Longfellow Bridge Repairs A Year Behind Schedule?


A friend of a friend is involved in the Longfellow Bridge repairs here in Boston (see previous posting about how the repairs, if done within budget, will cost 4X the original construction cost, adjusted for inflation). There hasn’t been a public announcement yet but apparently the project is already roughly a year behind the 3.5-year schedule (which would have enabled a reopening of Boston-to-Cambridge traffic in late 2016).

Barack Obama’s Community College Initiative


Barack Obama wants to make community college free (politico). This announcement comes right after the American Economics Association meeting in which solid evidence was presented that the returns to attending non-selective colleges, at least for a lot of majors, is zero or negative (previous posting). Coincidentally, a friend came over for dinner this evening. Her sister has a master’s degree and teaches remedial skills in a Midwestern community college. “She pours her heart into the job, which can be tough because people come out of high school functionally illiterate. But she loves math and statistics,” said my friend, “so she did a study and found that students who’d been through her remedial program did not earn higher grades in their subsequent classes compared to a control group of students who did not get the remedial program.” What happened when the administrators saw the results? “Nothing. They’re still doing it even though it is expensive, time-consuming for students, and has been proven unhelpful.”

What do readers think? Will this make Americans more desirable to employers? Or just keep Americans age 18-20 out of the workforce and therefore out of the unemployment statistics?

Update: found a 1960 quote from Kingsley Amis: “The delusion that there are thousands of young people about who are capable of benefiting from university training, but have somehow failed to find their way there, is…a necessary component of the expansionist case…More will mean worse.”

Could talking to high school students constantly about sex encourage them to have sex?


What if you put a big barrel of condoms in a high school and put a sign on it saying “You can use these while you are having sex?” Would that encourage the 14-18-year-olds to have sex? The previous folks who looked into this question, typically with small samples, said “no.” The paper “Fighting AIDS, Changing Teen Pregnancy? The Incidental Fertility Effects of School Condom Distribution Programs” (Buckles and Hungerman; presented at American Economics Association 2015) looked a little more carefully. The researchers pulled birth certificates from the counties with free condom distribution in schools. They looked at births to women aged 15-19 compared to births to women aged 20-24 (the control group that presumably wouldn’t have had access to high schools) and found that births to the 15-19-year-olds increased by about 10 percent after the condom barrels went in. (Responding to an audience question, they said that they didn’t have any data on abortions so they couldn’t say how many extra pregnancies resulted from the free distribution programs. They noted that accurate data on abortion prevalence from surveys is difficult to obtain because people lie.)

Incidentally, the researchers noted that the American Academy of Pediatrics recently came out with a recommendation that condoms be distributed in schools. Thus people who get paid to provide health care to children support a policy that results in a larger customer base.

The Son Also Rises: Racism may not be relevant to inequality


The Son Also Riseslooks at social mobility, of which income and wealth correlation from generation to generation is a component, across a range of societies including the U.S., England, Sweden, India, China, Japan, and Korea. It turns out that there is no correlation between the ethnic homogeneity of a society and the amount of social mobility, contrary to what one would expect if racism were a factor in keeping sub-sections of a society either in a high-status or low-status condition.

I’m going to be writing about this important book in the days to come so I recommend grabbing the Kindle version to everyone who is interested in the questions “Why are some people more successful than others?”, “Whom should I have children with?”, “How many children should I have?”, and “What should I do with those children?”

Interview with me on helicopter instruction techniques


If you’re passionate about helicopter instruction you might enjoy this interview with me on the Rotary Wing Show (interviewer: Australian instructor Mick Cullen, who is too modest to mention his own background flying military helicopters such as the Huey and Blackhawk).

Union for Radical Political Economics


I attended a session run by the Union for Radical Political Economics (URPE), a 50-year group that can be lumped roughly into the larger “heterodox” camp of economics that had a small but continuous presence at the American Economics Association 2015 conference.

Why is there any reason to doubt that the mainstream “neoliberal” economists are correct? If they were, why would they waste their time working as economists? Paul Krugman, for example, writes New York Times articles that are based on the assumption that he knows the optimum way to run an economy. But if he actually did possess this knowledge he could survey the world’s countries with tradeable currencies and then, using the crazy leverage that is available for currency trading, bet on the sure winners and against the sure losers. He could thus accumulate infinite wealth within a few years. Why scribble away for the New York Times when he can join the Forbes 400 at the #1 spot?

