How did ADHD evolve and survive?
Michelle Dawson (without endorsing it) directs my attention to this paper:
The evolutionary status of attention deficit/hyperactivity disorder (ADHD) is central to assessments of whether modern society has created it, either physically or socially; and is potentially useful in understanding its neurobiological basis and treatment. The high prevalence of ADHD (5–10%) and its association with the seven-repeat allele of DRD4, which is positively selected in evolution, raise the possibility that ADHD increases the reproductive fitness of the individual, and/or the group. However, previous suggestions of evolutionary roles for ADHD have not accounted for its confinement to a substantial minority. Because one of the key features of ADHD is its diversity, and many benefits of population diversity are well recognized (as in immunity), we study the impact of groups’ behavioural diversity on their fitness. Diversity occurs along many dimensions, and for simplicity we choose unpredictability (or variability), excess of which is a well-established characteristic of ADHD. Simulations of the Changing Food group task show that unpredictable behaviour by a minority optimizes results for the group. Characteristics of such group exploration tasks are risk-taking, in which costs are borne mainly by the individual; and information-sharing, in which benefits accrue to the entire group. Hence, this work is closely linked to previous studies of evolved altruism.
We conclude that even individually impairing combinations of genes, such as ADHD, can carry specific benefits for society, which can be selected for at that level, rather than being merely genetic coincidences with effects confined to the individual. The social benefits conferred by diversity occur both inside and outside the ‘normal’ range, and these may be distinct. This view has the additional merit of offering explanations for the prevalence, sex and age distribution, severity distribution and heterogeneity of ADHD.
Overall the argument is weak because it relies too much on group selection. An alternative tack is to admit that ADHD, and correlated traits, can have cognitive advantages and thus survival and mating advantages. One simple story is that many people with ADHD can use their "jumpiness" to propel themselves to sample and learn extra new pieces of information. The current distribution of identified cases from the ADHD population likely suffers from selection bias, namely that it identifies ADHD cases associated with greater life problems.
Addendum: Jerry Fodor has a recent paper challenging common applications of evolutionary psychology; Razib defends Darwin.
Assorted links
1. Me on Reason.TV.
2. Nicholson Baker whinges about Kindle.
3. North Korean beer commercial.
4. An intellectual journey with many stops (one of Brad DeLong's best posts).
5. Extending the "all you can eat" concept, and yet the law intervenes. Or, "the culture that is Germany."
6. The Women's Leadership Fund, a new investment strategy.
7. More patently false claims about China.
8. Via Kottke, cats play Arnold Schoenberg's Op.11; I loved this one.
Will health care reform happen? A simple guide
I presented the following theory to two notable health care commentators a few nights ago. Congressmen are looking to sell their voters for the highest "price" possible and they know Obama really wants, and indeed needs, to win a health care victory. As health care reform "falls apart," these Congressmen face the risk that they will get nothing for those votes. Suddenly their cartel falls apart and they lower the price for those votes. A deal is then possible and Obama buys the votes at the lower price.
What appears to be pessimistic news for health care reform can in fact be optimistic news. Another implication of this theory is that a lot of the "news" along the way, concerning the fate of reform, is simply noise.
I don't know what is the "p" of an extended coverage bill passing, but I believe that p has stayed fairly constant so far.
There are plenty of games in which the equilibrium and the true offer curves are not revealed until the final period. When it comes to health care, we're not yet at the end.
Identifying and Popping Bubbles: Evidence from Experiments
On the way up, bubbles encourage excessive investment in the bubble sector. On the way down a bursting bubble can create wealth shocks, liquidity shortages, and balance-sheet death-spirals. For both of these reasons, it would be good to be able to identify and pop bubbles. Identifying bubbles isn't easy, however, because, especially when interest rates are low, prices can increase rapidly with small, rational changes in investor expectations. But the difficulty of identifying bubbles is reasonably well known. What I think may be less appreciated is that bubbles are hard to pop even when you know that they exist.
In the lab we can create artificial assets with known dividend streams and thus known fundamental values. Since Vernon Smith's classic experiments (JSTOR), we know that even in these cases efficient markets fail and bubbles are common. Bubbles occur even as uncertainty about the fundamental value diminishes (JSTOR). We also know that once a bubble starts it's difficult to stop. Circuit breakers and brokerage fees (transaction taxes), for example, don't do much to stop bubbles (see King, Smith, Williams, and Van Boening 1993, not online.) Investor education doesn't help (for example telling participants about previous bubbles doesn't help). Even increasing interest rates doesn't do much to stop a bubble already in progress and may increase volatility on net.
