Monthly Archives: April 2010

Med Like Car Insure?

With car insurance, you typically first get a neutral expert diagnosis of the damage to your car.  Second, you get a check based the estimated cost of a recommended treatment to fix that damage.  Finally, you can spend that money as you like; you don’t have to do as much as suggested, or anything, if you feel so inclined.

Medical insurance is usually different.  You still get an expert diagnosis, and a recommended treatment.  And in Medicare, the resulting cash paid depends only on the diagnosis.  But the expert who makes these choices is less neutral – if you the patient approve, it is he or she who is paid to do what they recommend.  And if you decline their treatment, or opt for something less expensive, you don’t get the difference in cash.  This greatly reduces your incentive to seek the most cost effective treatment, or to skip treatment if none are cost effective.

Could we do medical insurance more like car insurance?  Well one obvious problem is that medical diagnoses are sometimes based primarily on a patient’s complaint, and it won’t do to give someone cash just because they complained.  But we don’t have to allow the cash option in all cases; we could limit it to cases were the diagnosis was based primarily on independent clinical evidence.  We could also disallow the cash option when an untreated patient would be contagious, or in emergency situations without enough time for a data, diagnosis, cash, choice cycle.

There is also the issue that how you treat one condition may influence what other conditions appear later.  This is a reason to be careful in defining the scope of conditions, and also perhaps to only offer a discounted cash option (say 80% of the suggested treatment price).

Even with these limits, it seems to me most folks dislike this idea.  I think this is why such med insurance isn’t offered.  Why?  Some possibilities:

  1. By explicitly distinguishing cases where no clinical evidence confirms patient complaints, we’d embarrass and insult such “asymptomatic” patients.
  2. We frame medical insurance as a gift, and it is rude to encourage people to exchange their gifts for cash.
  3. We think of medical insurance as a way to force people to get more medicine than they’d choose for themselves.
  4. Doctors are our authorities, and so we look bad if we disrespect them by not following their advice.
  5. Health is noble, money ignoble; it is immoral to make folks choose between them.
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Democracy In Action

A Senate committee dealt a big blow to the plans of two trading firms looking to create a box-office futures exchange that would allow the movie industry as well as investors to wager on movie ticket sales. … Federal regulators only in the last week had given the first stage of approval to the exchanges. …

Included in the Wall Street Transparency and Accountability Act financial reform package, passed Wednesday by the Senate Agriculture Committee, is a provision banning futures trading on box office. …. [Many are] scheduled to testify along with other motion picture industry leaders before the House Subcommittee on General Farm Commodities and Risk Management, which is also investigating the proposed exchanges. … The next step in the Senate is for the Transparency and Accountability Act to be merged with similar legislation proposed by the Senate Banking Committee. (more; HT Midas Oracle)

This is sad hour for prediction markets.  Movie markets seem a near best case, where the public would:

  1. easily understand the value to be gained by more accurate estimates, since they could personally use prices when deciding what movies to see, and
  2. find it hard to get worked up about supposed “manipulation”; they know all their other sources of info on movies are manipulated as well.

The fact that one can kill these markets by just yelling “manipulation” in a crowded democracy is a very bad sign for other interesting markets in the US anytime soon.

A key confession by Max Keiser on HSX.com, today’s play money movie markets:

When I was CEO of HSX – I shared a board seat with members who were also on the board of Lionsgate Films.  Lionsgate was constantly moving the prices of their films (or films they had an interest in, or a friend’s film) on HSX as a way to manipulate perception and marketing dollar spends. … I went to war with the rest of the board to defend my creation, … [re] allowing the prices on HSX to be moved per ‘marketing’ requests made by the studios. This lead to a blowout on the board and my leaving HSX as a result.

I’ll take Max at his word.  So does this prove movie markets must be banned because manipulation is possible?  Well consider that the movie industry has been fine for 15 years with play money markets they can manipulate, and scared to death of real money markets, supposedly because someone might manipulate them.  The obvious difference:  it doesn’t cost much real money to manipulate play money markets, when market administrators will keep handing you as much play money as you want.

In contrast, the cost to manipulate real money markets would go through the roof, as savvy speculators jumped in on the other side of those losing manipulation bets.  On average, the movie industry would lose on their manipulation bets, fail to bias the prices, and increase movie market price accuracy.  Now you can see the movie industry’s real concern about manipulation: they might lose their ability to manipulate!

