Results for “age of em” 16698 found
A new argument for ACA, and how ACA interacts with disability insurance
This paper examines the effects of the Affordable Care Act (ACA) by considering a dynamic interaction between extending health insurance coverage and the demand for federal disability insurance. This paper extends the Bewley-Huggett-Aiyagari incomplete markets model by endogenizing health accumulation and disability decisions. The model suggests that the ACA will reduce the fraction of working-age people receiving disability benefits by 1 percentage point. In turn, the changes associated with disability decisions will help fund 47 percent of the ACA’s cost. Last, compared to the ACA, an alternative plan without Medicaid expansion will reduce tax burdens and improve welfare.
The pointer is from the excellent Kevin Lewis. I have not yet read the piece but thought it of sufficient interest to pass along right away.
The economic recovery in the United Kingdom
There is an excellent Chris Giles FT article on this topic, here is the bit of greatest interest to some recent debates:
The latest IMF fiscal monitor shows a cyclically-adjusted deficit of 5.9 per cent of national income in 2011, falling only to 5.7 per cent in 2012. This 0.2 percentage point drop in the cyclically-adjusted deficit appears tiny compared with the 2010 vintage of the same IMF document, which shows plans for a 1.4 percentage point decline over the same two years.
That’s not my favorite measure of fiscal stance, but it is the one most commonly cited. What we see is that “austerity didn’t get much worse,” to borrow the language of many of the Keynesians. It remains a mystery to me how this could account for the British recovery, as for instance expressed by Krugman:
Finally, Britain is growing much faster right now than I expected. Fundamental model flaw? I don’t think so. As Simon Wren-Lewis has pointed out repeatedly, the Cameron government essentially stopped tightening fiscal policy before the upturn, which means in effect that the “x” in my equation didn’t do what I thought it would. On top of that, there was a drop in private savings, which is one of those things that happens now and then.The point is that the deviation of British growth from what a standard Keynesian model would have predicted, while real, wasn’t out of line with the normal range of variation-due-to-stuff-happening; nothing there that warranted a major revision of framework.
I would say the fiscal stance of the British government stayed more or less the same, and a rapid recovery came, because the labor market was flexible and market economies have a natural (though in my view not universal) tendency to mean-revert and put unemployed resources back to work. Furthermore the UK had a relatively loose monetary policy, which sustained nominal values, even in light of a supposed liquidity trap. (The hypothesis that the relatively high inflation rate came from a VAT hike didn’t last long.)
I took the Keynesian position on Britain to be “they are in a liquidity trap, and possibly secular stagnation, so they will just sit there and not experience any natural tendency toward major recovery, at least not for a long time.” If the current Keynesian position (would it now be the New New Old Keynesian view?) is “in the absence of additional negative shocks, even in a liquidity trap market economies have a natural tendency to mean-revert and put unemployed resources back to work pretty quickly,”…well, I guess I am more of a Keynesian than I used to think.
Addendum: The article also offers this:
UK officials have no time for such comparisons, based on “spurious cyclical adjustment”. The Treasury said: “It’s interesting how the people who have started saying that we eased up on austerity are the very same people who just a few months earlier were accusing us of doggedly sticking to it. We have been consistent and stuck to the plans we set out.”
The independent Office for Budget Responsibility provides data with which to arbitrate this dispute. On the public spending side, there is no evidence of a secret stimulus. Public expenditure in 2012 and 2013 was a little lower than the level planned in 2010.
Its data also show there were no significant changes to the UK tax system in 2012-13, so no deliberate stimulus. Tax revenues, by contrast, were much weaker than expected as the economy stagnated, showing the strength of the automatic stabilisers in Britain.
Measures of the degree of fiscal tightening that do not rely on tax revenues, but changes in the tax system, such as those from the OBR or the independent Institute for Fiscal Studies, still show as much austerity in 2012 and 2013 as they did in 2010.
Sorry guys, but I have to call this one for some version of the classical hypothesis. And by the way, I still think the UK recovery is relatively fragile, but not for reasons which have much to do with traditional Keynesianism.
Assorted links
2. Hong Kong groups get together to eat food they hate. And the exposure of Taiwanese banks to China.
3. More companies are offering IPOs to employees, customers, and fans.
4. The new French school with no teachers, no books, and no tuition. And the price of higher education will be falling.
5. Miyazaki images.
What is the “sticker shock” for ACA reform?
