Sunday, January 30, 2011

RealClearMarkets - A Missed Opportunity On the Budget

RealClearMarkets - A Missed Opportunity On the Budget. But I wouldn't lay all the blame at the President"s feet. After all, he isn't from the party that claims to be the fiscally responsible. This is a problem that all politicians need to confront. We need to educate the public on the choices we face.

Friday, January 28, 2011

State of the Union

I listened to the State of the Union speech the other day, so I could be prepared for a brief WPR interview. The interview went horrible. I never got a chance to talk about what I thought the President did poorly. Joy Cardin, continues to believe the President has the ability to do something to create jobs. Despite the fact that I keep saying there is nothing more he nor any public official can do, she refuses to believe me. I think my profession is doing poor job of talking about jobs and "job creation".My views aren't as extreme as Casey's, but with each passing day his arguments look better. People should stop reading Krugman and start reading Cowen (and here).

Anyhow, Here were the points I wanted to make.

What the President did well:

Of course he is a great speaker, so that goes without saying. Yet I feel compelled to say it. Apparently we are all supply-siders now. He talked about the things government might be able to do to promote future growth. These are not short run fixes for the economy, but long run strategies for enhancing supply side growth. He talked about innovation, education and infrastructure. Of course the proof is in the details, as many things can be done in the service of these ideas that are wasteful, but many things can be positive for economic growth. For example a bad idea that addressed innovation would be subsidizing start up companies. A good idea would be improving the patent system. What about prizes?

What the President did poorly. He used the competition metaphor too much, and too literally when talking about the economy. Its one thing to improve our performance in education by improving our basic math and science instruction, to "compete" with China and Korea, but its still another to believe we need to "win" as if losing makes us worse off.

Economics is not a basketball game, its not zero sum. China's rapid economic growth does not "steal" jobs from us. People listening to that speech might be left with that impression.

Update: Krugman and I do seem to agree on the poor choice of the competitiveness metaphor.

Misc Heath Stuff

1. Circumcision reduces the transmission of AIDS/HIV. Lets hope that mass circumcision doesn't result in the moral hazard problem.

2. Trying to reduce demand for medical services which have little marginal benefit will prove to be very difficult. The legal impediments are large.

3. An older, but still excellent NPR show with Uwe Reinhardt.

4. Contraceptive use over time. Male condom use is on the decline, and withdrawal is on the rise.

5. People don't like lots of things about health reform, but a lot of people don't want their newly acquired oxes gored.

Wednesday, January 26, 2011

Alcohol and Violence

Alcohol causes --> Violence. Nude dancers do not.

Pain Relief

Physician's monopoly over access to pain killers is criminal. Matt Yglesias points to Mark Kleiman
Physicians and their regulators are naturally concerned about the risk of iatrogenic (treatment-induced) drug dependency. Consequently, they have tended to be sparing in their use of opiate and opioid pain relievers, even when the pain involved is extreme and the patient’s short life expectancy, as in the case of terminal cancer patients, makes addiction a largely notional problem. Better professional education has made more recent cohorts of physicians less afraid of over-prescribing painkillers than their older colleagues, but the upsurge of prescription-analgesic abuse (especially of hydrocodone [Vicodin] and oxycodone [Percodan, Oxycontin]) has generated a backlash. [...]

Current policies are scaring physicians away from treating pain aggressively. Many doctors and medical groups now simply refuse to write prescriptions for any substance in Schedule II, the most tightly regulated group of prescription drugs, including the most potent opiate and opioid pain-relievers and the potent amphetamine stimulants. The opiate-and-stimulant combination the textbooks recommend for treating chronic pain is almost never given in practice for fear (a fear well in excess of the actual risk) of disciplinary action and criminal investigation for a physician prescribing “uppers and downers” together. It’s time to loosen up.
This is a great example of the problem with physician agency. They are not perfect agents, and thus we the patients suffer.

Thursday, January 13, 2011

Bribing Kids

Economists are fond of saying incentives matter. We believe grades are incentives, yet they often fail to achieve the ends we seek. Alfie Kohn is famous for his book Punished by Rewards in which he advocates the abolition of grades. But it always struck me as a case of throwing out the baby with the bath water. Just because a set of incentives does not achieved the desired outcomes, doesn't mean the incentives are intrinsically bad, they are possibly just misaligned. Roland Fryer has been finding out how difficult it is do properly align them.

The results from using incentives are mixed. In some cases, incentives have been very cost effective: paying elementary school children in Dallas $2 for each book they read leads to substantial test score gains. On the other hand, a number of other programs aimed at older kids have been less effective. A lot of things change across the various experiments, but one hypothesis Roland puts forth in his academic paper is that better results will be obtained when focusing on inputs that the student can directly control (e.g. turning in homework, showing up for school, wearing a uniform), instead of outcomes (test scores, grades, etc.).
I imagine part of the reason is that students haven't learned the connection between inputs --> outputs. Giving them a goal of improving outputs doesn't help them discover that connection. We'd like to think it offers enough of a motivation that the discover it on their own, but clearly that is one of the important parts of learning, and it needs to be taught and encouraged.

Tuesday, January 11, 2011

Aid to Africa

It does more harm than good. But I've been saying that for awhile now.