Ragout

The Baker Plan to Eliminate Private Drug Development

2005-10-18T21:45:00.000-04:00

Personally, I'm very sympathetic to the Baker plan to have the government get more involved the later stages of drug development. Progressive economist Dean Baker wants the government to start funding clinical trials and develop drugs that would then be released into the public domain. Although the government spends a lot on pharmaceutical research now, they mainly fund basic research and leave the private sector to take the drugs to market. I'd be happy to throw in a billion dollars of taxpayer money to fund Baker's plan.

I think that eventually, it would probably succeed well enough to justify spending 10 or 20 billion a year. But Baker seems keen to go whole hog, and eliminate private drug research and patents as soon as possible. And that scares me.

Patents have worked tremendously well for hundreds of years. The track record of Baker's system is what exactly? That it would probably succeed just isn't good enough to justify anything more than evolutionary change. The stakes are, after all, life and death. And keep in mind that the promised payoff from the Baker plan is a few hundred bucks a year per person.

And it's easy to think of reasons to be cautious about the Baker plan for eliminating all private drug research. The Christian right is currently fighting the "morning after" pill and even a vaccine that prevents cervical cancer, because they believe both will encourage sexual activity among women. If government were the only institution funding drug development, religious fundamentalists would have a much easier time killing drugs they don't like.

Similarly, if Baker or Marcia Angell were in charge, I'd imagine they'd stop research into the "me too" drugs they're constantly criticizing. Which might leave us with drugs like Vioxx (which causes heart attacks) and not the "me too" alternative Celebrex, which doesn't seem to have the same problems.

So, in the end, I think Baker has a good idea, but he tries to make it sound as radical as possible. Consequently his plan sounds a whole lot worse than it would if he were actually trying to pitch his idea and convince people. I really don't understand what Baker's game is here.

Reforming Drug Research: First Do No Harm

2005-10-17T22:34:00.000-04:00

Presswatching economist Dean Baker has an interesting post over at MaxSpeak, proposing that the government take over financing all drug research. Baker points out that the government already provides most funds for basic research. He thinks the feds could also do at least as good a job as the private pharmaceutical companies that currently fund drug development with the support of profit-raising patents:

Why shouldn't we believe that if we doubled [federal drug research spending], to replace the $25 billion that the drug industry claims to spend on drug research (two-thirds of which goes to research copycat drugs) that we would end up with at least as good progress in developing drugs as what we have at present?

It seems to me the current system works awfully well at producing lots of amazing new drugs. I think we ought to place a high priority on not messing up a good thing. "First, do no harm," as doctors like to say.

So why not start "small" at, say, a billion dollars a year? That would be enough to start developing at least a dozen new drugs, a few of which would eventually prove beneficial. If it looks like we're getting somewhere, we can up the funding in a few years. But it's crazy to start by eliminating patents, which I think is what Baker has in mind. Certainly that's his long-term goal, and he places great emphasis on the evils of patents in his writing.

Really, there's no choice but to start small. To put Baker's idea into action, we'd have to set up a nonprofit or a new government agency, and let them try their hand at picking drugs and running drug trials to test for safety and efficacy. I don't know of any existing institution (other than the drug companies) that can do this.

Baker and lefty Congressman Dennis Kucinich suggest that the NIH and universities could replace the pharmaceutical companies. But drug development is mostly a hard, unglamorous slog. It's not the kind of thing academic researchers want to do. And it involves a large administrativeapparatuss to recruit thousands of patients into drug trials and collect data. Again, the NIH and Universities just aren't set up to do this kind of thing.

So there's no way to start spending $25 billion a year tomorrow, or even in the next decade. We'd have to build entirely new institutions.

So instead of trying to score rhetorical points by proposing to turn the existing system upside down, why try something modest? There will be plenty of political points to be scored when something so obviously reasonable is killed by the right and the drug companies.

The Washington Consensus: "Ideology, not Analysis"

2005-09-13T23:15:00.000-04:00

Brad DeLong discusses a fascinating debate between a Harvard economist and a Yale economist about the sources of India's remarkable growth. A common view is that India's growth acceleration is due to the neoliberal reforms that began in 1991: free trade, lowering tariffs, deregulating business, rolling back the "license raj," and so on.

A typical purveyor of this view is Thomas Friedman, according to Harvard's Dani Rodrik and the IMF's Arvind Subramanian. They quote a Friedman interview with a prominent Indian industrialist, who described "the cumbersome bureaucratic rules and pervasive state ownership that suffocated the Indian private sector," until the 1991 reforms, when "Our Berlin Wall fell."

It was like unleashing a caged tiger. Trade controls were abolished. We were always at 3 percent growth, the so-called Hindu rate of growth--slow, cautious, and conservative. To make [better returns], you had to go to America. Well, three years later [after the 1991 reforms] we were at 7 percent rate of growth.

As Rodrik and Subramanian point out in a compelling paper, the problem with this story is that India's growth in the 1980s wasn't at all slow. In fact, it was just as rapid as it's been since 1991. India's growth miracle began around 1980, long before the neoliberal "Washington consensus" reforms.

The Yale economist, critiquing the Harvard study, doesn't deny that the growth takeoff began long before the 1991 reforms, but argues that India's growth in the 1980s wasn't sustainable because it was driven by an expansion of the public sector. I think the Harvard side rebutted the "growth due to unsustainable deficits" theory in the original paper*, and I won't try to summarize the whole debate.

But I was particularly struck by just how weak some of the "unsustainable growth" arguments really are, despite having apparently gained widespread acceptance, from Friedman's spot on the Times' op-ed page to the hallowed halls of Yale.

The Yale guy says that India's expansion was "fueled by" the expansion of government, including "real wage expansion in the public sector." If you read his footnote, you learn that public sector wages grew a factor of 3.45, while prices grew by a factor of 2.37 during the 1980s. Do some division and take a 10th root, and you find that real government wages grew by 3.8% per year. Is that fast or slow? Well, in the economy as a whole, labor productivity growth was also just about 3.8% per year in the 1980s! (Rodrik and Subramanian Table 1).

So India's bureaucrats were just keeping up with their private sector counterparts! Wage increases just sufficient to keep pace with economy-wide productivity gains are hardly evidence of expanding government. So this Yale argument seems truly lame.**

With academic understatement, Rodrik and Subramanian nicely sum up the problem with their critics:

We suspect that there is a tendency to dismiss the growth of the 1980s because it makes the subsequent reforms less impressive ("since the system was not reformed, any growth that came out should have been unsustainable--i.e., bad growth"). But that would be just ideology, not analysis.

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* Rodrik and Subramanian point out that the only way that "Keynesianism run amok" could cause the India's huge surge in productivity during the 1980s is by putting unused resources to work: raising capacity utilization in factors and lowering unemployment. But that didn't happen, they argue, at least not on a large enough scale to explain much of the productivity acceleration.

