Tag: economics

Uninsurable

Another way to look at it is that better ability to predict risks allows us to avoid many of them. If insurers can tell which houses in an earthquake zone will fall, they can raise the price on insuring that house. This produces a more efficient market outcome that seems to be independantly desireable: fewer people will build houses that are likely to be crushed by earthquakes. Even genetic risks have controllable environmental factors; those at risk for heart disease can adopt low-fat diets, excercise, and take statins; those likely to develop diabetes can go easy on dessert. Even carriers of the infamous BRCA genes generally opt to reduce their risk, through the drastic step of removing their breasts, and often their ovaries. They do this, not to avoid high insurance costs, but to extend their lives. But what about the poor? It is hard to see any reason why insurance companies should subsidize them. If society thinks that poor families should have insurance, then society should pay for it through the tax code, not slap regulations on insurance companies to keep information from reaching the market.

the good and bad of increased actuarial fidelity

Organ Markets

The prospect of dying for want of a kidney has concentrated Sally Satel’s mind wonderfully on how to make sure that more kidneys become available. She comes down in favor of incentive payments to donors, and suggests 4 basic models:

  1. A forward market for cadaver organs (I like this one) in which you sign up to have your organs harvested at death, and receive a small payment on signing or a large one to your estate when you die
  2. A centralized single compensator. Medicare or whoever pays a bounty for the kidney; and pays $15-20k a year for the immunosuppressant drugs which the recipient will need; but saves $66k per patient per year on dialysis.
  3. Multiple compensators. As above, but private insurers and charitable foundations chip into the compensation fund.
  4. Private contracts. The sort of market we have now, between individuals, only regulated and legal. One nice nuance, suggested by Ms Postrel’s husband, is that donors/vendors should get a year’s tax holiday, evening out the incentive between rich and poor.

2007-03-14: iran, of all places, might be the first place with an organ market.
2011-05-31:

Scott Carney’s The Red Market is a book-length investigative journalism piece on the complicated and sometimes stomach-churning underground economy in human flesh, ranging from practice of kidnapping children to sell to orphanages who get healthy kids to pass off to wealthy foreigners to the bizarre criminal rings who imprison kidnapped indigents in “blood farms” or lure impoverished women into selling their kidneys.

the trade in human flesh is brisk.
2016-12-30: Car crash victims are a major source of organ donations. What will replace them? Better stock up on those artificial organs.

Against Smoking

Meanwhile, Switzerland is still a shithole when it comes to being molested by smoking. 1 of many areas where Europe is the laggard.

Belmont is the first city in the nation to ban smoking on its streets and almost everywhere else.

2007-07-22: What’s not to love about an artist (Adriana Salazar) who creates machines that smoke or try to tie shoes?

2007-10-18: Oxygen Smoker

A 90-year-old Ypsilanti woman was critically injured when the oxygen system she was using to breathe caught on fire while she was smoking.

2008-02-01: The scale of the epidemic

Vile indeed, but habit-forming and therefore lethally dangerous: it cuts short the lives of 33-50% of its practitioners. Perhaps 100m people died prematurely during the 20th century as a result of tobacco, making it the leading preventable cause of death and one of the top killers overall. Another 1b more may die from it in this century if current trends continue unchecked.

2008-03-13: Lung ashtray for the fatalistic smoker in your life.

2008-07-24: Fighting the smoking epidemic

Bill Gates and Mayor Michael R. Bloomberg announced on that they would spend $500m to stop people around the world from smoking.

2008-05-08: Second-hand smoke is terrible.

a 30-minute exposure to the level of secondhand smoke that one might normally inhale in an average bar setting was enough to result in blood vessel injury in young and otherwise healthy lifelong nonsmokers. Compounding the injury to the blood vessels themselves, the exposure to smoke impedes the function of the body’s natural repair mechanisms that are activated in the face of the blood vessels’ injury. Many of these effects persisted 24 hours later.

2014-12-11: China is far behind developed nations when it comes to smoking. Turns out, the government makes 7% of its revenue from tobacco, so little incentive to make the population healthier.
2017-06-25: The $10K life

Cigarette companies make about $10K for every 1M cigarettes purchased. Since there is 1 death for every 1M cigarettes sold (or smoked), a tobacco manufacturer will make about $10K for every death caused by their products. The value of a human life to a cigarette manufacturer is therefore about $10K

2018-04-20: Smoking decline

From the 1920s to the 1980s, the United States was the most smoking country in the developed world. In the 1960s, consumption peaked over 10 a day, per capita. But now it’s near the bottom of the chart—only Britain smokes less, among rich western countries.


2019-06-19: Corporate absolution

Philip Morris is pivoting to smoke-free cigarettes, because “society expects us to act responsibly, and we are doing just that by designing a smoke-free future”. Also, KFC “promises not to let vegans down” with their new meatless chicken-like nuggets. They’ll have to compete with factory-farming mega-conglomerate Tyson Foods, who are coming out with their own vegetarian chicken option. If evil companies want to do good, you should let them. If they have a line of retreat, they won’t fight so hard against change. If Tyson Foods wants to use its lobbyists to support meat substitutes instead of sabotaging them, that’s good for everybody. If they want to use their research budget to push plant-based meats forward, so much the better. After companies have started doing evil, we might want to break our previous precommitment and switch to “let evil companies avoid punishment if they stop doing evil”. And after companies have stopped doing evil, we might want (if only for the sake of our own sense of justice) to break both of our previous precommitments and go with “punish them after all”. What is the right action? I’m not sure, but I lean toward “buy the meatless chicken from KFC”, for a few reasons.

2023-08-31: An update on smoking in Europe. Switzerland is still at 25.5%.

The overall smoking rate in Germany was 34% in July 2023. In March 2020, the rate was 26.5%. The smoking rate for US adults in 2021 dropped to 11.5%.

Kevin Murphy profile

“Kevin answers, I explain, he starts talking me through it. On the whole, I had done quite well. But before long Kevin mentions a few subtle aspects of the problem that I hadn’t seen. As we talk, I’m thinking, ‘Good old Kevin.’ I imagine him sitting at his kitchen table, pencil in hand, scribbling equations on a napkin. He’s dropped everything to help me with my problem, and in 10 minutes he’s explaining aspects of it to me that I would never have seen. Then I hear a splash, and a squeal, then another splash, and it dawns on me: There’s no pencil, no paper. Kevin’s holding the phone to his left ear with his shoulder while he’s giving his kid a bath. Kevin is far and away the smartest guy in the field. Often, the better you get to know these guys, the less ingenious they seem. It’s just the opposite with Kevin. Not only is he widely regarded as the smartest economist on earth, but he can also fix your refrigerator.”

the smartest economist

3 ka BP Wealth of Nations?

We assemble a dataset on technology adoption in 3 ka BP, 2 ka BP, and 0.5 ka BP for the predecessors to today’s nation states. We find that this very old history of technology adoption is surprisingly significant for today’s national development outcomes. Although our strongest results are for 0.5 ka BP, we find that even technology as old as 3 ka BP is associated with today’s outcomes in some plausible specifications.