Sentences to ponder
Experts are more
persuasive when they seem tentative about their conclusions, a study
soon to be published in the Journal of Consumer Research suggests. But
the opposite is true of novices, who grow more persuasive with
increasing certainty. In one experiment, college students were
randomly assigned one of four variations of a restaurant review,
praising a local Italian spot. In some versions, the reviewer was
described as a famous food critic; in others, he was a technology
worker at a local college with a penchant for fast food. Each of the
critics expressed positive certainty about the restaurant's virtues in
one variation, and tentative praise in another. Asked to evaluate the
restaurant, the students who read the expert's review liked it much
better when he seemed tentative; the opposite was true of the novice…
The story is here. Of course I'm not sure you should ponder these sentences. Maybe you should, maybe you shouldn't. If that.
I thank John De Palma for the pointer.
Health Data Now!
It's well known that medical spending is highly variable but so are medical outcomes. Here is Begley and Interlandi in Newsweek:
After we interviewed dozens of oncologists, pored over published papers, and obtained outcomes data that cancer centers have never before made public, it became clear that for these cancers there are indeed significant outcome differences depending where you are treated.
Five years after surgery for prostate cancer, for instance, 72 percent of men treated at leading hospitals are alive, compared with 62 percent of those treated elsewhere. Scrutinizing data from specific cancer centers reveals even greater gaps. Five-year survival for stage IV prostate cancer is 71 percent at Fox Chase, for instance, but 38 percent nationally. For stage IV breast cancer, the respective figures are 28 percent and 19 percent–an almost 50 percent edge. For stage IV cervical cancer, five-year survival is 33 percent at the Cleveland Clinic vs. 16 percent nationally.
Some of this is probably due to differences in patient characteristics but it could go either way – the better hospitals often get the hardest to treat cases.
Many hospitals hide this data (or "fail" to collect it which amounts to much the same thing) but there are some good rules of thumb such as looking for hospitals that specialize in certain procedures and thus perform many of them (there are large economies of scale in quality). Patients can also find information about which hospitals closely follow best practices (kudos to Medicare for this data and see here for a mashup with Google maps) although the measures used are probably the ones that are easiest to collect and not the ones that correlate best with mortality.
Nevertheless, providing information does seem to drive change if only from the shame that a hospital receives when it is found not to be following best practices. It's true that report cards can cause problems when the drive to get a better score causes hospitals to be more reluctant to treat sicker patients but better data on patient characteristics (stage of cancer etc.) and better process/treatment information can alleviate this problem. In fact, all hospitals should be required to provide standardized information for all patients on patient characteristics, treatments and outcomes. Only by making outcome information public will hospitals have the incentive and researchers have the ability to develop more accurate report cards. In short, I cannot think of a simpler change that would improve health care to as great an extent as freeing the data.
Gone, gone, gone
At BofA and AIG close to a majority of the top executives whose salaries were to be cut have already left. Nuff said.
"There's no question people have left because of uncertainty of our ability to pay," said an executive at one of the affected firms. "It's a highly competitive market out there."
At Bank of America, for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision. Under his plan, compensation for the most highly paid employees at the bank would be a maximum of $9.9 million. The bank had sought permission to pay as much as $21 million, according to Treasury Department documents.
At American International Group, only 13 people of the top 25 were still on hand for Feinberg's decision.
A big hat tip to Ryan Lee for the link.
Assorted links
1. 4500-page Thesaurus: "The draft thesaurus was almost destroyed in a fire in 1978, but despite
the building being gutted, a metal filing cabinet protected the files."
2. Markets in everything: who said resources are not mobile in Germany?
3. Hayek opposed deflation; he said the same in MTaTTC too.
4. Donate your organs by iPhone.
5. Why so few DC residents are married.
I'm still looking for an ideal "economics" link on the Catholic-Anglican development. Do you have one?
Thomas Pynchon
One of the recent reader requests is to give my opinion of him. It's pretty simple. The first half or so of Gravity's Rainbow is extraordinary. V is a superb novel, his most consistent work, and it is best read by not trying to make much sense of it. The Crying of Lot 49 feels like an excellent novella but over time it slips away from you and is probably a minor work. The rest of it I cannot finish — or even get far in — and my best guess is that it is wheel-spinning and it will not last. I haven't tried the latest book and it is not high on my list. He's certainly an important figure and worth reading and indeed rereading. But I view him as belonging to the somewhat distant past.
Here is the Twitter stream on Thomas Pynchon, as good a place to start as any.
The request by the way comes from this blog. Here is a post on Vincent Ostrom, husband of Elinor, and an oddly neglected figure in recent times.
NYT forum on banker pay
The link is here, including a contribution by yours truly and also by Yves Smith.
What are the gains from competition among insurers?
Ezra Klein reports:
For people, like, well, me, who think that the health insurance
exchanges have a real shot at lowering health-care costs throughout the
system, the graph
above is difficult. For conservatives who believe that the key to
constraining health-care costs is to encourage competition between
insurers and give individuals the opportunity to choose, the graph
above is difficult. Because what the graph above shows is that neither
of those strategies has worked terribly well, at least as of yet.
