Tuesday, November 17, 2009

More Selective Concern on Sex Imbalances


From a new report "Staying Competitive: Patching America’s Leaky Pipeline in the Sciences" from the Center for American Progress:

The “leaky pipeline” for women in the sciences, sometimes referred to as the “pool problem” because of the low number of women in job applicant pools relative to their rates of doctoral degrees granted, has become a point of considerable debate in recent years. Discussions about the reasons for the leaks range from “chilly” institutional and departmental climates to gender bias and discrimination to innate differences in cognition to lack of mentoring to the role of marriage and children.

This debate was perhaps best brought to national attention in the aftermath of comments by former President of Harvard University Lawrence Summers in 2005, when he referenced theories that women might have less intrinsic aptitude to excel at academic science careers. In fact, research universities across the country and federal granting agencies are routinely confronted with evidence of a leaky or constricting pipeline for women in the sciences.

Data from both NIH and NSF, the two agencies providing the greatest amount of funds to researchers in U.S. universities and colleges, also suggest that the leaky pipeline is not an aspect of the past. As seen in the figure above women comprise a much larger proportion of the predoctoral fellowships given by these agencies than they do postdoctoral fellowships and competitive faculty grants. The drop-off in relative proportion is dramatic, with women comprising 63% and 54% of NIH and NSF’s predoctoral awards in 2007, respectively, but just 25% and 23% of the competitive faculty grants awarded in the same year.


MP: 1. Once again, another mis-characterization of what
Larry Summers actually said:

It does appear that on many, many different human attributes-height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability - there is relatively clear evidence that whatever the difference in means - which can be debated - there is a difference in the standard deviation, and variability of a male and a female population.

In other words, what Summers actually said is that "male intelligence is inherently more variable than female intelligence," which is significantly and distinctly different than saying that "women might have less intrinsic aptitude to excel at academic science careers." Anybody who understands basic statistics and the difference between the mean and standard deviation of a distribution will understand immediately the difference between what Summers said (the standard deviation of male intelligence is greater than the standard deviation of female intelligence) and what others claim he said (women have less intrinsic aptitude to excel in math and science).

2. Isn't it interesting that there is no concern whatsoever that women receive 170 NIH predoctoral awards for every 100 grants awarded to men, and 117 NSF awards for every 100 men, but there is suddenly a selective concern of a "dramatic drop-off" of NIH and NSF awards to faculty. If I understand the rules of gender activism correctly, they go something like this:

Rule A. If women are over-represented (college degrees, SAT scores for reading or writing between 750-800, doctoral degrees in the life sciences, English and foreign languages, etc., scholarly research awards, or tenured professors in education), that is because women are smarter, more motivated or more talented than men. No action, policies or funding required to correct the gender imbalance.

Rule B. If women are under-represented (engineering or math Ph.D.s, SAT math scores between 750-800, tenured math, computer science and physics professors at MIT, etc.) that is because of pervasive, unexamined sexism, which requires action, policies and funding to correct the sex imbalances.

3. The report concludes that "If we delay we simply continue to lose talented scholars [women] from fast-track academic careers in the sciences—to the detriment of our nation’s future."

Here's another solution: Make it easier for all of the foreign doctoral students studying math, science and engineering in the U.S. to stay here after they complete their degrees.

Baltic Dry Index Roars Back: 102.5% Gain in 39 Days

The Baltic Dry Index closed today at 4381, advancing for the 14th straight day, and registering positive gains in 31 out of the last 35 days. From the late-September low of 2163, the benchmark index for freight costs to ship dry bulk commodities such as iron ore, coal and grains has more than doubled in just 39 days, and has reached the highest level since September 24, 2008, almost 14 months ago. The global economic recovery is underway and gaining momentum.

See related post here from Scott Grannis, who says that:

Clearly, the wheels of global commerce are spinning back up. Everything I see is consistent with a global recovery in confidence, in demand, and in production.

Belichick Gets No Respect, Except from Economists

1. "Bill Belichick Is Great" by Steven Levitt

I respect Bill Belichick more today than I ever have. This decision may have hurt his chances for the Football Hall of Fame, but it guarantees his induction into the Freakonomics Hall of Fame.

2. "
Bill Belichick as Frederic Bastiat"

It's pretty evident that the degree of opposition to Belichick's decision amongst the sports public and even so-called football experts is disproportionately high compared to the true probability that Belichick's decision would fail. In fact, a few statistical geeks have even suggested that Belichick made the correct decision under the criterion that head coaches are supposed to use: maximize the probability of your team winning.

The type of response we see to Coach Belichick's decision is too often what we also see in public policy debates: there is a bias for what is seen versus what is not seen.


Update (Wall Street Journal): Somehow in American football, the punt—a clear and unambiguous symbol of surrender and retreat—has become the hallmark of sensible coaching.

Brian Burke, a statistician who has studied the results of fourth-down situations in the NFL, says a team in the Patriots' situation had a 79% chance of winning by going for it (either by converting the fourth-and-two or stopping the opponent thereafter). That compares favorably to a 70% probability of preventing a foe from driving down the field for a touchdown following a punt.

Unemployment, The Movie

Another interactive map showing monthly unemployment rates from December 2007 to September 2009. Watch "Unemployment, The Movie" here.

HT: Taxing Tennessee

Monday, November 16, 2009

Stripped of Its Intellectual Content, "Rainforest Math" Has Serious Implications for U.S. Economy

From the article "Who Needs Mathematicians for Math, Anyway?" by Professor Sandra Stotsky in the City Journal:

As part of his education-reform plan, President Obama wants to “make math and science education a top priority” and ensure that children have access to strong math and science curricula “at all grade levels.” But the president’s worthy aims won’t be reached so long as assessment experts, technology salesmen, and math educators—the professors, usually with education degrees, who teach prospective teachers of math from K–12—dominate the development of the content of school curricula and determine the pedagogy used, into which they’ve brought theories lacking any evidence of success and that emphasize political and social ends, not mastery of mathematics.