There is a new NBER Working paper on that topic, by Mark Pauly, Scott Harrington, and Mark Leive, here is the abstract:
This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the Affordable Care Act with estimates of total expected prices if they were to purchase silver or bronze coverage after reform, before the effects of any premium subsidies. We provide comparisons for purchasers of self only coverage in California and in 23 states with minimal prior state premium regulation before the ACA now using federally managed exchanges. Using data from the Current Population Survey, we find that the average prices increased by 14 to 28 percent, with similar changes in California and the federal exchange states; we attribute the increase primarily to higher premiums in exchanges associated with insurer expectations of a higher risk population being enrolled. The increase in total expected price is similar for age-gender population subgroups except for a larger than average increases for older women. A welfare calculation of the change in risk premium associated with moving from coverage that prevailed before reform to bronze or silver coverage finds small changes.
You will find an ungated version here. The general point is that you hear enormous amounts of talk, including from economists, about what a success ACA has been. This talk does not in general consider trade-offs or welfare calculations, as could be illustrated by these results.
From the comments, more on LBGT as deserving of respect
Mr. Econotarian wrote:
Actual science is that your brain can be gendered during development in a different fashion than your sex chromosomes. And that gender is not something that hormones alone can “fix”.
For example, the forceps minor (part of the corpus callosum, a mass of fibers that connect the brain’s two hemispheres) – among nontranssexuals, the forceps minor of males contains parallel nerve fibers of higher density than in females. But the density in female-to-male transsexuals is equivalent to that in typical males.
As another example, the hypothalamus, a hormone-producing part of the brain, is activated in nontranssexual men by the scent of estrogen, but in women—and male-to-female transsexuals—by the scent of androgens, male-associated hormones.
I would stress a social point. If it turns out you are born “different” in these ways (I’m not even sure what are the right words to use to cover all the relevant cases), what is the chance that your social structure will be supportive? Or will you feel tortured, mocked, and out of place? Might you even face forced institutionalization, as McCloskey was threatened with? Most likely things will not go so well for you, even in an America of 2014 which is far more tolerant overall than in times past, including on gay issues. Current attitudes toward transsexuals and other related groups remain a great shame. A simple question is how many teenagers have been miserable or even committed suicide or have had parts of their lives ruined because they were born different in these ways and did not find the right support structures early on or perhaps ever. And if you are mocking individuals for their differences in this regard, as some of you did in the comments thread, I will agree with Barkley Rosser’s response: “Some of you people really need to rethink who you are. Seriously.”
It’s not just the libertarian argument that you have — to put it bluntly — the “right to cut off your dick” (though you do). It’s that there are some very particular circles of humanity, revolving around transsexuality, cross-gender, and related notions, which deserve a culture of respect, above and beyond mere legal tolerance.
India is not the paradise for cross- and multiple-gender individuals that it is sometimes made out to be, but still we could learn a good deal from them on these issues. If nothing else, the argument from ignorance ought to weigh heavily here: there is plenty about these categories which we as a scientific community do not understand, and which you and I as individuals probably understand even less. So in the meantime should we not extend maximum tolerance for individuals whose lives are in some manner different?
No, I do not know what are the appropriate set of public policies for when children should receive treatment, if they consistently express a desire to change, and what are the relative limits of family and state in these matters. But if we start with tolerance and acceptance, and encourage a culture of respect for transsexualism, we are more likely to come up with the right policy answers, and also to minimize the damage if in the meantime we cannot quite figure out when to do what.
What do I think of David Brat?
I have received this question from many people. I still haven’t read much Brat, other than a very quick browse of some (poorly written) passages (by the way, here is a piece on Brat’s theology). In any case, my sense of him is this: he really believes in ideas, even if they are ideas a large number of people will find objectionable. He wants to govern on the basis of those ideas, and he wants to debate those ideas on the floor of Congress. He is authentic and thus he is exactly the kind of politician our Founding Fathers envisioned. It is no surprise that at least some subset of primary voters found that appealing, especially compared to the what-can-only-be-called-cynicism of Eric Cantor.
You don’t have to agree with what Brat stands for (mostly but by all means not entirely libertarian), but if you don’t like him at all you need to perform a broader reevaluation of this whole America idea, at least as it was laid out in the Constitution and other founding documents. This is in fact what it means to have citizen politicians, or alternatively we can call them amateur politicians. Along these lines, I also would like to see more candidates like Bernie Sanders — who basically seems to be a socialist — in Congress.
The victory of Brat also shows that money really does not rule politics these days.
By the way, he should learn to write “Deirdre McCloskey,” (p.60) instead of “Donald-Diedre McCloskey.” LBGT rights remain a neglected issue outside of “the Left,” but they are a good barometer of our overall degree of tolerance as well as a desirable policy in their own right. I am not sure it is an issue Brat is so likely to be good on or to make a priority.
