Singapore markets in everything

by  Tyler Cowen in

…the restaurant is designed from top to bottom in a medical theme.
wheelchairs, hospital beds, operating lights, test tubes and more, the
design is completely off the wall. The interior is far more subtle than
the al fresco seating out front.

It's called The Clinic and here is more information, and photos, including information on one of its tastiest dishes.  Here is their imaginative website.  Here is a floor plan with two excellent photos.  You sit in wheelchairs and drink out of IV bags. 

How many interesting cities are there in Venezuela bleg?

by  Tyler Cowen in

That's a serious question.  I've never been to the country.  I was browsing on Wikipedia and I came across the following description of their second largest city, Maracaibo:

Maracuchos are extremely proud of their city, their culture, and all
of Zulia. They usually claim that Venezuela wouldn't be the country it
actually is without Zulia. Rivalry with inhabitants of other regions is
common, specially with Gochos (people of the Mérida state) and Caraqueños (people of the city of Caracas).

Unfortunately, the city of Maracaibo has no facilities to treat domestic sewage.

Actually for a short visit I don't mind the sewage bit; the lack of sights of interest is more off-putting.  I have loved every part of South America I have visited (and that includes many poor places and indeed most of the continent, short of Paraguay and Venezuela), yet when I read about the cities of Venezuela I cannot muster much enthusiasm for seeing them.  Does Wikipedia simply fall flat on this topic?  Or does some factor make these cities boring?

Yes, I know about Angel Falls and the wood sculptures of Mérida.  But of the major cities of Venezuela, how many of them are interesting to see and visit?  And is there a theory behind your answer?

The new Smoot-Hawley?

by  Tyler Cowen in

The House bill contains a provision, inserted in the middle of the
night before Friday’s vote, which requires the president, starting in
2020, to impose a “border adjustment” – or tariff – on certain goods
from countries that do not act to limit their global warming emissions.
The president can waive the tariffs only if he receives explicit
permission from Congress to do so. The provision was added to secure
the votes of Rust Belt lawmakers who were wavering on the bill because
of fears of job losses in heavy industry.

Here is the story and Obama deserves praise for opposing this provision.  Here are my comments on the issue itself.  The bottom line is that Waxman-Markey, as it currently stands, would in fact be counterproductive, once the international scale of the problem is taken into account.  That we learn about this provision only now is startling enough.

I write this all as someone who a) favors a much higher price for fossil fuels, b) thinks that if micro-nutrients are a good idea they are not an alternative to addressing climate change; we could do both with positive expected long-run return, c) thinks that many people on the "Right" oppose W-M mostly because its passage would raise the status of environmentalists and others on the "Left" (but they will not admit as much), and d) thinks that our collective American incompetence in limiting emissions does not eliminate our moral obligation to address the problem.

Sadly, Ezra Klein nailed it:

Climate change is a big problem. It will eventually require a big
solution. My understanding is that the polling suggests that people
don't like it when you tell them this is a big problem and they don't
want to be convinced that they need to spend their time worrying about
something new. In fact, like kids who want to believe that they're
going to the doctor for a lollipop, they want to hear that this is an
awesome new jobs program. But it isn't an awesome new jobs program.
It's an effort to avert a catastrophe on the only planet we know how to
inhabit. I
can't see a successful respon[se] to climate change that doesn't
presuppose a majority sharing that belief.

How much good could health care monopsony do?

by  Tyler Cowen in

Greg Mankiw has an interesting column on the public plan option; you've already seen related points on his blog and on MR.

Today I'm interested in a slightly different question, namely the potential benefits of monopsony.  Imagine a benevolent single buyer of health care services.  Forget about whether or not it could be a government; let's just focus on the logic of the model.  I can think of a few scenarios:

1. The buyer bargains down price and suppliers in turn lower quantity.

2. The buyer bargains down price and the monopolizing suppliers respond by expanding quantity.  The monopsonist moves us to a more competitive solution.  Note that under this option the direct institution of more competition could have the same effects.

If #2 is true, you might expect supply restrictions to be an important issue.  That is, the people who favor monopsony should also favor greater competitiveness on the supply side.  Yet this does not seem like a current priority.  I hardly ever see talk of deregulating medical licensing, allowing paramedics and nurses to perform more basic medical functions, or abolishing other entry restrictions.  I do recall that an earlier version of Obama's plan, struck down by Congress, would have created a nationwide insurance market.  There was no big fight, either in the administration or in the blogosphere.

Those who favor monopsony might have another model in mind.  In this model there are many medical suppliers but each supplier still has a fair degree of ex post monopoly power.  Search costs, non-transparency, lock-in, and consumer irrationality can generate this kind of result.  And in these models allowing for more entry needn't much help the basic problem.

Under #2, which other policies will help set this market right?  What are the possible policy substitutes for monopsony?

