Results for “Tests”
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How to improve the Presidential debates

Slate.com lists some of the obvious suggestions, which try to inject greater intellectual content.  I would prefer to see the following:

1. Allow all candidates to watch a short debate of experts — with a fraud or two thrown in — and ask them to evaluate what they just heard and why they reached the conclusion they did.

2. Test candidates for the ability to spot liars.

3. Give each candidate a substantive message and then give each two minutes to turn it into pure fluff.  This tests communications skills, plus we can see the meat grinder in action.

4. Require each candidate to conduct an orchestra.  Watch to what extent each candidate defers to the players, and to what extent he prefers "panache."

Your ideas?

Robin Hanson’s health care petition


Whereas
,
our single clearest data point regarding the marginal value of this spending, the US-funded RAND health insurance experiment,
where from 1974 to 1982, 7700 subjects were randomly assigned to 3 to 5
years of free or not free medicine, found no significant evidence of a
substantial health effect of more medicine, confirming the usual results of continuing aggregate healthmedicine correlation studies,


We the undersigned petition
the US to
publicly conduct a similar experiment again soon, this time with at
least ten thousand subjects treated for at least ten years, which
should be feasible for a half billion dollars, or one part in forty
thousand of annual medical spending.  Whatever other purposes such an
experiment pursues, it should try to make clear the aggregate health
effects of variations in aggregate medical spending, variations induced
by feasible regimes of quality control, including free patient choice
induced by a varying aggregate price.

Here is the link.  I doubt if upping the number of subjects will much change the results.  As long as we are playing mad scientist, I would prefer some disaggregated tests, namely:

1. How much better off are the poor uninsured if they get health insurance?  (Financially much better off but in health terms only slightly better off is my current guess, and yes there is already some evidence here.)

2. How much less healthy would the well-insured be if they had to consume thirty percent less health care?

3. How much healthier would we be if we retargeted expenditures to some commonly recommended areas, such as pre-natal care and prescription drugs?

And my favorite is:

4. How much would health care cost if we simply banned all health insurance and modified forms thereof? 

Except possibly for #1, these are not easy experiments to run, and yes computational modeling would beg the relevant questions.  But I think #3 — or even the thought thereof — poses the biggest problem for Robin’s worldview that medicine doesn’t do us much good.  Robin is a real world innovator, a hands-on, duct tape kind of guy, so he can’t retreat into the claim that we cannot possibly parse current expenditures more effectively.  Lots of health care does lots of good, and from there we can pick up the ball and run with it.

For more on Robin’s revisionist health care views just scroll through the last week’s entries on his blog.

FDA payola?

The FDA will soon stipulate that researchers who accept more than $50,000 in corporate grants, contracts and consulting fees cannot sit on FDA advisory committees.  This will rule out many current advisors.

First, I wonder how this fits into the old Sam Peltzmann story that the FDA is too conservative in approving new drugs.

Second, what if we reformed in the opposite direction?  Why not do away with all the mandatory drug trials and the like, and simply let drug companies purchase approval for new drugs?  Think of the companies as posting bonds, and of course they still can be sued ex post if the drug harms somebody.  The companies still will have reason to conduct their own tests.  Set the price high if you wish.

To be sure, how much a company will pay for approval will depend on expected profits, not social welfare.  But even with market power there is usually some connection between those two magnitudes.  Or maybe the fear of lawsuits won’t deter poorly capitalized companies, but at the very least we could let the corporate giants take this path.

Some companies might be too overconfident about their drugs.  If you believe that, I hope you are buying puts on them.  Other companies might have excessively short time horizons.  If you believe that, I hope you are loading up on drug companies with heavy R&D and raking in your excess returns.

So does this idea have any takers?  If not, why not? 

Addendum: Matt Yglesias argues regulation is a substitute for litigation.

Markets in everything, German edition

Man schickt eine SMS mit der
Bezeichnung des Straßenzuges und der Uhrzeit, und zehn Sekunden später
geht das Licht an – gesteuert wird das über ein Empfangsmodul, das in
die grauen Schaltschränke eingebaut wird.  Auf der Teststrecke, die wir
eingerichtet haben, ist es dann fünfzehn Minuten lang hell.  Das sind 30
Laternen auf 2,5 Kilometer.  Den Nutzer kostet das 20 Cent, plus die
Kosten für die SMS.

In other words, you pay, using your cell phone, to have the street lights turned on.  That is for the town of Lemgo.  Here is the home page of the start-up.

