Default

Technically the US has defaulted before...on accident, and it wasn't pretty:

Terry Zivney and Richard Marcus describe the default in The Financial Review (sorry, I can’t find an ungated version):

Investors in T-bills maturing April 26, 1979 were told that the U.S. Treasury could not make its payments on maturing securities to individual investors. The Treasury was also late in redeeming T-bills which become due on May 3 and May 10, 1979. The Treasury blamed this delay on an unprecedented volume of participation by small investors, on failure of Congress to act in a timely fashion on the debt ceiling legislation in April, and on an unanticipated failure of word processing equipment used to prepare check schedules.

Obamacare

GOPers are afraid of Obamacare, but this is the scariest graph:

Paul Ryan's "solution" was to refuse to let it grow, as if this could be stopped through sheer force of will.

Shut Down.

Estimates of the consequences of the shut down. Also checkout MacroAdvisors shutdown calculator and run your own estimates.

Germany the Currency Manipulator

Paul Krugman points out that even within the most extreme version of a fixed exchange rate regime - a currency union - one can think about the misalignment of the underlying currencies (even if their are no underlying currencies).

The general point is that if we imagine a euro breakup, I think everyone would agree that the new mark would soar in value, making German manufacturing much less competitive. The German public imagines that it is being cruelly exploited for the benefit of lazy southerners; arguably, what’s really happening is more like China’s purchases of dollars, which are intended not to subsidize America but to boost industry.

Shutdown

What to expect Day 1. 10 ways it could affect you. Why it happened. And the bigger looming problem of the debt ceiling.

The Fed Surprise

As an exercise for the macro student, watch this video starting around minute 30. The video is a brief Q&A with Narayana Kocherlakota, the President of the Minneapolis Federal Reserve Bank.

Then make a prediction for monetary policy going forward.
A) The Fed Tapers or
B) The Fed Waits.

Then read what happened here.

Surprised?

Marriage Markets

Lets not forget that what we really do with University education is run a dating service. Ed Glaeser:

The college experience is profoundly different from what comes before and after in life. It is when 19-year-olds have chance encounters in different settings that make it easy to befriend and evaluate others. And they have enough free time to follow relationships where they may lead. Few of us will ever again walk into a dining hall filled with 100 interesting members of the opposite sex of roughly the same age. Most of life is far more structured and far less diverse. Dates and bar encounters present only a dimly lit window into a person’s character. Workplace romances occur, but they create challenges on the job and can produce marriages that are short on industrial or occupational diversification. Optimal portfolio theory, applied to marital choice, suggests that better diversification can push households closer to the risk-return frontier.

But it appears that broadband has improved search in more rural marriage markets. From the paper The Impact of Internet Diffusion on Marriage Rates: Evidence from the Broadband Market:

The Internet has the potential to reduce search frictions by allowing individuals to identify faster a larger set of available options that conform to their preferences. One market that stands to benefit from this process is that of marriage. This paper empirically examines the implications of Internet diffusion in the United States since the 1990s on one aspect of this market: marriage rates. Exploring sharp temporal and geographic variation in the pattern of consumer broadband adoption, I find that the latter has significantly contributed to increased marriages rates among 21-30 year olds. A number of tests suggest that this relationship is causal and that it varies across demographic groups potentially facing thinner marriage markets. I also provide some suggestive evidence that Internet has likely crowded out other traditional meeting venues, such as through family and friends.

Misc Health Links

A few more links to share:

1. Health Inequality Declining?

While studies like these are valuable in highlighting disparities between socio-economic groups, they do not tell us much about overall health inequality. That’s because most health inequality occurs within groups. In other words, if we look at a particular demographic group, the best outcomes for people in that group are dramatically different from the worst outcomes for people in the same group. These differences overwhelm any differences in average life expectancy across demographic groups. Thus, while inequality across some demographic groups has increased, it has fallen over the entire population. Overall, therefore, the health have-nots have made progress in catching up to the health haves.

