Here is an NYT notice, as noticed by Justin Wolfers.
At Cardiff University, students found it easier to pretend to be gay than Christian.
Here is more, from Evan Selinger, interesting throughout.
The researcher, Cormac Herley, looked into so-called “Nigerian scams,” named for the African nation where the scammers often claim to reside. The emails typically seek a cash investment and promise a lofty payoff, often linking themselves to off-shore corporations or royalty. Herley’s algorithm-rich analysis found that the obvious spam clichés are a deliberate attempt to weed out potential victims who are too savvy to fall for the scheme—and in turn make the most of the human capital required to secure funds from the people who are duped.
“Since gullibility is unobservable, the best strategy is to get those who possess this quality to self-identify,” Herley writes, and the scheme ingeniously lines up the most gullible recipients in one swoop. Those who are left “represent a tiny subset of the overall population” but nevertheless a lucrative one for the spammers.
This also explains the apparent overabundance of the emails from Nigeria, since the country is so widely associated with Web scams. Though some of the first such schemes originated there in the 1980s during a period of high unemployment for well-educated young professionals, most launch elsewhere today, including the United States.
Far from the usual spam indictment, Herley’s study suggests applying the spammers’ logic in a larger context. Read it in full here.
For the pointer I thank Claire A. Hill.
In earlier posts I have argued for a smaller tick size to reduce rent-seeking. The Wall Street Journal reports today that there is a move to increase tick size in order to increase rent seeking.
Smaller and lesser-known companies could benefit from being nickel-and-dimed, at least on stock markets.
Allowing thinly traded stocks to rise or fall in broader increments–five or ten cents versus the current penny, for instance–could help those securities draw more investors and make their shares easier to trade, according to exchange and brokerage executives.
Publicly traded companies or those eyeing an initial public offering should have the ability to choose whether they want their shares to move cent-by-cent or in larger steps, executives told lawmakers at a Wednesday hearing in Washington.
In other cases, exchanges ought to be able to transact the most heavily traded shares in fractions of a cent, some said.
There is a case for having a tick-size function, in which tick sizes would change with share price and perhaps also volume. Many exchanges in the world have such tick functions. I am suspicious, however, when industry insiders plump for higher tick sizes as being in the public interest. In particular, I have doubts that this is true:
Wall Street’s current methods for trading stocks have helped fuel a slide in the number of publicly traded companies, according to David Weild, senior adviser with Grant Thornton LLP. He told lawmakers Wednesday that the number of U.S.-listed companies has declined steadily for the last 15 years, with an average 208 listings falling off exchanges per year since 2002.
The increments by which stocks can be bought or sold, known as their “tick size,” are a key factor, Weild said at the hearing. Trimming the increment to one cent created more potential prices at which shares can trade, making it more work for traders to ensure liquidity, he said.
IPOs and listings are down but I think tick size is at most a minor reason. There are more plausible reasons for declining listings including more competition from abroad, greater use of private equity, increased stringency of regulation in the United States (SOX) and perhaps also declining profitability of small firms.
FYI, here is the testimony from the hearing before the House Financial Services Committee.
Hat tip: John Welborn.
As conventionally measured, both Ireland and Spain had responsible fiscal policies during the boom, but they were building up big contingent liabilities, in the form of irresponsible banking practices.
And:
Fiscal austerity will not help, but fiscal expansion is also unlikely to do much – although presumably it could increase headline numbers for a quarter or two. The private sector needs to grow, preferably through exporting and through competing more effectively against imports.
The whole column is excellent.
China accounts for no less than 92 per cent of its exports, a percentage that may actually rise as a massive copper mine comes on stream later this year.
Here is more. It is noted:
Mongolia is making some efforts to diversify.
Via Reihan, this is an excellent blog post. Rather than excerpt, let me reproduce the whole thing:
By now, you may be getting sick of reading articles and blog posts about the crisis in higher education. This post is different. It proposes an explanation of why students have been willing to pay more and more for undergraduate and professional degrees at the same time that these degrees are becoming both less scarce and more dumbed down. And that explanation rests on a simple and plausible economic hypothesis.
First, let me dispose of the idea that “college (and business school) is all about signaling.” The explanation I present allows signaling to represent a major part of the value of higher education, but it says that the historical increase in willingness to pay for education is not caused by an increase in its signaling value. (And the evidence for signaling or screening education premia, as opposed to human capital accumulation, is pretty thin anyway.) I’m certain signaling plays a role in creating value for certain degrees from certain institutions for certain people in certain situations. That it dominates the value proposition for college seems like a stretch.
My hypothesis is that it is precisely the dumbing down of U.S. education over the last decades that explains the increase in willingness to pay for education. The mechanism is diminishing marginal returns to education.
Typical graduate business school education has indeed become less rigorous over time, as has typical college education. But typical high school education has declined in quality just as much. As a result, the human capital difference between a college and high-school graduate has increased, because the first increments of education are more valuable on the job market than the later ones. It used to be that everybody could read and understand something like Orwell’s Animal Farm, but the typical college graduates could also understand Milton or Spencer. Now, nobody grasps Milton but only the college grads can process Animal Farm, and for employers the See Spot Run–>Animal Farm jump is more valuable than the Animal Farm–>Milton jump.