** This is just econ 101 stuff. The "law of one price" predicts that wages will tend to rise at the rate of economy-wide productivity. If private sector productivity and wages are rising, public sector wages have to rise too, even if government productivity isn't increasing. If public sector wages don't rise, bureaucrats will quit their government jobs and get higher-wage jobs in the private sector, as middle management in a factory, say. So basic economics predicts that public sector wages will tend to keep up with private sector wages, assuming the government doesn't want to see all its best workers leave.

New Orleans Evacuees: "Sort of Scary"

2005-09-07T00:56:00.000-04:00

How to explain the behavior of the authorities?

Why did FEMA turn away the Red Cross and many others who offered to help? Why were the Superdome and Convention Center locked down, and the evacuees forbidden to leave? "Worse than a prison," said one Superdome occupant. "We've virtually made them prisoners," said the Sheriff of neighboring Jefferson Parish, who had ordered his forces to surround a group of evacuees in an open field.

Why were people packed onto busses and planes without being told whether destination was Baton Rouge, Houston, or Utah?

Why were friends and relatives forbidden to enter the city and transport their loved ones to safety? Why were bridges out of town blockaded by armed police? I've seen relatively little about these hard-hearted practices in the mainstream press: the last two links are to horrifying first-hand accounts.

Presumably the authorities placed their first priority on preventing looting in the French Quarter or the wealthy neighborhoods of Jefferson Parish, both a short walk away from the Convention Center and Superdome. One National Guard General described his units' role as conducting "combat operations" against an "insurgency."

Preventing looting is a worthy goal, to be sure. But not a goal that justifies treating tens of thousands of people like animals. And not a goal worth people's lives.

How could the authorities decide to treat everyone in New Orleans as a potential looter, rioter, insurgent? The simplest explanation seems to be that they view poor black people with tremendous contempt and fear. An attitude nicely summed up by Barbara Bush's comment on the evacuees in Houston, "what I'm hearing, which is sort of scary, is they all want to stay in Texas."

Compare and Contrast

2005-08-31T22:13:00.000-04:00

A while back, Jane Galt quoted a passage that caught her eye from a National Review article about Germany:

Indeed, to Schroeder's eye, there is hardly anything worth cutting, right down to the generous dental benefits. "“I do not want to return to an era when you can judge someone'’s wealth by the state of their teeth," ”he observed.

Galt thinks the poor get pretty fine dental care in the U.S., pontificating:

The reason that I comment on this is that one thing you can't tell people's wealth by, in the dog-eat-dog dystopia that is America, is their teeth. Their sports gear, their vacations, their choice of dinner spot, yes, but not their teeth, at least not where I am.

Instapundit Glenn Reynolds found the whole thing pretty funny. Galt's post caught my eye too, because it seemed pretty callous and uniformed. Out of sight, out of mind, say Galt and Reynolds. Last week, the unblinking Malcolm Gladwell supplied the perfect rebuttal in a fascinating New Yorker article about health care in America.

Several years ago, two Harvard researchers, Susan Starr Sered and Rushika Fernandopulle, set out to interview people without health-care coverage for a book they were writing, "“Uninsured in America."” They talked to as many kinds of people as they could find, collecting stories of untreated depression and struggling single mothers and chronically injured laborers--and the most common complaint they heard was about teeth. Gina, a hairdresser in Idaho, whose husband worked as a freight manager at a chain store, had "a peculiar mannerism of keeping her mouth closed even when speaking." It turned out that she hadn't been able to afford dental care for three years, and one of her front teeth was rotting. Daniel, a construction worker, pulled out his bad teeth with pliers. Then, there was Loretta, who worked nights at a university research center in Mississippi, and was missing most of her teeth. "They'll break off after a while, and then you just grab a hold of them, and they work their way out,"” she explained to Sered and Fernandopulle. "“It hurts so bad, because the tooth aches. Then it'’s a relief just to get it out of there. The hole closes up itself anyway. So it'’s so much better."”

....

If your teeth are bad, you'’re not going to get a job as a receptionist, say, or a cashier. You'’re going to be put in the back somewhere, far from the public eye. What Loretta, Gina, and Daniel understand, the two authors tell us, is that bad teeth have come to be seen as a marker of "“poor parenting, low educational achievement and slow or faulty intellectual development."” They are an outward marker of caste. "“Almost every time we asked interviewees what their first priority would be if the president established universal health coverage tomorrow,"” Sered and Fernandopulle write, "“the immediate answer was '‘my teeth.'"”

Like Galt and Insty, I also rarely (but not never) see people with really bad teeth. No doubt like them, the poorest people I regularly come into contact with are behind the cash register or sweeping the floors. I don't ride the early-morning bus with home health care aides or spend much time in slaughterhouses with poultry workers. But unlike Galt and Reynolds, I don't assume because I rarely see it in my day to day life that a problem doesn't exist.

Vioxx: Excess Deaths, Excess Liability?

2005-08-29T22:06:00.000-04:00

In the reporting about Vioxx, I've seen a lot of citations of epidemiological estimates of the excess deaths and heart attacks, which range from 35,000 to 160,000. I've also seen a lot of estimates of Merck's potential liability, which are said to range from a few billion dollars up to $50 billion. But I haven't seen any estimates of the figures you'd actually need to estimate the potential liability. It seems to me that the relevant figures are simply deaths, not "excess" deaths.

"Excess" deaths are something of a statistician's fiction. It's not like there's any clear method to distinguish someone killed by a Vioxx-induced heart attack from a Vioxx user who would have had a heart attack anyway. To see what I mean, consider the estimates of David Graham, the FDA whistleblower-scientist.

Graham finds that about Vioxx users suffered heart attacks (fatal and not) at a rate of about 8 per 1000 person-years. Those using other anti-inflammatory drugs had a rate of 5 per 1000 person-years. The difference, 3 per 1000, is an estimate of excess heart attacks (it's not actually the estimate Graham uses, but it's close).

Since, Vioxx was used for about 10 million person-years, we get:
80,000 heart attacks among Vioxx users
50,000 heart attacks among similar patients using other drugs
which implies 30,000 excess heart attacks.

The final number (30,000) is what the epidemiologists focus on, and what gets reported in the newspapers. But the total number of heart attacks (80,000) is the relevant count of legitimate lawsuits. It's not like the coroner can examine the blood clot clogging somebody's arteries and look for Vioxx molecules. Although randomized trials have shown that Vioxx raises the likelihood of heart attacks, they don't tell us which particular Vioxx user died because of the drug, and which ones would have died anyway. So Merck's potential liability is awfully big (I'm shorting their stock).

From the point of view of economic efficiency, I think Merck is going to end up paying too much, even leaving aside any bogus lawsuits that are filed. Merck ought to be liable for the excess heart attacks and other diseases they caused, not the illness that would have occurred if Vioxx had never been invented. But even though only about a third of the heart attacks suffered by Vioxx users were actually caused by Vioxx, there's no way to tell which are which. So Merck will probably end up paying for all of them.