A new effort is under way to develop national math standards for K–12. The two organizations running the effort—the National Governors Association and the Council of Chief State School Officers, with support from both the Department of Education and the National Education Association—have not yet invited a single mathematical or science society to ensure that the high school mathematics standards and “college-readiness” standards they propose in fact prepare American high school students for the freshman calculus courses that serve as the basis for undergraduate majors in engineering, science, and mathematics (as well as other mathematics-dependent majors and technical/occupational programs). The effort, which is being pushed very quickly, seems determined to do an end run around the country’s mathematical and scientific organizations and the panel’s recommendations on the major topics for school algebra.

Baseless pedagogical theories mean that the educators’ long-term captive audience—K–12 teachers, most drawn from the middle academic tier of our high school population and the bottom third of our undergraduate population—will know even less about authentic mathematics than they do now. Alas, so will their students. And even if a new Congress or Secretary of Education were to support the panel’s recommendations, it will be essentially business as usual in the public schools so long as math educators, joined by assessment experts and technology salesmen, continue to shape the curriculum. A form of mathematics stripped of much of its intellectual content has obvious repercussions for higher education and the American economy. The math wars, which started in debates about pedagogy, may end in questions about the long-term prospects for American prosperity.


Exhibit A:
During their first math class at one of CUNY's four-year colleges, 90% of 200 students tested couldn't solve a simple algebra problem, the report by the CUNY Council of Math Chairs found. Only a third could convert a fraction into a decimal.

HT: Arthur Little

Welcome to the 2009 Worldwide Bull Market Rally

The MSCI World Stock Market Index has registered gains in 7 out of the last 9 trading days, and closed today at 1175.40, the highest close since October 1, 2008, more than a year ago (see chart above). The World Index has risen 27.7% since the first of the year, and by more 70% from the early March bottom. Welcome to the Worldwide Bull Market Rally of 2009.

Here's one report.

Retail Clinics: "Disruptive Innovation and Improved Value Proposition," The Magic of the Marketplace

From a new study released today by the Deloitte Center for Health Solutions "Retail Medical Clinics: Update and Implications - 2009 Report" (press release here and full study here):

1.
Retail clinic market growth has slowed from an astronomical 350 percent in 2007 to 30 percent in 2008, and it trended negative (-5 percent) in the first five months of 2009. The economic downturn that began in December 2007 had a chilling effect on retailers; conditions also were challenging for private investors backing start-ups in retail medicine.

2.
2009 marks a pause between wave one and wave two of retail clinic growth. Cautious growth is likely to resume from 2010-2011 and then accelerate from 2012-2014. Despite forecasts from a variety of organizations estimating 5,000 clinics by 2010 and perhaps 6,000 by 2012, data suggest those numbers are unattainable in that timeframe. Merchant Medicine, a leading tracker of retail clinic operators, has suggested that the market may, in fact, top out at 4,000 clinics in 2015 (see chart above).

3.
Employer sponsorship of onsite retail clinics is a key factor in their potential growth. By hosting and partially underwriting a clinic’s costs, employers have the potential to reduce employee health costs and lost worker time due to long wait times at physicians’ offices. One forecast suggested that 32 percent of large employers (those with greater than 1,000 employees) will have onsite clinics by 2009 – a total of more than 2,400 sites.

Conclusions:

1.
Retail clinics represent a new channel to deliver primary care services more conveniently and at lower cost to consumers. Clinic services are safe and effective, due in large measure to medical management programs that are evidence-based and supported by electronic medical records. As a new entrant, retail clinics represent a threat to many traditional health care industry stakeholders; however, to consumers, health plans and employers they offer an important care alternative with a strong value proposition.

2. The growth and evolution of retail clinics reflect opportunities for disruptive innovation and an improved value proposition for the U.S. health care system.

MP: What an amazing success and growth story, from only 200 retail health clinics in 2006 to possibly 4,000 by 2015, a 10-fold increase in less than ten years! At the same time that Congress debates a government takeover of the health care system, we have market-based health care reform taking place right now in the form of convenient, affordable, quality health care at more than 1,000 retail clinics around the country. Read more here.

As
Ronald Reagan reminds us:

We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.

Sunday, November 15, 2009

Markets in Everything: Selling Lesson Plans Online

NY Times -- Between Craigslist and eBay, the Internet is well established as a marketplace where one person’s trash is transformed into another’s treasure. Now, thousands of teachers are cashing in on a commodity they used to give away, selling lesson plans online for exercises as simple as M&M sorting and as sophisticated as Shakespeare.


Without Market Pricing, Kidney Demand Exceeds Supply 6 to 1, And 1000s Needlessly Die Waiting

From the article "White Collar Reset: Kidney for sale?" by Mark Cohen:

In my last installment, I entertained the notion of opening a medical marijuana store in the New York City suburb my wife and I call home. This week, while we wait for the New Jersey legislature to finalize the legality of that option and as I begin year two in what is now semi-officially the direst U.S. job market since the Great Depression, I'd like to move on to the next previously taboo plan for recapitalizing our household.

I'm considering selling one of my kidneys.

Now, before you say, "Oh, come on, that's absurd!" and immediately skip to the next story about housing starts or crude prices, hear me out for a few seconds. I, too, had my doubts and recognized the potential for a jump-the-shark moment. But that was before I spoke to Dr. Sally Satel, M.D., a resident scholar at the American Enterprise Institute in Washington, D.C., and author of the book When Altruism Isn't Enough: The Case for Compensating Kidney Donors.

While the two statistics admittedly most on my mind when I called Satel were 17.5 and 892 (that's the percentage of underemployed workers in last Friday's job report and dollars in my checking account, respectively), the number always front and center for her is 13. That's the average number of people who die every day in this country awaiting a kidney transplant. Despite decades of work encouraging people to sign donor cards and donate to loved ones, the number of kidney donors last year was less than it was in 2005. Clearly, the current system of appealing exclusively to people's better natures isn't working. What's interesting is how the economic downturn has suddenly created a whole new class of constituents for Satel's more free-market approach.