Thanks to Martin for the pointer.

Good luck

To extend [health care] coverage without changing these [cost-inflating] dynamics would add on another $77 billion of spending beyond what it should cost.

That is Ezra Klein, his post has some interesting data.  Note that while we might shift some of the financial burden of pharmaceuticals to Europe and elsewhere, this hardly qualifies as a global welfare improvement.  There are plenty of other ways to redistribute money from foreigners.  I am, however, struck by this bit:

Another $147 billion in increased spending, much of it a consequence of
the fee-for-service system, wherein doctors are paid based on how many
procedures they recommend and carry out.  Doctors with equity in
facilities where they can co-refer cases conduct between two and eight
times more tests than those without equity interests.

Some of this is third-party payment, but more generally the consumer as monitor is often either insane or asleep.  To get what is really wrong with health care markets, we must turn to the academics, not as analysts but rather as examples:

One 47-year-old professor, a classic blunter who had received a
diagnosis of prostate cancer, told me: "I would be insulted if some guy
read 15 papers on theoretical physics, my own field, and then came in
and asked me to help him design an experiment.  And I expect the same of
my doctor.  I pay her.  Let her sit down and tell me exactly what I need
to know — what are my choices and what do they mean?  That’s her job.  I
have other things to do."

Many consumers just don’t want to face the stark realities of how they are doing.  How about letting me make the health care decisions for a randomly chosen partner, and vice versa?  Here is much more, via Craig Newmark.  On related topics, here is Arnold Kling.

Not Normal on the New Deal

Readers will not be surprised to know that I am not normal.  Indeed, I have not been normal for a long time as this post from 4 years ago attests:

Roosevelt and the Great Depression

I was amused to see Conrad Black writing with shock:

Jim Powell of the Cato Institute (cited approvingly in a recent column by Robert L. Bartley) argues in a new book that FDR actually prolonged the Depression!

Of course, Powell is correct. Imagine, increasing the power of
unions to strike and raise wages during a time of mass strikes and mass
unemployment. Imagine thinking that cartelizing whole industries
thereby raising prices and reducing output could improve the economy.
Not everything Roosevelt did was counterproductive – he did end
prohibition (although in order to raise taxes) – but plenty was and
worst of all was the uncertainty created by Roosevelt’s vicious attacks
on business. (See, for example, the work of Bob Higgs especially this important paper and historian Gary Dean Best’s overlooked classic Pride, Prejudice and Politics.)
Business investment failed to recover because business people
legitimately feared a regime change like that which had occured in
Germany and Italy. Sound extreme? Roosevelt himself threatened/promised
this in his first inaugural:

…if we are to go forward, we must move as a trained and
loyal army willing to sacrifice for the good of a common discipline,
because without such discipline no progress is made, no leadership
becomes effective. We are, I know, ready and willing to submit our
lives and property to such discipline, because it makes possible a
leadership which aims at a larger good… I assume unhesitatingly the
leadership of this great army of our people dedicated to a disciplined
attack upon our common problems….in the event that the Congress shall
fail to take one of these two courses, and in the event that the
national emergency is still critical, I shall not evade the clear
course of duty that will then confront me. I shall ask the Congress
for… the power that would be given to me if we were in fact invaded
by a foreign foe.

Assorted

1. Megan (Non-McArdle) from Sacramento on modeling: "I am not altogether opposed to modeling, because I think it is mostly white collar welfare and it supports sexy graduate students."  That’s economic modeling, not fashion modeling.

2. Markets in everything: at-home drug tests.

3. Kramnik and the computer have drawn three more games, tomorrow is K’s last chance to tie the score with a victory.

4. Ten most viewed YouTube videos of all time; they seem OK but I prefer octopus escaping through a one-inch hole.

5. The best of free software, via Chris Masse.

The Methodology of Positive Economics

I’ve never read Milton as a naive positivist, although some of the quotations from his article sound that way.  Milton was more of a methodological pluralist and a Marshallian.  Do what works. 
Bring a variety of kinds of evidence to bear on a problem (it is sad
how neglected this principle is in modern economics), be pragmatic, and
don’t reject a model just because it doesn’t meet one of your
prejudices.  I think that is what he meant by not judging a model by
its assumptions.  Falsifiability is a chimera, but did Friedman really
seek or advocate that as a standard?  Most of all he wanted propositions with empirical content.  He understood that no single fact can refute a theory, and that many tests are of frameworks, not single propositions.  Data should and indeed must be viewed through the lens of theory, and our goal should be to solve problems.