A founder of the URPE group, Howard Wachtel, was the first speaker. He is an example of a friend’s rule that the most capable people in any field tend to be the pioneers (see Vermeer, for example, in the early years of modern oil painting). Wachtel said that what motivated his early research was the observation that labor markets were not functioning as predicted by classical economics. People with similar levels of education, and therefore presumably marginal productivity, were being paid different amounts. He looked especially at those with just a high-school degree or a maximum of two years of college. If they found employment in the Detroit automobile industry, for example, they could earn much higher wages than in a different occupation or in a similar occupation elsewhere in the U.S. [Note: I'm not sure that this falsifies classical economics; the auto makers were at the time an oligopoly extracting above-normal profits from American consumers and a powerful labor union was able to intercept some of those profits before they reached the shareholders; the free competitive market with perfect information postulated for much of Econ 101 is very far from the reality of the Detroit automakers circa 1970.]

Wachtel said that the structure of the labor market has a greater effect on wages than human capital and that proof of this is the “vast investments in education and student loans” that have been made for the preceding decades without much effect on wages (see previous posting). Wachtel gave a compelling example of  why we need of why we need a massive wealth tax to address complaints about income inequality: “What if I am playing monopoly with my grandchildren and I win the first game then say ‘Let’s play again but each person will start with however much money he or she had at the end of the last game.’ Very quickly they figure out that this isn’t a fair way to play.” (It is a great story but Gregory Clark spoils the ending with his 800 years of data; it turns out that when an English family had 15 children those kids did not turn out dramatically poorer than when a prominent English family had just a handful of children. See The Son Also Rises.)

The next speaker was Julie Matthaei, a professor at Wellesley College. Her talk was titled “Workers, Women, and Revolution: A Marxist-Feminist Perspective on URPE.” She talked about how Marxist-Feminists like herself are committed to ending both patriarchy (male domination) and capitalism (class domination), pointing out that the answer to “Can women be liberated in capitalism?” is “No because they would still be dominated by class.” Her group was forced to adapt in the 1980s when they came under criticism from black and lesbian academics. They also decided to broaden their horizons internationally by adding a program to object to the Jewish occupation of Palestine (Matthaei did not mention looking into criticizing any of the other 195 countries in the world; I’m wondering if this is an illustration of this recent Atlantic magazine story where the journalist says that supporting the Palestinian cause is popular among journalists in Israel because “You can claim to be speaking truth to power, having selected the only ‘power’ in the area that poses no threat to your safety.”) Matthaei criticized Sheryl Sandberg’s book Lean In (my review) as “an example of liberating only white privileged women”: “Sandberg talks about breaking the glass ceiling but for poor women the basement is flooding.” (After the talk I asked her about her abstract that cited the problem of “women’s unpaid reproductive work”. Didn’t the child support guidelines that we have had in place for 20+ years now put a price on reproductive work? If a woman can get paid for having a baby or selling her abortion, what kind of unpaid reproductive work is left? Matthaei cited the work that women do within an intact marriage.)

Michael Zweig talked about how the labor market must be viewed as employers and workers meeting as classes, rather than as individuals, and that the market is segregated by race and gender (note that this was seemingly contradicted by the fake resume study presented at the conference by a group of Harvard researchers). Zweig said that Gary Becker predicted that the market would eliminate racism, e.g., if black workers of the same quality were available at a lower price than white workers, a company such as Target would hire all black workers and put Walmart out of business. Zweig asserted that the fact that blacks and women still are paid less than white men shows that “capitalism embodies racism and patriarchy. It is not enough that we have a black president. We now know that. Class matters.”

Marlene Kim of U. Mass Boston was the “discussant.” She suggested that everyone needed to incorporate more feminism in their papers and also bring in “cutting edge theories on race” from Psychology. In her view the answer to income inequality was unionization. (I didn’t mention that I had been a member of a union that negotiated a 30:1 hourly wage ratio between senior and junior workers; see “Unions and Airlines”) For an example of why capitalism needs to be torn down she cited USDA inspectors coming out every week to farms to make sure that fruit being packed was up to standards but ignoring obvious child labor law violations. (I’m wondering if the issue is simply that there are separate government offices for performing these inspections, as noted in my posting about FAA oversight of my single-pilot helicopter operation.) But if capitalism is to be torn down, what other enterprise is big enough to take it on other than the U.S. government?

