Marginal Revolution

Assorted links

Tyler Cowen

1. Ben Casnocha reviews Kling and Schulz.

2. Are better-looking athletes more likely to win?

3. "Mozart was a Red" -- Murray Rothbard's satire of Rand, here is the full text.  It doesn't seem that funny to me.

4. Portrait of Durrr: an on-line poker player.

5. Seth Roberts interviews me.

Benton's smoky ham and bacon

Tyler Cowen

It's equal to the best I've had, including what I've sampled in Spain.  (I've also had especially fine ham in Slovenia.)  You can read about it and order it here.  It ships without incident or loss of value.  It's what David Chang uses in Momofuku and its affiliated restaurants, by the way.  It's not even very expensive.

Speaking of animal products, a few of you asked me a while ago how the eating of animals could possibly be morally justified.  My primary objection is to how we treat animals while they are alive, especially in factory farms.  The very rise and continuing existence of humanity is based on the widespread slaughter and extinction of other large mammals, not to mention other animals as well.  I'm not saying we should feel entirely comfortable with that, but rather a "non-aggression" stance toward other animals simply isn't possible, short of repudiating all of human civilization, even in its more primitive versions.  Everyone favors the murder of animals for human purposes, although different people draw the lines at different places.  I don't know of any good foundationalist approach to these issues, but at the very least we should be nicer to non-human animals at the margin and less willing to torture them.

At the policy level we should tax meat more heavily and regulate farms more strictly, for both environmental reasons and reasons of animal welfare.  I draw a line at where the life of the animal is "not worth living," but for me animal slaughter is not immoral per se. 

There are a few things you can do personally, including:

1. Buy less from factory farms.

2. Eat better meat and in turn eat less meat, substituting quality for quantity.  This is a common demographic pattern, so it shouldn't be too hard to mimic.

If you are a vegetarian, I think that is excellent.  If you're not, Benton's is a step toward both #1 and #2.

The culture that is Italy

Tyler Cowen

The new (old) labor market idea -- you can call it fifth best perhaps -- is hereditary jobs:

It is a problem many a company faces in these tough times: how to replace older – and costlier – workers with younger, cheaper ones.

A Rome bank has what it thinks is the solution: to make the jobs hereditary. Under a deal signed with unions this week, 76 employees of Banca di Credito Cooperativo di Roma (BCC di Roma) must take early retirement but they will get a choice: either take a payoff or leave your job to your son or daughter (or indeed any relative "up to the third degree", which would allow the post to be left even to great-nieces and nephews).

The full story is here and I thank The Browser for the pointer.

The corn genome

Tyler Cowen

I have many favorite topics which I don't blog much or at all.  One of these, taken from my time in Mexico, is the history of corn.  I very much enjoyed this recent article on the topic.  There is this good bit:

The sequencing revealed that an astonishing 85 percent of the corn genome is made up of "transposable elements" -- short stretches of DNA, some perhaps descended from viral invaders -- that show evidence of having moved around in corn's 10 chromosomes at some point in evolution. Their peregrinations provided the basis for new genes, or the on-and-off regulation of existing ones...

And this:

Corn's diversity of traits has been largely maintained, despite a century of intensive breeding. Modern corn produces cobs that range from the familiar farm-stand variety to lopsided baseballs and fat pencils and have a rainbow of kernel colors. Varieties of corn can have a greater genetic difference between them than what exists between human beings and chimpanzees.

And this:

Walbot, the Stanford geneticist, speculates that this unusual diversity survived because corn cultivation spread along a north-south axis. That exposed the species to a much greater variety of environmental conditions -- temperature, day length, rainfall, altitude -- than if it had spread along an east-west axis, as did wheat.

There is extraordinary genetic information and power in corn.  I am always willing to read another book on the history of corn and its breeding.

Is the Senate bill fiscally responsible?

Tyler Cowen

Matt Yglesias writes:

The bill contains provisions that have front-loaded positive impacts on the deficit and also have provisions that have back-loaded positive impacts on the deficit. The bill, rather intelligently, seems to balance this out well leading to net deficit reductions in the short-, medium-, and long-terms. The bill by no means solves the considerable long-term fiscal challenges to the United States, but it does improve the situation. If people want to say that on balance they think the bill is a bad idea, that’s fine, but to do so is to oppose what’s far-and-away the most politically realistic way to enact non-trivial long- and medium-term deficit reduction in the 111th Congress.