So the value of a college education has increased even as its rigor has declined, because willingness to pay for quality is really willingness to pay for incremental quality. This principle holds true in many markets. For example, a roof with mean time to failure of 5 years is a lot more valuable than one with a MTF of 2 years, but a 25-year MTF isn’t that much better than a 22-year MTF for most owners. A fuel economy increase from 12 to 15 miles per gallon is a bigger deal than an increase from 27 to 30 MPG.
Empirical points in favor of this diminishing marginal returns/reduced overall rigor hypothesis:
1. Rigor appears to be declining over time at all levels of American education.
2. Rate of return evidence classically suggests that the big marginal gains to education come from lower levels of education.
3. The median wages of college graduates have been flat, but the median wages of high-school-only graduates have gone down even more.
4. The MBA market has continued to support higher tuitions and enrollment despite the secular trend in rigor.
5. Employers increasingly favor those with more education even as they complain more about the quality of the graduates they hire.
Additional implications:
1. The incremental human capital gained from attending a (truly) better school rather than a typical school is increasing, since the additional learning is more basic (and hence more valuable) than it used to be.
2. Five and six-year undergraduate-to-masters programs should grow to accommodate those who would benefit from additional human capital.
3. More-rigorous high schools will attract larger premia (in either tuition, ability to be selective, or, for public schools, their impact on local property values), because at lower overall levels of rigor the increment of human capital is worth more.
Extensions of the logic to signaling considerations:
1. If you accept that the marginal ability and effort necessary to acquire education increases in the level of education (the flip side of the assumption about diminishing marginal payoff), then the signaling value of the typical degree is actually declining. The innate ability difference between the college and high-school-only graduate shrinks as both curricula are made less rigorous.
2. Signaling by the quality of the institution attended and the difficulty of the major subject studied is becoming more important; a very selective (or hard to complete) school or major adds back some of the lost signaling power of the typical degree.
3. We should see college degrees becoming more important in occupations that wouldn’t seem to “require” them under the old model of college, such as service staff in food service and hospitality jobs.
After nearly ten years of doing this series, I still find novel and (to me) startling entries, hat tip to @SciencePunk. Excerpt:
| P4304 | Sigma Pseudo™ Corpse Scent Formulation I | Canine training aids for the detection of corpses. For early detection, or below 0 °C |
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| P3929 | Sigma Pseudo™ Corpse Scent Formulation II | Canine training aids for the detection of corpses. For post-putrification detection |
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| PSCI | Sigma Pseudo™ Corpse Scent Corpse Scent Kit | Canine training aids for the detection of corpses. |
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| P7184 | Sigma Pseudo™ Corpse Scent drowned victim scent | A valuable training aid for water search. It provides a reliable scent source for 30 to 45 minutes, in still or running water, at depths of 1-12 feet. Canine training aids for the detection of corpses. |
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Although inflation in the late 1970s was below the 1974-1975 level, it was high by post-Korean War standards. It was up from 16% in 1977 to 22% in 1978 and 1979. The average rate of inflation in Korea in the period 1962-1969 was 17.3%. In the period 1970-1979 it was 19.3%.
You will note that South Korea, during those years and subsequently, was one of the greatest growth marvels in all of human history.
The point is not that we should aim for such high rates of inflation today, rather that if growth is strong an economy can stomach more inflation than you might think.
That quotation is from Alice Amsden, Asia’s Next Giant: South Korea and Late Industrialization.
The lesson of the crisis so far is that limited bond purchases simply give investors a way to exit from markets, rather than enticing them to commit fresh cash.
That is Richard Barley, here is more, recommended.
We have all heard about medical tourism to India, Singapore or Thailand, places where patients can enjoy high quality and low prices. But do you know about medical tourism to the United States? By some estimates, around 400,000 people travel to the United States for medical treatment every year and the big surprise is that for tourists U.S. health care prices can be very low! Canadians coming to the United States can get a knee replacement for less than half of what Americans pay and at a price not much more than they would pay in India. I learned this from John Goodman’s very interesting new book, Priceless: Curing the Healthcare Crisis (this is an Independent Institute book where I am director of research).
Nor is that the end of the story. Here is Goodman on an even more surprising twist:
Moreover, you do not have to be a foreigner to benefit from domestic medical tourism.
Colorado-based BridgeHealth International offers US employer plans a specialty network
with flat fees for surgeries paid in advance that are 15 percent to 50 percent less than a
typical network. North American Surgery, Inc., has negotiated deep discounts with 22
surgery centers, hospitals and clinics across the United States as an alternative to foreign
travel for low-cost surgeries. As noted, the “cash” price for a hip replacement in the
network is $16,000 to $19,000, making it competitive with facilities in India and
Singapore.One reason why so little is known about the domestic medical tourism market is that
hospitals prefer that most of their patients not know about it. The reason: they are often
offering the traveling patient package prices not available to local patients. That occurs
because the hospital is only competing on price for the patients who travel.