I don't see any way around this, except for dividing the court awards by three, which might not be such a bad idea.

Vioxx Verdict: AEI Cries "Junk Science"

2005-08-26T00:35:00.000-04:00

Predictably, conservative "tort reformers" are now proclaiming that the Vioxx verdict -- finding the makers of the popular painkiller liable for the death of a patient -- is nothing but "junk science." It's testimony to the power of a conventional narrative that anyone can make this claim with a straight face.

As I blogged a couple days ago, there's pretty overwhelming evidence -- including two large, randomized trials (the VIGOR and APPROVE studies) -- that Vioxx causes heart attacks. Even a layperson can easily verify the medical consensus by reading editorials in the most prestigious medical journals, which express no doubt.

But the American Enterprise Institute's John Calfee claims to know better than the medical journal editors, writing, "junk science now threatens to reign supreme in drug litigation."

The lawyers had to surmount the views of FDA and Canadian expert panels that Vioxx was safe enough to return to the market; evidence that, to the extent that Vioxx was dangerous, it wasn't necessarily any more dangerous than other drugs; and the inconvenient fact that the deceased in the case had died of heart arrhythmia, a cardiac problem not associated with Vioxx.

But none of Calfee's claims are true. Yes, the FDA expert panel did vote 17-15 to return Vioxx to the market, but

"Many of the panel members who were among the narrow majorities approving continued marketing of Bextra and Vioxx did so only with the stipulation that severe restrictions be imposed on their uses," according to one panel member, who added that "he expected that the uses of the drugs would be confined to very limited patient populations."

The transcript of the meeting is online, so it can be easily verified that this is an accurate description of the discussion. Vioxx does have some advantages over other drugs, but the experts say its dangers mean that it should be used at low doses, for limited times, on patients with a low risk of heart disease. In other words, it should be a niche drug, not a multi-billion dollar blockbuster drug.

Yes, the FDA, possibly being overcautious, suggested that alternative drugs like Advil and Aleve might be just as dangerous as Vioxx, but this is just an educated guess, not something based on strong evidence. As Calfee himself points out, "Advil and older prescription and over-the-counter arthritis treatments...[have] not been subjected to long-term clinical trials like the one that seemed to reveal heart problems with Vioxx." If you look at the FDA panel transcript, you'll see that many panel members suggested that Vioxx should only be used after the over-the-counter remedies have failed.

Yes, the doctor who performed the autopsy did find the cause of death to be arrhythmia rather than a heart attack. But that same doctor ended up testifying for the plaintiff that it was a heart attack that triggered the arrhythmia! And University of Michigan pharmacology professor Benedict Lucchesi, "who has studied heart arrhythmias for more than four decades," testified that Vioxx "contributed significantly" to the death.

In other words, Calfee and the "tort reformers" think the views of a pharmacology professor at a top university, the FDA advisory panel, and the editors of major medical journals are "junk science." With the whole medical establishment in the wrong, it's hard to imagine where we can find any "sound science." At the American Tort Reform Association and the AEI?

The Evidence Against Vioxx

2005-08-24T01:41:00.000-04:00

Blogging UCSD economist James Hamilton waded into epidemiology yesterday but appears to have been dragged under by the libertarian Reason magazine. Hamilton devotes most of his post to arguing that "studies suggest but can't prove" that Vioxx causes heart attacks. Hamilton is concerned about a recent jury verdict that found manufacturer Merck liable for the heart attack death of a Vioxx user.

Before going into the specifics, it's worth noting that the editors of the top medical journals don't share Hamilton's doubts about Vioxx's harmfulness. Lancet is the most vociferous:

"The licensing of Vioxx and its continued use in the face of unambiguous evidence of harm have been public-health catastrophes." [Lancet editorial, requires paid registration]

I've put excerpts from the JAMA and NEJM editorials at the end of the post.

Why are these editors so sure that Vioxx causes heart attacks? Because, unlike Hamilton, they don't rely on only one study [the link is to the free, preliminary version. Published version here.]. Since Vioxx was approved in 1999, studies have been piling up demonstrating the harmful effects of Vioxx. The best of these studies (because it was a randomized trial) found that Vioxx nearly doubled the risk of heart attack compared to a placebo.

Hamilton's most misleading statement is that Vioxx causes a "1 in 4,000 risk of dying from a heart attack." The casual reader might fail to notice that Hamilton says "dying from a heart attack," not having a heart attack. In fact, the FDA study Hamilton discusses says that 1 in 75 of those using Vioxx at high doses will suffer a heart attack due to using the drug (and 1 in 397 of those using low-dose Vioxx). These are "excess" heart attacks, in addition to those the patients would normally suffer. Before Vioxx was pulled off the market, it was pretty commonly used at high doses -- 18% of prescriptions, according to the FDA study.

Why the difference? Why does Vioxx seem to cause heart attacks but not deaths from heart attacks? Well, there probably is no difference. It seems much more likely that the issue is simply that many people survive heart attacks, so studies examining deaths rather than attacks will simply have a smaller sample, and so be unable to prove much of anything. In addition, the Vioxx studies have relatively short follow-up periods, mostly two years or less. Longer studies would be needed to observe the fatal second (third, fourth, ...) heart attacks.

Ultimately, Hamilton is upset that a jury is responsible for "evaluating the scientific merits of statistical evidence." While jury trials may not be the perfect system, in this case the 12 members of the Vioxx Jury managed to come to the right conclusion.

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Editorials in Top Medical Journals

The recent withdrawal of rofecoxib from the market because of adverse cardiovascular events identified in the unpublished Adenomatous Polyp Prevention on Vioxx (APPROVe) study has raised major concerns about the undue control of industry over postmarketing safety data. Topol pointed out that although he and his colleagues published a clear warning about the cardiovascular toxicity of rofecoxib in 2001, the FDA never insisted on a trial to determine the extent of the problem and the manufacturer countered with a "relentless series of publications . . . complemented by numerous papers in peer-reviewed medical literature by Merck employees and their consultants." [Jama Editorial, requires free registration]

The Adenomatous Polyp Prevention on Vioxx (APPROVe) trial, a study of patients with a history of colorectal adenomas, was stopped early because rofecoxib doubled the risk of major cardiovascular events (relative risk, 1.92; 95 percent confidence interval, 1.19 to 3.11). These findings confirmed the increased risk of myocardial infarction previously seen in the Vioxx Gastrointestinal Outcomes Research (VIGOR) trial [NEJM Editorial, requires paid registration].

It's Zucchini Season!

2005-08-08T23:35:00.000-04:00

Zucchini and other summer squash are in season right now and I've been experimenting with Zucchini pancakes. You didn't know you could convert squash into pancakes? Neither did I, but they're quite good.

