Results for “department why not”
169 found

From the comments — why are the ACA exchanges behind schedule?

From Errorr:

The primary issues are political and legal barriers to properly build a workable solution.

The first is that the ACA gives states the right to build and run their own exchanges. However, even if they rake the money HHS is still required to step in and fill the gap if they fail. So many states took the money (who wouldn’t) but the program is left to implement a system of unknown size. Just that would doom most IT implementations. In addition there weren’t any IT firms interested in helping to tackle the Federal system, instead they went to the bigger states where they don’t have to navigate the crazy laws that govern IT projects at the federal level. This also allowed them to integrate smaller less complex systems outside the gaze of an IG department who publishes reports that get national attention in their zeal to protect public money.

Second is that funding is discretionary and even though they mapped out the required headcount they Didn’t have the budget appropriated to hire even half what was needed (as defined by outside consultants like MITRE) which left them severely understaffed. My wife’s ‘team’ of 5 was actually 2. There is no chance that Congress would appropriate more money to fix this. It also isn’t like these people are all that great at their jobs. No person really good at their job in the private sector is going to take a big pay cut to work for HHS. These jobs aren’t a bunch of overpaid airport security people but are jobs that pay much much better in the private sector. This means promoting the inexperienced from within and there is no institutional experience to implement a complex system.

Next there is the political decision to fold the exchanges into CMS (Centers for Medicaid and Medicare Services). The congressional Republicans were using every power they could to harass the executives so HHS tried to shield them behind Medicare. However, it wan’t like CMS was any good at this type of implementation and it was now not the only priority for the contract shops to worry over.

The other problem on a technical level was the near impossible task of verifying eligibility of users for subsidies. All the data has to be verified to avoid fraud, this include income. That data is segregated at the IRS and they are prevented by law from sharing ANY of that information with other parts of the government. Thank Johnson and Nixon for their abuse of IRS info. So there is no easy way to automate the approval process based on tax returns. The only sensible way is to have the IRS do it, but that would require funding and no contract manager is going to go to jail to solve a problem without a new budget appropriated for them.

Last is just the factor that any large IT system like this has a horrible failure rate. Supposedly the success rate in the private sector is now above 50% but there aren’t many major news stories when private companies waste a billion dollars on a system that never does anything. The Government is even worse because of the hundreds of pages of regulations meant to ensure money isn’t “wasted”. Sure, the Federal Government generally gets the best pricing there is on products, but the massive overhead eats all of that up and delays the process by months. I think there is a reason that private companies don’t have the complex rules you see in the government. They also don’t have to worry about going to jail if they do break the rules.

I find it a miracle that there is ANY chance that the exchanges might actually be working in time. However, I think it would be wrong to say that it is some inherently governmental problem that couldn’t be solved with smart reform of the laws and congressional support to fix things. One party is invested in always excusing governmental problems and the other is opposed to the idea of trying to fix problems because they are invested in highlighting government failure for the simple purpose of killing it.

Department of spurious correlations?

Here is the abstract of a forthcoming AER piece, written by M. Keith Chen:

Languages differ widely in the ways they encode time. I test the hypothesis that languages that grammatically associate the future and the present, foster future-oriented behavior. This prediction arises naturally when well-documented effects of language structure are merged with models of intertemporal choice. Empirically, I find that speakers of such languages: save more, retire with more wealth, smoke less, practice safer sex, and are less obese. This holds both across countries and within countries when comparing demographically similar native households. The evidence does not support the most obvious forms of common causation. I discuss implications for theories of intertemporal choice.

Here is from a recent article in The Chronicle of Higher Education, by Geoffrey Pullum:

Chen’s data on languages comes from the World Atlas of Language Structures (WALS), and his evidence on prudence from the World Values Survey (WVS). Both are fully Web-accessible. Sean Roberts, who studies language evolution at the Max Planck Institute for Psycholinguistics in Nijmegen, decided to investigate the other linguistic factors treated in WALS to see how they related to prudence. He compared the goodness of fit for linear regressions on each of a long list of properties of languages (the independent variables), using as the dependent variable the answers that speakers gave to the WVS question “Did you save money last year?”