What I’ve been reading
1. Alan Macfarlane, Thomas Malthus and the Making of the Modern World, Kindle edition. It starts off slow, but overall an excellent short look at Malthus as an underrated thinker and a theorist of the cultural and demographic preconditions of capitalism.
2. Louise Lawrence, Children of the Dust, excellent, short and highly readable post-apocalyptic story, think of it as a precursor (1985) of some of today’s YA popular fiction, it should be turned into a movie. I’ve ordered two more of hers.
3. Sudhir Vadaketh, Floating on a Malayan Breeze: Travels in Malaysia and Singapore. A Singaporean travels through Malaysia to discover what divides their two countries and what ultimately unites them too. I read this one straight through. File under “great books you’ve never heard about.” Honest and frank throughout.
4. Adam Tooze, The Deluge: The Great War and the Remaking of World Order, 1916-1931. This one also starts slow but after about 13% becomes fascinating, especially about the internal politics in Germany and Russia, circa 1917-1918. I’m not quite halfway through but finishing is a sure thing. He has yet to cover monetary policy, however.
5. David Bromwich, The Intellectual Life of Edmund Burke. Clear, thorough, and to the point on its stated topic.
6. Jenny Davidson, Reading Style: A Life in Sentences. Why do we fall in love with some sentences rather than others? This book is consistently insightful into classic (and sometimes not so classic) fiction. For whatever reason, I agree with her about various novels to a remarkable degree. Here is Jenny’s daily read. Here is her blog. This book induced me to order Stephen King’s Needful Things, which I have never read.
Assorted links
1. How the Dismal Science Got Its Name, by David M. Levy, excellent book now available with free download at the link. Here is Alex’s MRU video on related topics.
2. Soccer as an economic experiment.
3. Excellent Tom Gallagher piece on Scottish independence.
4. Hacker and Pierson on the decline of the Downsian vision (pdf)
5. A nanosat (small satellite) might be only a four-inch cube.
6. Excellent profile of Ken Regan and his campaign against cheating in chess, by using computer programs to detect play which is too good. But this is not merely a chess piece, think of it as a tour de force on the future of law enforcement, the role of Black Swans in life, the importance of social networks, and the different ways that humans organize information.
7. The political economy of special economic zones.
All hail Khan!
Congratulations to Razib Khan, the noted genetics blogger, on the birth of his son. Born just last week, Razib’s son is already making the news:
An infant delivered last week in California appears to be the first healthy person ever born in the U.S. with his entire genetic makeup deciphered in advance.
Razib, a graduate student at a lab at UC Davis in California, had some genetic material from his in-womb son from a fairly standard CVS test.
When Khan got the DNA earlier this year, he could have ordered simple tests for specific genes he was curious about. But why not get all the data? “At that point, I realized it was just easier to do the whole genome,” he says. So Khan got a lab mate to place his son’s genetic material in a free slot in a high-speed sequencing machine used to study the DNA of various animal species. “It’s mostly metazoans, fish, and plants. He was just one of the samples in there,” he says.
The raw data occupied about 43 gigabytes of disk space, and Khan set to work organizing and interpreting it. He did so using free online software called Promethease, which crunches DNA data to build reports—noting genetic variants of interest and their medical meaning. “I popped him through Promethease and got 7,000 results,” says Khan.
Promethease is part of an emerging do-it-yourself toolkit for people eager to explore DNA without a prescription. It’s not easy to use, but it’s become an alternative since the FDA cracked down on 23andMe.
Craig Venter was the first person to have his genome sequenced, that was in 2007. Now, just seven years later, costs have fallen by a factor of 10,000. Personal genome sequencing is going to become routine regardless of the FDA.
Restoring Anatole France
Tesco has agreed to remove the anti-homeless spikes from outside one of its central London shops after days of protest.
The inch-high steel studs provoked outrage when they were spotted outside the supermarket’s Regent Street branch and in the doorway of a block of luxury flats near London Bridge.
As protests against the spikes gathered pace this week, managers at Tesco insisted that they were designed to prevent antisocial behaviour rather than to deter homeless people from sleeping nearby.
…Homelessness charities described the studs as inhumane. Jacqui McCluskey, director of policy at Homeless Link, said: “It’s shocking to see the use of metal spikes to discourage rough sleeping and hardly helps to deal with the rising number of people who are forced to sleep on our streets.
The full story is here, the France reference is here.