2. Nearly half of health spending for richer Americans is tax-financed.

3. Crying for radiologists. Their pay and prospects are falling.

4. Airline Fat tax? Charging based on weight.

5. Fancier Condoms?

ASC

Ambulatory Surgery Centers cut into hospital profits.

Fee For Service

Its far from dead, even if many want it to be. Here is a nice review of the current state of affairs with links.

Doc Watson

Escape Fire is a CNN documentary on the healthcare sector. An interesting discussion starter.  Maybe one proposal for lowering costs is hiring robots. IBM is training Watson to perform diagnostic work formerly the sole domain of MDs.  

Misc Health Notes

Some more links for class:

1. The variance in the raet of caesarean section births can ot be explained by medical necessity due to high risk births. From a low of 7% to 70% the variance must in part be a function of other factos such as

Professor Kozhimannil said she suspected that the vast patchwork of health management techniques was driving the variation, including how patients are admitted, how their labor is managed and how hospitals and clinicians are paid for the work.

2. Some facts about doctors

...new M.D.s per senior fell by about a third over the last three decades...and New male M.D.s per person are down by over 45%.

3. Doctors don't always share the risks of of screening with their patients.

4. Nursing homes for or not for profit? Which provide better care? Non-profits for short term stays.

5. Medical Malpractice. The probability of having a claim filed against you doesn't appear to be correlated with size of the eventual payout.

6. Pharma promotion. It might not all be bad, but it definitely leads to increased expenditures, some of which might be overtreatment or misuse.

7. Its not a surprise most docs hate electronic medical records. They don't see an ROI.

Health Econ Misc

A few interesting links for Health Economics:

1. Health Insurance stocks tanked the other day. Apparently the Medicare Part C gravy train is coming to an end.

2. Companies invest in self-service health kiosks.

3. Money and weight loss.

4. Choose wisely - not everything which can be done medically should be done medically.

5. Rick Scott bucks a Republican trend and embraces the medicaid expansion. Ironically FL was one of the plaintiffs against the government in the cases that made it to the supreme court.

Some Links

A few interesting and useful links for Health Econ.

1. The sharp slowdown in health care expenditures. How much is because income growth slowed and how much is due to structural changes in the healthcare sector?

2. Obamacare rules increase transparency on how much pharma and medical device companies kick back to doctors. It probably won't change consumer's behavior, but may change doctor's.

3. Sex ratios matter. The worst cities for single females. I bet they act more like men.

Airbag Helmet

Improving mortality statistics by reducing deadly accidents.

Narco

America's healthcare system is different than every other in the world, and so is our behavior. Take this fact:

America consumes 80% of the world opioid supply (99% of the world hydrocodone supply), but has about 5% of the world’s population. If you don’t think America has some kind of opioid problem, then move along because this rational, evidence-based, experience-laden way in which I’m going to discuss opioid use and misuse will not interest you.

The article has much more. Read it.

Skin Cancer Scammer App

From junkcharts:

The Wall Street Journal hyped a research article about mobile apps that supposedly "detect skin cancer". While the tone of the article is quite balanced, I cringed when the reporter wrote: "the best-performing app accurately identified cancerous moles 98.1% of the time."

A nicely misleading bit of marketing.

Those who have been reading this blog hopefully will immediately wonder... if the app produces few false negatives, would it produce lots of false positives? It's almost guaranteed because there is a trade-off between those two types of errors.

Another question you might have is: assuming the app tells me the mole is malign, what is the probability that I have skin cancer? Notice this is the reverse of sensitivity. Sensitivity is the probability that the app tells me the mole is malign assuming that I have skin cancer.

Sorry to pop the bubble. The so-called positive predictive value is between 33 and 42%. This means that of those people whom the app claims have skin cancer, less than half of them actually does.

The 98% number is pretty much useless. It's the 40% number that we need to be worrying about.