I should coin a new MR term: the retreat into the relative.  As I understand it, the apparently fiscally responsible portions of the bill come from a) eventual cuts in Medicare spending, and b) rising taxes on some health insurance plans and they come later of course.  Few Congressional representatives are willing to do these things today, so should we predict they will be done in the future?  (The same problem plagues Waxman-Markey, by the way, so these back and forth rhetorical debates are becoming quite common.)  In my view, policies structured in this manner are simply another way of doing deficit spending.

To quote Matt, he writes of: "the most politically realistic way...to enact...deficit reduction."  That sounds powerful.  and in fact I agree with his claim as it is worded.  But if all the politically realistic options make our fiscal position worse rather than better (Congress likes to spend money more than it likes to inflict pain on voters)...well, this bill still makes the deficit problem worse.  Even it is the best of the realistic worsening options.  We should be wary of the retreat into the relative because all the options may be bad.  Nor should the phrase "building a framework" be translated into anything but "we are unwilling to do this now or anytime soon and thus we are engaging in more de facto deficit spending."

The fact that Republicans can (correctly) be blamed for making the bill worse does not constitute an argument that the current bill will make things, in fiscal terms, better. 

Citing inconsistencies of bill opponents ("but he didn't scream loud enough about [fill in the blank] way back when") does not help on this score either.

Another argument I have seen in MR comments is: if we can't solve this health care costs problem it won't matter, therefore we can spend more without making the problem in net terms worse.  That's a fallacy and you would never apply such reasoning while driving over the speed limit ("I'll accelerate right now, after all at some point I've got to slow down anyway.")  Think of it as a kind of Zen-like, reverse Sorites ploy: "It is adding stones which takes a pile away."  Or "Let us add stones.  The pile must disappear in any case."

Here is a numerical style guide (SG) for identifying future arguments in these veins, because they will recur when you have an activist government which wants to be very popular, combined with an under-educated, short-term oriented citizenry:

SG1. The retreat into the relative: "All the other options are even worse."

SG2. Blame the Republicans: "They made the bill bad, not us."

SG3. The critic is evil or inconsistent: "Your views are inconsistent, or you are morally questionable, so I can dismiss your worries."

From now on in the MR comments section you can just cite the appropriate number and spare yourself carpal tunnel syndrome. 

Addendum: Megan McArdle adds relevant comments and also here.

Badges? We don't need no stinkin badges.

Alex Tabarrok

In pursuit of an Eagle Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours hours over several weeks to clear a walking path in an east Allentown park.

Little did the do-gooder know that his altruistic act would put him in the cross hairs of the city's largest municipal union.

Nick Balzano, president of the local Service Employees International Union, told Allentown City Council Tuesday that the union is considering filing a grievance against the city for allowing Anderson to clear a 1,000-foot walking and biking path at Kimmets Lock Park.

"We'll be looking into the Cub Scout or Boy Scout who did the trails," Balzano told the council.

Story here. Hat tip to Modeled Behavior.

Assorted links, second dose

Tyler Cowen

1. Air Genius Gary Leff is hailed by CNN.

2. Good post on interest rates (though I am not sure I agree with it).  Brad DeLong comments.  Critically important stuff and two of the best recent economics blog posts, in some time.

3. The world's first native Klingon speaker?

4. Spider silk tapestry.

5. Via Yana, France's hamster hotel, and here.

Markets in everything?

Tyler Cowen

A gang in the remote Peruvian jungle has been killing people for their fat, the police said Thursday, accusing the gang’s members of draining fat from bodies and selling it on the black market for use in cosmetics...

Three suspects have confessed to killing five people for their fat, said Col. Jorge Mejía, chief of Peru’s anti-kidnapping police. He said the suspects, two of whom were arrested carrying bottles of liquid fat, told the police it was worth $60,000 a gallon.

Colonel Mejía said the suspects had told the police that the fat had been sold to intermediaries in Lima, the capital. While police officials suspect that the fat was sold to cosmetic companies in Europe, he said he could not confirm any sales.

That's from The New York Times, not The Weekly World News.  Medical "experts" express varying degrees of skepticism about the depth and liquidity of this market, but if you read the whole article you will encounter some truly graphic descriptions of the production process.  Caveat emptor.