Added 5p: John Lopez at Vanity Fair says “the increased incentive for piracy still seems like a valid concern,” but given the huge incentive to pirate movies in order to watch them, it is hard to see pirating movies to maybe influence these thin markets would make much difference.

Added 6p: At lunch several of my colleagues sensibly suggested that studios are worried that more accurate pre-release movie quality estimates would make it easier for new studios to enter the movie industry.

Added 8p: Can this example finally put to rest the idea that play money markets work just as well as real money markets?

Added 24Apr: Early HSXer Ben Curtis comments below.

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Baby-Face Your CEO

We conduct beauty contest experiments, using close to 2,000 subjects. … We use pairs of photographs and find that subjects rate CEO faces as appearing more “competent” and less “likable” than non-CEO faces.  Another experiment matches CEOs from large firms against CEOs from smaller firms and finds large-firm CEOs look more competent and likable. …We find that executive compensation is linked to these perceived “competence” ratings. …  [This] can be explained by a quantitative scoring of the “maturity” or “baby-facedness” of the CEO.  That is, more mature looking CEOs are assigned higher “competence” scores. … We find no evidence that the firms of competent looking CEOs perform better. (more)

So to get a CEO that costs less but is just as effective, pick one that looks “baby-faced.”  Now that this news is out, do we expect such great deals to quickly disappear?   I don’t – since we limit hostile takeovers, boards face only weak pressures to make firms efficient.  So most boards prefer to pick a CEO that seems competent, over one who is competent.

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Clone Acceptance Markets

As a proud step-parent, I find it increasingly odd how many of you insist on the [standard kids-via-sex] “fifty percent solution.”  Ew!  What if [your kid] — heaven forbid — looks like you?  What if you’re both economists named Keynes?  But there’s more: the rest of your daughter looks just like the woman you chose to marry?  Yuck!!!!!  And so on.  Maybe you all think that fifty percent is great but one hundred percent is unacceptable, when it comes to the genes.  …  And I bet most of you don’t find it repugnant if a father wants a son rather than a daughter, but similarity of gender is pretty important too. …

[Notice] how quickly smart people will side with their Darwinian intuitions, and attack another smart person with intolerance, just because something feels icky to them.  It’s not so different from how some people find gay people, and also “what they do,” to be disgusting.

That is Tyler defending Bryan‘s desire to raise a clone of himself.   My initial reaction agrees with Tyler and Bryan.  On one side, the usual arguments for preferring to raise a genetically-related kid would seem to endorse clones as even better.   On the other side are the “ew, icky” feelings in many.   I don’t have those feelings, but I still accept that others having such feelings is relevant evidence.  So if I’m not going just assume my inarticulate feelings are wiser than those of others, how can I decide what to think here?  Bryan suggests a way out:

My prediction: Once a few thousand cloned humans are walking the earth, sneering at clones and people who want them will become as gauche as sneering at IVF babies and people who want them.

If Bryan’s prediction is true, that seems strong support for his case.  So I’ll strongly support creating a prediction market on this topic, and will agree with Bryan if market prices support him.

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Memories Lie

[Academic philosophers] Russ and I have presented our joint work in a number of venues now … and normally when we do so, … we set up a random beeper … When the beep sounds, each audience member is to think about what was going on in her last undisturbed moment of inner experience before the beep. We then use a random number generator to select an audience member to report on her experience. We interview her right there, discussing her experience and the method with the audience and each other. We’ll do this maybe three times in a three-hour session.

As a result, we now have a couple dozen samples of reported inner experience during our academic talks, and the most striking thing we’ve found is that people rarely report thinking about the talk. … Most audience members, listening to most academic talks, spend most of their time with some distraction or other at the forefront of their stream of experience. They may not remember this fact because when they think back on their experience of a talk, what is salient to them are those rare occasions when they did make a novel connection or think up an interesting objection.

(I think the same is true of sex thoughts. People often say they spend a lot of time thinking about sex, but when you beep them they very rarely report it. It’s probably that our sex thoughts, though rare, are much more frequently remembered than other thoughts and so are dramatically overrepresented in retrospective memory.)  (more)

We too easily assume we know what we have been doing.  Most who think they are obsessed with sex, or that they pay attention to academic talks, are wrong.  While understanding its content is what you are supposed to do at an academic talk, attending is probably more about showing your dedication and monitoring.  Similarly, our society places a high premium on sex, and looks down on the asexual.  In both cases our bias seems to be to assume we have doing whatever would make the best impression if it were true.  If you can be this mistaken about stuff this basic, how wrong could you be about other things?

