Tyler Cowen's Blog, page 194

The British may distribute mortality information to pensioners

British retirees may soon receive a novel kind of financial advice, courtesy of the state: They could be told when they are likely to die.

“People are living a lot longer, so we have to make sure they have up-to-date information,” the pensions minister, Steve Webb, said Thursday in an interview with the BBC.

“There’s no point being all British and coy about it,” he said. Gender, age and “perhaps asking one or two basic questions, like whether you’ve smoked or not,” Mr. Webb said, should be enough to determine how long, on average, someone is likely to live. Having an idea of life expectancy would help retirees with private pensions manage their finances more efficiently, he said.

There is more here.

The Socialization of Medicine

“We understand that we doctors should be and are stewards of the larger society as well as of the patient in our examination room,” said Dr. Lowell E. Schnipper, the chairman of a task force on value in cancer care at the American Society of Clinical Oncology.

In practical terms, new guidelines being developed by the medical groups could result in doctors choosing one drug over another for cost reasons or even deciding that a particular treatment — at the end of life, for example — is too expensive.

More from the NYTimes.

Assorted links

1. Austin Frakt draws up metrics for Obamacare success.

2. People who think they are attractive are less concerned with income inequality.

3. The forgotten giant arrows that guide you across America.

4. Fragmentary data on the duration of sex, as measured in ten countries.  Which economic variables predict the differences?  And against passwords.

5. “How burrowing owls lead to vomiting anarchists.” (on the SF housing crisis)

6. Orphan Black starts up again this Saturday.

7. Will manufacturing ever boom in sub-Saharan Africa?

*The Language of Food: A Linguist Reads the Menu*

That is the new and excellent book by Dan Jurafsky, due out this September, and I found it interesting throughout.  Here is just one bit:

In fact, the more Yelp reviewers mention dessert, the more they like the restaurant.  Reviewers who don’t mention a dessert give the restaurants an average review score of 3.6 (out of 5).  But reviewers who mention a dessert in their review give a higher average review score, 3.9 out of 5.  And when people do talk about dessert, the more times they mention dessert in the review, the higher the rating they give to the restaurant.

This positivity of reviews, filled with metaphors of sex and dessert, turns out to be astonishingly strong.

That is another reason not to trust customer-generated restaurant reviews.

And how exactly do Americans conceive of dessert?

Americans usually describe desserts as soft or dripping wet…US commercials emphasize tender, gooey, rich, creamy food, and associate softness and dripping sweetness with sensual hedonism and pleasure.

This association between soft, sticky things and pleasure isn’t a necessary connection.  For example, Strauss found that Korean food commercials emphasize hard, textually stimulating food, using words like wulthung pwulthung hata (solid and bumpy), coalis hata (stinging, stimulating), thok ssota (stinging), and elelhata (spicy to the extent one’s nerves are numbed).

How can you resist a book with sentences such as these?

The pasta and the almond pastry traditions merged in Sicily, resulting in foods with characteristics of both.

Here is a previous MR post on Jurafsky, including a link to his blog, and concerning “Claims about potato chips.”

Why isn’t New Zealand richer and more productive?

Here is a new study from the New Zealand Productivity Commission, and here is the basic puzzle:

Based on its policy settings, the authors estimate that New Zealand’s GDP per capita should be 20% above the OECD average. But it is actually over 20% below average, making New Zealand a clear outlier. The size of the gap indicates an apparent “productivity paradox” that costs more than 40 cents in every dollar of output.

Here is one problem:

The increasing importance of global value chains – where production activities are spread across countries – may have worsened the impact of New Zealand’s geographic isolation on trade in goods.  Because global value chains typically require intensive interaction and just-in-time delivery, they tend to be regionally based. For New Zealand, international transportation costs for goods are about twice as high as in Europe. This reduces access to large markets and the scope for participation in global value chains , where the transfer of advanced technologies now often occurs.

More generally, the “gravity equation” — also known as distance — makes it harder for New Zealand to trade with the rest of the world.

Another big problem has to do with problems of underinvestment in knowledge-based capital:

Most of the rest of New Zealand’s productivity gap…appears to come from an underinvestment in knowledge-based capital. Knowledge-based capital encompasses a wide range of assets including product design, inter-firm networks, R&D and organisational know-how. Knowledge-based capital can be used simultaneously by more and more firms without re-incurring the initial development costs.  This generates increasing returns to scale – an important property that makes ideas and knowledge a key engine of productivity growth.  It can also be difficult to prevent others from using knowledge-based capital, an example of “spillovers” of knowledge and ideas between firms.

