the egalitarian u.s. health care system?

Tyler Cowen writes:

Since old, high-bank-account white males have lots of social status and power, [believers in egalitarianism] cannot bring themselves to regard those males as holding very poor overall endowments.

Cowen claims that the poor old rich white guys’ supposedly “poor overall endowments” arise from the impairment of their human capital at the more-or-less imminent end of life. There might be half of an argument here if human capital were the only component of individual wealth. Instead, we have Shorter Tyler Cowen: The rich actually aren’t so rich if you don’t count their money. Whether and to what extent marrying Neutron Jack increased Mrs. Suzy Welch’s human capital as distinct from social and financial capital is left as an exercise for the reader.

Continue reading “the egalitarian u.s. health care system?”

perils of public sociology: not having a clue what you’re talking about

Dalton Conley wastes a page of valuable intellectual real estate.

1. Conley actually wrote this for publication in the New York Times:

The truth is that the triumph of conservative ideas may present a political problem for the ailing Republicans, but the party that’s truly lacking in ideas is my own, the resurgent Democrats.

Yeah, that triumph of conservative ideas is why the Republicans are in trouble.

2. In making the case for #1, Conley has trouble distinguishing the (vanishing) postwar corporatist “social compact” from the New Deal and Great Society programs, and figuring out that what’s “trouble” for the former is not obviously problematic for the government social insurance programs that are the hallmarks of the latter.

3. Conley mentions possible policy directions like government intervention to form health insurance pools and absorb other economic risks, and the “soft paternalism” movement, without noting that such things are hallmarks of Democratic policy, not Republican policy. For instance, making the government the reinsurer of last resort was the centerpiece of John Kerry’s health care plan, and arguably the most prominent advocate of “soft paternalism” in the U.S. is Cass Sunstein — a friend and informal advisor to last-time-I-checked-not-Republican Barack Obama.

4. Conley concludes that Democrats should “stop talking F.D.R., J.F.K. and L.B.J. and start thinking eBay, Google, and Wiki.” So the road to prosperity is paved with advertising sales of used stuff to each other. Great program.

(Cross-posted at Angry Bear.  Title edited.)

are economists really well-paid?

At Freakonomics, Daniel Hamermesh suggests maybe not:

While differences in earnings by college major are huge, once you account for longer hours worked by business and engineering majors, by the fact that they often have higher SAT scores, and other factors, the differences are much smaller; indeed, over half of the variation in earnings by major disappears.

This is via Maynard at Creative Destruction, who laments his marginal product:

So whereas I thought that by driving my students hard in my courses I give them human capital that helps them in their future careers, the truth is that by driving my students hard I cause hard-working, smart students to self-select into my classes. With economics degree in hand, they signal their future employers that they are smart, hard-working students (otherwise they would’ve majored in Political Science for god’s sake!), and they are rewarded with high-paying jobs. My value-added: virtually nothing, except for the rubber stamp.

Hamermesh seems to be freakonomizing his result a bit: in this case, half of a lot of variation remains a lot of variation. Nor does it exactly smash one’s intuition to find that smart people end up with relatively high-paying jobs conditional on such training as they’ve received.

I’d like to see a version of Hamermesh’s analysis for graduates with advanced degrees, which on its face has greater potential for countering intuition as there would seem to be a lot less variation in the right-hand-side variables. My prior is that almost nobody who can get a graduate degree from a decent university is shit-stupid, and if representations regarding the academic workweek made amid the Larry Summers kerfluffle are generally true (other Scatterbrains surely know more than me about that), then there’s little reason to expect raw brains or hours worked to explain a lot of the difference between the pay of investment bankers and that of English Lit professors.

So the (junior) economics professor’s coup is to be compensated in accord with the theory of opportunity costs, i.e. they collect a premium for the implicit threat to go slumming in the private sector and to cry all the way to the bank. (Not surprisingly, this effect is even more pronounced for B-school assistant profs.)

The irony, and possible additional direction for freakonomic research, is that economics departments seem to do just about everything they can to undermine the credibility of the threat by often actively discouraging reasonably smart PhD candidates from actually taking non-academic jobs. My plural-anecdotes include a post-defense conversation with one of my committee members [*] to the effect of “Yes, Really, I Do Economics For A Living” [**], and memory of our increasing difficulty as the Clinton-era boom waxed at recruiting any new PhD capable of rubbing two sticks together, culminating in a good candidate of no pedigree taking a mediocre academic job literally on the other side of the world under reportedly intense pressure from his department. I want to know what’s the minimum credibility at which the premium can be claimed.

[*] At this point, I’d already been working for a couple years as an ABD.

