Stimulus and Medicaid

States rush to settle Medicaid bills

The federal stimulus law and a later extension provided states an extra $80 billion in 2009 and 2010 for Medicaid, the nation's health care program for the poor. This was done by reducing the state's share of the program from a national average of 40% to 28%.

This bargain rate declines slightly April 1 and expires completely July 1. That means the average state responsibility on a $1,000 Medicaid bill will rise from $280 today to $400 July 1 — a 43% increase.

The bonus federal matching rate depends on when the bill is paid, not when the service is provided or the bill is received. Because states run the $400 billion a year program — while the federal government reimburses them — states can time payments to maximize the federal share.

Height

Looks like I need to find an asian woman to date. Anthropometry of Love: Height and Gender Asymmetries in Interethnic Marriages.

Both in the UK and in the US, we observe puzzling gender asymmetries in the propensity to outmarry: Black men are substantially more likely to have white spouses than Black women, but the opposite is true for Chinese: Chinese men are half less likely to be married to a White person than Chinese women. We argue that differences in height distributions, combined with a simple preference for a taller husband, can explain a large proportion of these ethnic-spefi…c gender asymmetries. Blacks are taller than Asians, and we argue that this signifi…cantly affects their marriage prospects with whites. We provide empirical support for this hypothesis using data from the Health Survey for England and the Millenium Cohort Study, which contains valuable and unique information on heights of married couples.

Elder Porn

The Japanese are well known for their unusual taste in porn. The latest is apparently referred to as 'elder porn'. Shigeo Tokuda is apparently a star of the genre.

Some Health Links.

1. One Third of Staten Island Is On Pain Pills.

2. Health Care Tidbits from Arnold Kling.

3. Half of German doctors prescribe placebos.

4. Better mortality estimates from Gary King.

NYT

$180 for something I previously got for free? I think I'll probably be reading a lot less New York Times.

Public vs. Private Sector Pay

I thought I would wrap up a bunch of the blog posts on public sector versus private sector pay, and union versus non-union. First, in this debate I've come to realize people's prior beliefs are strong, even if uniformed. Showing them data merely results in what has been called the confirmatory bias. They pick out the parts that validate their position and discount the data which does not. There have been many posts and op-eds but let me point you to a few. Adam Ozimek had a useful post which point to the related empirical work:

He linked to three reports (here, here, and here) that show that public sector wages are no higher than, and often lower than private sector wages.

A final point I’d like to make is that a wage premium is not equal to public sector union power. A powerful union may use all of it’s bargaining power to negotiate for absolute job security, which could then select for a different set of workers with lower unobservable skills. In this case you would observe wages equal to or even below private sector wages despite a clearly powerful union. Some would argue this is exactly what teachers unions do.

Part of the discussion of public versus private is also a union versus non-union argument. I think Adam does a good job of discussing it. I would suggest that he should include an interaction term as well (ie union*public) as well.  That said I think the evidence is that there is a wage premium for lower educated union public workers. There is a negative premium for higher educated non union public workers (ie university professors).

On the issues of the relationship between public sectors unionization and spending, taxing and state deficits, John Sides of the monkey cage has produced a bunch of nice bivariate correlations. (here, and a lot more here, and a final roundup here). He notes here, that a single comparison of two points is misleading, but multiple comparison of all combinations of two points is just a regression! Of course, like any regression it is still subjected to an omitted variables bias.

The current state budget shortfalls probably have far more to do with the housing market, than public sector unions. As this graph suggests.

Here is the macroeconomic case against unions.

Useful Comments from Richard Freeman on Labor Unions with this jewel here:

If you had the ear of Wisconsin Governor Scott Walker, who is pushing a bill to strip public sector unions of their bargaining power through the state legislature, what would you say?

I would say: consider what happened to John Howard, former Prime Minister of Australia. When he gained control of both houses of parliament, he did what the governor of Wisconsin seems to want to do: he forced through the legislature (in which his party had a small majority) a policy to radically restrict union activity, with the goal of basically de-legitimising that institution in society. John Howard was thrown out of office in the next election; he even lost his own seat. If you push to undo an institution that is part of the fabric of society, one that many people believe should be available to workers who want it (whether or not they themselves want to be part of it), you might find yourself pushed aside.

Removing collective bargaining from the public sector and lodging all power with employers will not solve the economic problems of U.S. states and cities. It will just remove one mechanism for bringing workers and management in the public sector together to deal with the fiscal problem that neither of them caused.

Here is a good comment from inside higher ed.

Here are my earlier comments. (here and here).

Innovation in Recessions

Starbucks claims to have had several.

Q: Was the decline due to the recession, or was it Starbucks failing to gauge consumers?

A: There was a dramatic change in consumer behavior. On a parallel track, Starbucks has to assume responsibility for decisions that were made. There were self-induced mistakes. But the last quarter (first fiscal quarter of 2011) was the best quarter in our 40-year history. When our back was against the wall, we were able to do our best work.

Q: In the depths of the recession, was there a moment you thought the Starbucks empire could implode?

A: I don't want to seem arrogant, but I always believed that Starbucks would be able to weather the storm. We certainly had challenging moments. But there was not one single moment when I thought we couldn't overcome the challenges. I have a book coming out at the end of March about the last two years of our transformation, Onward: How Starbucks Fought for Its Life without Losing Its Soul.