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Democracy Supports Hypocrisy

Hypocrisy: pretending to have qualities or beliefs you do not

To get away with saying one thing and doing another, it helps to put some distance between your words and acts.  It may not work to say “I always give to panhandlers I pass on the street” as you pass, and ignore, a panhandler on the street.  You might prefer to say that at another time and place, or to say something more abstract, with muddier implications about your specific behavior.

Further distance can come from hiring an agent to act for you.  If your instructions are vague and you reserve the discretion to fire an agent for ambiguous reasons, then you can claim you wanted your agent to do X, while making sure your agent understands that you really reward Y.   If your agent is caught clearly doing Y, you can fire and disavow them.   This works especially well if you can implicitly threaten an even stronger punishment if your fired agent tells folks you made it clear you wanted Y.

The more important an agent is to you, and more attention you pay to that agent, the less believable it is that you were unaware of large deviations between X and Y.  So maximal hypocrisy can be achieved via the agents to which we pay the least attention.  And this is where democracy shines: the very structure of a large election ensures you the voter had very little incentive to pay attention.  Since you had almost no chance to change the outcome, you of course didn’t pay great attention.  But you can still act outraged should an elected politician do Y when he said he would X.  Shame on him, for exploiting poor ignorant you.

The larger the election, the better your excuse, because the weaker your incentive to pay attention.  Longer tenures also help, as does divided government.  If you voted on hundreds of different offices, and did that ten years ago, how can you be very responsible for what any one of them did today?

Legal courts controlled at arms-length by large divided democratic governments seem a perfect storm for hypocrisy.  How can you be blamed for what some judge does, if he is only influenced indirectly by appellate courts, that are influenced by a supreme court, who were chosen decades ago by random politicians.  Surely you can’t be blamed when wannabe immigrants bodies pile up in the desert, when your troops slaughter foreigners in their streets, or when police use brutal street justice to keep your peace.  It must have been corrupt politicians or bureaucrats, or evil voters from the other party, or bought-off media, or just anyone but you;  you surely intended nothing of the sort.

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Price Conspiracies

A believable conspiracy theory:

Airlines and online travel agencies surreptitiously use computer “cookies” they’ve implanted on your Web browser to track your activity on their sites and then raise prices when it appears that you’re interested in a fare. That’s the rumor, at least. … For years … the industry … has vehemently denied any tampering with prices. …

A United Kingdom-based hotel site called VivaStay reportedly dinged customers by way of a special link from an affiliated Web site that showed slightly higher prices than those quoted to customers who clicked directly on the VivaStay site. VivaStay apologized, but said it was unaware that the price variation was frowned upon.  …

A teacher … says … she recently tried to buy a ticket to Vietnam … through the Delta Air Line Web site. … But when she was actually ready to buy her flights, the airline informed her that the ticket she wanted was $300 more than the original price quote. … “I returned to Delta’s home page and began the process again. … The same lower fare was still displayed, so I worked my way through the process again only to be informed once again that the fare was no longer available. Over the course of a half hour I repeated this process two more times. Same result.” …

“If there is no bias in a process, there are about as many negative outcomes as positive outcomes. The process of posting the lower airfares — that is, making them initially available — should result in as many surprisingly lower prices at booking as it does surprisingly higher ones because they have all been taken.”  [This physicist] makes a good point. I’ve heard of only one or two cases where the fare dropped.

Given a room full of computers, such as in a school or library, it shouldn’t take more than a few hours to test this price-jump conspiracy theory.  Just try to book random flights and record the initial and final prices offered.  If the non-random pattern is strong, it shouldn’t take long to see clearly.

Price discrimination, i.e., charging different prices for the same thing (that costs the same), has long been a wide-spread business practice.  Firms are reluctant to admit they do it not only because customers get mad, but also because it has been illegal in the US since the 1914 Clayton Antitrust Act, at least if “the effect … may be substantially to lessen competition.”  Mark this as another bendable rule authorities rarely enforce, letting them selectively punish whomever they wish.