To be sure, the prices paid in the “travel” market are probably closer to marginal prices than average prices. Nevertheless, I think Goodman is absolutely right to focus in on the sectors of the health care economy which are competitive, it is in these sectors that we see listed prices, falling costs and increasing quality. Priceless is about how we can expand the competitive sectors. More on the book here.
The conservatives and libertarians who earlier supported a mandate, ideally, should have been looking for the following qualities in a health care policy:
1. A very small number (one?) of categories for health care coverage and also reimbursement rates. Mandates for everyone, in other words. No Medicare, no Medicaid, no separate set of people in an employer-based, tax-subsidized health insurance sector, rather a unified system. Switzerland comes relatively close to this, and of course some commentators hope ACA will evolve into this (“means-tested vouchers”), though I suspect the scope of the mandate and the cost of the subsidies will prevent this.
2. A rejection of health care egalitarianism, namely a recognition that the wealthy will purchase more and better health care than the poor. Trying to equalize health care consumption hurts the poor, since most feasible policies to do this take away cash from the poor, either directly or through the operation of tax incidence. We need to accept the principle that sometimes poor people will die just because they are poor. Some of you don’t like the sound of that, but we already let the wealthy enjoy all sorts of other goods — most importantly status — which lengthen their lives and which the poor enjoy to a much lesser degree. We shouldn’t screw up our health care institutions by being determined to fight inegalitarian principles for one very select set of factors which determine health care outcomes.
3. A modest bundle of guaranteed coverage and services. I am very influenced by David Braybrooke’s book on meeting basic needs. Yet for me basic needs truly are basic and do not involve cable TV or small probability chances of delaying death from prostate cancer.
4. Price transparency (mandated if need be) and real competition in the health care sector, including freer immigration for doctors, nurses, and other caregivers, and relaxation of medical licensing and encouragement of retail medical clinics, a’la WalMart style. This helps keep the cost of the mandate to reasonable levels. Most cost-saving innovation should come through markets. The man strapped to a gurney, bleeding, while negotiating a price with his doctor is the exception in this sector, not the rule. In any case the insurance companies can prearrange the price for that one.
5. If you wish to move away from the strictly conservative direction, you could consider price controls on some areas of medicine. Singapore does them.
6. Always convert dollars of benefits, usually a private good, into dollars of support for medical research and development, a public good. You will never end up at a margin where this is a bad trade.
7. Society should firmly believe that it is the duty of the government, first and foremost, to protect us against foreign enemies, environmental catastrophes, pandemics, and other existential threats. History shows that such existential threats are real. Alleviating individual sufferings through governmental charity can be a useful source of mutual advantage but it should be subordinate to these broader goals. Furthermore we should be determined to resist the creation of a large class of perpetual beneficiaries who will strangle the government fiscally and pull it away from these more basic duties.
I would think that such a mandate would be a serious policy option, though maybe not a first best choice. (There are also mixes of single payer backstops and HSAs, as in Singapore, and a variety of provincial systems.) Yet that is far from the ACA. We should not “blame” Obama for that difference (it’s not clear what his more utopian preferences might be, though it is clear he could not have passed them), but still it seems to me that observers can support some version of an individual mandate and oppose ACA.
I agree, by the way, with Ezra Klein’s analysis of the “motivated reasoning” of many particular individuals when confronted with ACA a few years ago. You can think of this post as an “ideal type” analysis which may or may not apply to many actual people.
1. Charles Rosen, Freedom and the Arts: Essays on Music and Literature. Rosen has mastered pianism, writing, and learning. The best parts, such as on Chopin or Schumann, are stunningly good.
2. Karl E. Meyer and Shareen Blair Brysac, Pax Ethnica: Where and How Diversity Succeeds. Some parts of the world make cross-ethnic collaboration work. I would prefer more comparative analysis with the regions where diversity does not work so well, but this is an interesting book with historical substance.
3. Navi Radjou, Jaideep Prabhu, and Simone Ahuja, Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. Full of cliches, but thoey do not totally drown out the substance. I have been wanting a book on this topic, namely why the poor are (sometimes) more innovative, illustrated through India.
4. Alonso Cueto, The Blue Hour. Just translated from Spanish, this book made a big splash in Peru. It turns on a family story, the history of the Shining Path, and a man’s obsession with a woman. I have yet to see major reviews (here is one summary), but for my taste it is one of the best novels of the year. The UK has paper copies, right now US has only Kindle, possibly a paper edition in July.
That is the new book by Christopher Hayes, here is one marvelously good review. I was myself very impressed by the level of execution in this book.
In terms of pushback, I would offer two points.
1. The best critiques of meritocracy usually come from those with extreme merit.
2. I wish the book had been more Hegelian. One could well have written a book called *The Twilight of the Non-Elites*, for instance:
“Can’t you’all have some better schools? It’s not mainly about money, rather a school is a collection of parents and children.”
“Get married. And stay married.”
“You didn’t have to falsify your income on that mortgage application; isn’t that a felony?”
“It’s your fault you ended up in jail, don’t blame the elites.”
And so on. What’s interesting about today’s scene is that both “Twilights” seem correct.
