The new iTunes pricing
Instead, the majority of songs will drop to 69 cents beginning in
April, while the biggest hits and newest songs will go for $1.29.
Others that are moderately popular will remain at 99 cents.
DRM will change too, here is much more information. This is first a way to raise prices, yet without the consumer seeing nothing in return. But it’s also a sign of the maturing of the market. The most popular songs will be less of a loss leader for the hardware. Relaxation of DRM suggests that Apple fears long-run competition from less regulated sources, including CD burning from friends. Most of all this is a sign that the music business continues to experience economic troubles. You could call it the "do anything to increase revenue now" strategy. For 30 cents a song you can make your entire current collection DRM-free.
By the way, on DRM and related issues, I recommend the new James Boyle book Public Domain. The book is free and on-line here. You can buy it from Amazon here.
Cancer and Statistical Illusion
The cover of this month’s Wired promises "The Truth About Cancer" but the article inside is a tissue of misleading statistics and faulty logic. The article begins with fancy graphics telling us "If we find cancer early, 90 percent survive" but "If we find cancer late, 10 percent survive." And this:
Find the disease early "and the odds of survival approach 90 percent…This reality would seem to make a plain case for shifting resources toward patients with a 90 percent, rather than a 10 or 20 percent, chance of survival."
Thus, the opening block of text commands, "Scientists should stop trying to cure cancer and start focusing on finding it early. It’s the smart way to cheat death."
The fallacy in all of this is painfully easy to spot. If we measure survival, which these studies do, with a 5 or 10 year survival rate then obviously people whose cancers are detected early will survival longer than people whose cancers are detected late.
The key question is whether people who are treated early survive longer than people whose cancers are detected early but who are not treated. In Thomas Goetz’s long article there is not a single piece of evidence which demonstrates that this is true. Indeed, quite the opposite. About 9 pages into the article, after the jump, we find this about CT scans for lung cancer:
As with the Action Project, these studies found that, yes, CT scans detected a huge number of early cancers–10 times as many as they would expect to find without scanning. In that regard, the scans did their job as a screening test. And as expected, the number of surgeries based on those diagnoses jumped. But when Bach looked at the resulting mortality rates, he found essentially no difference between those who received a CT scan and those who had not. Despite the additional surgeries, just as many people were dying as before.
Nowhere does the author mentions that this finding invalidates just about everything he has told us in the first eight pages.
Addendum 1 : Do note that I have nothing against early detection and I am not claiming that it never works. My problem is with misleading statistical analysis.
Addendum 2: Careful readers will note that this is an almost perfect example of the economicitis fallacy that I blogged about late last year.
Words I wrote yesterday about fiscal policy
The argument for fiscal stimulus is simply that it will stop things from getting worse by preventing further collapses in aggregate demand. That may be true but fiscal stimulus won’t drive recovery. Recovery requires that zombie banks behave like real banks, that risk premia are properly priced, and that the economy undergoes its sectoral shifts toward whatever will replace construction and finance and debt-driven consumption. Fiscal policy won’t do much toward these ends and in fact a temporarily successful stimulus might hinder these long-run adjustments.
Here is a very good piece from Hal Varian on fiscal stimulus.
The marginal value of health care in Ghana: is it zero?
Megan McArdle points us to this scary report:
2,194 households containing 2,592 Ghanaian children under 5 y old were
randomised into a prepayment scheme allowing free primary care
including drugs, or to a control group whose families paid user fees
for health care (normal practice); 165 children whose families had
previously paid to enrol in the prepayment scheme formed an
observational arm. The primary outcome was moderate anaemia
(haemoglobin [Hb] < 8 g/dl); major secondary outcomes were health
care utilisation, severe anaemia, and mortality. At baseline the
randomised groups were similar. Introducing free primary health care
altered the health care seeking behaviour of households; those
randomised to the intervention arm used formal health care more and
nonformal care less than the control group. Introducing free primary
health care did not lead to any measurable difference in any health
outcome. The primary outcome of moderate anaemia was detected in 37
(3.1%) children in the control and 36 children (3.2%) in the
intervention arm (adjusted odds ratio 1.05, 95% confidence interval
0.66-1.67). There were four deaths in the control and five in the
intervention group. Mean Hb concentration, severe anaemia, parasite
prevalence, and anthropometric measurements were similar in each group.