The results (see this blog post for an informal account) were jaw-dropping. He found that dozens of linguistic variables were better predictors of prudence than future marking: whether the language has uvular consonants; verbal agreement of particular types; relative clauses following nouns; double-accusative constructions; preposed interrogative phrases; and so on—a motley collection of factors that no one could plausibly connect to 401(k) contributions or junk-food consumption.

There is a bit more here.

For the pointer I thank Mike T.  And I would gladly run a response from Chen, if he has interest in drafting one.

Addendum: Here is an important update from the critic, after improving the specification of his alternative fits:

The results showed that there was only one other linguistic variable that improved the fit of the model more than future tense.  That is, future tense was a better predictor than 99% of the linguistic variables.  For comparison, Dediu & Ladd’s test of the link between linguistic tone and Microcephalin/ASPM found that the hypothesised link was stronger than 98.5% of many thousands of links between genetic and linguistic factors.

Does Not Compute

Steven Salzberg from Forbes is right about this:

Wow, no one saw this coming.  The University of Florida announced this past week that it was dropping its computer science department, which will allow it to save about $1.7 million.  The school is eliminating all funding for teaching assistants in computer science, cutting the graduate and research programs entirely, and moving the tattered remnants into other departments.

Let’s get this straight: in the midst of a technology revolution, with a shortage of engineers and computer scientists, UF decides to cut computer science completely?

Salzberg, however, is critical of Florida Governor Rick Scott for cutting university funding overall (Scott famously decried anthropology degrees in favor of STEM). Salzberg also finds it “unintentionally ironic” that in announcing a new polytechnic just two day ago Gov. Scott said:

“At a time when the number of graduates of Florida’s universities in the STEM [science, technology, engineering, and mathematics] fields is not projected to meet workforce needs, the establishment of Florida Polytechnic University will help us move the needle in the right direction.”

Rather than ironic I see this as illustrating how university incentives are not always aligned with those of the Governor or with the social interest. As Governor, Scott can more easily direct new funds towards STEM than tell entrenched university bureaucracies how to reallocate funds among existing programs. In particular Scott wants to promote STEM and computer science graduates for the externalities they produce but universities don’t get paid for producing externalities they get paid based on student enrollment. Thus, this is not surprising:

…Meanwhile, the athletic budget for the current year is $99 million, an increase of more than $2 million from last year.  The increase alone would more than offset the savings supposedly gained by cutting computer science.

Department of Yikes

…his German counterpart [finance minister] suggested postponing Greek elections and installing [sic] a new government without political parties.

I do understand the financial motive here, but this is not a good idea!  It is even less of a good idea to say so in public.  Is the goal simply to irritate the Greeks so much that they leave the Eurozone on their own?  Twitter rumors are suggesting that Finland and the Netherlands are raising similar ideas, namely postponing elections and, it seems, simply ruling the country through its budget?  I am not sure how this is supposed to work, or to be received in Greece, or why it should be a good precedent for the European Union.  The FT story is here.

Why is there a glut of extra-large clothing?

Edward Casabian writes:

I'm a mostly loyal reader of Marginal Revolution and have a question for you.

Why is it that the vast majority items on sale in a clothing store are almost always XL or XXL?  I was in Old Navy last weekend and wanted to pick up a few t-shirts, but virtually all of them were too big for me.  The same went for shorts and jackets.  I am average size, about 5'9"

I would think that there would be more small, medium and large size clothing as these items would cost less to produce and seem to have a higher demand as evidenced by the inordinate amount of large clothing that is always on sale at department stores.

I believe the same goes with footwear.  The most popular sizes (9-11) always seem to be out of stock.

I can't vouch for these stylized facts but I do have the same casual impression. 