Barbara Bergmann, an influential feminist economist who is too old to travel to a conference like this one, recently published What to Do About Single Parenthood” (Huffington Post). She proposes more government support of children, regardless of the parents’ marital and living status and income, so that children would become essentially cost-free or perhaps even profitable even for married couples. I called her up (she’s a family friend) and asked whether she meant this to be a supplement to the existing litigated system of child support or a replacement for it. For example, could one still collect $4 million after a night of passion with a dermatologist (oxymoron?) and then pocket 100% of the money because the Feds were now paying all direct child expenses? Professor Bergmann said that this system would be a supplement and “I wouldn’t favor weakening any of the existing systems.”

[Note that cost-free (for married couples) or pure-profit (for child support plaintiffs) children might help address the "sustainability of the welfare state" problem identified by some of the demographically-minded economists at the conference. With the exception of the Netherlands and Singapore, most modern rich countries run Social Security-style pensions as a Ponzi scheme in which yet-to-be-born workers will pay for the pensions of current adults. Alicia Adsera and Ana Ferrer brought a paper titled "Do Migrants Adapt to Fertility Patterns in Destination Countries? Evidence from OECD Countries" and noted that college-educated Canadians have a lower-than-average and lower-than-replacement rate of fertility. In other words, they are doing A Farewell to Alms in reverse (in Farewell we learn that economic growth was driven by highly educated people having larger families than the illiterate)). Even without that, apparently almost every developed country is in trouble because so many systems were built under the assumption of an infinitely expanding population. (Assumptions made with the advice of mainstream economists, I might add!)]

An issue with this group is that they don’t seem to have any criteria for disbanding. If total compensation for all working Americans fell within a 3:1 range, would that be sufficient to call the economy “fair”? Would it require a 2:1 range? Would the group disband with a “mission accomplished” if all nations worldwide had only the income disparity of Sweden? URPE doesn’t seem seem to have a concrete numerical goal. Another issue is that data are used selectively. In the 1980s it wasn’t generally possible for an American to earn more from child support than from going to college and working. Then a sociologist published Divorce Revolution asserting that women were becoming 73 percent poorer (out of a maximum impoverishment level of 100 percent) after filing divorce lawsuits. Aside from some simple data coding errors identified 11 years later in an academic paper, the main reason for this counterintuitive result (why were women hiring lawyers and going down to the courthouse asking judges to make them poor? Then, as now, the majority of people suing are women) was that the author didn’t consider earned household income. A women who sued her VHS video cassette rental store clerk to marry a plastic surgeon was counted as impoverished because the author looked only at what the woman was collecting from the clerk and the total number of people in the household. So the marriage to the plastic surgeon made her poorer, not richer (since the surgeon’s income was not counted, only his postulated consumption of food and living space). The modern folks who earn a living by saying that women are getting a raw deal from the U.S. system flip this technique around. They look only at what women earn from wages. If the women is married, the woman’s ability to spend a share of the husband’s paycheck is ignored. If the woman is divorced, the child support, alimony, and tax-free property she may have received is ignored. One of the plaintiffs that we use as an example in our book is Jessica Kosow of Kosow v. Shuman (see previous posting). After a four-year marriage she obtained a spending power 3.2:1 larger than her University of Pennsylvania classmates. But her case would be evidence that the U.S. system is rigged against women because she has no W-2 job (based on an interview with the defendant in the case, two years after the trial before Judge Maureen Monks in Middlesex County).

It it tough to remain unbiased in this heterodox versus mainstream economics debate because all of us are bombarded on a regular basis with pronouncements from the mainstreamers. However, based on the presentations that I saw at the conference, the heterodox folks are begging the question (in the logical fallacy sense). Instead of having fancy graphs and lots of data like in the mainstream papers, which are designed to persuade and defend against criticism, the heterodox folks simply assume that everyone in the room already agrees with them. Thus the discussion in a heterodox session is how to achieve what are characterized as “reforms” rather than about, for example, whether data support the proposition that Americans employers are more interested in indulging their racism and sexism than in profits (the kind of project that Professor Wachtel was doing circa 1970). Thus it is a group primarily engaged in preaching to the converted. And it is more politics than economics.

Time to revisit the IRS doing our taxes for us?


