the price and beautiful women, though perhaps your enjoyment of the latter will remain at some distance.
Assorted links
1. The hug a Coca-Cola vending machine advertising campaign that is Singapore.
2. U. Michigan economics Ph.d student running for Congress, web site here.
3. Annie Lowrey profile of Piketty and Saez, and here is a list of French economists supporting Hollande, Piketty is on the list, via CFM.
5. Via Chris F. Masse, “The revolutionary calculator that shows the answer only when you also enter a suitable mental estimate.”
Relative to baseline forecasts, ACA and otherwise
Ruritania is fighting a war, and the status quo setting is that 90,000 lives will be lost each year. General Blythe comes up with a plan that increases the chance of winning the war, but is likely to cost 120,000 lives a year. He claims his plan costs only 30,000 lives a year, relative to baseline. General Smythe has a war plan which on net costs only 80,000 lives a year, so he argues that his plan saves 10,000 lives a year.
In comparative terms these claims are not incorrect, and there are obvious reasons why bureaucracies should draw up such estimates. Yet an anti-war group, SDS, argues that the real cost of the war is 90,000 lives each year, and that the one alternative plan costs 120,000 lives a year and the other 80,000 lives a year. If you are rethinking the entire war, the SDS estimates are relevant.
If we are going to keep at the war no matter what, the estimates of the Generals may be more useful. In the meantime, the generals get upset that SDS is stepping out of the framework of policy discourse and refusing to offer or accept numbers “relative to baseline.” Discourse fractures and names are flung.
To translate that into 2012, the “war” is the joint view — extremely common in America — that a) tax revenues are on an acceptable track, and b) we should spend more and more on health care each year at high rates, including in per capita terms.
If you think that dual project is sustainable, you may be relatively interested in estimates relative to baseline. If, like me, you think that project is like a failed and failing war, a success “relative to baseline” won’t much impress you. In fact it may scare you all the more to hear about success relative to baseline, as that can be taken as a signal that there is no really good plan behind the scenes. Here are a few factors which could radically upset current mainstream baselines:
1. Rates of growth stay in the range of 1 to 1.5 percent, see the work of Stock and Watson, top macro econometricians. Try redoing budget projections with those numbers.
2. Real rates of growth are higher than that, but they take the form of non-taxable pecuniary benefits.
3. Growth rates are acceptable, but more and more of economic growth is captured by private capital, which is difficult to tax for either mobility or political economy reasons.
4. The United States may need to fight a major war, or prepare to do so. (I do favor cutting the defense budget now, but we can’t be sure that cuts can last.)
5. The political economy of revenue hikes and/or spending cuts becomes or remains intractable. Buchanan and Wagner have been stressing this point for decades. A decision to borrow forty cents of a dollar spent, right now, may end up as more or less permanent, at least for as long as markets allow. Ezra’s excellent posts about how far “right” the Democratic Party has moved on taxes are along these lines.
6. Another major recession may arrive, perhaps from abroad.
7. Life expectancy goes up a few more years than we had thought, yet productivity for the elderly doesn’t rise in lockstep. You don’t have to think of that as “bad news,” but it still would be a major fiscal problem.
Maybe none of those are modal forecasts, but add them all up and I say the probability of being way off baseline is greater than 0.5, and possibly more than one of those problems will kick in. In expected value terms, the costs of those possible fiscal scenarios loom very, very large (yet suddenly the modern liberal desire to think in terms of “worst case scenarios” has diminished).
Imagine people sitting around in Spain, in 2006, debating various scenarios relative to the “baseline budget.” Maybe that’s America today, though we do not face the same particular problems or timing that Spain did.
Now enter Chuck Blahous, who wrote an article charging that ACA is likely to prove very costly, and that we are spending our cost savings on Medicare and other programs in advance, when we in fact need those cost savings to restore fiscal sanity. You will find responses here from Ezra Klein, Kevin Drum, Paul Krugman and there were many others, accessible through Google, Blahous counters here.
I have reread the Blahous article carefully, with an eye toward judging whether Blahous is simply playing “baseline games,” as some of the critics allege. I do not see that he is. He stresses that he is making economic, practical, causal, and public choice arguments, and that those trump baseline games in importance. He is trying to get us out of an obsessive focus on the baseline game, not play it in some misleading way.
