Tyler Cowen's Blog, page 289

What I’ve been reading

1. Sunil S. Amrith, Crossing the Bay of Bengal: The Furies of Nature and the Fortunes of Migrants.  Not thrilling, but a well-informed, readable book, full of good information, about a part of the world which is growing in importance rapidly.

2. Richard Bauckham, Jesus and the Eyewitnesses: The Gospels as Eyewitness Testimony.  This is a remarkably good, serious, detailed, and documented work on what we (possibly) know about the Gospels, if we read them through the lens of being eyewitness testimony.  Anyone interested in The New Testament should read this book.

3. Lara Feigel, The Love-Charm of Bombs: Restless Lives in the Second World War.  This book chronicles some fairly intense love affairs, albeit in an intellectual sort of way.

4. Jonathan Franzen, editor, The Kraus Project.  The Karl Kraus texts in German are energetically written, but one remembers how cantankerous and idiosyncratic he was.  The Kraus translated into English doesn’t work and probably the works are untranslatable.  The Franzen in English is cringe-worthy.  The Michael Hofmann review in TNYRB is one of the best book reviews I have read, ever, gated here.

Arrived in my pile are:

5. Brigitte Granville, Remembering Inflation, and

6. Dwight H. Perkins, East Asian Development: Foundations and Strategies.

Will the health care exchanges lower prices over time?

Here are some interesting arguments from David Goldhill, here is one of them:

The designers of the health-care exchanges have also assumed that consumers, by shopping for the best deal, will drive down premiums. However, a major flaw in the design of insurance subsidies will insulate almost all of the initial customers — the estimated 20 million subsidized households — from concern about how much their policies cost.

Now, it’s not supposed to work this way. Only those Americans who don’t get insurance at work and who have income that puts them between 100 percent (138 percent in Medicaid expansion states) and 400 percent of the federal poverty level are eligible for exchange subsidies. As income rises within this bracket, the subsidy shrinks. But in practical terms, everyone who is subsidized has an infinite subsidy that will make them insensitive to premium levels.

How can that be? Let’s take an example. A family of four at 138 percent of the poverty level ($32,499) has its premium capped at 3.29 percent of income or $1,071. The rest is subsidy. So, if the cost of a silver plan is $10,000, the subsidy for this family is $8,929. A family at 400 percent of the poverty level ($94,200) has to pay up to 9.5 percent of its income for a plan, or $8,949. So the same $10,000 premium carries a subsidy of only $1,051.

…But now look at those two families from the insurer’s perspective. A $10,000 plan already costs more than the maximum amount either family would pay. If the insurer raises the premium to $10,001, both families get $1 in additional subsidy. If it raises premiums to $11,000, both families get $1,000 in additional subsidy. In other words, no matter how much an insurer raises rates, a subsidized household pays zero more.

The full piece is here.  Reihan adds useful comments.  This evidence does indicate that more sellers does lead to lower premiums, relative to fewer sellers.

The culture that is England

England is the only country in the developed world where the generation approaching retirement is more literate and numerate than the youngest adults, according to the first skills survey by the Organisation for Economic Co-operation and Development.

In a stark assessment of the success and failure of the 720-million-strong adult workforce across the wealthier economies, the economic thinktank warns that in England, adults aged 55 to 65 perform better than 16- to 24-year-olds at foundation levels of literacy and numeracy. The survey did not include people from Scotland or Wales.

The OECD study also finds that a quarter of adults in England have the maths skills of a 10-year-old. About 8.5 million adults, 24.1% of the population, have such basic levels of numeracy that they can manage only one-step tasks in arithmetic, sorting numbers or reading graphs. This is worse than the average in the developed world, where an average of 19% of people were found to have a similarly poor skill base.

When the results within age groups are compared across participating countries, older adults in England score higher in literacy and numeracy than the average among their peers, while younger adults show some of the lowest scores for their age group.

Here is further information, via Annie Lowrey.

“Introducing login and pay with Amazon”

The site is here, and they call it Amazon Payments, it seems.  Instead of PayPal, I suppose.  Who will win that competition?

For the pointer I thank a loyal MR reader.

Seattle markets in everything?

To understand homelessness, you could work at a social service agency. Or volunteer. Or read.

Or, if you believe a website called “Real View Tours,” you can also pay $2,000 to live undercover as a homeless person in Seattle with a tour guide for three days.