As a Christmas present to Americans, the New York Times ran a story titled “Affordable Care Act’s Tax Effects Now Loom for Filers” about how “millions of [American taxpayers] will have to grapple with new tax forms and calculations [related to Obamacare subsidies and penalties] that may generate unexpected results.” Apparently if your income in 2014 was not the same as it was in 2012 there is going to be some additional paperwork.

Is this the time for the U.S. to move to a system already in place in some other countries? The government gets all kinds of reports on what Americans are paid by employers, banks, and mutual funds. Why can’t the government figure the correct taxes for most people and just send us the bill?

Health insurers are essentially government agencies at this point. Citizens are required by law to buy their products. No health insurer can operate without (state) government approval. A central planning government committee decides what the product is going to be. Other than paying higher-than-civil service salaries, how is that different from any other government agency? Thus if insurers are government agencies and the IRS is a government agency, why isn’t it the insurer’s job to tell the IRS who were the customers in the preceding tax year? Why do we have to get paper certificates and submit proof to one government agency (the IRS) that we bought something from another government agency (the insurer)?

Why can’t we have an IRS web site where we see what we owe, tell them about any new children or other household changes, type in any extra deductions, e.g., for charitable donations or business expenses (and if it is a capital asset, let the IRS figure depreciation too!), and be done with it?

I’m aware that this is an old idea and that various people have lobbied against it (example story). But this is the first year of Obamacare and the tax system taking on this bizarre new angle of subsidy clawbacks So perhaps this is the time when everyone can finally agree that government should take our money but leave us our sanity.

[The headline argument against the concept seems to be that the government might send out an erroneous bill and people would just pay it, so we're all going to be better off if we laboriously gather up our paperwork and pay bookkeepers, accountants, and Intuit (for TurboTax). And then, in those cases where the government does actually calculate a different number, pay whatever bill they send us and exchange letters back and forth. It would be a good argument if time were free and accountants were free. But if we have to spend days of our time and hundreds or thousands of our dollars each year to guard against the possibility of an IRS arithmetic error, we can't come out ahead unless the IRS would be making some truly spectacular mistakes.]

Two big questions for economists today


After spending a weekend with 11,000 economists at the American Economics Association 2015 meeting, here’s my perception of the Big Picture…

The two most important questions on which economists disagree are the following:

  • Can higher education make a person more productive at his or her ultimate job?
  • How much of a society’s resources should be put into reducing CO2 emissions?

Why is the economic value of higher education so important to establish? An assumption driving much of the debate regarding inequality is that a worker with a college degree is more productive and therefore will, in a properly functioning market economy, receive a higher wage than a worker without a college degree. Those who propose radical action to address inequality note that an increasing prevalence of college degree holders has not resulted in an increase in inequality. From this they infer that capital is stealing from labor, specifically by not paying workers for the increase in their marginal productivity as predicted by Econ 101. A possibility that the Big Thinkers don’t seem to consider is “Maybe colleges aren’t teaching anything of value to employers?”

This blind spot is curious because there is a fair amount of evidence that many American college graduates learned little during their four-year sojourn. The book Academically Adrift, for example, cites data from a Collegiate Learning Assessment test showing that many students don’t improve much from freshman to senior year. Studies on students who were admitted to elite schools, such as Harvard, but elected not to attend have found that there was little difference in lifetime income attributable to actually attending the elite schools (though being qualified for admission had a lot of value). There were some interesting additions to this literature at the conference.

Despite the evidence that people who weren’t academically inclined prior to college get little benefit from college and simultaneously suffer four years of lost income, Big Thinker-driven public policy has resulted in a trough being filled with federal tax dollars and a large group of non-selective colleges feeding from that trough. For-profit online schools, such as University of Phoenix, have been particularly aggressive feeders, with roughly 75 percent of their revenue coming from this federal source. “An Experimental Study of the Value of Postsecondary Credentials in the Labor Market” (Deming et al) sent out 10,492 fake resumes to employers on an “online job board” (presumably monster.com) and found that, for jobs that did not explicitly require a college degree, there was little increase in the chance of being contacted by virtue of having a college degree. In other words, the public and private investment in college might well be worthless for these entry-level positions. For jobs that did require a degree, an online degree was about 22 percent less attractive to employers than a “non-selective” bricks and mortar school, e.g., Cal State. For jobs that required a license that itself entails an exam, such as practical nurse or pharmacy technician, employers didn’t seem to care about anything other than whether or not the applicant was licensed. (This suggests that if colleges stopped grading their own students, as proposed in my “Universities and Economic Growth” article, and every college graduate took a comprehensive exam, employers might see a lot of value in those graduates who had scored well on a neutrally graded exam.) An author of the paper summarized by noting that the lowest level of employer interest was in resumes of graduates of the most rapidly growing and most expensive sector of higher education.