One simple hypothesis is that the less common sizes have more unpredictable demands, relative to inventory, and so they are more likely to end up in surplus.  They're also more likely to be unavailable when you need them, though perhaps that latter state of affairs is less noticeable.

I also question whether you will find an equivalent overrepresentation of XL at Banana Republic (I guess no) and what that means about the clientele of Old Navy.  The company which owns both may be pursuing a market segmentation/price discrimination strategy and Mr. Casabian is expressing his preference for more search and lower prices instead of reading MR all the time. 

The most general question is which clothes sizes should be most likely to experience oversupply.  My guess is that occurs when branding is least important and the possible durable goods monopoly breaks down.  Maybe people buying XL are less interested in brands (or brands are less interested in them) and thus their market is more likely to be flooded.

These are just my guesses; maybe Kathleen Fasanella would know the answer.

Is this why the Senate bill has an ok CBO rating?

Because the program would begin taking in premiums immediately
but would not start paying benefits until 2016, congressional budget
analysts have forecast that it would generate a nearly $60 billion
surplus over the next 10 years, cash that would help the larger
measure's balance on paper.

Not long ago I filed this under "Department of Uh-Oh."  In the longer run it is very bad for the budget and it is simply an accounting trick.  It's a sign that fiscal responsibility will never come to U.S. health care.  And yes there is a long-term care provision in the Senate bill.  Although I have not read through its current incarnation of 2000-some pages, I am willing to bet we are getting the cost back-loaded version of the idea.

Why are more colleges rewarding professorial research?

Dahlia Remler and Elda Pema are studying this question (do you know of an ungated copy?) but they don't yet have clear answers:

Higher education institutions and disciplines that traditionally did
little research now reward faculty largely based on research, both
funded and unfunded. Some worry that faculty devoting more time to
research harms teaching and thus harms students’ human capital
accumulation. The economics literature has largely ignored the reasons
for and desirability of this trend. We summarize, review, and extend
existing economic theories of higher education to explain why
incentives for unfunded research have increased. One theory is that
researchers more effectively teach higher order skills and therefore
increase student human capital more than non-researchers. In contrast,
according to signaling theory, education is not intrinsically
productive but only a signal that separates high- and low-ability
workers. We extend this theory by hypothesizing that researchers make
higher education more costly for low-ability students than do
non-research faculty, achieving the separation more efficiently. We
describe other theories, including research quality as a proxy for
hard-to-measure teaching quality and barriers to entry. Virtually no
evidence exists to test these theories or establish their relative
magnitudes. Research is needed, particularly to address what employers
seek from higher education graduates and to assess the validity of
current measures of teaching quality.

Here is an excellent summary of the piece, with discussion.

Can MR readers set them straight?  One hypothesis is that donors prefer to affiliate with research rather than with higher teaching loads and, until the financial crisis, donors have been rising in importance for many universities.

You might also claim that faculty prefer to do research, but why are faculty getting their way more than before?  (And why don't faculty just take the lower teaching load without the research requirement, if they are in charge of this evolution?)  Or are you wishing to claim that research ability is a good proxy (the best available proxy?) for teaching ability?  I doubt that.

My hypothesis draws on the tipping point idea.  Due to coalitional politics, it's hard to keep a happy medium, so the most valuable members of the department, whether defined in terms of teaching or research, push for higher research standards than they might otherwise privately favor, if they could have their way.  (This happens in both "research-teaching" departments and research departments.)  They fear that turning the keys over to "the barbarians" won't much improve teaching either.  Research prowess is one of the most efficient bases for organizing competing coalitions.  Didn't Dr. Seuss write a novel about this?

Ideally there should be a better way to keep down the losing coalition but it
is hard to find and implement in an incentive-compatible fashion.

One implication is that when growth is high, relatively tough research standards are needed to keep down the losing coalition.  When personnel is stagnant or shrinking, the emphasis on research may be less necessary because there is less chance of a shift in power.