The goal is to get the zucchini to brown and stay crisp. But the zucchini is full of water, so it wants to steam. One could attack this problem by salting the zucchini, draining it in a colander for half an hour, and finally squeezing out the water. But that's too time-consuming. Also, salting and draining is supposed to make the squash less bitter, which I consider a drawback.

So instead, you grate the zucchini coarsely and mix in some cornmeal (or flour or minute-oats or some other starch). The ratio I've been using is about two tablespoons of cornmeal to 1 medium squash, but it doesn't matter much. The cornmeal absorbs the water and binds the zucchini into a patty. If you saute the patty at this point, you tend to get cornmeal mush with crunchy zucchini embedded in it: the mush seems to protect the vegetable.

This mush is actually pretty good, but I haven't succeeded in browning it. To get a pretty, browned, pancake, you need to stir in a beaten egg too. Oh, and you need more oil than the thin coat you'd use for sauteing. The celebrity chef Emiril has a recipe for Zucchini Bam! cakes along these lines.

And that's how you take a wholesome vegetable, and it a few simple steps turn it into something attractive and delicious, and still maybe somewhat healthy.

Is Zoning Causing a Housing Affordability Crisis?

2005-08-03T00:14:00.000-04:00

Everyday Economist Steve Landsburg wrote one of his better columns in Slate last week, eschewing his usual attempts to push neoclassical economics to the point of absurdity. Instead, he summarizes a recent empirical study Urban Economists Edward Glaeser and Joe Gyourko. Writing in the Cato Institute's Regulation, G&G argue that

If policy advocates are interested in reducing housing costs, they would do well to start with zoning reform. Building small numbers of subsidized housing units is likely to have a trivial impact on average housing prices (given any reasonable demand elasticity), even if well-targeted toward deserving poor households. However, reducing the implied zoning tax on new construction could well have a massive impact on housing prices. [A somewhat more technical paper is available too]

Glaeser & Gyourko's argument is mainly empirical: they claim to be able to split land prices up into two components: the fixed cost of acquiring a parcel of land, and the marginal cost of an additional square foot. Landsburg calls this fixed cost the "mystery component," and summarizes G&G's argument pretty well:

When you buy a house, you're not just paying for the land and construction costs; you're also paying for a building permit and other costs of compliance. You've got to get the permits, pass the zoning and historic preservation boards, ace the environmental impact statement, win over the neighborhood commission, etc. If Glaeser and Gyourko are right, that's the mystery component right there.

I'm fairly sympathetic to this idea. These kind of regulatory costs surely drive up the price of housing in some places, especially in the exurbs, where zoning can restrict minimum lot sizes to 10 acres or more.

Unfortunately, G&G aren't talking about the exurbs or even the suburbs, they're talking specifically about big cities like San Francisco and Dallas. There are certainly restrictions on building in central cities too, but there are also a lot of other possibilities for the "mystery component" of land prices.

The most obvious candidate the "mystery component" of land prices is just the pre-existing housing stock, which is going to impose a lot of constraints on any new construction. One can't simply tack on an extra story to an old building because land prices are high.

If you want to replace a single-family home with three townhouses, you have to tear down the existing house first. Even with a vacant lot, builders have to do a careful survey to avoid cutting underground utility cables and pipes, and to avoid building on land with toxic waste like a leaky underground oil storage tank. And of course, just finding a vacant lot in big built-up cities is costly and time consuming. Not to mention that building one infill house at a time is more expensive than building house as part of a large tract of new homes.

All these drive up the price of housing. And they're also all probably captured in G&G's "mystery component" of land prices, because they're all fixed costs. They're start-up costs that need to be paid before construction can begin, and that don't vary much with the size of a lot. It costs the same to tear down an old house whether or not it has a big yard.

So, there's at least some reason to think that G&G's promise of a "massive" drop in house prices from weaker zoning is exaggerated. But even if they're right, it isn't clear that weakening zoning in big cities is a good idea. Zoning is most needed precisely in big cities where people live close together. Sure zoning has costs but as G&G acknowledge -- at least in the more technical version of their paper, if not the Cato version -- zoning has benefits too.

If There Was a Housing Bubble In Wichita, Would Anybody Notice?

2005-07-19T22:36:00.000-04:00

It's often said that while there may be a housing bubble in some areas, especially big cities on the coasts, there isn't a nationwide bubble. But what if there's a nationwide bubble in land prices, a bubble that's being masked because land just isn't a very big of house prices in many places?

One of many recent statements of the idea that the house price boom is confined to a few areas comes from Greenspan-in-waiting Ben Bernanke, who recently argued,

While speculative behavior appears to be surfacing in some local markets, strong economic fundamentals are contributing importantly to the housing boom.

Econbrowser James Hamilton chimes in:

I would argue that the huge differences across communities in the rate of housing appreciation are much more of an embarrassment for Bernanke's critics than they are for him. Those challenging Bernanke's interpretation are forced to suggest that there are hundreds of separate little bubblets, expanding in different communities at curiously different rates.

One simple point that hasn't received enough attention is that standard statistics on house prices actually measure a combined package that includes both land and the structures built on them. And we'd only expect a bubble in land prices, not in the price of structures.

The price of structures will be constrained by the cost of construction. The price of houses themselves (absent the land) can never rise much over the cost of building a new one. On the other hand, it's pretty hard to make more land, so as long as the demand is there, the price can go sky-high. In the language of econ 101, the supply of structures is quite elastic, while the supply of land is very inelastic.

It may seem a little odd to think of land and houses being sold separately. But if we imagine a city with abundant land, it's pretty easy to see that we can't have much of a boom in house prices. If house prices start to rise, people will just build new homes instead of buying existing ones, and prices will fall back down.

In high-priced areas, land is a bigger portion of house prices, probably a much bigger portion. In Wichita, land may be only 10% of the price of a house (of the house-land package, that is), while in New York City, 90% of the value of a house or apartment may be in the land. If land prices doubled nationwide, people in Wichita would hardly notice: the price of a house would only go up by 10%. But in New York, house prices would go up 90%.

At a casual glance, this is exactly what's been happening, with booming prices in places that already were high-priced to begin with. We can test this a little more rigorously by estimating a regression. The regression tests whether there is a relationship between rents in the initial year and later house price growth. The idea is that cities with high rents are cities where land prices will be a high fraction of the house price package.

Specifically, I regressed the percent change in house prices from the first quarter of 2000 to the first quarter of 2005 (measured by Freddie Mac) on the natural log of median rent in 2000 (from Census 2000), for the 163 metro areas tracked by Freddie Mac. The graph below plots the data. The regression equation is

(House Price Growth) =	-5.74 +	0.97 ln(Median Rent),	N=163 Metro Areas
	(-8.43)	(9.18)

The t-statistics in parenthesis indicate that the effect of initial rent on later house price growth is highly significant. The t-stat of 9.18 is way above the cutoff of 2 that's usually taken to indicate statistical significance. The correlation between the two variables is 0.59, fairly high. So the regression shows that the boom in house prices has been much stronger in areas where rents were high initially. I also tried this regression with initial house prices (also from the census) instead of rents, and got similar but slightly weaker, results (t=7.6).