Academic attitudes toward business were on display in this session. Karl Marx had sympathy for the employer, constantly at risk from competition and incorrect estimates of demand. Today’s economists have mostly rejected Marx and apparently have abandoned this sympathy. Nobody raised any questions about whether it was ethical to waste employers’ time with 10,000+ fake resumes. When the authors presented their conclusion that there was no difference in employer interest correlated with sex or race, the audience was flummoxed. As racism and sexism were assumed to be high priorities for America’s employers, how to account for this result? Nobody was willing to ask “Could it be that these employers just want to make money and don’t care whether they make money with black male workers, white female workers, or any combination?”

Justine Hastings, of Brown University, presented “Earnings, Incentives and Student Loan Design: The Case of Chile.” It seems that Chile did what the U.S. did, i.e., offered a lot of student loans for higher education. Their program was more intelligently designed, however, in that they didn’t allow universities to raise tuition in response to this new source of funds. Schools ended up with more students, but not more money per student as has been prevalent in the U.S. Nonetheless, the default rate has been high, especially for graduates of non-selective schools and especially for those who majored in humanities and arts. Unlike Americans, Chileans don’t like to keep flushing cash down the toilet, so now they are experimenting with adjusting the maximum loan amount according to the expected return to getting a particular degree (in Chile you don’t apply to “University of Santiago” you apply for a specific major). It turns out that when students see that the government won’t lend them the maximum for a particular degree program they get the message and try to switch into a degree that will result in higher post-graduate earnings. This is especially true for “low SES” students. SES? Due to the rejection of Marx, mainstream economists apparently can’t talk about class so they refer to “Socioeconomic status“. Hastings has a separate paper “The Labor Market Returns to Colleges and Majors: Evidence from Chile” with the discouraging result that attending a lower quality college and majoring in poetry will not set the country’s employers on fire and, in fact, many people would have higher lifetime earnings if they refrained from attending college.

Amanda Pallais of Harvard presented “Leveling Up: Early Results from a Randomized Evaluation of Post-Secondary Aid”, a paper on the Susan Thompson Buff ett Foundation scholarship for lower income Nebraskans who have a high-school GPA of at least 2.5 and maintain a college GPA of at least 2.0. It turns out that people who are going to attend college and graduate will do so even without this grant and people who were marginally attached to academic will become only slightly more attached. The cost of keeping one student in college for an additional semester is $40,000 of foundation funds.

Gregory Clark, in my opinion the best of the Big Thinker economists out there, pointed out that when looking at the cost and benefit of programs to get more people into college, the correct approach is to focus on that last person who, without the program, would not have attended college but with the program will. If the objective of the program is to spur economic growth or reduce inequality, the question must be “How much more attractive will that person on the margin be to employers once graduated? (And how likely is that person on the margin to graduate.)”

Economists generally seem to divide into two camps on the question of mass higher education. Some economists believe that good college students are born, not made. If you weren’t born with a talent for math and studying college can’t help you. Others believe that you can send almost anyone to college and they’ll come out with more “human capital” that employers will pay for. My personal view is that traditional American K-12 and college are reasonable matches for some people, e.g., those who love to sit still and do what a teacher tells them to do. The remainder, however, should not be regarded as discards. They could probably learn the same material if it were presented in a different way. (This view is partly informed by research finding that lectures are extremely ineffective for student learning and they are the cornerstone of K-12 and universities, partly by my experience teaching lab courses and seeing how quickly all kinds of people can learn to program, and partly by experience as a flight instructor where I have had no difficulty teaching qualitative physics to people from all walks of life.)

To sum up, the question of education is critical to the question of whether we should consider the kinds of drastic changes to tax policy that are proposed by Piketty and followers. If K-12 and college are making ever-better American workers then capitalists are using their class power to steal from the working class (potential exception: globalization has made a lot more workers available, thus reducing the market-clearing wage). If on the other hand we are to believe the test scores, the problem is simply that engineers keep designing better machines (capital) while our education system turns out workers no better than those of 30 years ago (but at a vastly higher cost in dollars and time).

