A Solution To The Health Care Problem? Change In Behavior

We all know about rising health care costs. The health care industry is now about 17% of GDP. How behavior changes can help are in this article Gentlemen, 5 Easy Steps to Living Long and Well.

Here is an exerpt:

"Living past 90, and living well, may be more than a matter of good genes and good luck. Five behaviors in elderly men are associated not only with living into extreme old age, a new study has found, but also with good health and independent functioning.

The behaviors are abstaining from smoking, weight management, blood pressure control, regular exercise and avoiding diabetes. The study reports that all are significantly correlated with healthy survival after 90."

More Bad Economic News

Here are exerpts from an article:

"...factories get squeezed by rising prices for energy, materials and labor" and

"stricter enforcement of labor and environmental standards, are causing some manufacturers to leave for lower-cost markets" and

"Costs have climbed so much that three-quarters of businesses surveyed...believe [the country] is losing its competitive edge."

The country? Is it the USA? No, it is China. You can read about it in As business costs rise in China, some firms exit for cheaper markets.

Trees vs. Solar Power?

What is more important, having trees or using renewable energy like solar power? It seems that if your trees block the sun from getting through to your neighbor's solar cells, you have to cut them down. But if your trees were already there and then your neighbor put in the cells, you don't have to cut them down. This is a California law which says:

"The law requires homeowners to keep their trees or shrubs from shading more than 10 percent of a neighbor's solar panels between 10 a.m. and 2 p.m., when the sun is strongest. Existing trees that cast shadows when the panels are installed are exempt, but new growth is subject to the law."

You can read about this at Neighbors Clash Over Trees, Solar Power. My understanding of this case is that these Redwoods kept growing and are now casting a shadow over the solar cells that were installed after the Redwoods were there, but not as tall. This case reminds me of a blog entry I made last year called Environmentalists vs. . . . other environmentalists? Or, are birds more important than clean, cheap energy?. The idea there is that wind turbines might harm birds.

This all reminds me of The "COASE THEOREM" . It is an economic idea from the Nobel Prize winning economist Ronald Coase. It should not matter who has the property right in determining the most efficient outcome. In this case, the Redwoods owners could pay money to their neighbors so they would not have to cut them down. But the Redwood neighbors would have to care more about their trees than the neighbors care about renewable energy. If the court had ruled for the Redwood owners, and the solar neighbors cared more about their cause, they could pay the neighbors into cutting them down. So it does not matter who owns what. Whether the trees get cut down or not depends on who values their good or cause the most.

Unemployment Has Been Good Recently

The time chart below shows the U.S. unemployment rates since 1970. We are at 4.9% right now. That is low, but not as low as the 4% we had in 2000. But if you look back at the 1970s and 1980s, we are still doing well.



But, as my students know, unemployment could be low if there are alot of discouraged workers out there, people who are not looking for jobs (they have given up). They are not part of the calculation of the UE rate. But, in the graph below, the blue line is the labor force participation rate (the % of adults who are working or trying to find work). The pink line represents the % of the adult population that have a job. Although not as high as around 2000, both of these numbers are higher than for the 1970s and most of the 1980s. So alot of people are trying to find jobs and alot of them do have jobs, by historical standards.

Poverty Might Affect The Brain

Here is brief idea of what is going on:

"a deprived childhood may affect the physical development of the brain and render its owner less intellectually capable." That comes from The London Times article It’s just as you might think: being poor can damage your brain. Another article, Study shows stress affects brain growth, says "CHILDREN who suffer deprivation in early life show altered patterns of brain growth by the time they are teenagers." This article also said "the change in brain development might be a consequence of high blood levels of stress" and that "children who lived in poverty were likely to suffer more adverse consequences of stress." Another article, from the Financial Times, Poverty mars formation of infant brains, also discusses the issue.

But here is a quote from the Chronicle of Higher Education which tells a different story:

"While many of the researchers at the session supported the hypothesis that socioeconomic status plays a strong role in affecting brain development in children, Mabel L. Rice, director of the doctoral program in child language at the University of Kansas, described a new study that goes against the hypothesis, at least in the case of early verbal abilities. In tests of 1,766 children in Australia, Ms. Rice and her colleagues found no correlation between a child's verbal abilities at 24 months old and the parents' socioeconomic status or their education levels.
"The conclusion is that we don't want to assume too strongly that children of poverty are unable to acquire early vocabulary," she told The Chronicle."

That is not available online unless you subscribe to the Chronicle.