Was Milton closer to Quine than to Carnap?  Here is his classic essay.

Claims about my friends

Robin Hanson will like this one:

The more fiction a person reads, the more empathy they have and the
better they perform on tests of social understanding and awareness.  By
contrast, reading more non-fiction, fact-based books shows the opposite
association.  That’s according to Raymond Mar and colleagues who say their finding could have implications for educating children and adults about understanding others…

If you, like Robin, are fond of signaling theory the causality can run either way.

Bryan Caplan will like this one:

In general, the students and experts believed mental disorders were
less ‘real’ than medical disorders.  For example, most of the
participants agreed that you either have a medical disorder or you
don’t, but that this isn’t true for mental disorders (although a third
of the experts felt it was).  The experts and students also believed
more strongly that medical disorders exist ‘naturally’ in the world,
than do mental disorders.  The familiarity of conditions didn’t make any
difference to the participants’ views.

Pumping Neurons

So I’m in the local Best Buy and I see that the Nintendo DS has Brain Age on display, it tests your "brain age" with a series of mental exercises.  Heh, I’m up for a workout so I run the game which does things like show you the word blue but written in red and you are supposed to say the color (not the word).  The store is noisy, however, so the damn microphone isn’t picking up my answers.   It gives me a brain age of 95!  What the #$$!%!.  So I run the game again and this time I’m shouting into the machine, blue, red, no I said red damn it, green, green, green…  Well, I managed to get my brain age down some but by now people were looking at me real funny.

    Anyway, if you want to try some of these exercises you can now join an online gym and workout at home.  The Washington Post has a brief review of some of the sites including MyBrainTrainer, Happy-Neuron and Brain Builder.  Of course, you know my recommendation for the best website to improve your brain power.

Does television viewing trigger autism?

Gregg Easterbrook says yes, citing this new study.  Here is part of the abstract:

…we empirically investigate the hypothesis that early childhood television viewing serves as such a trigger [for autism].  Using the Bureau of Labor Statistics’ American Time Use Survey, we first establish that the amount of television a young child watches is positively related to the amount of precipitation in the child’s community.  This suggests that, if television is a trigger for autism, then autism should be more prevalent in communities that receive substantial precipitation.  We then look at county-level autism data for three states – California, Oregon, and Washington – characterized by high precipitation variability.  Employing a variety of tests, we show that in each of the three states (and across all three states when pooled) there is substantial evidence that county autism rates are indeed positively related to county-wide levels of precipitation.  In our final set of tests we use California and Pennsylvania data on children born between 1972 and 1989 to show, again consistent with the television as trigger hypothesis, that county autism rates are also positively related to the percentage of households that subscribe to cable television.  Our precipitation tests indicate that just under forty percent of autism diagnoses in the three states studied is the result of television watching due to precipitation, while our cable tests indicate that approximately seventeen percent of the growth in autism in California and Pennsylvania during the 1970s and 1980s is due to the growth of cable television.  These findings are consistent with early childhood television viewing being an important trigger for autism.

I am unconvinced.  Precipitation, in these states, is a coastal phenomenon and is proxying for heterogeneity in the gene pool.  Perhaps the coastal areas attract a more "autism-ready" group of individuals.  In fairness to the authors, they do try to control for income and education and population density and diagnosis capacity, among other variables.  Note two worrying features in the results: in California precipitation is not correlated with autism rates at all (there is a north vs. south split for rain, rather than the coast vs. inland), and precipitation is a better predictor of autism than cable viewing is directly. 

Here is the latest autism news on the genetic front.

Addendum: Steve Levitt is also skeptical.

If we abolished the penny would prices go up or down?

I should have known you were going to ask.

I will bet on up.  Remember when Western Europe moved to the Euro?  A disproportionate share of retail prices went up, leading to the designation "the Teuro."  ("Teuer" means "expensive" in German.)  It seems that retailers had wanted to increase their prices in the first place, but were afraid of irritating their loyal customers.  The regearing of the monetary unit gave an "excuse" for price increases plus not everyone noticed the higher prices in the new monetary unit.  I predict similar results, albeit smaller ones in absolute terms, from abolishing the penny.

How bad an outcome would this be?  Ironically it was Greg Mankiw who wrote of excessively high prices, by a small degree, leading to large welfare costs for the economy as a whole.   But this model may not apply to abolition of the penny.