Futures markets (JSTOR) and short selling do tend to dampen but not eliminate bubbles, thus, there is a case for expanding futures markets in housing and making short selling easier (not harder!).
Bubbles are also less common with more experienced traders – this is one of the strongest findings. Don't get too excited about this, however, it's experience with bubbles that counts not just trading experience. I once asked Vernon, for example, how the lab evidence generalized to the larger economy. In particular, I asked whether 3 bubble experiences in the lab–the number which seems to be necessary to dampen bubbles–might translate to 3 big bubbles in the real world such as the dot com, commodity and housing bubbles (rather than to experience with your run of the mill bubble in an individual stock). He thought that this was a reasonable inference from the evidence. Thus we may not see too many big bubbles during the trading lifetime of current market participants but experience is a very costly teacher. Can we do better?
The last factor that does seem to make a difference is that bubbles liftoff and reach higher peaks when there's a lot of cash floating around. In theory, this shouldn't matter, fundamental value is fundamental value. If an asset is worth $10 in expected value then it's worth $10 whether you have $20 in your pocket or $200. But in practice bubbles are bigger when cash relative to asset value is high.
Note that the latter experiments are consistent with the Fed having a significant role in bubble inflation (a theory I have not pushed). In other words, rather than identifying and popping bubbles already on the rise, not blowing bubbles in the first place may be easier and more productive.
High-frequency trading
A few MR readers ask about high-frequency trading. Senators are calling it unfair because some traders have access to more powerful computers,and better quants, than do others. The traders with the most powerful aids get there first and make more money. Here is a typical critique. Felix Salmon is also skeptical.
I do not worry about high-frequency trading. Telegraphs and telephones also brought their own, earlier versions of high-frequency trading. As did stock index futures. There are second-best arguments relating to hockey helmets and the like but that is the case with most forms of progress and greater economic speed. You don't have to think that the current profits measure the current social value of high-frequency trading to argue that the overall trend should be allowed. The correct judgment of efficiency occurs at the system-wide level, not at the level of the individual trading strategy. The short-run story is that private profits exceed social returns but in the longer run the trading activity and liquidity brings increasing social returns and better communication of information.
I'm not a believer in the strong versions of efficient markets hypotheses, so I do admit that high-frequency trading, like just about every other trading strategy, can bring short-run "whiplash" effects on market prices. But if you don't like it, you can trade yourself at much lower frequencies, which is probably what you should be doing anyway. At the same time high-frequency trading smooths out or shortens many other cases of price whiplash. High-frequency trading brings more liquidity into the market. Call it "low quality liquidity" if you wish, but it still looks like net liquidity to me.
The complaint is that this liquidity sometimes vanishes. Maybe high-frequency trading can scare other traders out of the market;
that charge has been leveled against every method of informed
trading. In the short run it is sometimes true but markets respond by
upping the general requirements for quality trading and many market
participants rise to meet the new standard or else switch to longer
time horizons.
On the critical side there is lots of talk of "unfairness" and "manipulation," combined with snide references to the financial crisis. I'd like to see a serious efficiency argument against high-frequency outlined and defended, without the polemics. That would include a case that regulation will prove workable and catch only the "bad liquidity," while at the same time avoiding capture by envious and inferior competitors.
If high-frequency trading is used to trick other traders into revealing their demand schedules, and then canceling orders, I can see a case for regulating that particular practice. On that issue, here is background, from a critic, but note that these charges seem to be unverified.
The philosophical question is why it might possibly be beneficial to have market prices adjust within five seconds rather than within fifteen. One second rather than five? 0.25 rather than one? If you had been writing in the year 1800, what comparisons would you have chosen?
Remember that old comic book where they had Superman race against The Flash? The Flash won. Someone had to, just keep that in mind.
Interview with Kenneth Arrow
With Conor Clarke, it's about his classic paper on health care. Excerpt:
…the question that I started with was why health insurance coverage was
limited. There was virtually no insurance outside of hospitalization,
which was limited and heavily taxed. When I heard about this myself, it
was just as a consumer. My first health-care plan as a professor had a
$15,000 ceiling. A ceiling? I was thinking that should be a floor!