Turning our attention to the question of climate change… Energy expenditures are about 8 percent of U.S. GDP. (Compare to 8.4 percent for finance (WSJ), which means that we pay as much to banks than to run our cars, heat and cool our houses, smelt aluminum, and spin our hard drives!) If we do something big in energy it will mean cutting back in other areas, e.g., shoveling out money to universities.

The talk that I was most drawn to was by Juliet Schor, a Boston-based economist who has addressed the question of “Why do Americans work so many hours?” in popular books, starting with The Overworked American: The Unexpected Decline of Leisure (1993). She noted that the 1990 standard of living was roughly double that of 1950. Why wouldn’t Americans all work half-time instead of enslaving themselves to buy more stuff?  amazon.com hadn’t even launched at the time!) Schor’s work starts from the presumptions that there are declining marginal happiness returns to earning more while extra leisure time makes people happier. She also implicitly relies on my theory that buying expensive organic locally produced food accelerates environmental damage (due to higher spending). Now that the planet is melting, says Schor, what better time to consider a coordinated reduction in hours so that our economy stops growing and therefore our contribution to global warming is reduced. We’ll all be happier. [sidenote: From Schor's talk, I learned that Maslow's hierarchy of needs, a required subject for FAA certificated flight instructors, has been discredited by academics.] Schor proposed a $1.2 trillion annual carbon tax on American industry to be distributed per capita to the American people. This would, she noted, have a salutatory effect on income inequality as well.

For each paper there was supposed to be a “discussant” that provided a critique. Schor, however, got a cheerleader in the form of Frank Ackerman, who teaches in the MIT Department of Urban Studies. He said that it is obvious that we need an immediate massive carbon tax and said that there is a 6:1 ratio in per capita carbon emissions among U.S. states (California: good; Texas: bad; this government chart shows that, excluding a couple of barely populated outliers, states actually fall into a pretty narrow range and nearly all of the variation is due to industry, not consumers). Germany overall emits only half the carbon per capita that we do, according to Ackerman. Why haven’t Americans taken drastic action? Ackerman says that it is because a majority of Americans are (1) stupid (anti-science/Tea Party), (2) racist (oppose CO2 action because action is supposed by Barack Obama, whom they identify as black), (3) stupid (because they see an opinion advertisement from Exxon and don’t recognize the likely bias).

I asked “Do these people you posit all have to be stupid and racist? Isn’t it possible that Americans are simply selfish and like their SUVs, McMansions, etc.? Or that they recognize that this is going to be a big government project and they are skeptical because a lot of other government efforts over the last 50 years didn’t work out as planned/hoped? Or that they are skeptical of science because they remember being told that margarine was the key to heart health while now it is considered poison? Or that they simply prefer to put more effort into this problem after technology is more advanced?” Ackerman responded “I’ve said all that I’m going to say on that subject.”

Ackerman’s point of view that economists were infallible and their suggestions should be adopted uncritically by voters was called into question by the fact that the group neglected to book the most popular speakers, such as Thomas Piketty, into sufficiently large rooms and, though they were videotaping the talks, did not have any provision to show the videos in real-time on screens in lobbies or other rooms. If the nation’s top economists can’t estimate demand for talks by economists can we trust them to tell us what to do about global warming?

Ackerman’s point of view that it is obvious what to do was called into question by the diversity of papers at the conference. Adapting to increased atmospheric CO2 may turn out to be much cheaper than reducing atmospheric CO2, depending on which paper you read (see “Climate Change Impacts on United States Agriculture: Accounting for the Option Value of Farmland in the Hedonic Approach” by Ortiz-Bobea, for example: “New results suggest no damages – and possibly benefits- of climate change on the sector, which is in contrast to large damages found in other studies.”). Taking a ton of CO2 out of the atmosphere might be a lot cheaper 15 years from now compared to today (one of my favorite books is The Path Between the Seas, about the construction of the Panama Canal; the late 19th century project failed while the early 20th century project succeeded mostly due to improved steam shovels and an understanding of the role of mosquitoes as disease vectors). As a technologist I love the idea of new energy technology (see my 2008 posting on converting all U.S. cars to electric), but do I have a rational financial basis for this love? And if someone disagrees with me, do I get to call them a racist because there is a black politician who likes the same technology that I like?