The more Satel talked, the less selling my kidney seemed like some bizarre, macabre act of depravity, and the more I wondered why the hell I hadn't thought of it before.

I'll put it this way: A hundred thousand dollars (for a kidney) would do a lot more to stabilize our finances than the other items (a Pottery Barn cabinet, a Thomas O'Brien leather club chair, a cowhide rug) currently under consideration for sale around our house. Although I've been bringing in more freelance and consulting work, the checks have been slow to trickle in, and, at any rate, it will likely take months before I figure out how to organize and focus my business to where it comes close to approaching my old salary. The other option up for discussion -- emptying my 401(k) -- now seems more irresponsible and injurious to my future than my new (k)idney plan.

If all this were happening two years ago, my mortgage company would be encouraging me to take out a second mortgage or tap my home-equity line. That's obviously no longer on the table, but is tapping the one truly valuable asset I have left really so much different?

As my mortgage broker used to say about the home-equity line: It's just sitting there. Why not use it?

MP: The chart above shows the current number of registered patient candidates waiting for a kidney transplant (
data here) and the number of kidney transplants performed this year from January 1 to August 31 (data here). That's a ratio of 7.3 patients on the waiting list for each kidney transplant performed through August. If we increase the number of transplants for September, October and the first half of November by 1,131 per month (the monthly average for Jan.-Aug. 2009), it would still be a ratio of almost 6 candidates on the waiting list for every kidney transplant.

ECON 101: Congestion, shortages, and surpluses are always caused by a failure to apply market pricing. The market for kidneys is no different in principle than the market for gasoline, Miley Cyrus tickets, old coins, pork bellies or unskilled labor. Since the demand for kidneys exceeds the supply by a factor of 6, it seems obvious that the deadly kidney shortage is artificially created because the current "price" for kidneys is way, way below the market-clearing price, and people will continue to die waiting until some type of market pricing is allowed.

Interestingly, there is actually one country that currently allows various forms of cash compensation for kidneys, and that country has completely eliminated its kidney shortage to the point that nobody dies anymore on a waiting list -
find out here.

The "Good Old Days" Are Now and It Gets Better All the Time, Thanks to Free-Market Capitalism

Click to enlarge.


From the BLS report "100 Years of U.S. Consumer Spending":

1. The material well-being of families in the United States improved dramatically, as demonstrated by the change over time in the percentage of expenditures allocated for food, clothing, and housing. In 1901, the average U.S. family devoted 79.8 percent of its spending to these necessities. By 2002–03, allocations on necessities had been reduced substantially, for U.S. families to 50.1% of spending (see top chart above).

2. The continued and significant decline over the century in the share of expenditures allocated for food also reflected improved living standards. In 1901, U.S. households allotted 42.5% of their expenditures for food; by 2002–03, food’s share of spending had dropped to just 13.2%.

3. Over the 100-year period, expenditure shares for clothing steadily declined. In 1901, the average U.S. household allocated 14% of total spending for apparel. By 2002–03, spending shares for clothing had decreased to 4.2%.

4. In 2002–03, the average U.S. family could allocate about 50% ($20,333) of total expenditures for a variety of discretionary consumer goods and services, while the average family in 1901 could allocate only 20.2%, or $155, for discretionary spending (see bottom chart above).

Conclusion: Perhaps as revealing as the shift in consumer expenditure shares over the past 100 years is the wide variety of consumer items that had not been invented during the early decades of the 20th century but are commonplace today. In the 21st century, households throughout the country have purchased computers, televisions, iPods, DVD players, vacation homes, boats, planes, and recreational vehicles. They have sent their children to summer camps; contributed to retirement and pension funds; attended theatrical and musical performances and sporting events; joined health, country, and yacht clubs; and taken domestic and foreign vacation excursions. These items, which were unknown and undreamt of a century ago, are tangible proof that U.S. households today enjoy a higher standard of living.


MP: As I wrote in a previous post: Teenagers today can afford products today like cell phones with cameras, digital cameras, GPS systems, CD players, DVD players, laptop computers, and iPods that even a billionaire couldn't have purchased 20 years ago. As much as we might complain, just by being alive in the 21st century America, even if you're earning the minimum wage, you've already "won first prize in the lottery of life."

HT: Lyle Meier

Saturday, November 14, 2009

Krugman Excels in Two Widely Disparate Activities

It’s always impressive to see one person excel in two widely disparate activities: a first-rate mathematician who’s also a world class mountaineer, or a titan of industry who conducts symphony orchestras on the side. But sometimes I think Paul Krugman is out to top them all, by excelling in two activities that are not just disparate but diametrically opposed: economics (for which he was awarded a well-deserved Nobel Prize) and obliviousness to the lessons of economics (for which he’s been awarded a column at the New York Times).

It’s a dazzling performance. Time after time, Krugman leaves me wide-eyed with wonder at how much economics he has to forget to write those columns.

~Steven Landsburg


Chinese Food Quiz

1. Which is greater - the combined number of McDonald's, Burger King and Wendy's franchises in the United States, or the number of Chinese restaurants?

2. What is the ratio of Chinese restaurants to McDonald's franchise units in the U.S.?

3. A study by the Center for Culinary Development, a food product development company, asked children between the ages of 10 and 13 about their favorite type of food. Guess what percent said they favored Chinese food compared to the percent that said they favored American food?

Answers here and here.

Bottom Line: Globalization is good.


Markets in Everything: Cell Phone Car Ads in India

MUMBAI: Car makers like Maruti, Hyundai, Tata Motors and others have begun advertising heavily through cellphones which is generating higher buying decisions among Indians this year compared to global buyers. The mobile phone advertisements constitute 31% of buying decisions among Indians while globally this is only 8% according to the latest estimates from Carsonline.

With Universal Coverage, No More Votes to Buy

Once the whole population is covered [by health insurance], there is little political incentive to increase spending on medical care. Once the bulk of costs have been taken over by government, as they have in most of the other OECD countries, the politician does not have the carrot of increased services with which to attract new voters, so attention turns to holding down costs.