[**] This is not a totally trivial discussion, since a lot of non-academic “economics” (esp. at think tanks) is actually what I think Krugman terms “policy entrepreneurship,” which is to say generating plausible explanations for foreordained conclusions off of which some sponsor thinks money can be made. Of course, some academic economists do this, too, without getting paid upfront.

how to diminish the influence of economics

1. Expend energy railing against the Patriot Employer Act, co-sponsored by Barack Obama. What’s to hate about it? From the Economist‘s Free Exchange blog (h/t Mark Thoma):

There is much to dislike in the bill. Essentially, it offers employers a tax credit, worth one percent of taxable income, in exchange for adherence to a set of economic limitations. Among them are: a minimum wage, minimum standards on retirement and health plans, and protections for workers and headquarters based in America.

Yeah, that Obama sure is History’s Worst Monster for wanting to give corporations a modest tax incentive to do that sort of stuff. (They do need to hire a Frank Luntz type to come up with a better short title for the bill, though.)

A couple of European academics go much further in calling this package “reactionary, populist, xenophobic and just plain silly.” It perhaps goes without saying that, were Willem Buiter and Anne Sibert somehow to lose their sinecures, they wouldn’t have to pray to the gods of health that they not get too sick for a while. Or perhaps they’re just part of a movement, which I’ve found curious, of neoliberal Euroeconomists who seem want to show their pals at Chicago how tough they are. Or, as Charlie Stross put down New Labour:

And lo, in the thrusting entrepreneurial climate of the early nineties a new government came into power with the remit to bring about the triumph of true socialism by privatising the post office and air traffic control systems…

And it might be prudent to verify that the U.S. doesn’t get thrusted by its entrepreneurial climate before frothing at the mouth about the evils of populism.

more sensitive than most

Dispatch from Madison:

People working in UW-Madison buildings along Lake Mendota reported a shake and a boom apparently caused by an ice quake Thursday afternoon.

“It actually sounded like a bus drove into the building. The whole building shook, ” said Patrick Brenzel, a staff member in the eighth-floor offices of the department of sociology, 1180 Observatory Drive.

University geologists didn ‘t feel the quake on West Dayton Street, but their seismograph documented a tremor that lasted two or three seconds.

’twas the night before Tax Day… or is that Happy Helicopter Day?

A correspondent asks:

I’m searching for economic advice. If I were to create a national holiday meant to coincide with the stimulus package being planned in Washington, when would be a good time to have the holiday?

It’s not so much an economic question, and I dunno. Perhaps, like “Love Day” from The Simpsons [*], it should fill in the gap between established spending opportunities. In one of many cases of life imitating The Simpsons, many of those gaps have been filled — as Easter, for one thing, is being marketed increasingly as Christmas II rather than Chocolate Bunny Time. Otherwise, I don’t think windfall opportunities for the Mobility are consistently timed enough to locate the day that’s the statistical middle of them.

Any thoughts?

Added: Ben Bernanke’s birthday is in mid-December, but Alan Greenspan’s (March 6) is sitting there right in the late-winter doldrums.

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[*] Not to be confused with “Love Day” (2004) from Blue’s Clues [**], though I’ve wondered whether that’s a deliberate wink at parents trapped in front of the Tube with their toddlers.

[**] And I never thought I’d say it, but Dora the Explorer makes Blue’s Clues look like Twin Peaks.

sometimes the dismal science just gets you down

Hi everyone! With all this discussion of incentives going on, or something, Jeremy lent me the keys to bring in a view from the economics (and/or non-academic) side of things.

If I were offered the chance to eliminate forever one influence of Econ 101 reasoning from the popular discourse, it would be hard to resist the temptation to spare the world justifications of various policies based on reverse Mary Poppins incentive arguments. That is, there must be a spoonful of medicine to keep peoples’ mitts out of various sugar bowls. [*]

Apart from the one being a joke and one not, there’s not much difference in logic between:

Threatening to slicing off a bit of someone’s toe provides an incentive to stay away from Coldstone Creamery and promotes a healthy diet,

and:

Threatening cervical cancer provides an incentive to stay away from premarital sex and promotes chastity;

the latter being an actual argument floated in some parts of Greater Wingnuttia against vaccination for HPV. [**] The particular annoyance, I suppose, is that the incentive arrangement is often irrelevant in these cases; the religious right may well oppose STD vaccination even if they couldn’t try to argue that it would make society sluttier. This separates these from ordinary disincentive cases such as taxing gasoline to align private and social costs of driving or threatening would-be criminals with time in the slammer.

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[*] Why yes, I did recently watch Mary Poppins with the kids.

[**] As policies, these would likely fail for different reasons. The former is effective-looking but lacks a commitment mechanism for people who don’t have professional torturers shadowing them during Coldstone Creamery’s business hours [***]. The latter is likely to suffer from some combination of bounded rationality and imperfect information.

[***] Why yes, I am reading Gene Wolfe’s Book of the New Sun, an account of the adventures of a journeyman torturer in a far-future dystopia.