While comprehensive data on knowledge-based capital are currently not available, indications are that New Zealand ranks well in software investment and trademarks but very poorly in R&D and, to a lesser extent, patents. Indeed, R&D intensity in New Zealand – particularly business R&D – is among the lowest in the OECD. This not only reduces capacity for frontier innovation but also the ability of firms to absorb new ideas developed elsewhere, constraining technological catch-up.

In part, New Zealand suffers a low return on R&D due to its limited access to large markets, which reduces the likely payoff from the successful commercialisation of new ideas. New Zealand’s economic structure may also play a role. The industries in which New Zealand specialises typically have low R&D intensity. For instance, across countries, R&D in agriculture rarely exceeds 0.5% of value-add.

Here is a good FT summary blog post on the study.

I would have liked more comparison with the time when New Zealand was one of the world’s wealthiest nations per capita, and when, pre-1973, privileged access to British markets for Kiwi lamb and dairy was enough to maintain such high living standards.  And might we be reading a very different piece if the Chinese had a stronger taste for milk?

I recall the Michael Porter report from the 1990s, arguing that New Zealand did not have enough strong economic sectors which could lead to the accretion of cumulative advantages.

Overall, if there is any nation which should be aiming to double or triple its population, it is New Zealand.

Gabriel García Márquez has passed away at 87

Everyone reads One Hundred Years of Solitude and Love in the Time of Cholera but actually my favorites are some of the early short fiction and also News of a Kidnapping [Noticio de un Secuestro], plus the unfinished autobiography.

The NYT obituary is here.

Matthew Gentzkow wins the Clark medal

The citation is here:

Matthew Gentzkow has made fundamental contributions to our understanding of the economic forces driving the creation of media products, the changing nature and role of media in the digital environment, and the effect of media on education and civic engagement.

Matt is at the Booth School of Business at the University of Chicago and there is much more at that link.  Here is Matt at scholar.google.com.  Matt’s well-known paper on ideological segregation, with Jesse Shapiro, is here (pdf).  Our class on the economics of the media at MRUniversity.com considers Matt’s work, for instance see this video on ideological segregation.

Here is A Fine Theorem on the Bayesian persuasion paper.

An excellent choice, of course, and hearty congratulations are in order.

From the comments

This is from John B. Chilton:

For those who don’t click through this is what Tyler wrote:

“6. The exchanges will be mostly working by March 2014, but by then the risk pool will be dysfunctional. In the meantime, real net prices will creep up, if only through implicit rationing and restrictions on provider networks. The Obama administration will attempt to address this problem — unsuccessfully — through additional regulation.”

The simple answer to Christian’s query (“I’m curious how you stand now given current enrollment numbers and your previous prediction about a dysfunctional exchange.”) is that it’s not the enrollment numbers that matter, it’s the risk pool.

The jury’s out on the risk pool — lots of opinions out there on whether exchange premiums will go up for 2015.

Here is Ross Douthat on how will we know if Obamacare is working?  It is the best post on this debate so far.  He closes with this:

I’ll lay down this marker for the future: If, in 2023, the uninsured rate is where the C.B.O. currently projects or lower, health inflation’s five-year average is running below the post-World War II norm, and the trend in the age-adjusted mortality rate shows a positive alteration starting right about now, I will write a post (or send out a Singularity-wide transmission, maybe) entitled “I Was Wrong About Obamacare” — or, if he prefers, just “Ezra Klein Was Right.”

Is country music a countercyclical asset?

In tough times, do happy or sad songs top the charts? Do we prefer music that reflects our fears and hardships, or tunes that allow us to temporarily forget our troubles?

Newly published research suggests the answer varies dramatically by genre. Pop fans reflexively gravitate to music that mirrors their emotions, while country devotees go for escapism.

In an analysis of the most popular country songs over six decades, Jason Eastman and Terry Pettijohn II of Coastal Carolina University finds top hits are “lyrically more positive, musically upbeat, and use more happy-sounding major chords during difficult socioeconomic times.”

In contrast, previous research on best-selling pop songs found that, in times of societal stress, those numbers “are longer, slower, more lyrically meaningful, and in more somber-sounding keys.”

There is more here.  And here is the NYT article on how country music has gone totally mainstream.  After all, why not lower your systemic risk?  Is the higher cyclicality of on-country music due to what is possibly a younger demographic profile of listeners, including many students who may not yet be so worried about the state of the labor market?

Assorted links

1. Japan’s latest trend?

2. Young Americans are shunning the suburbs.

3. Will DNA-marker-assisted breeding outpace GMOs?

4. Profile of Alisha Holland.

5. Quick tour of British Isles accents (short video).  And are knighthoods bad for CEO performance?

6. Soft robots.

7. Worst video ad ever?  Or a really good ad? (Singapore, Philippines value)