~Milton Friedman

MP: How to hold down costs? Think Canada. Long waiting lines, fewer MRI machines and fewer physicians per capita compared to the US, etc.

Friday, November 13, 2009

Majority: Health Coverage Not Gov’t. Responsibility

PRINCETON, NJ -- More Americans now say it is not the federal government's responsibility to make sure all Americans have healthcare coverage (50%) than say it is (47%). This is a first since Gallup began tracking this question, and a significant shift from as recently as three years ago, when two-thirds said ensuring healthcare coverage was the government's responsibility.

MP: Current odds on Intrade for health care reform passing with a public option by December are currently at about 5%.

More on The Case for Insider Trading: Legalize It!

Suppose, for example, that shares of Acme Inc. are now selling for $50 per. Suppose also that an insider knows that Acme’s CEO and CFO have been cooking Acme’s books to make Acme appear to the public to be more profitable than it really is. If that insider can trade on that non-public information — obviously, by shorting Acme stock — the price of Acme stock will start to fall immediately upon the commencement of such insider trading.

Any trader who buys Acme stock after this insider trading commences gets a ‘fairer’ price — a more truthful price — than that trader would have gotten if Acme’s shares were still trading at $50 due to the fact that information about Acme’s true financial state remained private and unincorporated into Acme’s share price.

To the extent that insider trading causes prices to reflect asset values more quickly and more accurately, general investors should be more confident in asset markets and, hence, more likely to invest their earnings in such markets.


From
Don Boudreaux at Cafe Hayek, following up on his WSJ article "Learning to Love Insider Trading."

We Never Got Close to 900,000 Jobless Claims

Jobless claims as a share of the labor force have fallen in each of the last seven months from the 0.422% peak in March, and dropped to 0.345% in October, the lowest level since last November (see chart above). In contrast, jobless claims as a share of the labor force peaked at 0.60% in the three recessions above in the 1970s and 1980s. Given the current size of our labor force (about 154 million), we would have to have had more than 900,000 jobless claims during the most recent recession to reach the level of 0.60%, which is much higher than the peak jobless claims level in April of 658,750.

Read more here at The Enterprise Blog.

Congress to Market on Healthcare: Drop Dead

Government healthcare reform sure gets a lot of media attention. In just the last month alone there have been about 13,000 new stories containing the word “government” and the phrase “healthcare reform.” In contrast, there have been only 66 news reports during the last month with both of the terms “market based” and “healthcare reform.” That’s a ratio of almost 200 stories on government healthcare for every one story about market-based healthcare—government-based “reform” has completely monopolized the debate.

Given the momentum in Congress for some kind of government healthcare overhaul, the media attention is understandable. But at the same time that Congress debates different versions of Obamacare and considers various public options, some market-based healthcare solutions have gone largely unnoticed, despite the fact that they have successfully lowered medical costs and improved both access and quality of service.

In a new article, I outline seven such examples of market-based healthcare alternatives, read it here at American.com.


Chart of the Day: Gender Gap for Top Math Scores

The chart above shows the ratio of males to females for SAT math test scores in the range between 750 and 800 (data here) between 1996 and 2008. For example, in 2008, there were 26,610 males who tested between 750-800 for the SAT math test, compared to 13,854 females in that range, for a Male-Female ratio of 1.92 to 1. In 1996, the male-female ratio for SAT math scores above 750 was 2.70. So although the ratio has decreased over time, males are still over-represented for math test-takers with scores between 750-800 by a factor of about 2 to 1.

Update: There were 704,226 males who took the SAT test in 2008, and 812,764 females. That means that 3.78% of male test-takers scored above 750 on the math test compaed to 1.70% of females above 750.

Thursday, November 12, 2009

Growth in Online Ad Revenue Turns Positive in Q3

TECH CRUNCH -- After two straight quarters of annual declines (aka, the Great Ad Recession of 2009), it looks like online advertising revenues stabilized in the third quarter. The combined online advertising revenues of Google, Yahoo, Microsoft, and AOL rose 1.2% to $8 billion. While the online advertising industry is not out of the woods yet, it might be stabilizing. Since these four companies account for such a large portion of total Internet advertising, looking at their combined advertising revenue numbers serves as a good indicator of the health of the overall online advertising industry.

Commercial Real Estate Rebounds in Canada

Canada's commercial real estate market is rebounding faster than many in the industry projected just a few months ago. The market unexpectedly caught fire in September as access to capital improved and buyers waded into the depressed market, and a full-blown recovery seems under way in major segments of the market.

"Things have changed," said PwC partner Frank Magliocco as he released the report yesterday. "Things just took off." There have been three deals worth more than $100-million in the past month - an apartment portfolio in Vancouver, as well as residential land and a downtown building in Toronto - which would have been unthinkable in July.

"If I told you in the spring that those deals would happen, you'd have told me I was crazy," said George Carras, president of tracking firm RealNet Canada Inc. "There was no way you'd have believed me, sentiment was just too low."

There have been other signs of recovery, most notably the first quarter of growth in Toronto's commercial real estate sector after 18 months of declining fortunes. Data for Calgary and Vancouver show those markets stabilizing as well, according to RealNet.

Why Compel Young Adults to Buy Health Insurance They Don't Need and Don't Want?

Barack Obama won the presidency with 66% of the vote among adults ages 18 to 29 - a larger share than any presidential candidate in decades. So it's ironic that his health plan could impose its greatest hidden taxes on young adults.

Young adults make up just 17% of the population but account for 31% of the uninsured. The legislation before Congress would force young adults to purchase health insurance at prices far higher than the market would charge. The legislation would use that hidden tax to reduce premiums for their parents, who typically have higher incomes.

Since about one-third of young adults already reject health insurance at current prices, even more of them would avoid coverage if Congress drives those prices higher. Congress anticipates that response. Each bill includes an "individual mandate," which would force U.S. residents to purchase health insurance, whether they want it or not, on penalty of fines or imprisonment.