In general, I do not think that the answer to the problem of homelessness involves raising the costs of being homeless. But if that ever were to be the case, even one percent of the time, who would be willing to do it? Furthermore, if we regard the current homeless as “low-elasticity” (e.g., raising the costs of being homeless will not much lower the number of homeless), is that a compliment to them or an insult? Does citing “bad luck” automatically connect one to the low-elasticity view, or can bad luck and high elasticity coexist in the same explanation of homelessness? It seems to me that the exonerative bad luck explanation and the low-elasticity view are packaged together in discourse, although not necessarily for any strong analytical reason. For instance, it is bad luck if my car breaks down, but if that cost me my life I would buy a more reliable car or maybe cease driving altogether.
Assorted links
1. Do imaginary companions die?
2. Albert Hirschman’s Hiding Hand.
3. Should adults read Young Adult fiction?
4. Edward Conard on whether rescuing subprime borrowers would have fixed the economy.
5. Why hasn’t the price of oil gone up more? And should you in fact fear Friday the 13th?
6. Do dogs prefer to avoid being part of the 47%? (speculative, to say the least)
Is the lack of war hurting economic growth?
I have a new piece for The Upshot on that topic, here is one excerpt:
Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely. This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work. Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.
It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.
I also discuss new books by Ian Morris, Kwasi Kwarteng, and some research by my colleague Mark Koyama, as well as Azar Gat. I did not have room in the piece to point out there is an interior solution concerning this issue. That is, if the chance of war is too high, and property rights are too insecure, that isn’t good for economic growth either.
Tesla Says “All Our Patent Are Belong To You”
Big news from Tesla. Elon Musk writes:
Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.
Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.
When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.
…We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.
Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.
I believe that this announcement will be discussed in business schools for years to come much like Henry Ford’s announcement of the $5 a day wage.
How effective is internet advertising?
This new paper by Tom Blake, Steven Tadelis, and Chris Nosko is not entirely reassuring for the future of journalism, but it confirms what I have long suspected:
Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.
The Moral Inversion of Economic Thinking
In a delightful, short article on Economics and Morality, Timothy Taylor asks why economics has a reputation for leading to corruption:
Political science, history, psychology, sociology, and literature are often concerned with aggression, obsessiveness, selfishness, and cruelty, not to mention lust, sloth, greed, envy, pride, wrath, and gluttony. But no one seems to fear that students in these other disciplines are on the fast track to becoming sociopaths. Why is economics supposed to be so uniquely corrupting?
Arnold Kling gives one answer:
I think that economics is singled out for opprobrium because of the way that it challenges the intention heuristic. The intention heuristic says that if the intentions of an act are selfless and well-meaning, then the act is good. If the intentions are self-interested, then it is not good.
I would put the point more directly. Economics is detested because it doesn’t just study vice it shows that some vices have good consequences. The moral inversion of economic thinking begins early, in Mandeville’s scandalous and wicked book the Fable of the Bees, which aimed to show how private vices can lead to public benefits. Later, of course, Adam Smith would make a similar point in The Wealth of Nations with his metaphor of the invisible hand and his famous admonition that “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”
The private vice, public virtue theme is not limited to self-interest and microeconomics. Keynes was an admirer of Mandeville as an early discover of the paradox of thrift. Namely, that in some situations the virtuous behavior of saving can lead to public ruin and the vice of consumption can lead to riches. Paul Krugman continues to make this point today with his admonition that economics is not a morality play. Krugman offends traditional morality when he writes:
As I’ve said repeatedly, this is a situation in which virtue becomes vice and prudence is folly; what we need above all is for someone to spend more, even if the spending isn’t particularly wise.
Economists understand composition fallacies: a sum of light feathers is not necessarily light, a sum of bad actions isn’t necessarily bad and a sum of good actions isn’t necessarily good.
It’s no surprise that Hayek was another fan of Mandeville and also an opponent of traditional morality (also here) because Hayek recognized that nominally bad actions and beliefs can lead to good outcomes (“spontaneous order”) and that nominally good actions and beliefs can lead to bad outcomes (“the atavism of social justice”).
Even more recently we see Tim Geithner making the argument against morality:
“…in a panic, to rescue people from the risk of mass unemployment, you’re going to be doing things that look like you’re helping the arsonists…”
Standard morality, as Kling argues, often stops at intentions while economists are interested in consequences. Consequentialist philosophers also look at consequences but economists have the tools to trace interactions as they sort themselves into an equilibrium. Equilibrium outcomes may be very far from intentions. As a result, we find that economists often places themselves and their discipline in opposition to standard morality.