The bottom line is that premiums seem to go up no matter what the institutional structure or its degree of competition.
Markets in everything
Customized cupcake cars, courtesy of Neiman-Marcus.
I thank Allison Kasic for the pointer.
How can a weak dollar be beneficial?
I'm still receiving email pushback on my view that a falling dollar can be good for the U.S. economy. The critics charge: why not just let the dollar fall close to zero or at least hope for such? A few points:
1. I'm not asking for a specific weak dollar policy (we've already done enough on that front!). The point is that if the market brings a falling dollar, this outcome can be part of the equilibrating process.
2. You don't have to approve of all the policies, or private sector practices (e.g., a low savings rate) that produced the weak dollar. A weak dollar is still a healthy response, given those constraints.
3. Never forget the difference between real and nominal exchange rates. That answers the conundrum about wishing for a dollar of near-zero value.
4. A falling dollar will (often, not always) increase employment in the export sector. Supply-side, production-based multipliers are the best kind to have and they can outweigh the economic costs of higher import prices. When the dollar falls, a big chunk of that shift is born by foreign exporters like a tax rather than being passed along to U.S. consumers. The net effect is that Mercedes-Benz subsidizes job creation in the United States. And sometimes a falling currency is in fact an efficient form of lump sum taxation in this regard.
5. Free traders are usually economic cosmopolitans, which is good. A weak currency in one country means a strong currency in another and the distribution effect, at least at the first-order level of analysis, is a wash. So cosmopolitanites shouldn't object to weak currencies per se. From a global point of view, a lot of currency movements are close to a net wash in efficiency terms, although they may be good for at least one of the countries in the equation. As a rough rule, weak currencies do the most good where resources are unemployed and there is a realistic elasticity of exports, though it is more complicated than that.
6. A weak dollar poses the biggest problems for the EU and other foreign regions. Still you can see those as real problems and think a falling dollar is OK for the U.S., taken alone.
7. Again: blah-blah-blah caveats about the difference between a currency falling as a pure thought experiment and a currency falling as associated with some particular cause. Blah, blah, blah, etc. Blah.
Daniel Drezner offers related commentary.
Which areas are taught best?
Joanne asks a good question:
Everything else being equal, are there subjects that lend itself to
better teaching by professors? I've always chosen classes mostly on
professor teaching quality as measured by anonymous student surveys,
but was wondering if there are certain classes of subjects where one
could find better or worse teachers?
This may sound odd, coming from someone with a Ph.d, but I don't feel I have much experience being a student. A lot of the time I didn't pay attention.
A foreign language is especially hard to teach well. What can you do with verb conjugation? Microeconomics can be taught well. Literature. Classes that can be taught well make for easy narrative and vivid anecdote. The instructor can be enthusiastic without it seeming forced (not the case for introductory accounting). The students can be presented with relatively high-level material even in lower-level courses; poetry and literature illustrate that principle. Finally, the class must have actual substance, which rules out any number of offerings, best left unlisted. It's harder to teach macro well because it's less likely the instructor actually believes the material.
The best teachers I ever had were Hilary Putnam for Philosophy of Language and Charles Pine for calculus, plus H. Bruce Franklin for literature. Franklin was (still is?) a Stalinist and he edited The Essential Stalin. Barbara Jean Glotzer taught a very good Algebra II.
Assorted links
1. How to get a Russian to buy butter.
3. Does beauty enhancement increase societal trust?
4. How to resist delicious chocolate: imagine it as a doorstop.
Going Galt
The Obama administration orders huge pay cuts:
Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.
And for the 25 best-paid executives, the total compensation, which includes bonuses, will drop, on average, by about 50 percent.
The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.
There is no way this will work as advertised. If the administration actually follows through, most of these executives will quit and get higher paying jobs elsewhere. Executives not directly affected by the pay cuts will also quit when they see their prospects for future salary gains have been cut. Chaos will be created at these firms as top people leave in droves. Will the administration then order people back to work?
Addendum: Larry Ribstein has an excellent post on this issue and see Max Fisher for an interesting explanation of the timing and a good roundup.
Russia markets in everything
AndrewG points us to the following:
A Russian armoured-car builder is boasting that its latest vehicle has seats covered with “whale-penis leather”.
That is not all:
The bulletproof windows are gold-plated, the exhaust is made of
tungsten, the gauges are encrusted with diamonds and rubies and the
exterior has a Kevlar coating.The car also comes
with three bottles of the world’s most expensive Vodka, RussoBaltique,
although the website does warn prospective buyers not to drink and
drive.
It is supposed to be the world's most expensive…whatever it deserves to be called. Here is more information.
Assorted links
1. Lots of opinions about lots of people, including assessments of their relative status.
2. How will Twitter make money? (a request), and more here.
3. Garett Jones: "How much have
cell phones pushed down the cash wages of tedious jobs? Labor supply
increase: parking attendant, janitor, better jobs now."
5. Rules for writing non-fiction.
6. Pay as you wish, for the Goo Game: the results.
I, Coffee
Modified from original. Hat tip to ChartPorn.