Now the regression doesn't prove that there's a bubble, that the house price boom has been driven by speculation rather than favorable fundamentals like low interest rates. But it does provide an answer to Hamilton's "embarrassment ... of hundreds of separate little bubblets." It suggests that something is happening nationally, not just in certain cities.

Is there a nationwide bubble in land prices, that's being masked by the fact that we only measure the combined price of land and structures? I'm not sure, but it is consistent with the data.

[hat tip to Bostic, Longhofer, Painter, and Redfearn, whose recent paper emphasizing the importance of land prices inspired this post]

Why Lee Got Spanked at Antietam

2005-07-14T23:40:00.000-04:00

A debate over a statue of Confederate General Robert E. Lee at the Civil War battlefield of Antietam has turned into a debate in the Washington Post's letters to the editor over Lee's role in the battle. I'll leave aside the question of why we need yet another statue commemorating someone who rebelled against his own country in order to protect white Southerners' right to own slaves.

Antietam was the bloodiest single day in the Civil War with about 6000 killed, split fairly evenly on both sides; more casualties than at D-Day in WWII. At the time, it was seen as a great Union victory. After all, Lee had invaded the North, accomplished little, and been forced to retreat back to Virginia. It was the victory Lincoln had been waiting for in order to announce the Emancipation Proclamation. And in Europe it pretty much ended all talk of Britain intervening on the Confederate side. According to historian James McPherson, Antietam was the crucial turning point in the war.

Perhaps aware of this history, one Lee critic writes to the Post's editors,

The monument commemorates a battle that Lee lost -- a battle that many of his officers (those who survived) thought never should have been fought. The Battle of Antietam forced the Confederate general to retreat to Virginia.

Another Post reader responds:

Lee was outnumbered roughly 2 to 1, yet through his usual generalship he managed to fight to a tactical draw. Yes, he withdrew to Virginia, a retreat that is still taught at West Point today.

The problem with this argument is that it was no accident that Lee's army was outnumbered at Antietam. Lee's troops had melted away on the march north. As Lee reported just before setting out, "The army is not properly [equipped?] for an invasion of an enemy's territory. It lacks much of the material of war, is feeble in transportation, the animals being much reduced, and the men are poorly provided with clothes, and in thousands of instances are destitute of shoes."

Yet Lee invaded anyway, hoping that his army's deficiencies would be made good by an uprising of Marylanders in support of the Confederacy. But that never happened.

Lee lost perhaps 10,000 of his 55,000 man army on the road north, according to McPherson. Lee himself put the figure higher, reporting a few days before the Antietam battle, "One great embarrassment is the reduction of our ranks by straggling, which it seems impossible to prevent with our present regimental officers. Our ranks are very much diminished-I fear from a third to one-half of the original number." Although many of those stragglers may have eventually turned up, the fact is a large proportion of Lee's army didn't make it to Antietam, either because they were too weak and underequipped to make the journey, or because they deserted.

Lee thought desertion was common, reporting after the battle that "Some of the stragglers have been gathered in, but many have wandered to a distance, feigning sickness, wounds, &c., deceiving the guards and evading the scouts. many of them will not stop until they reach their distant homes." One of his generals thought that Confederate troops were throwing away their shoes in order to have an excuse not to march on.

So Lee lost the battle long before any of his men ever saw Antietam Creek. He lost it when he sent his underfed, underclothed, demoralized men off on their march northwards.

Economists Say the WTO Hurts the Chinese Poor?

2005-07-13T01:19:00.000-04:00

Titled "Rural Poor Aren't Sharing In Spoils of China's Changes -- Costs of Goods Rise, Standard of Living Falls" Peter Goodman's article in today's Washington Post claims that conditions are dire in rural China.

A recent study conducted by the World Bank found that incomes among rural Chinese -- about three-fourths of the total population -- have declined slightly in the years since China entered the WTO, while urban residents have enjoyed modest gains.

Economists say this trend underscores the downside of globalization: While free trade has proved highly efficient in generating wealth, it has failed to share the spoils, intensifying gaps between rich and poor, urban and rural.

No doubt "economists" do say that globalization can increase inequality, in the sense that the rich may gain faster than the poor gain. But I would be pretty surprised to find any economist claiming that the poor have actually seen declining incomes in China. If it were true, this would be a huge turnaround from the 1990s, which saw tremendous reductions in poverty, according to numerous studies, including another World Bank report:

Between 1990 and 2000, the number of people living on a dollar per day fell by 170 million during a period when total population rose by over 125 million. Over the past two decades, China accounted for 75 percent of poverty reduction in the developing world.

According to Goodman, this new World Bank study of the WTO also contradicts China's goverment statistical agency, which reports continuing declines in poverty since China entered the WHO.

Of course, Goodman is wrong. He's entirely misunderstanding the World Bank's recent report on the impact of the WTO on China.

He seems to be talking about chapter 15 of the report, "Welfare Impacts of China's Accession to the WTO." The key word here is impacts. The World Bank is predicting the effect of the WTO on the distribution of income in China, based on an elaborate model. They're not describing trends; they're predicting that, in the short run, the dramatic gains experienced by China's rural poor will slow down a little. In the first few years, rural poverty will continue to decline, but not by quite as fast as it would have without the WTO.

Specifically, the World Bank predicts that China's poorest city-dwellers will enjoy an increase of 1.5% in income due to the WTO, but the poorest of the rural poor will lose 6%. Until recently, China's had high tarriffs on agricultural imports. As part of joining the WTO, China is reducing these tarriffs. In the short run, this will result in cheaper food for urbanites, but lower farm incomes. The World Bank authors are careful to note that they do not consider the long run. That is, they do not consider that in the long run, cutting farm incomes will spur migration to the cities, where incomes are much higher.

Now a 6% reduction in income is pretty serious for someone living on a dollar a day, but it's important to put that in context. According to the official Chinese statistics I cited above, rural incomes grew 6.8% faster than inflation last year, while urban incomes grew 7.7%. Perhaps the slower growth in rural incomes is due to the WTO. But China's spectacular growth means that the temporary 6% reduction predicted by the World Bank was wiped out in a single year.

Bush Winning on Social Security?

2005-07-06T23:31:00.000-04:00

Karl Rove thinks so, according to a story in today's Washington Post.

"We've been probably to some degree too successful" in selling private -- or personal -- accounts, White House Deputy Chief of Staff Karl Rove said yesterday.

There was a recent poll he had seen that found that about 40 percent of those who disapprove of Bush's performance on this issue actually want private accounts, explained Rove....

