Questions I haven’t made much progress on

by  Tyler Cowen in

1. If you are in a liquidity trap, is your exchange rate indeterminate?  Under what conditions?  Along what range?

2. Does it matter if the other currency is also in a liquidity trap?

3. What will result from the intersection of two possible trends: insistence on a greater equality in health care outcomes, and the development of new technologies — some at the genetic level for the individual — which will lead to a greater inequality of health care outcomes?

Norway Tax Data Now!

by  Alex Tabarrok in

It's the moment nosy Norwegian neighbors have been waiting for — the release of official records showing the annual income and overall wealth of nearly every taxpayer in the Scandinavian country.

In a move that would be unthinkable elsewhere, tax authorities in Norway have issued the ''skatteliste,'' or ''tax list,'' for 2008 to the media under a law designed to uphold the country's tradition of transparency…

Many media outlets use the tax records to produce their own searchable online databases. In the database of national broadcaster NRK, you can type a subject's name, hit search and within moments get information on what that person made last year, what was paid in taxes and total wealth….

The information had been available to media until 2004, when a more
conservative government banned the publication of tax records. Three
years later, a new, more liberal government reversed the legislation
and also made it possible for media to obtain tax information digitally
and disseminate it online.

There has got to be more than one dissertation here.  Aside from the obvious issues of studying the distribution of wealth over time and cross-sectionally the three year break raises possibilities such as testing whether making salary and wealth information public encourages people to work more or less and  whether public information about income increases or decreases inequality.

Perhaps most interesting–does conspicuous consumption fall and efficiency increase in a society in which income is conspicuous?

Dining tips for Manhattan

by  Tyler Cowen in

JonSanders, a loyal MR reader, asks:

I read "Discover Your Inner Economist" (as well as "Create Your Own
Economy") and I want a little more help with the Manhattan dining tips
you covered. Care to help someone on a serious budget, like say, an
undergrad at NYU? Staying off the main avenues is useful, but it is
still hard to find dirt cheap authentic food from most cultures. More
advice?

I'm was in New York yesterday and I despaired.  Short of dropping $50-$70 or more for lunch, it's hard to get a good meal in most of Manhattan.  Greenwich Village went mainstream long ago and the overall problems in Manhattan are high rents, rising tourism, and the importation of growing numbers of people from U.S. regions with lesser food taste (can you guess where?).  That's a triple whammy.  I recommend the following:

1. Eat on the far west or far east side, like 9th Ave. or The Bowery.  The East Village hasn't been ruined.  The West Village still has some quirky places near The Village Vanguard, usually further west off the main paths.  There are good places near Hudson St., the neighborhood Jane Jacobs wrote about.

2. Eat on the way to or from LaGuardia in Flushing, Queens, in superb Chinatown.  If you try the Chinatown in Manhattan, go for breakfast — not dinner — for the best chance at quality.

3. Look for obscure ethnic places in the mid 30s, on the streets, not the avenues.

4. The best food reviews are in New York magazine, by far. 

5. Two of my reliable stand-bys are Ess-a-Bagel and Shun Lee Palace, both in East/Midtown.  They're both pretty tired in terms of concept but the quality still is excellent.  I enjoy them every time I go.  Shun Lee Palace would not count as dirt cheap, however.

6. Get to Brooklyn or Queens.  Or (gasp) New Jersey.

What advice can you give this poor fellow?

Sentences to ponder

by  Tyler Cowen in

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!

by  Alex Tabarrok in

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

by  Alex Tabarrok in

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

by  Tyler Cowen in

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

by  Tyler Cowen in

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.

What are the gains from competition among insurers?

by  Tyler Cowen in

Annual_Change_Premiums_for_ESI_FEHBP_and_CalPERS

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.

How can a weak dollar be beneficial?

by  Tyler Cowen in

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?

by  Tyler Cowen in

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.