“You will gain a new respect for the folks that find themselves in this predicament,” Real View Tours says of its “Course in Applied Homelessness.”

“You will see the seedier side of Seattle in a new light and have an experience that you will never forget. Embrace the Experience!”

There is more here, and I thank Mark Thorson for the pointer.

Assorted links

1. More on rollout glitches for the insurers.

2. Rogoff responds again to Krugman.

3. On open borders, Nathan Smith responds, but I consider it a surrender.  What he calls “open borders” I call “not open borders.”  Price and quantity are dual.

4. Some further results on risk and uncertainty shocks (pdf).

5. The New York Post covers Average is Over.  And here is James Pethokoukis on the book.

The Adult Skill Gap

From the NYTimes reporting on the OECD Skills Outlook 2013, a study of adult skills.

The study, perhaps the most detailed of its kind, shows that the well-documented pattern of several other countries surging past the United States in students’ test scores and young people’s college graduation rates corresponds to a skills gap, extending far beyond school. In the United States, young adults in particular fare poorly compared with their international competitors of the same ages — not just in math and technology, but also in literacy.

More surprisingly, even middle-aged Americans — who, on paper, are among the best-educated people of their generation anywhere in the world — are barely better than middle of the pack in skills.

Ho hum, move along, nothing to see here (really)

I can’t load the image into WordPress for some reason, but check out this picture of how VIX — one measure of U.S. market volatility — is behaving in recent weeks and months.  It’s down, and staying low.

This is one reason why I am not much covering the government shutdown or debt ceiling crisis, though I view both disputes as inefficient, harmful, and tactically unwise to boot.  In fact, that graph should be plastered below most of the blog posts you read on these topics.

What are the ethics of the cyborg cockroach? (Franz Kafka edition)

At the TEDx conference in Detroit last week, RoboRoach #12 scuttled across the exhibition floor, pursued not by an exterminator but by a gaggle of fascinated onlookers. Wearing a tiny backpack of microelectronics on its shell, the cockroach—a member of the Blaptica dubiaspecies—zigzagged along the corridor in a twitchy fashion, its direction controlled by the brush of a finger against an iPhone touch screen (as seen in video above).

RoboRoach #12 and its brethren are billed as a do-it-yourself neuroscience experiment that allows students to create their own “cyborg” insects. The roach was the main feature of the TEDx talk by Greg Gage and Tim Marzullo, co-founders of an educational company calledBackyard Brains. After a summer Kickstarter campaign raised enough money to let them hone their insect creation, the pair used the Detroit presentation to show it off and announce that starting in November, the company will, for $99, begin shipping live cockroaches across the nation, accompanied by a microelectronic hardware and surgical kits geared toward students as young as 10 years old.

And what is the problem exactly?

The roaches’ movements to the right or left are controlled by electrodes that feed into their antennae and receive signals by remote control—via the Bluetooth signals emitted by smartphones. To attach the device to the insect, students are instructed to douse the insect in ice water to “anesthetize” it, sand a patch of shell on its head so that the superglue and electrodes will stick, and then insert a groundwire into the insect’s thorax. Next, they must carefully trim the insect’s antennae, and insert silver electrodes into them. Ultimately, these wires receive electrical impulses from a circuit affixed to the insect’s back.

Gage says the roaches feel little pain from the stimulation, to which they quickly adapt. But the notion that the insects aren’t seriously harmed by having body parts cut off is “disingenuous,” says animal behavior scientist Jonathan Balcombe of the Humane Society University in Washington, D.C. “If it was discovered that a teacher was having students use magnifying glasses to burn ants and then look at their tissue, how would people react?”

The full story is here, interesting throughout and with a video too.

Interregional trade is growing much more slowly than international trade

Paul Krugman writes:

…we can measure the growth of each flow from 1997 to 2011, which covers much though not all of the era of “hyperglobalization.” And here’s what I get for percentage changes from 1997-2011:

Exports: 46.5

Imports: 108.7

Total trade (exports plus imports): 81.2

Domestic shipments: 25.6

Real GDP: 36.6

I think this makes sense: the forces behind hyperglobalization — reduced transportation and communication costs leading to vertical disintegration of production — are encouraging mainly long-range trade to save a few percent on labor costs, not shipping stuff between U.S. cities. Interregional trade seems even to be lagging GDP, possibly because our cities are becoming less specialized than they used to be. (What does Atlanta do for a living, exactly?)