$15,000 I can handle, but above that… it would be a problem.
The most interesting segments are the (hard-to-excerpt) remarks on the erosion of professional standards in medicine.
By the way, what will life expectancy be when population is infinite?
Product placement markets in everything, Hollywood style
Last month, 18-year-old Kenya Mejia closed her valedictory address
at Los Angeles's Alexander Hamilton High School on a startling note:
publicly professing a secret passion for a classmate.
"I cannot let this opportunity just pass by," said Ms. Mejia, who is
to enroll at the Massachusetts Institute of Technology in the fall. "I
love you, Jake Minor!"
The crowd roared. Mr. Minor stood and pumped his fists in the air. A few days later, Ms. Mejia cashed a check for $1,800.
The commotion Ms. Mejia created was actually part of a ploy cooked
up by marketing executives and consultants for Twentieth Century Fox,
the Hollywood studio whose headquarters is less than two miles from
Hamilton High.
A valedictorian speech in the movie involves a similar reference. Here is the full story.
Assorted links
1. God and majors.
2. Will scientists lose authority?
3. American Spectator review of Create Your Own Economy.
4. Is The Nichepaper the future?
5. Substitutes are everywhere; the culture that is India.
David Brooks on the sterilization of half of humanity, hail David Brooks
Today he writes:
Every day, I check a blog called Marginal Revolution, which is famous
for its erudite authors, Tyler Cowen and Alex Tabarrok, and its
intelligent contributors [TC: that's you!]. Last week, one of those contributors asked a
question that is fantastical but thought-provoking: What would happen
if a freak solar event sterilized the people on the half of the earth
that happened to be facing the sun?
His Burkean answer is here and I very much agree with it. Excerpt:
Without posterity, there are no grand designs. There are no high
ambitions. Politics becomes insignificant. Even words like justice lose
meaning because everything gets reduced to the narrow qualities of the
here and now.
And:
If millions of immigrants were brought over, they would populate the
buildings but not perpetuate the culture. They wouldn’t be like current
immigrants because they wouldn’t be joining a common project, but
displacing it. There would be no sense of peoplehood, none of the
untaught affections of those who are part of an organic social unit
that shares the same destiny.
Here is the original inspiring MR post.
The effect of community rating in health insurance markets
Maybe there's been enough discussion of Paul Krugman on health care but still this caught my eye. In a recent blog post Krugman wrote:
The reason we have restrictions on interstate sales of health insurance is that a number of states regulate insurers. In particular, some states have a form of community rating, which basically says that insurers can’t deny you coverage or charge extremely high premiums if you have a preexisting condition. And community rating will be unsustainable if individuals can buy insurance from out of state; insurance companies in states that don’t have community rating will cherry-pick the healthy, good risk people, leaving the community rating states with only the highest-cost people.
Krugman's post seems to be very approving of such community rating. When it comes to California, which has no community rating, "insurers compete by doing their best to deny coverage to anyone who might actually need medical care."
Based on a close look at the data, Herring and Pauly write (I can't find an ungated version can you?):
Some states have implemented community rating regulations to limit the extent to which premiums in the individual health insurance market can vary with a person's health status. Community rating and guaranteed issues laws were passed with hopes of increasing access to affordable insurance for people with high-risk health conditions, but there are concerns that these laws led to adverse selection. In some sense, the extent to which these regulations ultimately affected the individual market depends in large part on the degree of risk segmentation in unregulated states. In this paper, we examine the relationship between expected medical expenses, individual insurance premiums, and the likelihood of obtaining individual insurance using data from both the National Health Interview Survey and the Community Tracking Study Household Survey. We test for differences in these relationships between states with both community rating and guaranteed issue and states with no such regulations. While we find that people living in unregulated states with higher expected expense due to chronic health conditions pay modestly higher premiums and are somewhat less likely to obtain coverage, the variation between premiums and risk in unregulated individual insurance markets is far from proportional; there is considerable pooling. In regulated states, we find that there is no effect of having higher expected expense due to chronic health conditions on neither premiums nor coverage. Overall, our results suggest that the effect of regulation is to produce a slight increase in the proportion uninsured, as increases in low risk uninsureds more than offset decreases in high risk uninsureds [emphasis added by TC]. Community rating and guaranteed issue regulations produce only small changes in risk pooling because the extent of pooling in the absence of regulation is substantial.