"I think their attitude," he said, "is: 'I disapprove of the president's performance on Social Security because he hasn't gotten it done.

Rove's optimism seemed pretty overheated, so I thought I'd look at a few polls. I guess you shouldn't be to quick to dismiss Rove's analysis, since he does seem to have something of a point.

According to a recent Pew Foundation poll, for example, it turns out that although only 29% of the public approve of Bush's handling of Social Security, 47% favor "a proposal that would allow younger workers to invest a portion of their Social Security taxes in private retirement accounts, which might include stocks or mutual funds." So polls rating his handling of Social Security do seem to make Bush's support on the issue look weaker than it really is.

On the other hand, support for private accounts falls dramatically -- from 48% to 27% -- if it is described as "reducing the rate of growth in guaranteed Social Security benefits for future retirees," according to a Washington Post poll. Since the Bush guys have been talking about exactly that (a "clawback" that would reduce traditional Social Security benefits for those who chose to put their contributions into private accounts) it seems like Bush and Rove are going to have a hard time selling their plan. Unless they mislead the public, of course.

Perhaps that's why there's no mention of the clawback on the White House Social Security page. And perhaps that why polls asking which party people "trust more to protect the Social Security system and retirement benefits" show the Democrats coming out on top by 46% to 36%.

Worthless Wine Reviews

2005-06-29T22:56:00.000-04:00

I'm not much of an expert on wine, but I though I'd pass on one of the few good pieces of advice I've ever read: buy the importer, not the wine. That is, you're unlikely to go wrong if you buy a wine distributed by a good importer. There's a list at the end of the Slate article in the link. I can personally vouch for Robert Kacher's $10-$12 wines from the south of France.

Sure you can read wine reviews in a newspaper or on the web, but what good will it do you? You won't remember the name of the wine when you go to the liquor store, and if you write it down, the liquor store won't have it anyway.

I once made a serious effort to track down a great wine I had in a New York restaurant. It turned out to be sold in one store in NYC, and was impossible to find in DC, even if I'd been willing to special-order a case.

Of course, with wines produced in large quantities, reviews are worthwhile, so let me point out that Zardetto Prosecco (a sparkling, dry white wine) is great and widely available. As I learned at DC's second-best pizza place (Matchbox is the best) it pairs really well with pepperoni pizza.

New Blogroll

2005-06-29T22:41:00.000-04:00

I've updated my blogroll, attempting to come up with a list closer to what I'm currently interested in. The most notable changes are the addition of a "Sixth Sense" section (science blogs); the replacement of Pierre Carion, who I suppose has gone back to France, with two French-language economics bloggers; and a bunch of new economics blogs. The most interesting of the last group is Jim Hamilton, who looks like he's as good at econ-blogging as he is at time series econometrics.

Oh, and I've long since lost interest in what Glenn Reynolds has to say.

Traveling to France? Don't Forget the Soap.

2005-06-23T21:41:00.000-04:00

What's up with cheap hotels that don't provide soap? This is a common practice in France and other European countries. Last week I stayed in a bed & breakfast in rural France that was very nice, and a real bargain at 37 euros ($45) a night. It was relatively low-end, I suppose (no TV, no 24 hr front desk, 3 flights of stairs to my room) but they provided a clean, attractive room with a private bath, and it was certainly no youth hostel. The one guest I chatted with seemed to be an old-money, wealthy Brit. But no soap.

As a good economist, I've got to consider the possibility that the hotel is striking an efficient bargain with its guests. In the U.S., lots of half-used hotel soap bars are probably wastefully thrown out at the end of a stay. Suppose that the little soap bars cost a dollar a day, but that European hotel guests can supply their own soap, taking it home at the end of their stay, for only fifty cents a day. Then an economist might speculate that the typical American is happy to pay the extra half-dollar for the convenience, while Europeans prefer to pack a bar of soap and save a few euros. The average European is poorer than the average American, after all.

But as I've said, the guests at this "chambre d'hotes" didn't seem particularly hurting for money. Further, why not offer a choice? For American hotels where the default is to provide little bars of soap, this might be difficult, requiring the maids to be informed of the different preferences of each guest: high "transaction costs" might prevent American hotels from offering fewer services to their guests who'd prefer that. I guess that's why I can't get a discount by offering to re-use unlaundered towels a second time, or even a third.

But soapless European hotels could just sell bars of soap at check-in (and how about little bottles of shampoo as well). I'd certainly buy one, even at an inflated price, rather than have to run out to the convenience store to pick up a bar of my own. Is it possible that cheap European hotels actually do this, but no one's told me?

Lancet Quiz: The Answer

2005-06-23T08:01:00.000-04:00

Someone has finally attempted my quiz! Commenter Kevin, writes:

My guess is that Apfelroth's reasoning is along these lines: in a war, refugees move away from potential flash-points, so the population is not geographically disributed as it would be for a census. So if your sampling method derives from census data, you will be over-sampling violent areas.

No, that's not it. Kevin's critique has previously been raised (very mildly) by Daniel Davies, one of the Lancet study's defenders. But that isn't what Apfelroth is saying, and in my opinion the reliance on old Iraqi census data is probably only a small problem with the Lancet study.

The problem is this. Within cities and villages, the Lancet researchers drew a rectangle around the village on a map, divided the rectangle up into a grid of hundred meter squares, and chose one of the squares at random. Each square had an equal chance of being chosen even though they might have had vastly unequal populations.

Apfelroth, who seems to be knowledgable about surveys, knows that if you draw a random sample of neighborhoods with unequal populations, you have to re-weight the sample to take that into account. Apfelroth is saying that given the available data, this would have been very hard: "it seems quite likely that the grid rectangles created by driving around in a war zone were much smaller than the original census tracts used in the 'cumulative population lists'."

In fact, Apfelroth is being overly generous here, assuming that the Lancet researchers did their best with this crucial step (weighting for neighborhood population). Either he is giving them the benefit of the doubt, or he's failed to notice that the Lancet researchers did not take this vital step at all: they weight all neighborhoods (100m grid squares) equally. Because they weight neighborhoods with different populations equally, their sample is much more likely to choose people from low-population neighborhoods: neighborhoods near parks or rivers, neighborhoods on the fringe of the city.

Anyone who's ever seen a Red/Blue map of Presidential voting in US counties will understand this phenomenon. Bush won the vast majority of the counties in the US (something like 80%) covering the vast majority of the country's land area (maybe 95%, I'd guess). Suppose you took a poll using the Lancet grid method. First you draw a rectangle around the continental US, then you choose grid squares within the rectangle at random, and finally you survey 30 people in each selected grid square. You'd end up with a lot of grid squares with no one living in them at all (e.g., oceans and deserts). And the vast majority of people interviewed would be in the rural, "Red" areas. A survey like this would likely find that 95% of respondents voted for Bush even though only 51% of the country actually did.