To be sure, my view, or at least my emphasis, is different from that of Blahous in at least two ways. First, he is more worried about the political economy of Congressional responses when the trust funds are exhausted, whereas I am more worried about the list immediately above (that said, Blahous very clearly does discuss several other major concerns besides double-counting and he may well agree with these broader worries too). Second, my inclination is to focus on the entire budget, as a unified entity, and not so much stand-alone ACA (or Social Security, as in other debates) per se. I suspect Blahous may well agree with me, but as a more active budget analyst/specialist than I am he is forced into debates on stand-alone analyses, whereas I can play the role of aloof blogger. In any case, “fixing” this difference of emphasis would strengthen rather than weaken the overall thrust of his argument.
At the end of the day, I agree with the basic point of Blahous, which is that ACA, should it stand, is spending potentially available budget savings which we will need for other purposes. I also would argue, though I do not have space to do so here, that this has become standard practice in American politics, with Democrats too.
Here are some choice words from Steven Rattner, who worked at Treasury under Obama:
Given that context, the government’s accounting practice — counting $748 billion of cost savings and $259 billion of revenue increases toward both Medicare and the cost of the Obama plan — is particularly troubling. Moreover, this problem is largely hidden from public view.
Under Washington’s delusional rules, budget crunchers in both the White House and Congress credit this $1 trillion twice: once in calculating that the care law will generate more revenues than costs, and again in concluding that the Obama plan will chip away at the Medicare problem.
You can argue that Rattner isn’t quite correctly describing CBO procedures in his piece, but on the economic and causal arguments he, like Blahous, is essentially correct.
At the end of the day, economic models do not use a “relative to baseline” framework. The effect of “Delta G,” “Delta T,” or any other variable, depends on realized and expected values of that variable and others, and not that the size of that variable relative to what other people are proposing. As I mentioned above, “relative to baseline” does have legitimate bureaucratic and accounting uses. But we should not let it blind us to a) the divorce of that mode of reasoning from traditional economics, b) the likely unsustainability of our current fiscal path, and c) that the actual reality of ACA and other policies that we are spending “cost savings” as soon as we create them or even sooner.
Addendum: I am happy to call out the various Ryan budget proposals as unworkable fiscal disasters, most of all on the revenue side. I also refused to endorse the 43 Bush “tax cuts” at the time, though I was sent one of those pieces of paper to sign. No point in throwing the “Team Republican” charge, which in any case disrupts discourse rather than advancing it.
The Internet in Estonia
Free Wi-Fi is everywhere, and has been for a decade.
Viik says you could walk 100 miles – from the pastel-coloured turrets here in medieval Tallinn to the university spires of Tartu – and never lose internet connection.
…Last year, 94% of tax returns were made online, usually within five minutes. You can vote on your laptop (at the last election, Ilves did it from Macedonia) and sign legal documents on a smartphone. Cabinet meetings have been paperless since 2000.
Doctors only issue prescriptions electronically, while in the main cities you can pay by text for bus tickets, parking, and – in some cases – a pint of beer. Not bad for country where, two decades ago, half the population had no phone line.
Estonia is also at the forefront of privacy issues. Everyone in Estonia has a national ID card, which might frighten some Americans–although we already have essentially the same thing, but everyone in Estonia also knows who else has accessed their records. Thus, compared to the United States, Estonia is in many ways a more transparent society. Estonia is also on the forefront of dealing with cyber-terrorism with their own national “electronic” guard.
More at The Guardian.
Economic themes in *Girls*, the new HBO show
The comic timing is very good, and the show also explains:
1. Why the “Rotten Kid theorem” fails and why theories of strategic bequest are unlikely to work,
2. The longer-term consequences of a slow job market for youth, and
3. What life is like when your IQ is high but the shadow value of your labor is low.
The first episode is now on YouTube.
NPR Morning Edition coverage of *An Economist Gets Lunch*
You will find it here. Here is one quotation:
“Vegetarians are more virtuous than the rest of us; they should be admired.”
The shift to on-line education can happen gradually and easily
I left the following comment on Bryan Caplan’s blog post:
You don’t need to overturn all convention. The top schools could shift at the margin, as they have many times in the past, and suddenly the conformist thing to do is to have ?? percent of your classes be on-line, and so on. In virtually any other context you would see the flexibility of the market here! No major credentials need to collapse, if it turns out that cannot happen easily.
This is a phantom issue, raised by many people but not thought through deeply enough. Markets convexify (sometimes).
It is fine to argue “on-line education is not in fact more efficient.” It is much harder to argue “if it is efficient, conformity pressures will keep it out of the market.” Don’t confuse the former case with the latter.