Assorted links

Tyler Cowen

1. How much will U.S. taxes ever go up?

2. Useful lateral thinking and how it is described by the lateral thinker.

3. The biological bases of business and entrepreneurship.

4. One hour show with me in Second Life; they even did up a Tyler Cowen avatar.  Other shows are here, including economist Robert Frank and libertarian Adam Thierer.

5. Matt Kahn on "cash for caulkers".

6. The new AEA calendar of economists.  To whet your appetite, here is a photo of Francis Ysidro Edgeworth.

*The Unincorporated Man* and slavery

Tyler Cowen

As long as we are on the topic of slavery, why not consider fiction?  This science fiction novel has an intriguing economic premise: you're born a slave and you're not free until you can buy yourself back from your owner (which may be a corporation).

It may sound funny to think that a slave can save money but arguably an optimal slavery contract in a high-productivity society will give the slave some residual claimancy and some property rights, in order to spur work effort.

At some point you wonder whether a slave in this futuristic society is better off buying the rights to himself or herself.  (Then he has to find individual health insurance!)  If the system of slavery is truly secure, it's like living under Laffer Curve-maximizing taxation.  That's oppressive, but many people have lived under worse.  There would be lots of "Nudge" as well and with advanced technology very effective monitoring and control.

Is it possible that in such a world you would trust only a person who was a slave?

In many historical instances, slaves cannot precommit to "no revolt."  So slaves aren't allowed to earn at the Laffer maximum point, for fear they will rebel or otherwise receive or lobby for greater rights.  Real world slavery is much much worse than this hypothetical portrait might make it seem.

I won't have time to read through the novel (the new Alice Munro is out, for one thing) but I thought the premise was an intriguing one.  The Amazon reader reviews are favorable.

In praise of Robin Hanson

Tyler Cowen

My fondest memory of Robin Hanson is when we interviewed him for a job and, during his on-campus visit, I gave him some papers I had been working on.  Later he emailed me back, before getting the offer I might add, and told me the papers weren't very good and what was wrong with them. 

Ten years later, as his colleague, I disagree with Robin on many topics, including futarchy, whether we will become computer uploads, and meta-ethics (oh, if Robin would only advocate the ethical theory he so consistently lives by!..instead of his contorted contractarian version of preference utilitarianism, which he sometimes calls "dealism.").  Despite our disagreements, Robin and I are oddly in frequent common agreement on practical "life topics."  Most of all, I view Robin as a reductionist thinker to a greater degree than I am comfortable with for myself; relative to Robin, I'm more attached to the mumbo-jumbo of the mess and the piling on of multiple perspectives to the point of squishiness.

Those of us who speak regularly with Robin know how brightly his star blazes.  He's a truly original and important thinker in a way that few are, plus on analytic back and forth he is blindingly fast and accurate.  But you can't expect him to be a "I'm going to agree with him all around" kind of guy; he isn't.  If you are one of his detractors, or even just a common sense skeptic, you can always find many of his beliefs to be outright absurd,  The real question, however, is how much you can learn from him and on that he is an A+.

Addendum: Robin responds.

Assorted links

Tyler Cowen

1. Scott Sumner's most absurd belief: India as #1 in gdp by 2109.

2. Click "play" and watch unemployment grow.

3. Who is Hollywood's most overpaid star, relative to box office returns?  Will Farrell is #1 it seems.

4. Markets in everything: NYC McDonald's with sleek Danish furniture.

5. Saddam's strategic thinking.

6. Via Caroline Flyn, China ethnicity of the week, good for a whole year (photos, recommended).

7. The Political Economy of Trust, by Henry Farrell.

MR vocabulary guide

Tyler Cowen

1. "Self-recommending": the very nature of the authors and project suggest it will be good or very good.  This also often (but not always) means I haven't read it yet.  I am reluctant to recommend *anything* I haven't read, but I am signaling it is very likely recommendation-worthy and I wish to let you know about it sooner rather than later.

2. An "Assorted link" that ends with a question mark: Worth thinking about, but I wish to distance myself from the conclusion and the methods of the study, without being contrary per se.

3. Hansonian: of, or relating to Robin Hanson.  Yesterday I asked Garett Jones whether his date was as pretty as Robin is smart.

4. The Jacksonian mode of discourse.  I am opposed to this.  Political and economic pamphlets in the Jacksonian era were excessively polemical and sometimes the Jacksonian mode is still used today, in 2009, believe it or not.