Under one scenario, prices go up but they would have gone up sooner or later anyway.  Within a year or two, inflation has caught up with the price increase.  In the long run the whole thing is more or less a wash, although we do suffer from higher prices and higher deadweight loss for just a little while.

Under a second scenario, prices go up and remain at a permanently higher plateau.  Future price decisions are taken from this new reference point.  For this model to work, we must assume that price is a signal of quality and that the frame of reference for interpreting the meaning of a price is based upon an observed status quo.  So the price boost comes, everyone assumes that is just how much food (or whatever) is now worth, and that is our new marker for judging future price movements.  Keep in mind that these assumptions cannot be true globally (there cannot be Walrasian slack at every margin), but only have to be true across relatively small price increases (N.B.: many tricks lie in here, since the price increases will be large in percentage terms for some goods).

I would bet my money on the first scenario, as I assume Greg Mankiw would as well.  If you believe in the second, you probably shouldn’t want to abolish the penny.

You can modify these scenarios in many ways, including through the explicit recognition of option value.  Do you know of any empirical tests on which model of prices is the better guess?

Virginia Postrel is Mad

No one is more familiar with the ethics of organ donation than Virginia Postrel so when she says that the National Kidney Foundation is behaving reprehensibly you can be damn sure she is right.

The National Kidney Foundation
is behaving reprehensibly, especially given its mandate. When I first
got interested in organ donations, I naively thought that the
foundation would be in the business of doing everything possible to
encourage kidney donations. I was terribly wrong. The group vehemently,
and successfully, opposed a bill that would have allowed tests of incentives for organ donors. (CEO John Davis brags
here, scroll to second item.)

So determined is the NKF that kidney donors should never, ever, in any
way be compensated for their organs–no matter how many kidney patients
current policy kills–that the organization is now trying to stamp out public discussion of the idea. When they heard that AEI is planning a conference
on the subject for June 12, they wrote a letter to AEI president Chris
DeMuth suggesting that the conference shouldn’t be held. The letter
from NKF chief Davis (PDF available here) opens:

The officers and staff of the National Kidney Foundation (NKF) were
surprised to learn that AEI has scheduled a forum entitled "Buy or Die:
Market Mechanisms to Reduce the National Organ Shortage" that will be
held on June 12, 2006. …we believe that the concept of financial
incentives has been adequately debated for 15 years, begining with the
National Kidney Foundation’s 1991 workshop on "Controversies in Organ
Donation," and culminating in the definitive Institute of Medicine
(IOM) report that was issued late in April 2006. We don’t see how an AEI forum would contribute substantively to debate on this issue. [Emphasis added.]

In other words, "We’d like to maintain our monopoly on the policy debate, so please shut up."

…For more background on the policy debate, see previous posts here, here, and here. Marginal Revolution blogger and GMU economist Alex Tabarok takes a detailed look at incentives here.

жесткий is Russian for “intense”

Millions of passengers traveling through Russia soon will have to take a lie detector test as part of new airport security measures that could eventually be applied throughout the country.
    The technology, to be introduced at Moscow’s Domodedovo airport as early as July, is intended to identify terrorists and drugs smugglers. But many passengers will be chilled by the set of four questions they will have to answer into a machine, including, "Have you ever lied to the authorities?"
    The machine asks four questions: The first is for full identity; the second, unnerving in its Soviet-style abruptness, demands: "Have you ever lied to the authorities?" It then asks whether either weapons or narcotics are being carried.
    To cut delays, passengers will take the tests after taking off their shoes and putting baggage through the X-ray machines. He doesn’t get his shoes back until he satisfactorily answers the questions. Each test will take up to a minute. "If a person fails to pass the test, he is accompanied by a special guard to a cubicle where he is asked questions in a more intense atmosphere," says Vladimir Kornilov, IT director for the airport.
    The fully automated instrument to be used, known as the "Truth Verifier," is hardly the polygraph familiar from old spy thrillers. Passengers will simply speak into a handset. Thanks to "layered-voice-analysis technology," the system, developed by an Israeli company, can even establish whether answers come from the memory or the imagination.

Here is the full story.

Sentence of the Day – French Edition

Unexpected violence broke out in Lyon when a march of about 2,500 Turks
protesting against a memorial to Armenian victims of a 1915 massacre in
the then Ottoman Empire crossed paths with the anti-CPE demonstrations.

(From Reuters
regarding today’s huge protests in France against the new bill allowing
firms to fire young workers in their first two years of empolyment if
they don’t work out.)