Why would Congress compel young adults to purchase health insurance they don't want to buy, at prices higher
than they have already rejected? There are at least four possible reasons.


Read the rest here.

Jobless Claims Fall to 42-Week Low

The short view:

The long view:

WASHINGTON - Fewer Americans than anticipated filed claims for jobless benefits last week, signaling the worst employment slump in the post-World War II era is easing as the economy expands.

Initial unemployment claims fell by 12,000 to 502,000 in the week ended Nov. 7, the lowest level since January,
Labor Department figures showed today in Washington. The number of people receiving jobless benefits dropped, as did those getting extended payments. The four-week moving average of claims, a less volatile measure, decreased to 519,750, the lowest level in almost a year, from 524,250 (see top chart above).

Wednesday, November 11, 2009

Markets in Everything: Human Punching Bag

Women fuming because they still see it as a man’s world can finally take it out on the Man himself. Or one of them, at least. Chinese gym coach Xiao Lin has launched a part-time career as a punching bag for stressed-out women. Lin reportedly charges 100 yuan (about $15) for a 30-minute bash-fest.

Employer-Provided Medicine Is Completely Illogical

Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.

No third party is involved when we shop at a supermarket. We pay the supermarket clerk directly: the same for gasoline for our car, clothes for our back, and so on down the line. Why, by contrast, are most medical payments made by third parties? The answer for the United States begins with the fact that medical care expenditures are exempt from the income tax if, and only if, medical care is provided by the employer. If an employee pays directly for medical care, the expenditure comes out of the employee’s after-tax income. If the employer pays for the employee’s medical care, the expenditure is treated as a tax-deductible expense for the employer and is not included as part of the employee’s income subject to income tax. That strong incentive explains why most consumers get their medical care through their employers or their spouses’ or their parents’ employer. In the next place, the enactment of Medicare and Medicaid in 1965 made the government a third-party payer for persons and medical care covered by those measures.

We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

The revival of the company store for medicine has less to do with logic than pure chance. It is a wonderful example of how one bad government policy leads to another. During World War II, the government financed much wartime spending by printing money while, at the same time, imposing wage and price controls. The resulting repressed inflation produced shortages of many goods and services, including labor. Firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit. That benefit proved particularly attractive to workers and spread rapidly.

~Milton Friedman in his 2001 article "How To Cure Health Care."

Why Central Planning Fails

Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:

First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it.

Second, this "data" is dynamic: It changes without notice. No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.


~John Stossel

Tuesday, November 10, 2009

Rx: Wal-Mart's Healthcare Plan - $50 Office Visits, But Those Unable to Pay Will Be Treated Anyway

BANGOR, MaineComing soon to a Wal-Mart near you: walk-in health care. In Bangor, Monday marked the first day of business at The Clinic at Wal-Mart in the recently opened Stillwater Avenue Supercenter. Additional clinics will open in coming months at stores in Brewer, Palmyra and Presque Isle. Although Arkansas-based Wal-Mart has in-store clinics in many other states, the four northern Maine clinics announced Monday are the first in Maine.

Clinicians at the Wal-Mart clinics — nurse practitioners and physician assistants — can perform physical exams for participation in sports, administer tetanus shots and flu vaccines, and test for high blood sugar, strep throat, urinary tract infections and pregnancy. They will prescribe some medications, but not narcotics or psychoactive drugs.

No appointments are accepted. Patients who have to wait to be seen and are well enough to shop will be issued an electronic pager to alert them when one of the two exam rooms is available. The clinics will be open seven days a week, including some evening hours.

The Clinic at Wal-Mart accepts all insurance coverage as well as MaineCare and Medicare. Those paying cash will be charged $50 for a standard office visit, and more for any testing or vaccines. Those unable to pay will be treated and referred to Eastern Maine Healthcare Systems' charity care office to arrange discounts or installment billing.

Milton Friedman on How The Changing Meaning of "Insurance" Has Contributed to Our Current Mess

Employer financing of medical care has caused the term insurance to acquire a rather different meaning in medicine than in most other contexts. We generally rely on insurance to protect us against events that are highly unlikely to occur but that involve large losses if they do occur—major catastrophes, not minor, regularly recurring expenses. We insure our houses against loss from fire, not against the cost of having to cut the lawn. We insure our cars against liability to others or major damage, not against having to pay for gasoline. Yet in medicine, it has become common to rely on insurance to pay for regular medical examinations and often for prescriptions.

This is partly a question of the size of the deductible and the copayment, but it goes beyond that. "Without medical insurance" and "without access to medical care" have come to be treated as nearly synonymous. Moreover, the states and the federal government have increasingly specified the coverage of insurance for medical care to a detail not common in other areas. The effect has been to raise the cost of insurance and to limit the options open to individuals. Many, if not most, of the "medically uninsured" are persons who for one reason or another do not have access to employer-provided medical care and are unable or unwilling to pay the cost of the only kinds of insurance contracts available to them.

If the tax exemption for employer-provided medical care and Medicare and Medicaid had never been enacted, the insurance market for medical care would probably have developed as other insurance markets have. The typical form of medical insurance would have been catastrophic insurance (i.e., insurance with a very high deductible).

~Milton Friedman in his 2001 article "How to Cure Health Care"

Most Popular C4C Deal: Old Pickups for New Ones

WASHINGTONThe most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevy pickups with new ones that got only marginally better gas mileage, according to analysis of new data by The Associated Press.

The single most common swap — which occurred more than 8,200 times — involved Ford F-150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F-150s. They were 17 times more likely to buy a new F-150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

In at least 145 cases the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. A driver in Michigan traded a 1987 Suburban that got 18 mpg for $3,500 toward a new Silverado pickup that got only 15 mpg. An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg for $3,500 toward a new Volkswagen Rabbit that got only 24 mpg. In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.

HT: Felix Salmon

Monday, November 09, 2009

Cartoon of the Day


Auto Affordability Reaches Record High (21.9 Wks.)