Assorted links
1. Carrying costs > liquidity premium, German dead body edition. Raise the price of a donation, I say.
2. Liquidity premium > carrying costs, German live body edition, disintermediation; “He meets 10 to 15 women a month.” Recommended, I read it twice.
3. Jeff Sachs toys with the idea of a three-child limit for Nigeria (for fathers? mothers? probably de facto just the latter, then won’t it boost polygamy?). In any case it would be a huge tax on rural Nigerians and it is a very bad idea, not to mention a massive violation of personal liberty. Wouldn’t a more right-wing thinker have encountered a firestorm for a similar proposal? (Addendum: a related set of links and commentary from Chris Blattman.)
5. Me in El Diario, on El Paso and Ciudad Juárez, sister cities of a sort, a wonderful near-controlled experiment on how the law influences our food (in Spanish).
Why is U.S. higher education so dominant? And why is Harvard #1?
Shailendra Raj Mehta reports:
The key innovation was alumni control of the Board of Trustees. This is what made possible several desiderata on the Rosovsky (1991) and (Aghion, Dewatripont et al. 2007) lists in the first place. This is what simultaneously allowed autonomy, continuity of purpose, large endowments and the ability to weather turbulence. The role of alumni trustees has not been fully examined so far. Now, to be sure, Rosovsky does talk about the role of independent trustees. Certainly it is true that in one sense the trustees of US schools are often truly independent in that they provide a buffer against interference from the political and other domains. Further, they are usually able to take a view of the institution independent of the interests of the faculty. But, in fact, the trustees are not independent or uninterested observers at all. This is on account of the fact that the Board of Trustees, at least in the top US schools, consists primarily of alumni, the group which has the highest permanent stake in the reputation of the university.
…Therefore, whichever measure of school quality that we use – rank, school selectivity or endowment, we find that same result – the greater the degree of alumni control, the higher the quality of the school.
…so why is Harvard #1? This question, then becomes easy to answer. Except for a few brief years in its early days and a decade in the middle, for almost its entire existence, a period of nearly 400 years, Harvard has been controlled by its alumni.
The paper is here (pdf), interesting throughout.
Toward a 21st-Century FDA?
In a WSJ op-ed, Andrew von Eschenbach, FDA commissioner from 2005 to 2009, is surprisingly candid about how the FDA is killing people.
When I was commissioner of the Food and Drug Administration (FDA) from 2005 to 2009, I saw firsthand how regenerative medicine offered a cure for kidney and heart failure and other chronic conditions like diabetes. Researchers used stem cells to grow cells and tissues to replace failing organs, eliminating the need for expensive supportive treatments like dialysis and organ transplants.
But the beneficiaries were laboratory animals. Breakthroughs for humans were and still are a long way off. They have been stalled by regulatory uncertainty, because the FDA doesn’t have the scientific tools and resources to review complex innovations more expeditiously and pioneer regulatory pathways for state-of-the-art therapies that defy current agency conventions.
Ultimately, however, von Eschenbach blames not the FDA but Congress:
Congress has starved the agency of critical funding, limiting its scientists’ ability to keep up with peers in private industry and academia. The result is an agency in which science-based regulation often lags far behind scientific discovery.
Should we not, however, read the following ala Strauss?
The FDA isn’t obstructing progress because its employees are mean-spirited or foolish.
…For example, in August 2010, the FDA filed suit against a company called Regenerative Sciences. Three years earlier, the company had begun marketing a process it called Regenexx to repair damaged joints by injecting them with a patient’s own stem cells. The FDA alleged that the cells the firm used had been manipulated to the point that they should be regulated as drugs. A resulting court injunction halting use of the technique has cast a pall over the future of regenerative medicine.
A peculiar example of a patient-spirited and wise decision, no? And what are we to make of this?
FDA scientists I have encountered do care deeply about patients and want to say “yes” to safe and effective new therapies. Regulatory approval is the only bridge between miracles in the laboratory and lifesaving treatments. Yet until FDA reviewers can be scientifically confident of the benefits and risks of a new technology, their duty is to stop it—and stop it they will. (emphasis added).
von Eschenbach ends with what sounds like a threat or perhaps, as they say, it is a promise. Unless Congress funds the FDA at higher levels and lets it regulate itself:
…we had better get used to the agency saying no by calling “time out” or, worse, “game over” for American companies developing new, vital technologies like regenerative medicine.
Frankly, I do not want to “get used” to the FDA saying game over for American companies but nor do I trust Congress to solve this problem. Thus, von Eschenbach convinces me that if we do want new, vital technologies like regenerative medicine we need more fundamental reform.