Department of I just don’t believe this

Remember the debates on whether/why conservatives are happier than liberals?  Here is a new contribution, from Jamie Napier and John Jost::

In this research, we drew on system-justification theory and the notion that conservative ideology serves a palliative function to explain why conservatives are happier than liberals. Specifically, in three studies using nationally representative data from the United States and nine additional countries, we found that right-wing (vs. left-wing) orientation is indeed associated with greater subjective well-being and that the relation between political orientation and subjective well-being is mediated by the rationalization of inequality. In our third study, we found that increasing economic inequality (as measured by the Gini index) from 1974 to 2004 has exacerbated the happiness gap between liberals and conservatives, apparently because conservatives (more than liberals) possess an ideological buffer against the negative hedonic effects of economic inequality. 

I am not at all committed to the view that conservatives are truly happier than liberals, whether adjusting for relevant demographics or not.  But to think that if liberals are less happy, it is because of they suffer under a greater awareness of economic inequality…that to me is dubious.  We’re simply being told that conservatives are more happy because they enjoy living with evil.  You’ll notice that the paper does not provide a single piece of causal evidence for this claim.  (And do you recall the results that conservatives give more to charity?)  A simple alternative model (but not the only one) is that people have a certain amount of unhappiness in them and they channel their political discontents to fill that unhappiness. 

This paper is drawn from a long list of new papers devoted to attacking markets, linked to a Harvard Law conference, and I thank Daniel Klein for the pointer.

Why not nationalize?

Megan McArdle piles on:

…what works in the banking system of a small economy does not
necessarily work in a large one.  For starters, no offense to the
Swedes, but very few other countries are affected by what happens in
their economy.  One family, the Wallenbergs,
indirectly controls something like 30-40% of Sweden’s GDP.  Even now,
the Swedish financial system is considerably less broad and complex
than that in the US; it’s not a world financial center.  And in 1992,
everyone’s financial system was a whole lot less complicated than they
are now…

Possibly the biggest problem with this plan,
among many, is that Sweden is essentially able to command the labor of
its bankers; they have relatively few alternatives without starting
over in a new country and a new language.  American government has no
such leverage.  Yes, the folks in the mortgage departments royally
screwed the pooch, but running a major bank is not something you can
hand over to a GS-17.  Nor is it a job for academic economists. 

And,
of course, the political ramifications in the United States are very
disturbing.  A small homogenous country with a parliamentary system and
a lot of social capital invested in the government is going to do
better at nationalizations than we will.  The fractious structure of
the American legislative system means–as we’ve just seen–that huge
amounts of political maneuvering and log-rolling will go into the
running of any national banking system.  Imagine the banking system run
by the Department of the Interior.

…The problem with
the Japanese system (or at least, one major problem) is that for
political, social, and career reasons, banks kept pouring money into
zombie firms, trying to salvage the bad loans of a decade ago.  Is a
nationalized banking system less or more likely to do this than a
private one, in America?  I imagine any banking head, appointed
or career civil service, would get a lot of calls from Senators and
congressmen demanding that the bank prevent companies in their
districts from going under.

There’s lot of talk in the blogosphere in favor of the Swedish plan, but not much consideration of its drawbacks. 

Department of Uh-Oh, The End of the Mortgage Agencies

Fannie and Freddie’s
preferred shares have been considered so safe that banking regulators
let banks count them in the capital required as a cushion against loan
losses.

That should read "*had* been considered so safe."  Further background is here and here.  We also have an impossibility theorem.  I do not see how our government can let the value of this preferred stock fall much further, given the extent to which bank insolvency would increase.  I also do not see how our government can prop up the value of this preferred stock to a significant degree.  Silly me.  I guess that means I bet on the latter impossibility.

Here is yet further discussion of the end game.  It seems the common stock owners will end up suffering more dilution than they had been expecting.  The $340 billion in agency debt held by the Chinese central bank will be protected, as it must be.  Have a nice day.