And in #2, what happens if a monopsonist third party payer bargains prices down?  What are the offsetting quality responses?  Are monopsonists good at bargaining for higher levels of quality?  Or might the all-in-one, bureaucratic nature of the monopsonistic enterprise mean that the monopsonist is very good at bargaining over price (measurable) and very bad at bargaining over quality (harder to measure and verify and we already know there is irrationality, non-transparency, lock-in, etc).

If we put monopsony in place, can a version of the Card-Krueger monopsony model apply to medicine, namely a welfare-improving minimum wage for doctors, albeit at a very high level?  That would mean we don't want the monopsony to economize on how much we spend on health care. 

For all the recent writings on health care, these questions remain underexplored.  Comments are open, but today I'm not interested in the usual bickering about public vs. private sector.  I'd like to hear about the logic of monopsony.

When No Means Yes

by  Alex Tabarrok in

… Having voted against the administration's climate change bill on the record means that at least some of these House Democrats will be able to vote for what emerges from a House-Senate conference later in the year. Therefore, the chances of a climate bill being enacted this year is now much greater than it was 24 hours ago.

That's the ever-perceptive Stan Collender on the politics of the climate change bill.

The Powerpoints of Emily Glassberg Sands

by  Tyler Cowen in

Find them here and they are excellent.  One thing we learn is that women playwrights are more likely to write stories about other women.  Women playwrights are also more likely to write plays with fewer major characters (slide 19).  Outside evaluators are most likely to perceive the story's characters are less likable, if they believe a given script was written by a woman (slide 31).  They also judge the economic prospects of a script to be poorer (slide 32).  It is female artistic directors who have the harshest judgments of scripts submitted under female names (slide 34).  Women writing plays about other women have the toughest time (slide 36).  On Broadway, female-written shows are 18 percent more profitable than male-written shows yet they do not have longer running times (slides 44 and 45).

The original paper is here.  She'll be on The Colbert Show on July 2.

Hat tip goes to the indispensable Literary Saloon blog.

Assorted links

by  Tyler Cowen in

1. China theory of the day: The Chinese save so much to compete for mates.  Should I believe it?

2. Paying interest on reserves, and why it should be easy to disarm future inflationary pressures.  Do I believe it?  (Brad DeLong comments.)

3. Markets in everything: pirate hunting cruises; should I believe it?

4. Stores are cutting back on variety; I believe it.

5. Farrah Fawcett and Ayn Rand.

Trolley problems and experimental ethics

by  Tyler Cowen in

A second experiment developed this idea and showed further that an
action is most morally condemnable when personal force and intention
co-occur. Students judged as most morally unacceptable a situation in
which Joe deliberately pushed a victim off a bridge so that he could
reach a switch to save five others. By contrast, if the victim was
knocked off the bridge accidentally so Joe could reach the switch, or
if Joe killed him by diverting a trolley with a switch, then the
students' moral judgements were not so harsh.

"Put simply,
something special happens when intention and personal force co-occur,"
the researchers said. This prompts many further questions, such as what
counts as personal force. "Must it be continuous (as in pushing), or
may it be ballistic (as in throwing)?" the researchers asked. "Is
pulling the same as pushing?"

Here is more.

Interview with Kevin Murphy

by  Tyler Cowen in

Via Mark Thoma, here is an interview with the ever-impressive Kevin Murphy.  One excerpt, on the topic of medical R&D:

What really does matter is the cost of treatment. If treatment costs
are $10 trillion, the project has a negative net present value even if
the research is free. With $2 trillion in treatment costs, the net gain
from success is $3 trillion, so that we would get a good return even if
the probability of success was one in 30. So when you think about
research, it’s not the dollars you spend that matter–what matters is
the cost of implementing the treatment that might be discovered. The
downside to research is not failure, but unaffordable success.

I think the following message comes out of that exercise: Cost
containment and health progress are complementary. That is, if we can
control costs, that makes research a much more attractive option.
That’s the most important lesson I learned from doing this work.

When you go to Washington and talk to people at NIH, what are they
excited about? They’re excited about that $5 trillion number. They’re
excited that, boy, we could do something that could generate tremendous
value for people. We can cure disease and lengthen lives, both of which
make people much better off. The work that Bob and I did quantifies
that number; it says it’s huge, $5 trillion for that 10 percent
reduction in cancer.

You walk across the street and talk to the guys who have to pay for
it, and they’re terrified that people are going to come up with more
new medical treatments that they’re somehow going to have to finance.

Is there any man who thinks more like an economist than does Kevin Murphy?  Maybe one:

Region: Does Gary Becker ever stop working?

Murphy: No. He never stops working. He’s a machine. He outworks everybody half his age.

Pre-order Gretchen Rubin’s new book

by  Tyler Cowen in

She writes:

Blatant self-promotion alert: If you’re thinking about buying
my book, please consider pre-ordering it. A book gets a big boost from
pre-orders, because that early support shows that people really are
enthusiastic. It’s early,..I’ve ordered my copy! And that made me very happy.

The new link to Gretchen's book is here.  Seth Roberts would say that her subtitle leaves out the notion of watching faces early in the morning.