Tag Archives: Tyler Cowen

Cowen calls for evidence in health care options

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Yes, it’s been a little quiet here lately (other than comments about 9/11 being an inside job, and who knows what kind of traffic mentioning that will bring?).  The reasons are twofold:  first, I have been building a new business I started early last year; and second, I just launched a blog that describes my thinking about that business.  I’m very excited about both.

That said, PublicOrgTheory has been my first love for over five years, and I always come back to it.  This meditation by Tyler Cowen on health care caught my attention this morning:

Over at Twitter, Matt Yglesias asks:

Do rightwingers really believe that US health insurance has no mortality-curbing impact?

I don’t speak for “right-wingers,” but I’ll say this:

1. I genuinely don’t know what to believe.  And I often toy with the idea of an “innovation-maximizing” health care policy, so that future coverage is more effective.

2. I am commonly excoriated by people (not Matt) for not supporting government-subsidized universal health insurance, yet few if any of these people grapple seriously with the best evidence.

3. I live in a country where the extension of health insurance is a major issue, and a major budgetary issue, yet much of the discussion is in an evidence-free zone.

There’s more, but it was the evidence-based points that I found most compelling.  While I think coverage for all Americans should make for a healthier nation, an economically stronger nation, and a nation better prepared for its own defense, I have to agree with Cowen that no one–including myself–is offering up evidence that would support the plans being discussed.  There’s an opportunity to be seized here.

National debate seems to be one of the few areas left in American society–management and medicine being two notable others–in which evidence need not be the basis of an argument or action.  “Proving it” is a big deal among people whose lives and livelihoods hang in the balance.  It would be an excellent change to see that kind of urgency to “prove it” in all matters of national interest.

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Cowen unpacks Baucus health care proposal

Tyler Cowen has a lengthy and well-reasoned post on the Baucus health care proposal:

1. CBO scoring is a very useful institution, for purposes of fiscal discipline, but you shouldn’t confuse it with true cost estimates.  Often a negative CBO score isn’t as bad as it sounds and a positive CBO score isn’t as good as it sounds.  The deadweight cost of taxation matters, and we should fear future government insolvency, but at the margin a revenue transfer is simply that — a revenue transfer and not a social cost per se.

2. The main benefit of the bill is greater financial security, vis-a-vis health care expenditures, for many U.S. households.  This doesn’t show up as a benefit in standard estimates of gross revenue flows.

3. The bill will, over time, create a economic and political dynamic that turns health insurance companies into regulated public utilities.  You might think this is good or bad, but its one of the most important changes.

4. I fear what else might end up jammed into the required insurance policy.  The political dynamic here has not been thought through very well and this will be important for the long-run fiscal impact.

6. The Baucus bill, and some of its cousins, is a bit like cap and trade in the sense that it postpones a lot of the expenditure-cutting pain into the future.  If Obama — a relatively popular President with a Democratic Congress — can’t do it now why should we think we will find fiscal discipline in the future?  With revisions this problem is likely to become worseThe proposed pilot programs for cutting costs I view as postponements of tough decisions, not impressive starts on the problem which will be pursued scientifically.

Much much more there.  Cowen tends to think rigorously about this (and most) issues, and I tend to trust his instincts.

Grim views on unintended consequences in drug laws

Laura Miller writes a compelling review of Ryan Grim’s new book This Is Your Country on Drugs: The Secret History of Getting High in America:

But if Grim has learned anything from his forays into the tangled world of drug laws (he once worked for the Marijuana Policy Project, which lobbies for the repeal of pot prohibition), it’s that the American passion for getting high turns enforcement-centered strategies into a vast game of Whack-a-Mole. “Policies enacted to counter other drugs — marijuana and cocaine, for example — have ended up encouraging the meth trade, as have laws against meth itself,” he writes. Crackdowns on pot smuggled from Mexico during the 1970s caused growers, dealers and users to turn to heroin, meth and especially cocaine, the last of which was brought in from Colombia via the Caribbean and Miami. When federal authorities finally got around to draining the swamp of crime and corruption in Miami (where one-fifth of all real estate transactions were paid for in cash), coke smuggling migrated to Mexico, and when attacked there, it scattered throughout the region, “creating the cartel structure that exists today.” This year, the National Drug Threat Assessment has described Mexican cartels as “the greatest organized crime threat to the United States,” whose violence has spilled over the border and whose influence “over domestic drug trafficking is unrivaled.”