And the newspapers were wondering why the Dow tanked 345 points.

Why do college costs outpace inflation?

Tuition and other costs, not including room and board, rose on average
to $6,185 at public four-year colleges this year, up 6.6 percent from
last year, while tuition at private colleges hit $23,712, an increase
of 6.3 percent…In recent years, consumer prices have risen less than 3 percent a year,
while net tuition at public colleges has risen by 8.8 percent and at
private ones, 6.7 percent.

Etc., and please note that explanations for high costs (i.e., lazy professors who won’t blog) do not automatically translate into explanations for rising costs.

Rrecall that 78 percent of the buyers in this market choose the public sector.  Tuition is going up because it can, to paraphrase the old saw about the dog (or is it the monkey?).  But too big a sticker shock across one year would irritate voters, who might then insist on tighter regulations on public sector higher education.  Think about the equilibrium.  Many state schools could earn more money by forgoing state aid and raising tuition to profit-maximizing levels, or some approximation thereof.  Step-by-step, we are moving toward some version of this outcome.

Why do low-tuition goodies for middle class parents no longer figure so prominently in the political calculus?  Could it be the aging of the population?  Or simply that some schools tried raising tuition and found that it did not backfire?. 

If the market discounters — who capture 78 percent of the customers — can raise their price, so can the other suppliers.

If more people want to get into Harvard, Harvard doesn’t have much incentive to increase the size of a yearly class.  The academic departments don’t want to lower standards by hiring more professors or adjuncts, and the development office seems OK with just raising the size of the required bribe for admission, rather than hoping that a bigger class means more donations thirty years from now.

At the same time the returns to skilled labor are rising, so many people even feel they’re getting their monies worth.  Toss in a dash of Robin Hanson’s "showing that you care" ("I’m sorry Johnny, but we won’t be spending a penny more on you") and the market seems to hang together.

Nor do universities have the best governance structures for controlling costs.  Here are some good comments on the problem.

Why law associates work so hard

I have learned a new mechanism to explain the organization of knowledge-based, client-intensive partnerships:

From the property rights perspective, large law firms are poorly suited to sustaining employment relationships because they have no enforceable means of controlling the firm’s key knowledge asset–client relationships.  The up-or-out partnership systems that have evolved over time in these firms offer an awkward but workable resolution to this problem.  By restricting partnership size to maximize surplus per partner and by making senior attorneys residual claimants, law firms limit the opportunity for sub-groups of partners to grab and leave with the firm’s clients.  This action, however, creates additional demand for inexperienced associates who serve as (imperfect) substitutes for their more experienced counterparts.  The result is that more associates are hired than can be promoted into a stable partnership.  Those associates who do not succeed outgoing partners will be dismissed before they acquire sufficient client knowledge to themselves pose a threat of grabbing and leaving.  That law firms find it worthwhile to commit to the costly practice of firing qualified attorneys in order to retain control over client relationships points to the general importance of control over assets in more conventional employment relationships.

The property rights model, in contrast to other explanations, can explain the coincidence of up-or-out promotion rules and partnerships in large law firms.  At the root of our model is the claim that law firms cannot rely upon legal mechanisms to establish control over client relationships.  We demonstrate that this is, in fact, the case under U.S. law.  In addition, the property rights model suggests two propositions that are supported by the available historical, institutional and econometric evidence: (1) up-or-out appeared first in large corporate law firms who specialized in delivering large scale, complex legal services to valuable, long-term clients, and (2) large law firms practice a style of law that limits contact between associates and clients.  Finally, the property rights model can account for the otherwise anomalous absence of up-or-out personnel policies in government agencies and large corporate litigation departments [TC: I like this latter point].

Here is the paper.  Here is another version with abstract.

Market Failure? Academic Departments

The Angry Professor describes a new budgeting system at LSU:

Several years ago LSU moved to a business model budget. Under this
model, each department has control over its own funds. We might choose,
for example, to give everyone a big raise. Or, we might choose to hire
new faculty. We might purchase equipment, or furniture.