Families who previously self-enrolled in the prepayment scheme were
significantly less poor, had better health measures, and used services
more frequently than those in the randomised group.
Economists v. Historians on the New Deal and the Great Depression
Writing at The Beacon Jonathan Bean nicely reminds us of Robert Whaples survey of economists and historians on questions in economic history. Among the questions that Whaples asked members of the Economic History Association to express agreement or disagreement on was the following:
Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.
About half of the economists agreed (or agreed with some provisos) that the New Deal lengthened and deepened the Great Depression. Thus this point of view among economic historians is basically mainstream. Among historians there was much less agreement with the statement, although a significant minority, 27%, agreed, mostly with some provisos.
Assorted links
1. H5N1 update, per reader request; there is more here.
2. Me on fiscal stimulus on NPR.
3. What is the 11th best job?
A Matter of Life or Death
Also known as Stairway to Heaven, directed by Michael Powell. It’s one of the best movies, period, and it is finally on DVD, appearing today. I’ve been waiting for years and I just ordered mine; I’ll also be teaching it in Law and Literature this spring. It’s a law trial, a primer on Anglo-American relations, a love story, and a meditation on hope and death. Here is a review.
Department of No
Many organizations that spent years building large endowments to
provide more stable sources of support have seen them decimated. A
number of our most loyal donors have watched their own investment
portfolios be depleted and cannot provide their traditional funding.
Our audience members cannot buy as many tickets as they have in the
past. And our board members are less able to involve friends and
associates in our fundraising galas and other activities.This perfect storm has already weakened the fabric of our nation’s arts ecology. Over the past several months, the Baltimore Opera Company,
Santa Clarita Symphony, Opera Pacific, the Los Angeles Museum of
Contemporary Art and others have closed or come close to closing. There
probably will be a torrent of additional closures, cancellations and
crises in the coming months.
Of course they want a bailout but this is for me not a priority. Given the new distribution of wealth, arguably we need more culture for lower-income people and less culture for the rich. I don’t think the old distribution of wealth is coming back anytime soon.
It’s something to watch when the egalitarian and elitist tendencies of modern liberalism clash so strongly. When it comes to high culture it’s like this: "I don’t think they should have so much money, but I sure like what they spend their money on." Yet if deflationary pressures are going to benefit lower class individuals with jobs, something has to give and that is, in part, the discretionary arts spending of the wealthy.
The longer plea for aid is here. I thank Christopher Janak for the pointer.
Where is the geographic center of Johnny Cash’s moral and musical universe?
I was listening to the new and excellent Vince Mira CD of Johnny Cash covers (some of them in an elegant Spanish), when Yana asked me to explain Johnny Cash to her. "Does he sing about the South?" was a tough question to answer. I place the center of his moral and musical universe somewhere between Little Rock, Arkansas and Oklahoma City. (How about Fort Smith?) That locale rules out neither trains nor cattle. That allows him to straddle the South, West, Midwest, and Texas, while retaining the option of a rail connection to the North. The town even has a prison. (For the underinformed, here is a list of Johnny Cash songs.) Is there a more appropriate center?
Addendum: I now discover that Vince is only fifteen years old!
Here is Vince performing "That’s All Right"; phenomenal. Here is the overall YouTube listing.
How did the tax cut get so big?
Yes, 40 percent of the Obama stimulus package will be a tax cut. It’s already a talking point that "the Democrats have lost their nerve" but the reality is not so devious. Obama wishes to deliver on his pledge to cut taxes (always electorally popular) and upon close inspection the economic team probably hasn’t found a lot of first-year stimulus spending it likes. That leads to this obvious policy conclusion and of course it is very good news. No, I do not think these tax cuts will drive recovery but a) less money will be wasted, and b) it shows that the Obama team is willing to flinch and be realistic, not just as a final compromise but indeed as an opening gambit.