Now the Lancet study isn't quite this bad. It was only after they'd chosen a set of cities, towns, and villages to survey, using a reasonable method that gave a larger chance of selection to larger towns, that they began drawing rectangles and grids, and sampling land-area rather than people.

This is a huge problem for the Lancet survey if fighting is heavier on the fringes of cities than in the center, as I think it is. It will cause an overestimate of the death toll (I think a large overestimate). My commenter, Kevin, thinks that fighting is more common in city centers. If he's right, the Lancet study is still biased, although towards finding too small a death toll. It's hard to be sure who's right about where most fighting has occurred, but I'll make my case in a later post.

Deadly Europe

2005-06-13T04:56:00.000-04:00

There seems to be a fad among right-wing authors to write anti-Europe and especially anti-France books. But whenever I travel in Europe I'm always shocked by how dangerous it is, which I attribute to a lack of trial lawyers. In this regard, it's a right-wing paradise!

In Europe, people ride bikes without helmets, signs inform the innocent tourist of beautiful views atop cliffs without guard rails, narrow twisty staircases are unlighted, bread slicing machines are self-serve. Today I saw a Belgian fire escape, which was a ladder bolted to the side of a building. No doubt it was much safer than all the adjoining buildings, which lacked fire escapes entirely.

You may say, big deal, only fools would walk off a cliff, get their finger caught in a bread-slicing machine, or smash their head in a fall from a bike. But during my fairly brief time in Europe, I've see a friend trip and fall flat on his face at an unexpected step in the middle of a long, unlighted hallway, and later ride a bike at high speed into a chain stretched across an unlighted road entering a campsite. Myself, I've smashed into a closed glass door at the bottom of a spiral staircase.

No one was seriously hurt in any of these mishaps, and no doubt many will say that this only proves that I and my companion are fools. Indeed, after his spills, I explained to my friend that he had behaved extemely foolishly. But, in hindsight, I think I would have rather have dangerous areas lit up, safe egress from burning buildings, and a bike helmet protecting my head -- even at the cost of government intervention and tort actions by agressive trial lawyers.

Mississippi Michelin

2005-06-10T18:31:00.000-04:00

So, I'm in Europe, investigating how the lifestyle compares to Mississippi. Specifically, I'm in Leuven, Belgium, a university town of 100,000 or so about 30 minutes from Brussels. Leuven has two Michelin-starred restaurants. I highly doubt that the same, nor anything similar, can be said of anywhere in Mississippi.

Lancet: Extra Credit Assignment

2005-06-07T12:40:00.000-04:00

I've occasionally debated the Lancet study with their blogging defenders for some months now. It's been frustrating, and I've finally figured out why. The Lancet defenders, such as Lambert and Davies, both know something about the kind of statistics that starts "assume you have a random sample," but aren't particularly knowledgeable about the actual mechanics of obtaining a random sample.

The most egregious example is Lambert's casual dismissal of the cogent and well-informed criticisms of Professor Stephen Apfelroth of the Albert Einstein Medical school. Lambert dismisses Apfelroth's criticisms as "just speculations the sampling was not done correctly." In fact, Apfelroth's criticisms are hardly speculations: they're the expert opinion of somebody who obviously understands survey methods. They could be taken straight from a textbook on sampling. Here, Lambert is just sneering from ignorance, and I doubt that he understands Apfelroth's criticisms, which are indeed pretty terse.

One of Apfelroth's more obscure, but more important criticisms is this:

When a town or village was selected from the "cumulative population lists for the Governorate", the survey team then "drove to the edges of the area and stored the site coordinates"....it seems quite likely that the grid rectangles created by driving around in a war zone were much smaller than the original census tracts used in the "cumulative population lists".

If you understand survey methods, you'll understand why it is a huge problem that the grid rectangles were much smaller than the original census tracts. And if you think about this issue further, you'll realize that the Lancet method is highly likely to oversample rural areas and the fringes of cities. It is precisely these low-density areas where the fighting was most intense.

So here's the extra credit question. If you get it right, I promise to take your criticism or praise of the Lancet study very seriously. Why does the discrepancy between the grid rectangles and the census tracts imply that the Lancet study oversamples low-density areas?

UPDATE: So, as of June 10, no one's attempted my quiz, even though I know plenty of people have come over here from the Lancet discussion on Tim Lambert's blog. Come on people! I'll settle for an explanation of what Apfelroth is talking about!

Lancet's 100,000 Deaths in Iraq Vindicated? Nope.

2005-06-06T01:12:00.000-04:00

Before the presidential election, the medical journal Lancet released a study finding 100,000 excess deaths from the Iraq war. Since then, the UN and the Iraqi government have released a new study (the ILCS survey) with a much larger sample size, finding about 24,000 deaths from military action. This has lead to much uninformed crowing from the right, charging that the Lancet study has been refuted.

The fact is, the two numbers are not comparable. The Lancet figure is for all excess deaths, and is based on higher post-war rates of violent crime, disease, infant mortality, and so on. The ILCS figures ask specifically about deaths due to combat.

But now Tim Lambert, an Australian computer science professor who delights in denouncing bad science and has written over 40 blog entries defending the Lancet study, has done some new calculations based on the Lancet data. And he's crowing that the Lancet study has been "vindicated."

Lambert calculates that 33,000 deaths occured as a direct result of fighting in Iraq. Since the Lancet study is for a slightly longer period (18 months vs. about 14 months), Lambert concludes that the numbers suggest about the same death rate. But Lambert's claim of "vindication" is just as flawed as the earlier right-wing debunking.

First, the ILCS counts include Iraqi soldiers killed during the war, while the Lancet counts include only civilians: so say the authors of the two studies. More importantly, Lambert's figures exclude Falluja, where most of the deaths in the Lancet sample occured. If Falluja were included, the Lancet figure would be 189,000, almost an order of magnitude higher than the ILCS numbers.

Now, I don't deny that there are good reasons to exclude the Falluja cluster. But if you do so, you can't claim to have an estimate of war-related deaths in Iraq. You have an estimate of war-related deaths in areas without intense combat. In a letter to the editor of a British newspaper, the Lancet authors give a good description of the issue.

Our study found that violence was widespread and up 58-fold after the invasion; that from 32 of the neighbourhoods [i.e. excluding Falluja] we visited we estimated 98,000 excess deaths; and that from the sample of the most war-torn communities represented by 30 households in Fallujah more people had probably died than in all of the rest of the country combined.

Fallujah is the only insight into those cities experiencing extreme violence (ie Ramadi, Tallafar, Fallujah, Najaf); all the others were passed over in our sample by random chance. If the Fallujah duster is representative, there were about 200,000 excess deaths above the 98,000.

Perhaps Fallujah is so unique that it represents only Fallujah, implying that it represents only 50-70,000 additional deaths. There is a tiny chance that the neighborhood we visited in Fallujah was worse than the average experience, and only corresponds with a couple of tens of thousands of deaths. We also explain why, given study limitations, our estimate is likely to be low.