Grim has a knack for digging up facts and crunching statistics to get unexpected results. The meth “epidemic” that has recently inspired so much media alarm is already in decline, while crack use, never as pervasive as it was depicted in the 1980s, has remained fairly steady since then. Today’s kids aren’t smoking much pot because pot is a “social” drug, shared among peers who gather in parking lots and other hangouts; teens have less unstructured time now and tend to socialize online. They still get high, only on prescription drugs pilfered from adults or ordered off the Internet. “There’s no social ritual involved,” he observes, “just a glass of water and a pill,” which “fits well into a solitary afternoon.”

One obvious point here is that building policy on perception rather than data results in a lot of wasted effort and misplaced sanctions.  Another is that the regulation of innate desires is likely to produce a bizarre set of unintended consequences.

[HT: Tyler Cowen]

Hawthorne debunked?

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Steve Levitt–yep, that one–claims the Hawthorne effect was completely fictional:

The “Hawthorne effect,” a concept familiar to all students of social science, has had a profound influence both on the direction and design of research over the past 75 years. The Hawthorne effect is named after a landmark set of studies conducted at the Hawthorne plant in the 1920s. The first and most influential of these studies is known as the “Illumination Experiment.” Both academics and popular writers commonly summarize the results as showing that every change in light, even those that made the room dimmer, had the effect of increasing productivity. The data from the illumination experiments, however, were never formally analyzed and were thought to have been destroyed. Our research has uncovered these data. We find that existing descriptions of supposedly remarkable data patterns prove to be entirely fictional. There are, however, hints of more subtle manifestations of a Hawthorne effect in the original data.

Ouch.  I can think of a great many books and graduate programs that will need revision if this proves true.

[HT: Tyler Cowen]

MORE:  Peter Klein adds more ammo to the argument.  Several friends and colleagues claim to have always thought Hawthorne suspect.  I’m surprised more people haven’t spoken up about their misgivings before, but we’re all busy people.

Global CEOs: We Aren’t the World

Observations on the relevance of corporate nationality from Matthew Yglesias via Tyler Cowen:

What I find interesting, however, is not so much how irrational it is to attribute nationality to a business enterprise but how much nationality really does seem to matter. For example, the oil business is an global business. And the six “supermajor” firms are all global firms. But the CEO of Royal Dutch/Shell is Dutch. The CEO of Total is French. The CEO of BP is British. And the CEOs of ConocoPhillips and ExxonMobil are Americans. It’s a bit hard to understand why a competitive international labor market would work out that way. And beyond CEO nationality, local norms seem to make a big difference. The CEO of Total earns way less money than the CEOs of the other supermajors and to a first approximation the reason is that he’s French, and French CEOs just don’t get paid very well. More broadly, European and Japanese executives earn less money than American executives, with British executives in the middle. I recall that one of the issues with the DaimlerChrysler merger was that the executive pay scales were totally out of whack.

Any number of explanations could account for that appearance, including organizational bias, organizational inertia, small sample size, local regulations in the country of incorporation, shareholder and board pressures, just plain history, and probably a bunch more.  One I’ll add to the mix for consideration, though:  incompetence.

What if the reason global CEOs often come from the company’s home country is that that’s just the way they’ve always done it?  That’s not precisely incompetence, mind you, but the inability to think beyond the tight parameters of history and culture in order to make strategically constructive choices might be.

Week in Public Organizations, 27Feb2009

The weekly wrap-up was suspended a few months ago, but I’d like to revive it.  If nothing else, it helps me bundle stories into nice little packages.

Looming government reorganization, internet piracy, stimulus watchdogs, stupid terrorists, controversial spies, centralization, and copula functions.  These were some of the stories involving organizations in public life this week:

5 predictions about the coming government reorganization

Politico notes absence of CEOs in Obama adminstration

Prosecutors drop half of Pirate Bay charges

Cowen: no agency prepared to manage holding companies

Devaney named stimulus watchdog

Timothy Noah labels terrorists stupid, lucky, dysfunctional

Amid controversy, support for Freeman NIC bid

Biden promises rigorous stimulus oversight

Bob Sutton on centralization, leadership change at Yahoo!

Foss on copula functions and social construction

Cowen: no agency prepared to manage holding companies

It would be premature to claim the “reorganizing government” meme is gathering momentum, but when Tyler Cowen is making the point, I give it much greater weight:

Thinking through the implications of said nationalization for the counterparty positions of a bank holding company, or its role in the commercial paper market, is mind-boggling.  Neither the FDIC (which generally does an OK job) nor any other government agency is in any way prepared for this kind of management task. It has very little to do with standard FDIC procedures.  All I hear about is “bank” this, “bank” that, etc. but again little or no talk of the bank holding company.

Of course this is only a problem for the five or six biggest financial institutions but those are precisely the issue at hand.  (emphasis pointedly present in original)

That’s the issue in a single sentence, and not just for bank holding companies.