Tyler Cowen's Blog, page 352
June 6, 2013
How to kill bedbugs, 1777
“Spread Gun-powder, beaten small, about the crevices of your bedstead; fire it with a match, and keep the smoak in; do this for an hour or more; and keep the room close several hours.”
The Complete Vermin-Killer: A Valuable and Useful Companion for Families, in Town and Country, 4th ed. (London, 1777), 4.
The link is here. That is from a new-to-me blog, askthepast.blogspot.com. Here is “How to Make Pink Pancakes, 1786,” and you will find numerous other excellent items. Try “How to Sober Up, 1628” or “How to Grow a Beard, 1539.”
For the pointer I thank the excellent Hollis Robbins.
The decline of interest in female film stars
Glamour featured film stars on half of its covers in 2012. But the May 2012 issue featuring Lauren Conrad, the former star of the reality show “The Hills,” was the year’s best-selling issue, at 500,072 copies. The magazine now expects to make film stars the minority presence in 2013.
At Cosmopolitan, the best-selling cover this year featured Kim Kardashian in April, with 1.2 million copies sold, followed by the singer Miley Cyrus in March with 1.1 million copies. In 2012, three out of five of Cosmopolitan’s top covers featured the celebrities Demi Lovato with 1.379 million copies sold, Khloé Kardashian at 1.354 million copies and Selena Gomez at 1.334 million copies.
Vogue’s best-selling cover in the first four months of 2013 featured Beyoncé with 340,000 copies sold. In 2012, Lady Gaga commanded the cover of Vogue’s September issue and sold nearly double the number of copies of the January 2012 issue, featuring Meryl Streep.
It’s not just younger women’s magazines that are moving away from film stars. When Redbook landed an interview with Gwyneth Paltrow for its January issue, the magazine featured her with her trainer Tracy Anderson and not in what the magazine’s editor in chief, Jill Herzig, called the “traditional A-lister in a ball gown kind of way.”
It is music and TV which are in the ascendancy. I blame the globalization of the movie market in part, which skews Hollywood movies more toward Asian male audiences, in turn limiting their appeal to American females. In general international audiences lower the return to good dialog and raise the return on action and explosions, which on average hurts prominent female roles. Note that men’s magazines are now having more film stars on their covers. And there is this:
A recently published study by the University of Southern California’s Annenberg School for Communication and Journalism showed that the percentage of female characters with a speaking part in the nation’s top movies each year reached its lowest point in the past five years in 2012, at 28 percent. Ms. Coles said it had become so difficult to find female film stars to feature from this summer’s blockbusters that her magazine was publishing an article about the problem.
The full article is here.
June 5, 2013
A simple parable on cutting government spending vs. raising taxes
Referring to Europe, here is an email (slightly edited for clarity) I sent last night to a libertarian friend:
…let’s say the private sector is so screwed up that at the margin it won’t grow, no matter what, though some going concerns hold govt.-protected monopoly power.
If govt. cuts spending by $100, that is $100 less of output and employment (admittedly may be wasteful), but still the numbers come out that way. None of those workers are reemployed.
If govt. raises taxes by $100, some of the firms with monopoly power, while their profits are now lower, still will produce roughly the same output. Neither output nor employment falls so much.
That gives you a composition difference, pretty much fully blameable on government intervention, and without requiring any belief in Keynesian economics. Govt. spending cuts are *worse* for short-run gdp than are tax increases.
I am not saying that is always the true story, but I don’t see anything in the 1990s Alesina results to convince me to believe otherwise. Europe (or rather parts thereof) is less dynamic these days. And I don’t see why libertarians are in such a hurry to dismiss that particular story.
I am not claiming that Keynesian effects have to be zero, but rather using that as a hypothetical starting point. And this is a thought experiment to raise some points about observational equivalence, not a series of empirical claims about the real world.
You also may notice that in this “model” contractionary fiscal policy lowers gdp. And while expansionary policy raises measured gdp, it doesn’t necessarily do the economy a lot of good. It’s like a hidden transfer payment with possible hysteresis benefits through the illusion of make-work, but it is hardly on its own a source of much turnaround.
It is “loose paywall” time at The Washington Post
Ezra explains, Matt offers some analysis. I am very happy to pay full price, noting that I live around here, but in any case I plan to do so until the very end, for either them or me. I do however see this as a further sign that the golden age of free links is over, forever. Bloggers take note. From what I understand of the paywall, Twitter connections will be free and this, along with other developments, will raise the relative import of Twitter. Perhaps at some point Twitter will become so important that this is no longer price discrimination and Twitter cannot be allowed as a free way in. But we remain far from that point, it seems to me.
Should states jump on the Medicaid expansion bandwagon?
Carter C. Price and Christine Eibner have a new study in Health Affairs suggesting a definite “yes,” and I have seen this piece endorsed numerous times in the blogosphere and on Twitter. I do understand that part of their argument is a normative one, given the desire to expand insurance coverage for the currently uninsured. But they and their endorsers also seem to be making a state-level financial prudence argument, as if there were no possible reason for a state not to expand participation behind sheer ideological stubbornness. On that matter I don’t think they have pondered the problem deeply enough and they fail an intellectual Turing test.