The best way to think about fiscal policy is to judge, in advance, what is actually likely to come out of the process. The alternative approach is to recommend policy based on one’s personal sense of what should be done and then to blame all the forces which stop that from happening. (Rarely do these people stop to ask whether their political views are robust to the presence of significant opposition.) A lot of people on the left are disappointed, but in my view what is coming out of the process is, so far, above average.
Do we compete more against fewer competitors?
This caught my eye:
If you’ve ever had to take a test in a room with a lot of people, you may be able to relate to this study: The more people you’re competing against, it turns out, the less motivated and competitive you are. Psychologists observed this pattern across several different situations. Students taking standardized tests in more crowded venues got lower scores. Students asked to complete a short general-knowledge test as fast as possible to win a prize if they were in the fastest 20 percent completed it faster if they were told that they were competing against 10 people rather than 100. Students asked how fast they would run in a race for a $1,000 prize if they finished in the top 10 percent said they would run faster in a race against 50 people rather than 500. Similarly, students contemplating a job interview or Facebook-friending contest said they would be less competitive if they expected more competitors – even if "winning" only required finishing in the top 20 percent. The authors conclude that competitiveness was curtailed because the larger the group, the more difficult it is to compare oneself directly to others.
The original paper is here, but note that context effects may well give you varying results in other settings. The initial article, from the Boston Globe, discusses several other social science mechanisms of interest, although I was not surprised to learn that your dog relaxes you.
Addendum: Here is my earlier article on invisible competition.
Assorted links
1. The work habits of famous people.
2. MasterResource; a free market energy blog.
3. Arnold Kling is very wise; today on fiscal policy.
Why being President-elect is a difficult job
But evidence is mounting that Obama is already losing ground among
key Arab and Muslim audiences that cannot understand why, given his
promise of change, he has not spoken out. Arab commentators and
editorialists say there is growing disappointment at Obama’s detachment
– and that his failure to distance himself from George Bush’s strongly
pro-Israeli stance is encouraging the belief that he either shares
Bush’s bias or simply does not care.The Al-Jazeera satellite
television station recently broadcast footage of Obama on holiday in
Hawaii, wearing shorts and playing golf, juxtaposed with scenes of
bloodshed and mayhem in Gaza. Its report criticising "the deafening
silence from the Obama team" suggested Obama is losing a battle of
perceptions among Muslims that he may not realise has even begun.
Here is more. Under one interpretation of the signaling game, these observers might have inferred that the very timing of the Israeli attack implies Obama’s disapproval or at least an uncertain reaction; the Israelis could have waited for the Obama Presidency but they did not. Under another interpretation, signals aren’t just about information but signals also show caring and solidarity as valued for reasons not directly related to the initial information. Message recipients care about who sends the signal, and how the signal is sent, not just the revelation of the underlying information. Under this second interpretation (relatively neglected by economic theory, I might add, though not by Robin Hanson), it is much harder for things to go well.
Ed Glaeser’s words of wisdom
While the mechanics of a payroll tax cut are simple, spending hundreds
of billions wisely on infrastructure is hard. Currently, the federal
government spends about $40 billion a year in transportation, and
another $20 billion on other forms of infrastructure. There is a case
for significantly increasing this amount. Our roads do need repairing,
and it makes sense to invest more in a downturn when unemployment is
high. But even doubling the current federal infrastructure expenditure,
a vast increase, would represent only 8 percent of a $750 billion
package.
Here is much more, on the mark throughout. Here is related material by Mark Thoma and Paul Krugman. Here is a related post by Alex.
Addendum: Obama now is calling for $300 billion in tax cuts as part of the stimulus plan, roughly forty percent of the total.
John Taylor on the Fed’s “industrial policy”
"What you are looking at now is really being determined by other
considerations. How much should we buy of mortgage-backed securities?
How much should we loan to foreign central banks? This is really more
like an industrial policy," he said…"If you have a situation where the Fed is borrowing to invest in all
these sectors it seems to me you have a huge governance issue…that
demands a lot of thought," Taylor said.Taylor said the U.S. Congress has a legitimate right to demand a say
in who the Fed lends money to. The outcome would be "radical reform"
that would risk monetary policy independence, he said.
Here is the full article.