You'll find some unadjusted raw data for states here.
Herring and Pauly, who wrote this paper in 2006, stress that what I am describing as the Krugman view is the "conventional wisdom" yet not supported by the facts. More generally, you can think of their excellent paper is a contribution to the ongoing debate over health insurance and adverse selection. As the authors say "there is considerable pooling."
I am not, by the way, suggesting that we should move everything to the individual insurance market or that Jim DeMint is an objective analyst of U.S. health care.
The funniest sentence I read today
At a recent town-hall meeting in suburban Simpsonville, a man stood up and told Rep. Robert Inglis (R-S.C.) to "keep your government hands off my Medicare."
The longer article is here.
New York Times Can’t Afford to Hire Housekeeper
This comment from Paul Krugman, Nobel prize winner, hugely popular New York Times columnist, and important media star, says more about the state of the economy and newspapers than anything else I have seen to date:
Comments here are moderated; the Times doesn’t have anyone to moderate them on weekends, and I can only do so much myself.
Totally false and ridiculous claims about Chinese bubbles
China's communist government owns a large part of the money-creation and money-spending apparatus. Money supply therefore shot up 28.5 percent in June. Since it controls the banks, it can force them to lend, which it has also done.
Finally, China can force government-owned corporate entities to borrow and spend, and spend quickly itself. This isn't some slow-moving, touchy-feely democracy. If the Chinese government decides to build a highway, it simply draws a straight line on the map…
…But don't confuse fast growth with sustainable growth. Much of China's growth over the past decade has come from lending to the United States. The country suffers from real overcapacity. And now growth comes from borrowing — and hundreds of billion-dollar decisions made on the fly don't inspire a lot of confidence. For example, a nearly completed, 13-story building in Shanghai collapsed in June due to the poor quality of its construction.
This growth will result in a huge pile of bad debt — as forced lending is bad lending. The list of negative consequences is very long, but the bottom line is simple: There is no miracle in the Chinese miracle growth, and China will pay a price. The only question is when and how much.
The link is here. The claim is that the entire Chinese economy is a huge bubble waiting to burst, but in the meantime it is being sustained by government monetary and fiscal policy, plus it is being lending to its major customer (never a good long-run strategy), namely the United States. These charges were written by Vitaliy Katsenels.
I thank Laeeth Isharc for the pointer.
The Uninsured: Adverse Selection Problem or Distribution Problem?
In his recent post on health care and insurance Paul Krugman writes:
[Insurance companies] try to avoid covering people who
are actually likely to need care.
If insurance companies do avoid covering people who are
"likely to need care," this suggests that the uninsured are
unhealthy. But 60% of the uninsured are in excellent health
(Table 10) (In fact, overall the uninsured are only slightly less healthy than the insured).
To be sure, this doesn't mean that being uninsured is not a problem
but, contra Paul, it does mean that insurance companies would be
willing to cover most of the uninsured at the same rates as the insured
if the uninsured could or would pay those rates. In Paul's story there is a market failure, in the latter story health insurance is expensive and some people don't buy it. The difference matters because the wrong diagnosis will almost surely lead to the wrong treatment.
Addendum: McArdle nicely takes the time to follow the logic.
Should Bernanke be reappointed?
Mark Thoma says yes (with links to a debate) and I think his analysis is on the mark. Nonetheless he is leaving out one very strong point in favor of his view. The Obama administration has done plenty of interfering with the car companies and also with executive compensation. These episodes make me nervous. Reappointing Bernanke, who is from an opposing party, is a signal that such meddling won't be applied to the Fed and that the Fed will be allowed to regain some of its autonomy vis-a-vis Treasury. Not reappointing Bernanke would make the markets very nervous about the future autonomy of the Fed. (Even if Alex is right more generally about central bank independence, I don't want the current Fed to resemble General Motors or Chrysler.) There's lots of talent in the current White House, but given how much policy has been run from the White House, it would be a bad signal to look to the White House for a Fed pick. Many of the other possible picks seem to be largely untested at a major league level. You can complain about Bernanke all you want but his likely successors probably have the same list of drawbacks that perhaps you are ascribing to him.
So yes, Bernanke should be reappointed.