5. Wunderkind: Take the average age of that person's relevant peers.  If said person is either under twenty or less than half that average, that person may qualify for "Wunderkind" status. 

6. Markets in everything: Some of these are celebratory but many of these are sad or tragic.  Usually I am trying to get you to think about -- as a philosophical question -- why the market exists at all and not whether it should be legal.  

7. Tyrone is my brother and alter-ego who believes the opposite of what Tyler believes.  Trudie offers personal advice.  Neither has good time management skills and thus they don't write very much these days.

8. "Shout it from the rooftops": What to do with wordy, obscure truths which the world badly needs to learn.

What have I left out?

Is this why the Senate bill has an ok CBO rating?

Tyler Cowen

Because the program would begin taking in premiums immediately but would not start paying benefits until 2016, congressional budget analysts have forecast that it would generate a nearly $60 billion surplus over the next 10 years, cash that would help the larger measure's balance on paper.

Not long ago I filed this under "Department of Uh-Oh."  In the longer run it is very bad for the budget and it is simply an accounting trick.  It's a sign that fiscal responsibility will never come to U.S. health care.  And yes there is a long-term care provision in the Senate bill.  Although I have not read through its current incarnation of 2000-some pages, I am willing to bet we are getting the cost back-loaded version of the idea.

*From Poverty to Prosperity* watch

Tyler Cowen

That's the title of the new and self-recommending book by Arnold Kling and Nick Schulz.  This work has text by the authors, interspersed with interviews with famous economists, including Robert Fogel, Robert Solow, Joel Mokyr, Doug North, Bill Easterly, Edmund Phelps, Amar Bhide, William Lewis, and Bill Baumol.  Here is Paul Romer:

It's the kind of culture that can tolerate rap music and extreme sports that can also create space for guys like Page and Brin and Google.  That's one of our hidden strengths.

You can buy the book here.  The subtitle is Intangible Assets, Hidden Liabilities and the Lasting Triumph over Scarcity.

Giovanni Peri's latest on immigration and productivity

Tyler Cowen

Here is the abstract and it has to do with a Smithian theme, namely division of labor:

Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technological change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.

The paper is here.

What did Obama eat in China?

Tyler Cowen

I've been trying to find out what Obama ate in China and this is the closest I can come:

"We're also hosting a 'Stars and Stripes' week featuring iconic American cuisine," said a hotel spokesperson, who declined to give her name due to company policy.

"The White House guests may want to enjoy New Orleans flavors, American steak BBQs and Jack Daniel's cocktails," she added.

That was the Marriott but I suspect the Chinese government had a say in things or at the very least it was negotiated.  It's an interesting question which side is signaling the dominance with that choice; I say the Chinese.  Fortunately in Beijing it seems he had:

Obama-Hu 90 min meal feat. prawns, soups and lamb chops, plus a presentation of Chinese noodle making, which the Americans enjoyed.

Economics and biography

Tyler Cowen

I think of the biographer as standing up and demanding that economists take their own method seriously.  Surely the economist should at some point be required to explain something in the life of an actual human being.

That is from my (favorable) review of E. Roy Weintraub and Evelyn L. Forget, Economists' Lives: Biography and Autobiography in the History of Economics.  The review will be published in a journal called Biography.

Assorted links

Tyler Cowen

1. Strange China video of the day.

2. Do men live longer if they marry smarter women? (No, I haven't checked if the original paper deals with the identification problem in a reasonable way.)

3. Another review of *The Big Questions*.

4. Daron Acemoglu in Esquire on economic growth.

5. How to get wealthy from your own life insurance (hint: Hansonian).

How do you convince someone to stay away?

Tyler Cowen

The feverish but resilient Megan McArdle refers us to a problem in signaling theory:

Slate ponders how to communicate the danger of radioactive waste to the far future.  The problem is, if they can't read English, or recognize the radiation trefoil, anything you do sounds more likely to intrigue future anthropologists than to warn them off...

Juliet Lapidos at Slate writes:

Even if future trespassers could understand what keep and out mean when placed side by side, there's no reason to assume they'd follow directions. In "Expert Judgment," the panelists observe that "[m]useums and private collections abound with [keep out signs] removed from burial sites."