The idea that we should put our faith in the U.S. Government is not supported by the papers at the conference. “An Imperfect Storm: How FEMA, Private Hurricane Insurers, and Climate Change Can Create Inefficient Coastal Housing Markets and Impose a Burden on Inland Taxpayers” (Conte and Kelly) shows that subsidized flood insurance “increases coastal development, which when combined with climate change and slow learning, creates a multiplicative effect which ‘fattens the tail’ of the hurricane damage distribution.” Taxpayer-subsidized crop insurance, similarly, discourages adaptation.

There may be a market opportunity for an economist to write a big Piketty-style book on climate change. Even if one were to assume no uncertainty regarding future temperatures on our planet as a function of CO2 emissions there is a huge amount of inquiry to be done on the best course of action for the world as a whole and for each country in particular. The range of estimates of the cost of each additional ton of CO2 spewed into the atmosphere seems currently to be between about $10 and $900. There is no agreement on what discount rate to use to model the value of an improved economy or environment 50 or 100 years from now. There does not seem to be any convincing analysis of how the cost of pulling a ton of CO2 out of the atmosphere (or refraining from putting one in) is likely to vary over time. Tightening up these numbers in a convincing way would be a great achievement. Finally, incentives and games are often studied by economists. The book needs to explain how to ensure that countries won’t cheat on carbon emissions.

Egyptian versus U.S. health care system


I’m on Day 10 of a nasty cold with an unusual (for me) amount of sinus congestion. Most people in Boston seem to have flu or strep so I guess I should count my blessings. Anyway, I decided to see if antibiotics would help (science says that it doesn’t (example), but science also says that science is wrong (Ioannidis) and I do think that previous similar incidents have been helped by antibiotics).

I did this back in the early 1990s in Egypt. I walked from my sister and brother-in-law’s apartment to a pharmacy, described my symptoms to the pharmacist, and walked out five minutes later with antibiotics at a total cost of less than $5.

My primary care doctor was busy so this morning I went to a walk-in clinic at Mt. Auburn Hospital in Cambridge, which has a pretty good reputation for delivering ambulatory care without crazy wait times. Nonetheless I did have to spend some time in a crowded windowless waiting room surrounded by flu victims wearing masks. I interacted with seven different people (reception/admission, walk-in clinic front desk, triage nurse, intake nurse, physician, physician in training, discharge nurse), which involved a certain amount of repetition of story and measurements (e.g., my temperature was taken twice). Ultimately I was prescribed antibiotics, though I did not specifically ask for them and the exam room contained a big poster saying “antibiotics are not helpful for viral illness”. Then I went to CVS to get my prescription filled. I had to update them with new prescription drug plan numbers so that I wouldn’t be charged $61 for generic amoxicillin (cost = 42 cents according to UNICEF). Thus what had taken five minutes and $5 in Egypt with one interaction, one payor, and one vendor took three hours and cost perhaps $500 here with eight interactions (including at CVS). There were three payors in the U.S.: me, Blue Cross, and Medco (for the pills). There were at least three vendors, I think: the hospital, the doctor, and the pharmacy.


Stupid question #672: How is eco-detergent different from Tide and Cascade?


My Caveman Chemist model of the world is that all detergents are the same (e.g., see this soap, shampoo, and shaving cream in one bottle or this laundry detergent that can also be used to clean floors). Thus there would be no difference in damage to the environment from using Tide to wash clothing versus some other brand. Ditto for Cascade versus some other brand of dishwasher detergent. Now that phosphates have been more or less banned there isn’t a distinction among detergents based on phosphate content. Yet Whole Foods carries a whole aisle of detergents whose labels imply that somehow the Earth will be better off if I buy those brands, e.g., Seventh Generation, rather than the poisonous products of devil-worshiping Procter & Gamble. The Seventh Generation web site isn’t very informative. Their laundry detergent is “non-toxic” (so it is actually better for drinking than Tide? Straight or with ice and soda?). They have no “dyes or synthetic fragrances,” but Tide has a fragrance-free variant. And is fragrance harmful to the planet? If we are going to roast our planet about 5.4 billion years ahead of schedule (when the red giant Sun would have done it for us), what’s wrong with a pleasant odor?

So… can our household reduce the amount of environmental harm that we cause by using “eco” detergents in the kitchen and laundry? And is the answer different whether we are putting this into a septic versus a municipal sewage system?

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