Note: Left scale inverted.
DALLAS/November 9, 2009 – The purchase and financing of an average-priced new vehicle took 21.9 weeks of median family income in the third quarter of 2009, according to Comerica Bank’s Auto Affordability Index. The third quarter reading improved 0.6 of a week, pushing the latest Index reading to the best affordability on record. Median family income was roughly unchanged in the third quarter. The average total cost of a light vehicle, however, fell by $800 to $25,500. The drop mostly reflected a 2.4 percent decline in the average amount spent on a new car.

"The impact of the cash-for-clunkers program cannot be isolated in the data that we use to construct our Index," said Dana Johnson, Chief Economist at Comerica Bank. "However, the average amount that consumers spent on new vehicles in the third quarter was the lowest since early 2004. That along with the monthly pattern of sharp declines in July and August strongly suggests that the federal rebate program was largely responsible for the improvement in affordability this past quarter. In all likelihood, affordability will deteriorate modestly in the current quarter now that these rebates are unavailable."

Cannabis Use in Europe

Via The Economist.

Interesting that two of the European countries known as having the some of the most liberal drug laws (Netherlands and Portugal) in the world have relatively low cannabis usage rates compared to other European countries. Here's a previous CD post on Portugal's experience with drug decriminalization.

De-Linking Health Insurance from Employment Could Possibly Cut Health Insurance Costs By 50%

Click to enlarge.

The chart above compares the average annual costs in 2009 (individual and family coverage) for: a) employer-sponsored health insurance (data from the Kaiser Family Foundation) and b) individual health insurance purchased privately (data from AHIP).

For employer-sponsored health insurance individuals pay only 17% of the total cost (employer pays 83%) and families pay 27% of the total cost (employer pays 73%), compared to private health insurance which is covered 100% by the individuals and families.

Maybe this illustrates one of the biggest problems with health care: our current system of tax-advantaged, employer-sponsored health insurance, which results in family coverage costing 111% more on average than private insurance, and individual coverage costing 62% more on average. Because of the tax advantage, and because consumers are insulated from about 75% of the full cost, there is a tendency to spend much more on health care insurance when an employer purchases it compared to when individuals pay on their own.


Solution: De-link heath insurance from employment. Jeff Jacoby has written about this here and here. Evidence shows that when families buy their own insurance they spend about half ($6,328) of what a typical employer spends ($13,375).

Update: Certainly the details (deductible, co-pays, etc.) and scope of the coverage are different between employer-sponsored and individually-purchased private insurance, as some commenters have pointed out. Another difference is that private insurance premiums are age-adjusted and young people get pretty low premiums (as low as $113 for singles and $214 for families), compared to employer-sponsored insurance which are usually priced the same for all age groups.


Government Cable


Sunday, November 08, 2009

Affordable Private Insurance is Currently Available

Click to enlarge.
According to a recent study by America's Health Insurance Plans (AHIP), "Individual Health Insurance 2009: A Comprehensive Survey of Premiums, Availability, and Benefits":

In the summer of 2009, America’s Health Insurance Plans (AHIP) conducted the latest in a series of comprehensive surveys of member companies participating in the individual health insurance market. The data on premiums and benefits are based on nearly 2.6 million policies in force during May or June 2009, covering approximately 4.2 million people.

Nationwide, annual premiums averaged $2,985 for single coverage and $6,328 for family plans in mid-2009. For single policies, annual premiums ranged from $1,350 for persons under age 18 to $5,755 for persons aged 60-64. For family policies, premiums ranged from $2,573 for policies covering children under age 18 to $9,952 for families headed by persons aged 60-64 (see chart above).

MP: Do we really need Obamacare with a public option when individuals under 40 can buy private insurance right now for about $200 per month or less (see chart above), and families in the group below 45 years old with up to 3.5 average members per family can get private insurance right now for less than $500 per month ($142 per family member)? We keep hearing how expensive health insurance is for the average person, but private insurance seems pretty affordable according to the data from AHIP, about the same or less as a monthy car payment.

Why Obamacare Won't Work: It Will Be Rational for People and Companies to Drop Insurance, Pay Fine

Martin Feldstein explains a fatal flaw of Obamacare in the Washington Post: It will be rational for individuals and companies to drop their current health insurance, pay the penalties, and wait to purchase insurance when they get sick:

A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual's health condition.

This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums. (Separate accident policies might develop to deal with the risk of high-cost care after accidents when there is insufficient time to buy insurance.)

In an attempt to prevent this, the draft legislation provides penalties for individuals who choose not to buy insurance and for employers that do not offer health insurance. But the levels of these fines are generally too low to cause a rational individual to insure.

Consider: 27 million people are covered by health insurance purchased directly, i.e. outside employer-based plans. The average cost of an insurance policy with family coverage in 2009 is $13,375. A married couple with a median family income of $75,000 who choose not to insure would be subject to a fine of 2.5 percent of that $75,000, or $1,875. So the family would save a net $11,500 by not insuring. If a serious illness occurs--a chronic condition or a condition that requires surgery--they could then buy insurance. Since fewer than one family in four has annual health-care costs that exceed $10,000, the decision to drop coverage looks like a good bet. For a lower-income family, the fine is smaller, and the incentive to be uninsured is even greater.

The story is similar for single people. The average cost of an individual policy is $4,800. An individual with earnings of $50,000 would face a fine of $1,250 and would therefore save $3,550 by not insuring.

In short, for those who are now privately insured through employers or by direct purchase, there would be substantial incentives to become uninsured until they become sick. The resulting rise in the cost to insurance companies as the insured population becomes sicker would raise the average premium, strengthening that incentive.

MP: What would make this choice to drop insurance and pay the penalty even more rational is the convenient, low-cost availability of basic health care from 1,200 retail clinics around the country, or through pre-paid plans like the No Insurance Club, or concierge medicine.

Cuban Blogger Yoani Sanchez Detained, Beaten

MIAMI HERALD -- Famed Cuban blogger Yoani Sanchez said Friday she and another blogger were punched and thrown violently into a car by presumed state security agents as they walked to participate in a peaceful march in downtown Havana.