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I Am Sexist

I am sexist, because I knowingly say something sexist: I believe women are naturally inferior to men in a certain way.  Time magazine:

For humans, there has always been something about a health message coming from a woman that gives it special authority. … Traditionally … it was the mother who saw to it that the kids got vaccinated, Grandma made it to her heart specialist and Dad stayed on his blood-pressure meds. …

Women make the primary health care decisions in two-thirds of American households. They account for 80 cents out of every dollar spent in drugstores and are likelier than men to choose the family’s health insurance. …  “Global development agencies [know] … when you give resources or money to women, more winds up in children’s health. When you give it to men, it’s likelier to wind up going for things like tobacco.” …

As with so many things, it begins with evolution, but it doesn’t stop there. Females of nearly all species expend far more time and energy producing young than males do and are thus far more motivated to protect that investment. … [Researchers] asked men and women in doctor’s offices why they were there and if anyone had encouraged them to come. Men were 2.7 times as likely as women were to say they were prodded by a member of the opposite sex.

Time describes a way that women are naturally different from men.  Is this “sexist“?  Technically yes, as it expresses a “belief or attitude that one gender or sex is inferior to, less competent, or less valuable than the other.”  But no, not according to common serious usage* of the term, since here Time says it is women who are superior.  Folks who say that are almost never seriously labeled “sexist.”

Now I believe we consume too much med, especially in the US.  We’d be better off to crudely cut med, via higher prices or less geographic practice variation.  So I think whomever is responsible for pushing for more med at the margin does a bad thing.  Therefore if I agree with Time that women naturally push med more, I must conclude that in this way women are naturally less valuable or competent than men.

Thus, I am “sexist.” So must you all now shun and condemn me for my knowing serious “sexism,” or can we agree either that it isn’t such a bad thing to be “sexist,” or that we should move to a narrower usage of the term?

Our social norms on serious sexism are now bendable; the way we’ve defined “sexist” gives media elites the flexibility to tar most anyone who speaks honestly with the label. After all, if honest, most should admit women are different from men in many ways, and worse in some of those ways.

By opposing such flexibility, I signal I am more likely that most to be so tarred, and hence less connected, influential, or savvy.  So be it.  Will anyone else join me, and publicly admit they are “sexist” as the term is used today?   Will anyone else oppose the term’s bendability?

*(Many agree “all men are rapists” is sexist, but few ever say that.  I can’t find an actual claim of female superiority widely accepted as seriously “sexist.”)

Added:  Two more “sexism” definitions:

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Unincorporated Man

The science fiction novel, The Unincorporated Man, is widely praised for its thought-provoking premise.  Yet I find no evidence that it provoked thought about its premise.

The premise is folks selling shares in their future income.  Initial ownership is: person 75%, parents 20%, government 5% (there are no other taxes).  People typically sell 12-15% to their university, more for other early training and resources, and they trade shares with relatives, spouses, and coworkers.  They then own less than 50%, must accept majority control over their careers and locations, and try over time to rebuy enough to regain control.

Among the 70+ reviews/comments on the book I’ve read, a few take a position on this idea (all against), but none engage the idea, i.e., offering arguments for or against it based on details of the book.  The most detailed argument I found was:

A horrendously bad idea that will only fuel the worst aspects of human nature: greed, ruthlessness, selfishness, and more of such unpleasantness.

The book’s characters at least give arguments.  For: gains from voluntary trade, and the system’s wide acceptance among vast peace and prosperity.  Against:  Horrors, its “slavery”!   (Spoilers below the fold.) Continue reading "Unincorporated Man" »

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Wary Of Law

The Securities and Exchange Commission knew that Texas-based financier R. Allen Stanford was probably running a Ponzi scheme 12 years before it halted the fraud. … Top officials in the agency’s Fort Worth office favored pursuing as many simple cases as possible rather than taking on more challenging ones like that presented by Stanford. The internal report also raised questions about a former head of enforcement in Fort Worth, Spencer Barasch, who played a “significant role in multiple decisions over the years to quash investigations of Stanford,” but then “sought to represent Stanford on three separate occasions after he left the Commission.” (more)

A few days ago I listed some examples, mostly on police and soldier brutality, suggesting we don’t seem serious about enforcing many laws; we seem to like having law enforcement organizations respond to informal social pressure about which laws to enforce how vigorously on whom.  We seem to prefer everyone being guilty of something, giving police the power to arrest whomever they want.

Even more than via independent government agencies, the obvious way to ensure laws are enforced is to empower everyone to enforce them.  Civil lawsuits, especially class action or with whistle-blower rewards, give everyone an incentive to discover and discourage violations.  But we mostly seem wary of private law, preferring centrally-enforced criminal law for most “important” topics.  In fact, we go out of our way to prevent natural private punishment of lying.

Yet we do allow private, and hence reliable, enforcement of some laws.  What distinguishes the laws we want reliably enforced, from the laws we prefer central elites have discretion to enforce when and where they like?

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