Let’s start with a simple observation, namely that a Republican may win the next Presidential election. There is also quite a good chance that such a victory would be accompanied by a Republican Senate (and House), given the distribution of vulnerable seats. That means a very real chance that the federal government will scale back its commitment to Medicaid expansion, for better or worse. States don’t want to be left holding the bag, and governors know it is hard to take back benefits once granted.
I often interpret the Republicans as operating in a “they don’t really mean what they say” mode, but on Medicaid I think they basically do mean it and we already can see some of the demonstrated preference evidence. Furthermore a new Republican President would face very real pressure to “repeal Obamacare,” yet we all know that the “three-legged stool” centered around the mandate is hard to undo selectively. That ups the chance Medicaid will be the target and much of the rest will be relabeled (“repealed,” in the press release) but in some manner kept in place in its essentials.
Another possibility is that a Republican administration would somehow restructure the deal to, in some way, favor the holdout red states, relative to the deal already on the table. (Why not reward your supporters?) That increases the prospective return to being a holdout red state.
On top of all this, there is option value. The chance to jump on the Medicaid expansion bandwagon won’t go away tomorrow. Even if the cost-benefit ratio > 1, you still might want to play wait and see. There is even a chance that in the meantime you are somehow offered a better deal yet.
Now if someone wants to argue that, given these considerations, Medicaid expansion still makes financial sense for a state, fine, I would be keen to read such an analysis. But that is not what I am seeing. The Price and Eibner piece doesn’t analyze these considerations or even bring up most of them. Governors are not stupid, or their chiefs of staff are not stupid, and many governors are far less ideological than they let on. They are politicians. And they are politicians who understand that the federal government is not to be trusted and yes if you wish you really can blame that on the Republicans, or indeed on any prospective switch of power. That is why we are not seeing more states do the Medicaid expansion. In the meantime, the debate needs to catch up to the reality.
Is there ACA rate shock in California?
I wasn’t going to weigh in on this, but enough of you have asked me what I think of Avik Roy’s claim that California insurance premiums, under ACA, will go up 64% to 146%. Let me start by telling you this: based on a reading of the secondary commentary, I cannot tell you how much rates in California will be going up (and my original inclination was not to blog it for this reason).
Still, the question having been raised, let’s go back in time. In 2009, the CBO wrote (pdf):
CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.
About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law.
If you read their subsequent discussion, it seems fairly clear to me they are not averaging “higher premia for those still getting insurance” with “a price decline from infinity, for those who couldn’t get any insurance in the pre-ACA days,” in some kind of complicated index number fashion. They are talking about price increases on already-existing policies and what kind of continuation one can expect.
I will treat this as the canonical estimate, and stipulate that we will have had “rate shock” if the percentage increases are three times higher than had been forecast by the CBO.
You will note that these higher rates still may be an efficient form of lump sum taxation, or they may be unsustainable price hikes which cause the mandate to unravel () by encouraging non-participation, or perhaps a bit of both. Megan McArdle considers some public choice implications of unpopular and unexpected high rates.
In 2009, you will find a claim by Jonathan Gruber:
What we know for sure the bill will do is that it will lower the cost of buying non-group health insurance.
Maybe he had in mind an index-number weighting where the “price decline from infinity” weighs heavily in the calculation and in that sense such a claim can always be true if even one person receives extra coverage. Still, I am more likely to call it a misspoken sentence, a Denkfehler, an excess enthusiasm, and most of all a highly inexact way of describing the issue no matter what is the truth. It was always the case that the median and modal individual premium was likely to go up, even with full political cooperation from the Republicans. After all, that is part of the “efficient lump sum taxation” idea behind the use of the mandate in the first place. And yes I do understand that a competitiveness effect and a transparency effect still may push prices down but that is not the way I would bet it and for sure it is not “for sure,” to quote Gruber, that such prices are going to fall. (By the way here is an Indiana estimate of rate increases in the range of 70-90%; I can’t vouch for the underlying data. It also seems that price declines are highly likely for New York state, in part because the current system has so many problems. So we also need to be disaggregating the different states here. Also, here is some informal poll evidence for a 30-40% rate increase at the individual level, with some higher increases for some other groups. Caveat emptor, but those would be higher rates and they might even surpass the 3x standard I have set up.)
If you add in President Obama’s varied comments on the matter, I absolutely do see the real truth behind conservative and Republican complaints of “bait and switch.” The median and modal cost of buying non-group health insurance is likely to go up, not down, and not everyone will enjoy the option of keeping the status quo, as had been promised. And that whole matter is being given a different spin today than it was say in 2009. On that Roy is entirely correct.
(In passing, I see employer shedding of coverage as a greater danger to ACA at the macro level, so in my view it is a mistake to see too much of ACA as turning on this issue.)