What the stimulus package means for you

I wanted my students to have some idea of how the economic stimulus plan might work and effect them. President Bush has signed the bill. So people will be getting rebate checks in a few months. How much you might get depends on your income, marital status and number of children. To read all about it go to What the stimulus package means for you. As I have explained in class, the hope is that people will spend this money, causing an increase in aggregate demand in the flat or relatively flat part of short run aggregate supply. This will increase Q or GDP in the economy, which will cause firms to hire more workers without causing might inflation (inflation could always occurr if SRAS shifted left if, for example, oil prices shoot up again). Also, lower interest rates will encourage people to borrow and spend, shifting AD to the right.

A Special Valentine's Message On Romantic Love

Abstract: "Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.
The study of romantic love can provide insight into the general process of introducing novelty into a system of interacting variables. Novelty, however, is functional only in an open system characterized by uncertainty where the variables have not all been functionally looped and system slacks are readily available to accommodate new things. In a closed system where all the objective functions and variables must be compatible to achieve stability and viability, adjustments in the value of some variables through romantic idealization may be dysfunctional if they represent merely residual responses to the creative combination of the variables in the open sub-system."

The author was K. K. Fung of the Department of Economics, Memphis State University, Memphis. It was from a journal article in 1979. More info on it is at this link. The entire article, which is not too long, can be found at this link. I originally became aware of this back in the early 1980s when another student at the University of Chicago showed it to me. It was in a magazine. The student was David Brooks, who now writes for the New York Times.

When Self-Interest Isn’t Everything

It might seem surprising to see an economist write an article with this title, but it was in the New York Times a few days ago by Robert Frank which you can read here. One thing he says is

"Self-interest is surely an important human motive, perhaps even the most important motive much of the time. But it is never the only important motive."

Another famous economist, Frank Knight, wrote in 1934:

"Life is at bottom an exploration in the field of values, an attempt to discover values, rather than on the basis of knowledge of them to produce and enjoy them to the greatest possible extent. We strive to 'know ourselves,' to find our real wants, more than to get what we want."

You Are What You Spend

That is the title of a very interesting New York Times article which you can read here. It is by two economists who work at the Federal Reserve bank in Dallas. They show that the level of consumption between rich and poor in this country is not as big as the difference between income. The poor often have resources that the government does not count, like capital gains. Here is one really interesting quote:

"At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work-time price of a mid-size Ford sedan declined by 6 percent."

Studies Warn Biofuel Crops Could Accentuate Global Warming

That is the title of an article you can read here. In one of my classes this week, we read about ethanol in the book The Economics of Public Issues. This article talks about the environmental problems that biofuel crops might cause. Here is the first paragraph:

"Just one month ago, a study conducted by a team of American researchers concluded that there was nothing more environmental-friendly than the biofuel crops, that could reduce the greenhouse gas emissions by 94% and produce five times more energy. New studies however warn that by transforming the various ecosystems into biofuel crop fields would only accentuate the global warming phenomenon rather than reducing it. According to the latest estimations, converting natural ecosystems into biofuel crop fields is likely to release up to 420 times more carbon."

United Air to Charge Some Fliers for 2nd Checked Bag

That is the title of an article you can read here. Doing this will encourage people to bring fewer suitcases or pack their suitcases more efficiently. It could mean less weight on the plane, which is important with higher fuel costs. It makes sense that those with more bags pay more since they use more fuel. But people might just get a bigger suitcase. That one suitcase could carry all that they want and would mean no extra charge. You say the airlines should weigh everyone and charge people partly based on their weight. But that would mean weighing everyone. That would mean buying scales and taking the time to weigh everyone. So the suitcase policy is easier to carry out. It will work as long as people just don't go out and buy one big suitcase.

Amazon.com Sells Book For Less Than The Publisher

I got an email from Amazon.com the other day offering to sell me a book for abut $14. It is a baseball book by Bill James, the well known stat guru. The book is published by ACTA Sports. A couple of hours later I get an email from ACTA sports wanting to sell it to me for $21.95 and they charge more for shipping than Amazon.com. So, of course, I ordered it from Amazon. It made me wonder, does ACTA sports know that I could by it for alot less at Amazon? Maybe not everyone gets that offer from Amazon. Maybe I got it because I have ordered other books from them and people who have not ordered much from Amazon before would not get the offer.

One way this might make sense for ACTA is that their email might simply alert me and others that a book is available. They might even know that some of us will head over to Amazon to buy it, but some won't and they will get a few extra bucks from them. In any event, the email might be a pretty cheap way to advertise.