Sánchez, the best-known Cuban blogger on the island and off, said she and bloggers Pardo and Claudia Cadelo and a woman friend were walking to join a "march against violence'' organized by several young musicians when they were intercepted by three men in civilian clothes. Cuba's state security service agents frequently operate out of uniform.

Here's one reaction:

It shows that the Cuba Michael Moore touts and the left praises is nothing but a vicious police goon state. This is the real Cuba. For a long time everyone wondered how Yoani could get away with the blogging she did without coming under fire from the Castroites, and well, now it looks like she can't.

I think they've struck because Castro can't stand the truth coming out about his hellhole regime, Yoani's fame is growing, and Columbia J-School recently offered her an award that the Castroites wouldn't allow her out of the country to accept. Now these animals won't stop till they get her.

HT: Mike Carlson

Update: Here's Yoani's own account of the "Gangland Style Kidnapping."

Saturday, November 07, 2009

Public-Employee Union Troubles in Detroit

On Tuesday, voters in Detroit trudged to the polls and re-elected 65-year-old Mayor Dave Bing, giving him five new city council members to accomplish a mission impossible: bring Michigan's biggest city back from near death. There's no clear prescription that will work, and Detroit's recalcitrant public-employee unions will resist the fiscal therapy that will necessarily be a part of any recovery.

Short term, Detroit's best hope may be to go bankrupt. However, given Michigan law, which has never been tested because no city has ever filed for bankruptcy, it's unclear if even bankruptcy will fully release Detroit from the clutches of its unions and allow it to start over. The only thing certain is that fate is not kind to a city that allows unions to run amok.

Shikha Dalmia, senior analyst at Reason Foundation, in today's Wall Street Journal

Friday, November 06, 2009

Mancession Update: Record Oct. Male Jobless Rate of 11.4%, Female Rate Still 1.6% Below 1982 High

Based on today's Employment Report from the BLS, the male unemployment hit an historical record high in October of 11.4%, surpassing the previous record of 11.2% in December of 1982 (see chart). The female jobless rate increased to 8.8% in October, but is still 1.6% below the record high of 10.4% established in December of 1982. The male-female jobless rate gap of 2.6% in October (11.4% - 8.8%) is just slightly below the record gap of 2.7% set in August.

Public Option = Single Payer = Gov't. Monopoly

1. Among the things that people complain about under the present medical care system are the costs, insurance company bureaucrats' denials of reimbursements for some treatments and the free loaders at hospital emergency rooms whose costs have to be paid by others. Will a government-run medical system make these things better or worse? This very basic question seldom seems to get asked, much less answered.

If the government has some magic way of reducing costs — rather than shifting them around, including shifting them to the next generation — they have certainly not revealed that secret. The actual track record of government when it comes to costs — of anything — is more alarming than reassuring.

2. Ironically, it is politicians who have already made medical insurance so expensive that many people refuse to buy it. Insurance is designed to cover risk. But politicians have mandated that insurance cover things that are not risks and that neither the buyers nor the sellers of insurance want covered.

In various states, medical insurance must cover the costs of fertility treatments, annual checkups and other things that have nothing to do with risks. What many people most want is to be insured against the risk of having their life's savings wiped out by a catastrophic illness. But you cannot get insurance just for catastrophic illnesses when politicians keep piling on mandates that drive up the cost of the insurance. These are usually state mandates but the federal government is already promising more mandates on insurance companies — which means still higher costs and higher premiums.

All this makes a farce of the notion of a "public option" that will simply provide competition to keep private insurance companies honest. What politicians can and will do is continue to drive up the cost of private insurance until it is no longer viable. A "public option" is simply a path toward a "single payer" system, a euphemism for a government monopoly.

~Thomas Sowell's latest column on the "costs" of medical care.

Thursday, November 05, 2009

Ford's Main Problem: The UAW's Crippling Job Classifications and Work Rules

Ford's 2,215 page 2007 master contract with the UAW
1941 UAW-Ford contract
Factory wages aren't Detroit's problem, and strikes are very rare in the auto industry nowadays. The real issue is the job classifications (see top photo of Ford's 2,215 page 2007 master contract with the UAW vs. the 1941 UAW-Ford contract below).

Ford's UAW contract has lots of them, governing who can and who can't perform specified tasks on the factory floor. So if a machine breaks down, an assembly line can come to a halt while everyone waits for the worker with the proper classification to arrive at the scene. If other workers nearby are perfectly capable of fixing the machine, well, that doesn't matter. The number of job classifications is less than it was a decade ago, but it's still far too many to maximize a factory's efficiency.

The classifications and attendant work rules are enforced by union bureaucracies—members of each plant's shop committee, grievance committee, health and safety committee, etc. They're all paid by the companies, as are their legions of corporate counterparts. One man's feather-bedding is another man's job.

All this begs a fundamental, and uncomfortable, question. Can a UAW-represented car company compete effectively, long term, with its nonunion competitors? At the very least, companies organized by the UAW have lots of extra costs to bear at their factories located in the U.S.

It's interesting, then, that Consumer Reports rates the quality of the four-cylinder Ford Fusion higher than the Toyota Camry and Honda Accord, and the Lincoln MKZ higher than its Acura and Lexus counterparts. The Fusion and MKZ are built in a factory without job classifications because it's in Hermosillo, Mexico, and isn't represented by the UAW. If Ford targets future expansion in Mexico, the recent contract vote will spell further decline for a union that, like Detroit's car companies, badly needs cultural change.

"How Ford Is Making Its Comeback: The news from Dearborn is sunny, except for the auto maker's labor relations," in today's WSJ by Paul Ingrassia

Prosperity: Comparing India and China

On a lot of important measures of prosperity, India tops China these days according to the new 2009 Legatum Prosperity Index, read what AEI's Nick Schulz has to say about it here.

Great Depression II? Not Even Close

I'm travelling today to give a talk at the Chicago Federal Reserve Bank branch in Detroit, so might not have a lot of time for new posts, but I have one here at AEI's Enterprise Blog.