...Likewise, a scavenger on the Carlsbad site in the year 12,000 C.E. may dismiss the menace of radiation poisoning as mere superstition. ("So I'm supposed to think that if I dig here, invisible energy beams will kill me?") Hence the crux of the problem: Not only must intruders understand the message that nuclear waste is near and dangerous; they must also believe it.

How can we solve this problem?  Similarly, if an attractive woman tells you "You don't want to go out with me" do you believe her and act on that?  What other problems have this structure?

Monitoring the bureaucracy in Dubai

Tyler Cowen

Sheikh Mohammed oversees a cadre of undercover mystery shoppers...They pose as prickly members of the public seeking the government's help.  Their reports are instrumental in firings and promotions.  No bureaucrat can be sure the demanding customer across the counter isn't secretly reporting to the boss.  Once in a while, Sheikh Mohammed turns up at 7:30 on surprise inspections.  He's been known to fire late-arriving managers on the spot. 

That is from Jim Krane's fascinating City of Gold: Dubai and the Dream of Capitalism.  This is pretty clearly the best book on Dubai.  It has an insider's perspective but is also analytical.  Recommended

Only in economics are floors above ceilings!

Alex Tabarrok

Only in economics are floors above ceilings!  It might be better to say "a minimum allowed price above the market price" and "a maximum allowed price below the market price," although that is a bit of a mouthful.  I find that the floors and ceilings language does work, however, if the instructor explicitly points out the oddity of floors above ceilings!  In that case, students find the distinction memorable.

Chindogu, making the simple complicated

Tyler Cowen

Today's bizarrely fascinating cultural nugget from Japan: Chindogu. Literally translated as "weird tool," Chindogu is the Japanese art of creating deliberately complex devices that solve simple everyday problems.

Here is one example:

The Dumbbell Phone

People cite "lack of time" as the number one reason they don't work out more. With the dumbbell phone, that's no longer an excuse. Great for bulking up at your otherwise worthless telemarketing job, this phone will have you shaped and sculpted in no time.

This phone also makes a great gift, especially to that parent, friend, or girlfriend who's been known to talk your ear off on the phone. It's subtle, but effective, especially for those with weak arms.

You'll see a photo here, along with a discussion of other ideas, such as using "solar power" to light your cigarette or a fan to cool off your hot noodles.  The "grid-backed" shirt helps you tell your partner where to scratch your back.  It's a trend:

There's the International Chindogu Society, the Ten Tenets of Chindogu (Number Three: "Inherent in every Chindogu is the spirit of anarchy"), and scores of websites devoted to tracking the newest, and most ridiculous, Chindogu inventions.

Personalized markets in everything, increasing cost edition

Tyler Cowen

Ezra Furman takes his music personally. He doesn’t want to just write songs, he wants to change lives, and in the process have his life changed as well.

Which is why the 23-year-old Evanston native is doing something (take your pick) outlandish, heroic, Quixotic, exhausting, ridiculous. He’s writing a song for every fan who buys his latest album, Ezra Furman and the Harpoons’ “Moon Face: Bootlegs and Road Recordings 2006-2009,” available at ezrafurman.bigcartel.com.

More than 100 albums have been ordered since it became available a few weeks ago. Each consists of 10 tunes culled from Furman’s voluminous archive plus a customized song written directly to and for each paying customer. The tunes range from talking blues to more fleshed out melodies that Furman bashes out into a computer microphone on the road and then emails to his father back in Evanston to mail out on compact disc.

Here is more information.

Assorted links

Tyler Cowen

1. Profile of Doug Elmendorf.

2. Ross Douthat's new blog.

3. Gladwell responds to Pinker.

4. Via Felix Salmon, Clay Shirky on ontological classification.

5. The economics of pinball.

6. Why does the universe look the way it does?

7. Inventing a better patent system.

8. Interview with a Michelin inspector.

San Antonio bleg

Tyler Cowen

Alex and I will be there for the Southern Economics Association meetings, along with many other economists.  I don't know the city well, as I've been there only once.  There might be a bit of free time.  What should we do?  Where should we eat?

What should we do instead of the Obama health reform bill?

Tyler Cowen

A lot of people think you have no right to criticize a bill unless you propose a better bill.  I don't agree (if the aforementioned bill is bad on net), but in any case I will give this a try.  These are not my first best reforms or even my second best reforms.  They're my "attempt to work with some of the same moving pieces which are currently on the table" set of reforms.  I would trade away the Obama bill for these in a heart beat.  Keep in mind people, with a "no insurance" penalty of only $750, the current bill isn't going to work (and that's ignoring the massive implicit marginal tax rates on many individuals and families, or the "crowding out" of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.