Teen Sex

It appears to have declined slightly. The full report has lots of interesting details on sexual behavior by gender and age group. And this article discusses in part why these facts are counter to popular belief.

Dating the Recession

I was asked by the local newspaper to comment on the recession. Has the recovery begun locally? The article is here, and my thoughts are here.

Sex Toys and Class

To think I once had a colleague who objected to my study of pornography. She was concerned a student would walk into my office and see porn. This despite the fact that all of my research is based on a dataset, and does not involve actually looking at porn. The comical thing about her objection was that at the time, some faculty on campus would show ACTUAL porn in class.

Now we have this from Northwestern:

Northwestern Uni defends sex-toy demonstration.

EVANSTON, Ill. (AP) — A Northwestern University professor concluded a discussion of bondage and other sexual fetishes in his human sexuality class by having a woman take off all her clothes, climb on stage and graphically demonstrate the use of a sex toy, the school has acknowledged.

The demonstration took place Feb. 21 at the conclusion of psychology professor John Michael Bailey's class on human sexuality. According to guest lecturer Ken Melvoin-Berg, after the students were told that a couple would take part in a demonstration involving a sex toy, the students were warned about a half dozen times that "what was about to happen would be graphic."

With that, Jim Marcus and his fiancee Faith Kroll climbed on the stage in front of about 100 students and demonstrated the use of the motorized device with a phallic object attached to it, as students heard about issues such as safety and consent, Melvin-Berg said.

However this has to be my favorite quote:

"It is probably something I will remember the rest of my life," said senior Justin Smith, 21, one of the students who stuck around voluntarily after class when students were told about what they were about to see.

"I can't say that about my Econ 202 class and the material that I learned there," Smith told The Chicago Tribune.

Gold Bugs

A gold standard. Thats what Ron Paul wants. And thats why he is a nutter. A writer tries to explain the depths of Ron Paul's question to Bernanke.

Bernanke says: My definition of the dollar is what it can buy. Consumers don't want to buy gold; they want to buy food, and gasoline, and clothes and all the other things that are in the consumer basket. It is the buying power of the dollar in terms of those goods and services that is what is important, and that's what I call price stability.

The writer says: Compare that to a gold standard. Let's say at the beginning of the year, the price of gold is $1,000 per ounce. That's the same as saying that a dollar is worth one one-thousandth (1/1000) of an ounce of gold. At year's end, you can still buy the same amount of gold with your dollar, unless the definition has been changed by policymakers. It is possible, however, that you may be able to buy additional or fewer goods and services with that dollar, depending on how other factors in the economy have changed.

So Bernanke's definition of a dollar is constantly moving, while Paul's would be static. Which framework is better is a far more complicated and controversial question. We'll leave that for another time, but both methodologies have pros and cons.

That dude is either intentionally misleading people or is an idiot. Just because the state says 1 dollar is worth 1/1000 an oz does not make it true, nor does it make it fixed (other than in some nominal meaningless way). For proof look at every fixed exchange rate ever...just because the govt declared their currency to equal something, doesn't mean the market agrees. A gold standard is no different. Its just a fixed exchange rate, that may equal the market rate (ie the relative supplies) or it may not.

The fundamental difference between a gold standard and a fiat standard is who controls the supply of money. In a fiat world, the Fed does. In a gold standard, miners do. Who do think is better suited to run our economic lives?

Premarital Sex

It looks like a couple of sociologists are imitating economists with their book Premarital Sex in America: How Young Americans Meet, Mate, and Think about Marrying. The New Republic reviewer has the traditional complaints seen from non-economists.

Mark Regnerus and Jeremy Uecker, sociologists both, rely heavily on this theory to explain the sex lives of young adults today. The rise of “the hookup culture” at colleges, they argue, can be attributed in part to the increasing scarcity of men on campus—an oversupply of sellers works to a buyer’s advantage. Sexual economics also suggests that many women look unkindly on promiscuous members of the same sex out of the same impulse that makes retailers angry when Wal-Mart comes to town: they are being undersold, and now they have to give discounts or lose customers.

Regnerus and Uecker are either indifferent or tin-eared about how distasteful this idea is:

Sex might cost little or nothing—a few drinks or some attention and compliments, or simply a promise to be discreet about the liaison. Typically it’s more expensive than that, such as a perceived commitment to being in an exclusive relationship for a while. The highest price a man can pay is a lifetime promise to share all his wealth, income, and affections with a woman exclusively.

Equating an intimate act to a business transaction is not only crass and reductive; it is also analytically misleading. The analogy to commerce implies an adversarial situation wherein the buyer always wants to pay the minimum and the seller wants to get the maximum. But men often find themselves bestowing attention, falling in love, and getting married after they have already been sleeping with the woman in question. Sexual economics has trouble accounting for that. Men willingly overspend, which describes approximately no one who buys a car. Similarly, the pay-for-play hypothesis fails to capture the fact that most women do not want to extract caring and love from a person disinclined to offer it, and they do not see sex as something they wish they could avoid until marriage.

The author fails to understand supply and demand in this context as a matching model. He also has apparently never heard of signaling.