Assorted links
Robert Sampson responds to my short book review
Prof. Cowen – your Marginal Revolution blog earlier today was brought to my attention…A quick note on your selection/transparency comment, which I found of interest. One of the ways that traditionally conceived “selection”/individual effects are neighborhood effects is when the former are an outcome of the latter. It is common in the literature in sociology or psychology at least to see controls for the mediating pathways through which neighborhoods (or really, any context) might plausibly work. For example, we typically see controls for all kinds of family and individual characteristics (including learning), almost all of which are at least potentially influenced by context. Controlling them can thus have the result of eliminating the neighborhood coefficient, which is usually interpreted as evidence for selection as the governing process. But in this example selection factors are themselves neighborhood effects, the basis in part for my reversing a common claim. A number of recent papers independent of my own work have shown a variant of this process (e.g, http://www.ssc.wisc.edu/soc/faculty/pages/docs/elwert/Wodtke%20Harding%20Elwert%202011.pdf). Although often technical, behind the development of these models is an important substantive point I think. Part V of the book also delves into residential migration flows and higher-order structures as another kind of mechanism, including how changing characteristics of neighborhoods influence residential selection.
More generally, I do not view choice/selection and context as an either/or proposition, and as an economist I am guessing you might agree. (Sociologists are typically structural determinists, but that is another story). At Chicago I was influenced by Heckman and his arguments on modeling selection and the often misleading faith put on experiments as revealing causality). Although I tried to examine neighborhood selection seriously, the main motivation of the book was to build up the social science of measuring and conceptualizing the neighborhood and spatial dimensions of social life. Massey’s recent review of my book I think captures the essence of what I was trying to accomplish in terms of contextualizing human behavior and choice/selection — http://www.sciencemag.org/content/336/6077/35.summary.
The economics of Robert Caro
The two Bobs, Gottlieb and Caro, have an odd editorial relationship, almost as contentious as it is mutually admiring. They still debate, for example, or pretend to, how many words Gottlieb cut from “The Power Broker.” It was 350,000 — or the equivalent of two or three full-size books — and Caro still regrets nearly every one. “There were things cut out of ‘The Power Broker’ that should not have been cut out,” he said to me sadly one day, showing me his personal copy of the book, dog-eared and broken-backed, filled with underlining and corrections written in between the lines. Caro is a little like Balzac, who kept fussing over his books even after they were published.
Can they not publish a “Director’s Cut” eBook? The Power Broker, by the way, is in my view one of the best non-fiction books ever, so read it if you don’t already know it.
The article, from the NYT Sunday Magazine, is interesting throughout. Note I have provided the “Single Page” link, I believe this helps you get through your quota of ten clicks at less expense.
Bryan Caplan’s signaling model and on-line education
The very useful model is here, and there is further commentary from Bryan here. My question is this: does the model imply that on-line education should succeed, or not?
Let’s say that education signals conscientiousness. A purely on-line class, with no ogre standing over your shoulder to discipline you, should be blown off by those who are not conscientiousness. The on-line class would seem to offer a better signal and a cleaner separation of types.
Alternatively, let’s say education signals IQ or some other notion of “smarts.” On-line education would seem to offer less opportunity to get through by buttering up the teacher, spouting mumbo-jumbo in basket-weaving classes, and so on. For better or worse, a lot of on-line education seems to be based on relatively objective tests. Then on-line education would seem to offer a better signal of smarts.
One possible application of Bryan’s model might be this. Income inequality is rising, so there is greater care to get the signal, selection, and screening right for top jobs. Relatively high levels of education should be all the more discriminatory, and that may mean more on-line education. In fact, in normative terms that might well be a problem with on-line education, namely its inegalitarian nature with regard to curiosity and effort and smarts.
Oddly, the signaling model could be true, but through an invisible hand mechanism — schools competing to separate quality in the most effective ways — you can end up with a state of affairs where upfront signaling costs are fairly low. Imagine a chess school, needing to sort talent, and unable to teach its students very much, but setting up a quite cheap on-line tournament and declaring some winners. Aren’t the Khan Academy users some really talented people?
Alternatively, through an invisible hand mechanism, if the learning model is correct, you could end up with an equilibrium in which upfront signaling costs appear to be relatively high, namely that you impose “taxes” to make sure people end up learning what they need to know. Think Paris Island or KIPP schools.
It is important not to confuse “seeing high upfront signaling costs” with “the signaling model of education is essentially correct.” They sound like they should go together, but quite possibly they don’t.