Here goes:

1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the "second stimulus" while you're at it.  It's better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.

2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net.  Do you people like the idea of a public plan?  We already have one! 

2b. Make any "Medicare to Medicaid" $$ trade-offs you can, while recognizing this may end up being zero for political reasons.

3. Boost subsidies to medical R&D by more than the Obama plan will do.  Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.

4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.

5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis.  Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.

6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services.  This can be done.

7. Preserve current HSAs.  The Obama plan will tank them, yet HSAs, while sometimes overrated, do boost spending discipline.  They also keep open some path of getting to the Singapore system in the future.

8. Invest more in pandemic preparation.  By now it should be obvious how critical this is.  It's fine to say "Obama is already working on this issue" but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.

9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.

10. Enforce current laws against fraudulent rescission.  If these cases are so clear cut and so obviously in the wrong, let's act on it.  We can strengthen the legal penalties if need be.

11. Realize that you cannot tack "universal coverage" (which by the way it isn't) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways.  If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage.  But don't bet on that ever happening.

Separate issues:

12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it's not clear what the rest of that deal looks like.  The original tax break makes no economic sense but you don't want to end up with a big tax increase and a lot more people on the public books with little in return.

13. If the current bill were voted down, you can imagine some version of the above happening, although not necessarily all at once in one big bill.

14. Commission a study of how much the Obama plan is spending per QALY saved.  I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase.  I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty.  In any case, do the study, scream the number from the rooftops, and reread points 1-11.  Enact.

That's my recipe.  It's better than what we are doing now.  You don't have to adhere to any extreme form of economistic or free market ideology to buy it.  It might even be politically easier than the current path, as it "sounds less socialistic."

Alberta fact of the day

Tyler Cowen

Edmonton and Calgary are among the few metropolitan areas in the developed world that are not connected to comprehensive motorway systems.

Here is much more, on highways in Canada or rather the relative lack thereof.  I am not convinced by his argument that a "bigger and better" highway system is what Canada needs, but I found this interesting reading nonetheless, mostly because it shows how few highways Canada has.

Assorted links

Tyler Cowen

1. Reverse remittances: Mexico to the U.S.

2. Will intelligent aliens look like us?  (By the way, I say no.)

3. The most important law passed this year?

4. Pictures of libraries.

5. This is very dangerous information.

6. Provocative feminist (?) blog.

7. Tips for getting better advice: "Listen to people who hate you."

Root for the home team

Tyler Cowen

Controlling for location and time fixed effects, weather factors, the pre-game point spread, and the size of the local viewing audience, we find that upset losses by the home team (losses in games that the home team was predicted to win by more than 3 points) lead to an 8 percent increase in police reports of at-home male-on-female intimate partner violence.

Here is the source paper and that is from David Card and Gordon Dahl.  In contrast, if you go see a violent movie, for that same length of time you are sequestered and thus less likely to be a danger to others.

The Big Questions

Alex Tabarrok

In The Big Questions, Steven Landsburg ventures far beyond his usual domain to take on questions in metaphysics, epistemology and ethics.  Beginning with Plato, mathematicians have argued for the reality of mathematical forms.  Rene Thom, for example, once said "mathematicians should have the courage of their most profound convictions and thus affirm that mathematical forms indeed have an existence that is independent of the mind considering them."  Roger Penrose put it more simply, mathematical abstractions are "like Mount Everest," they are, he said, "just there."

All this must make Steven Landsburg history's most courageous mathematician because for Landsburg mathematical abstractions are not like Mount Everest, rather Mount Everest is a mathematical abstraction.  Indeed, for Landsburg, it's math all the way down - math is what exists and what exists is math, A=A. 

Read the book for more on this view, which is as good as any metaphysics that has ever been and a far sight better than most.  Moreover, Landsburg's view is not empty, it does have real implications.  Since there is no uncertainty in math, for example, Landsburg's view supports a hidden variables or multiple-worlds view of quantum physics.