On the other side of the debate, you will find criticisms of Roy here, here, here, here, and here, among many others. At least two points of the critics seem to stick, first that these may be teaser (status quo) rates sampled by Roy and second we don’t know actually which individuals can end up getting those rates, once they fill out the questionnaires about the earlier medical histories. But even there we are left with “we don’t know” more than “I have better numbers which show Roy to be wrong.” The level of subsidies is relevant too. I think also that Roy’s response undercounts the number of uninsurable people. The worry is not that the market price for insurance is infinite, but rather at the prevailing market price one is simply paying one’s medical bills, plus a processing premium to the insurance company, rather than obtaining ex ante insurance.
To raise two other points critical of Roy’s position, first I am uncomfortable with putting so much emphasis on percentage rate increases, when some of these sums in question may be relatively small. (I find the emphases in Megan’s presentation of the numbers more useful.) I also think it requires a lot more argumentation to measure the number of “those who can’t get useful insurance” than by looking at the number of applications for the high-risk pools, even if that argument ultimately succeeds.
That all said, I find the screeds of most but not all of Roy’s critics to be inappropriate or in some cases beyond inappropriate. It is disturbing how much space and emotional energy is devoted to attacking Roy, and to attacking conservative policy wonkery, relative to trying to calculate the actual extent of rate shock or possible lack thereof. That is not how good policy wonks go about their job.
I think there is quite a good chance we will see rate shock, as I have defined it above. I also think we still don’t know. I also see rhetorical bait and switch from ACA defenders. I also see that Roy is too quick to jump on possible negative information about the California rates without nailing down the case. I also don’t think these are the most important issues for ACA, though they are issues worth discussing.
Overall this is not a debate which is going very well.
Airport Security Signals
Lars Christensen has a theory of airport security:
…my theory is that if you meet an unfriendly bureaucrat at the security check in the airport then it is also very likely it will be hard to start a business in that country. Therefore, I tend to think of airport security as an indicator of the level of government regulation of the country’s economy. This is something that makes me terribly bearish on the US’ long-term growth perspectives every time I encounter a TSA official in an US airport – and makes me terribly depressed about the prospects for Ukraine and it gives me an understanding of why the Scandinavian countries ‘works’ well despite excessively large public sectors.
It was therefore a pleasure today to meet friendly and efficient people at the security check in Chopin airport (Poland). And if my theory has any value this is an indication that Poland has “matured” and the level of regulation is luckily getting lighter. That is good news. So now I am thinking of raising my long-run growth forecasts for Poland…
I recently asked my young son whether he thought he could travel by himself to visit his grandmother in Victoria, Canada. He said that he could navigate the airports fine and getting into Canada was no problem but he was afraid of the security people coming back into the United States. Bear in mind that my son is American.
June 4, 2013
Shares of economic growth
The world’s top 10 countries by share of global growth will have shifted entirely out of Europe and the whole EU is expected to account for only 5.7 per cent of world growth. Together, India and China will represent almost half of global economic expansion.
That is from Chris Giles and Kate Allen at the FT. By the way, here is an FT table, by Kate Allen, of the most rapidly growing economies right now, keep in mind data problems may be significant.
South Sudan
32.1
Libya
20.2
Sierra Leone
17.1
Mongolia
14.0
Paraguay
11.0
Timor-Leste
10.0
Iraq
9.0
Panama
9.0
The Gambia
8.9
Mozambique
8.4
source: IMF
How depressing is the moral regression of Syria?
Syria is undergoing moral regression (one NYT update here), just as Lebanon did in the 1970s or the former Yugoslavia did in the 1990s or for that matter Germany in the 1930s. The behavior of the government is far more evil and oppressive than before, while the moral quality of the opposition is worse than what we might have expected several decades ago.
That said, most of the world is not regressing morally and arguably can be seen as advancing morally, at least on the fronts of general tolerance, democracy, and the moral virtues which are encouraged by prosperity and market exchange.
Syria is only a small percentage of the broader world and there are only a few other places which count as (possibly) morally regressing. In total they will not sum to a billion people. Just for purposes of argument, if you toss in DRC and parts of Pakistan and Egypt, along with a few other areas, let us say it runs at five percent of the world’s population which is morally regressing (though DRC has made some very recent progress and is arguably the new undervalued nation).
One worry is that observed regression draws our attention to the contingency of moral progress. It can be argued whether Syria is one data point or millions of data points. I don’t understand very well what observed moral progress is contingent upon, and the histories of Germany and Yugoslavia make this especially tough. Both locales seemed to have bright futures when they fell apart, morally speaking that is. So I am not all cocky about moral progress continuing indefinitely.
Is it possible there is more moral regression in the world today than say five years ago? Does moral regression have a unit root? Serial autocorrelation? Do we understand the causes of moral regression better as time passes? I don’t see that.
Another worry is how well the rest of the world can cope with five (?) percent of its citizens undergoing moral regression. “Quite fine” it seems so far, although this may be contingent on technology and furthermore Israel and Lebanon may not feel the same way. In any case the moral regression of Syria may be a more serious problem when insect-sized drones can enable strategic assassinations, including outside of Syria.
The technologies and prices of fifty years from now may require much higher moral standards of us — “every man a Denmark” — than the world of today. More generally, we dismiss the possibility of moral regression at our peril.
For a useful conversation on this topic I am indebted to SL.
Tyler Cowen's Blog
- Tyler Cowen's profile
- 844 followers