I hope I'm not belaboring this obvious point: excluding the part of the sample where the most war-related deaths occured means that the Lancet's 100,000 and Lambert's 33,000 are likely to be underestimates. Indeed, in other contexts the Lancet's defenders on the web have emphasized this point: the Lancet figures are conservative, probably very conservative. Lambert himself has written that "excluding Falluja biases the results downwards."

Now Lambert appears to have changed his mind. I've raised this point with him on his blog, and as near as I can figure out, his reply is that Falluja was uniquely violent, or that the period covered by the Lancet survey after the ILCS survey had ended (April or May 2004 to September 2004) was uniquely violent. So he claims that the figures from the two surveys are comparable even when the Falluja data is dropped from the Lancet survey.

In fact, both surveys cover time periods with similar amounts of fighting. Both surveys exclude the second round of fighting in Falluja during November 2004. Both surveys include the intense fighting during the conventional war itself (March-April 2003). In general, there has been a lot of fighting in Iraq, at many times and places.

According to the Iraq Body Count, 7,981 civilians were killed from the start of the war until March 2004, a time period covered by both surveys. During intense fighting in Baghdad, Falluja, and other parts of Iraq in April 2004, another 1,165 civilians were killed. These deaths are covered in the Lancet survey, but some were probably missed by the ILCS, which was in the field from March 22, 2004 to May 2004. Finally, 1,696 civilians were killed in fighting from May 2004 to September 2004, a time covered only by the Lancet study. The Iraq Body Count figures are based on newspaper reports, and so probably miss many deaths. But there's no reason to doubt that they get the time pattern of deaths about right.

Some calculation shows that the ILCS survey covers about 3/4 as long a time period as the Lancet study, during which time about 3/4 of the deaths occured. Although there was a lot of fighting in April 2004, the next 3 or 4 months were relatively quiet. So Lambert's claim that "the intense fighting was mostly after the ILCS was conducted" is simply false.

And that leaves us back where we started. Lambert's 33,000 figure of war-related deaths in a narrow population (excluding areas of intense combat and the deaths of soldiers) just isn't comparable to the ILCS figure of 24,000 for the whole population. If anything, the similarity of these numbers suggests that something went very wrong with the Lancet study. It certainly doesn't "vindicate" it.

[The Iraq Body Count figures can be found here (for the first 50 days of the war) and here (for the period since then)].

Okrent Swings and Misses

2005-05-31T19:45:00.000-04:00

In his final column as NY Times Public Editor, Daniel Okrent charged that "Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers," but didn't bother to give a single example to support his smear. Krugman, not surprisingly, took offense. Okrent responded with some specific charges, which Krugman then devastatingly rebutted, as has Brad DeLong.

Krugman and DeLong don't bother to answer some of Okrent's sillier charges, so let me. Okrent criticizes:

[Krugman's] 1/27/04 assertion that the cost of unemployment insurance "automatically" adds to the federal deficit. This two-fer misrepresents a pair of facts: that unemployment insurance is largely borne by the states, and that major federal contributions to the states come about only because of an act of Congress, which is hardly automatic.

Obviously this quibble over Krugman's use of the word "automatic" has no relevance at all to Okrent's original charge: that Krugman misrepresents the numbers. Presumably this is why Krugman and DeLong ignore it.

But it's worth pointing out just how ignorant Okrent's complaint is. Krugman is just using the absolutely standard language economists use to describe this particular aspect of fiscal policy, called "automatic stabilizers." For example, in his undergraduate textbook, Greg Mankiw (recently chair of the Bush Council of Economic Advisors) writes

"The system of unemployment insurance automatically raises transfer payments when the economy moves into a recession, because unemployment rises." [Mankiw, Macroeconomics, 1992, pp. 324-5]

which is something you'll find in pretty much any macro textbook, whether written by a conservative or a liberal. And which is almost exactly what Krugman originally wrote. Let me join with Jonathan Chait is saying that Okrent ought to be ashamed.

Laser-Guided Infrared Thermometers

2005-05-27T21:02:00.000-04:00

A surprising number of people come to this blog searching for "Alton Brown infrared thermometer," since I once mentioned that Alton Brown recommends them. Apparently, he isn't enthusiastic enough to include infrared thermometers on his list of essential equipment. So, here's my take.

Infrared thermometers are in widespread use by mechanics for measuring engine temperatures and such, but can be also measure the temperature of a pan. You just point it at a metal object a few feet away, using the built-in laser beam to target it, and press the trigger to display the temperature.

I've never actually used one, but I recently gave one as a gift. The Bonjour thermometer is sold on lots of cooking sites. If you want to save a few bucks, I'm pretty sure that the Bonjour is just a repackaged version of the Mastercool infrared thermometer marketed to auto mechanics. They both look the same, and have the same temperature range. The recipient of my gift, who's quite a good cook, says he hasn't used it to test a pan yet, but that it seems to works very well on his boat engine.

Personally, I'm pretty happy with the usual methods of judging the temperature of a hot pan: watching how easily the oil flows; waiting for the butter to foam up, the olive oil to give off its characteristic aroma, or the oil to begin smoking; or throwing on a test piece and listening to the sizzle. Hmm, maybe it really isn't all that simple. I guess it would be nice to have an infrared thermometer. And they sure are cool.

Electronic Vote suppression

2005-05-24T23:31:00.000-04:00

Perhaps the most important finding in Card and Moretti study I blogged about last week is that electronic voting seems to suppress turnout. The Berkeley economists found that voter turnout fell by seven tenths of a percentage point in counties that switched to touch screen voting, compared to what would be expected based on past voting patterns and county demographics. Card and Moretti suggest that some voters may distrust or be intimidated by the machines, and so been deterred from voting.

It seems to me that there's a much more obvious interpretation: electronic voting machines don't work all that well. There's certainly tons of anecdotal evidence. In the last election, watchdog groups recorded over 2,000 reports of trouble with voting machines, three quarters specifying electronic voting machines.

Here's a report from one precinct in Houston.

"Yes, there are six machines down. I got there at 8 o'clock and they have been down since," said voter Melita Warren. "The tech does not know how to fix it. She is reading the manual, so therefore I should have been at work a long time ago."

A private election watchdog group documented the problems.

"Long lines, an hour and half wait. People (were) coming in at 7:30 and not leaving until 9," said Mary Huffine.

No one knows how many voters left before casting their ballots and there is no way of knowing who will be back
...

All 11 E-slate machines are working now, but it took three technicians to come out to the site and fix the problem. Officials told Eyewitness News it should have just taken one technician to do the repairs.

There is still no word on what exactly was wrong with the equipment. Several other precincts were having problems with the E-slate machines as well.

For more, see VotersUnite.org or the National Academy of Sciences Electronic voting Committee.