Speaking of quantum physics, The Big Questions, has the clearest explanation of the Heisenberg uncertainty principle that I have ever read.  In fact, this is a necessary consequence of Landsburg's metaphysical views; since it's all math all the way down, the explanation of the uncertainty principle is the explanation of the math and any true uncertainty or mystery is simply a fault of our own misunderstanding.

Turning to epistemology, the theory of beliefs and knowledge, two chapters stand out for me.  I learned a lot from Landsburg remarkable clear explanation of Aumann's agreement theorem--and I say that despite the fact that in the office next to mine is Robin Hanson, one of the world's experts on the theorem (see Robin's papers on disagreement and also his paper with Tyler, but read Landsburg first!).

Landsburg's skills of explanation are also brought to bear in a wonderful little chapter explaining the theory of instrumental variables and of structural econometric modeling  - and this from an avowedly armchair economist!  

Finally for those, like me, who loved The Armchair Economist and More Sex is Safer Sex there is also lots of economics in The Big Questions.  Highly recommended.

Political vs economic competition, or why a two-party system can be OK

Tyler Cowen

Max Kaehn, an occasional MR commentator, expressed a common sentiment when he wrote:

You think a voting system that sticks us with a two-party cartel instead of a diverse market in political representatives isn’t a major problem? Are you sure you’re an economist?

Here are a few reasons why political competition isn't the same as economic competition:

1. Economic competition lowers costs.  For the average worker, it cost a month's wages to buy a book in eighteenth century England and today it might cost well under an hour's wage.  The competitive incentive to use and introduce new technologies drove that change.  Political competition may support cost-reduction enterprises in an indirect manner, by providing good policy and spurring the private sector, but the mere ability to supply candidates and parties at lower cost is no great gain.

2. Having lots of parties means you get coalition government.  This works fine in many countries but again it is not to be confused with economic competition.  Coalition government means that say 39 percent of the electorate gets its way on many issues, while 13 percent of the electorate -- as represented by the minor partner in the coalition -- gets its way on a small number of issues.  Whatever benefits that arrangement may have, they do not especially resemble the virtues of economic competition.  

3. Many people think that greater inter-party competition, and/or more political parties, will help their favored proposals.  Usually they are wrong and they would do better to realize that their ideas simply aren't very popular or persuasive.

4. Often the U.S. system is best understood as a "no-party" system, albeit not at the current moment, not yet at least.  The bigger a party gets, often the less disciplined it will be.

5. Stronger electoral competition, in many cases, brings outcomes closer to "the median voter or whatever else is your theory of political equilibrium."  That's better than autocracy, but again there are limits on how beneficial that process can be.  It's not like economic competition where you get ongoing cost reductions in a manner which saves lives, brings fun, and enriches millions.

The bottom line: Political competition is better than autocracy, but its benefits are not well understood by a comparison with economic competition.

Questions that are rarely asked: the Wikipedia paradox

Tyler Cowen

Michael Nielsen has two of them:

Question 1: What’s the most notable subject that’s not notable enough for inclusion in Wikipedia?

Let’s assume for now that this question has an answer (“The Answer”), and call the corresponding subject X. Now, we have a second question whose answer is not at all obvious.

Question 2: Is subject X notable merely by being The Answer?

Do you see where this is headed?  Must Wikipedia include everything?  There is more analysis at the link and note that the more these questions are asked, the more likely we encounter a paradoxical answer:

...suppose I went to great trouble to convene a conference series on The Answer, was able to convince leading logicians and philosophers to take part, writing papers about The Answer, convinced a prestigious journal to publish the proceedings, arranged media coverage, and so on. The Answer would then certainly have exceeded Wikipedia’s notability guidelines!

I wonder, as do you, whether this notoriety extends in transitive fashion to the seventeenth round of deciding who or what is the marginally deserving entry: "Well, you're not really notable, or even close, but all the others who were marginal became famous through the process of having had their lack of fame debated.  Mick Jagger now invites you to his party."  Not!

At some point these people under debate, once there are enough of them, all turn into a big group of Wikipedia nobodies.  

Assorted links

Tyler Cowen

1. Only 35,000 viewers for Fox Business Network at a typical moment in time; MR content gets a bigger audience than that.

2. The economics of Second Life and Worlds of Warcraft: a discussion and comparison.

3. Atlantic books of the year.

4. Tips for all-you-can-eat buffets.

5. What economists don't understand about cell phone pricing.

6. Angus responds to Scott Sumner.