In a few years when all of the economic analysis is complete, I think the "Great Recession" of 2008-2009 will be much, much closer in length and severity to the 1973-75 and 1981-82 recessions than anything close to the Great Depression.

Quotes of the Day: Thomas Sowell

1. If we cannot afford to pay for doctors, hospitals and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals and pharmaceutical drugs, in addition to a new federal bureaucracy to administer a government-run medical system?

2.
Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual's own circumstances and preferences.

Politics deals with the same problem by making promises that cannot be kept, or which can be kept only by creating other problems that cannot be acknowledged when the promises are made.


~Thomas Sowell's new column

Wednesday, November 04, 2009

Cut In Half Overnight: Intrade Odds for Healthcare

Intrade odds for Health Care passing by December dropped overnight from 14% yesterday to only 6% today (graph shows 7%, but the current buy price is 6). Could it have anything to do with the election results?

10 Year Nominal-Real Treasury Spread Now at 2%

The spread between nominal 10-year treasuries (data) and 10-year TIPS (data) has increased to about 2% this week, up from almost 0% at the beginning of the year. The 200 basis point spread is still below the 250 basis point average during 2004, 2005, 2006, 2007 and the first half of 2008.

According to
Scott Grannis:

Inflation expectations have been slowly working their way higher all year, and it shows up in the combination of declining real yields on TIPS, as demand for TIPS's inflation expectation increases, and rising nominal yields, as demand for unprotected bonds declines.

I've argued many times this past year that the bond market is not the best place to go looking for signs of inflation. That's because the bond market is heavily influenced by what the Fed says and does, and the Fed is not always right about the direction of inflation. Bonds (and the Fed) tend to be late to the inflation or deflation party, and that's one way that inflation or deflation feeds on itself.

So while the bond market's inflation expectations have increased substantially this year, it is not really sending any warning signals about inflation.

MP: The current WSJ consensus forecast for inflation in June 2010 is 1.8% (with outliers Mark Nelson forecasting 4.7% and Brian Wesbury/Bob Stein forecasting 3.6%) and 1.8% again for December 2010 (with Nelson at 5.2% and Wesbury/Stein at 3.8%).

Jacoby's "Public Option": More Choice

More competition among health insurers is a consummation to be devoutly wished. But there are better ways to get there than a public option. Here are three:

■Tear down the barriers to buying insurance across state lines.

Repeal mandatory benefits that make health insurance needlessly expensive.

De-link health insurance from employment.

Read more here of Jeff Jacoby's column in the Boston Globe.


Enjoy a Turkey Dinner for Eight for $20

You can also pick up a $298 HP Notebook computer, 42-inch Sharp HDTV for $498, or a Panasonic plasma HDTV for $788.

Where else?

Dow Jones Economic Sentiment Indicator Rebounds to Highest Level Since August 2008

NEW YORK, November 2, 2009The Dow Jones Economic Sentiment Indicator (ESI) rose to 36.9 in October, up from 34.1 in September as a result of positive media coverage of ongoing stock market gains and news that the gross domestic product rose at an annual rate of 3.5 percent in the third quarter (see chart). The gain in the ESI runs counter to unexpectedly large drops in two leading consumer-based economic indicators.

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the coverage of 15 major daily newspapers in the U.S. The ESI has risen 10 out of 12 months since its low of 22.2 in November 2008, data that confirm the consensus among economists that the U.S. recession ended sometime early in the summer.

A gain in the ESI historically indicates improvement in the labor market, but significant improvement may still be months away. In past economic recoveries, increases in the ESI have lead improvements in non-farm payroll by two to five months and improvement in the unemployment rate by five to seven months.

The ESI represents one of the most comprehensive and far-reaching examinations of media coverage as an economic indicator. The ESI’s back-testing to 1990 shows that the ESI clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators.

False Lessons of History for Policy Guidance

The true lesson to be drawn from business cycle history is that, if left to run their natural course, severe downturns are followed by rapid snapbacks. For example, during the 1921 recession, wholesale prices, industrial production, and manufacturing employment fell by 30% or more, reaching their low in mid-1921. But, absent government intervention, the economy recovered naturally, and by early 1922, it had fully recovered, from its mid-1921 low.

Far from saving the patient, government intervention (in the 1930s) came close to killing it. But you wouldn't know it from listening to the current discourse about the Panic of 2008-09. Indeed, politicians and pundits throughout the world have unfortunately dialed back to the Great Depression and drawn on the false lessons of history for policy guidance and justifications for their mega-interventions.

~Steve Hanke, Professor of Economics, Johns Hopkins University


"Bringing Down the Cost of Medical Care"

Although it is cheaper to buy a pint of milk than to buy a quart of milk, nobody considers that to be lowering the price of milk. Although it is cheaper to buy a lower quality of all sorts of goods than to buy a higher quality, nobody thinks of that as lowering the price of either lower or higher quality goods. Yet, when it comes to medical care, there seems to be remarkably little attention paid to questions of both quantity and quality, in the rush to "bring down the cost of medical care."

There is no question that you can reduce the payments for medical care by having either a lower quantity or a lower quality of medical care. That has already been done in countries with government-run medical systems.

You can save money by cutting down on medications to relieve pain, as is already being done in Britain's government-run medical system. You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.

In the United States, the government has already reduced payments for patients on Medicare and Medicaid, with the result that some doctors no longer accept new patients with Medicare or Medicaid. That has not reduced the cost of medical care. It has reduced the availability of medical care, just as buying a pint of milk reduces the payment below what a quart of milk would cost.

But reducing these things is not "bringing down the cost of medical care." It is simply refusing to pay those costs-- and taking the consequences.

~Thomas Sowell latest column "The "Costs" of Medical Care: Part II"


Tuesday, November 03, 2009

Markets in Everything: Pay-By-The Mile Insurance

A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the "tank" runs dry, motorists buy more.

"We absolutely anticipate coming to California," said Chris Gay, MileMeter founder and chief executive officer. "Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address."


HT: Economics 101