As
with all such schemes, the administration makes sure that they will get
money from somewhere to sustain their bloated salaries. Each department
pays a "tax" to the college, which is determined by enrollments and
indirects as earned in "Year Zero" (the year before the new budget took
effect). If the department fails to generate at least the enrollments
and indirects earned in this year, the college will take the shortfall
out of the departmental budget. We’re not talking about that funny fake
money that colleges usually shuffle around, but real dollars: my
raises.

Some good things have come out this arrangement:

My department and several others have taken
advantage of the new model by "firing" the custodial staff provided by
Physical Facilities and hiring a private contractor to keep the
bathrooms looking spiffy. I must say, the bathroom has never looked
cleaner, and my office carpet has been vacuumed for the first time in
several years.

But, of course, the Angry Professor is angry. 

In the social sciences, every department is trying to offer
statistics courses in house, so we now have about 8 courses titled
"Introduction to Statistics in [insert department name here]." 

But why doesn’t the Coase Theorem and comparative advantage apply?  The problem here can’t be the budgeting.  I suspect a lack of property rights.

Each department is now in direct competition with every other for undergraduate enrollments.

Sounds good to me but the Angry Professor has a rebuttal:

The marginal departments, the ones with the
lowest possible academic standards, are pulling in vast numbers of warm
bodies and the tuition dollars associated with them.
The departments that formerly only provided degrees to the football players are now thriving.

But grade inflation and the incentive to take easy courses in easy departments is nothing new, the only difference is that now the easy departments have funding commensurate with enrollments.  The bottom line, therefore, is that the angry professor is angry at the students for not choosing classes more wisely. 

A better grading system that takes into account the fact that some departments and professors grade easier than others would help students to make better choices.   It’s not obvious to me, however, that on the whole the students aren’t making rational choices.

Thanks to Tom Slee for the pointer.  I hope to say more about his interesting new book, No one Makes You Shop at Wal-Mart, in the future.   Contrary to the title it’s about how markets fail, not a defense of Wal-Mart!

Futures markets in everything, NOT

A Wall Street lawyer gave new meaning to the term
"futures market" when he tried to auction his future Social Security
checks – money did doesn’t now have – on eBay for $200,000 so he could
use the cash for a down payment on a Manhattan apartment.

"I’ve put a lot of money into the Social Security system, so why can’t I sell it to someone else?" mused Thaddeus Wojcik.

File that under "Department of HA!."  Ebay yanked the auction.  Here is the full story, and thanks to Chris D. for the pointer.

Department of Yikes

Two teams of federal and university scientists announced today that they had resurrected the 1918 influenza virus, the cause of one of history’s most deadly epidemics, and had found that unlike the viruses that caused more recent flu pandemics of 1957 and 1968, the 1918 virus was actually a bird flu that jumped directly to humans.

The work, being published in the journals Nature and Science, involved getting the complete genetic sequence of the 1918 virus, using techniques of molecular biology to synthesize it, and then using it to infect mice and human lung cells in a specially equipped, secure lab at the Centers for Disease Control and Prevention in Atlanta.

The findings, the scientists say, reveal a small number of genetic changes that may explain why the virus was so lethal. The work also confirms the legitimacy of worries about the bird flu viruses that are now emerging in Asia.

The new studies find that today’s bird flu viruses share some of the crucial genetic changes that occurred in the 1918 flu. The scientists suspect that with the 1918 flu, changes in just 25 to 30 out of about 4,400 amino acids in the viral proteins turned the virus into a killer. The bird flus, known as H5N1 viruses, have a few, but not all of those changes.

Here is the full story, which contains many other points of interest, including whether the sequencing should have been done in the first place.  In case you forgot, 1918 was the flu pandemic which killed 50 to 100 million people, and don’t think we are so much better protected in 2005.  Today I started writing my piece on what we should do about avian flu.