Unbiased Analysis of Today's Healthcare Issues
In classical economics models, supply and demand curves create a unique market price. Anyone who has shopped around for a good deal, however, knows that there is often significant price dispersion, even for homogeneous goods. For instance, gas prices can often vary greatly within a single neighborhood. On Monday I attended a seminar by Matthew…
There is an interesting article from the Techdirt blog about “How patents skew medical research.” The blog post states “The monopoly power granted by patents pushes all research money into only things that can be patented, ignoring other possible cures, even if they can be both profitable and quite helpful.” The post includes an example…
I just finished reading Burton Malkiel’s influential book A Random Walk Down Wall Street. Originally published in 1973, the book was one of the first to advocate for the creation of a “no-load, minimum-management-fee mutual fund that simply buys the hundreds of stocks making up the broad stock-market averages and does no trading from security…
The Laffer curve is a compelling economic concept. It claims that government revenue as a function of tax rates is shaped as an inverted-U. This means that, at first, raising the tax rate from zero will increase tax rates. However, there is some tax rate which maximizes government revenue (but not necessarily social welfare). When…
Why do the Orthodox Jews have so much political power in Israel? Why are third parties in the U.S. so weak? These phenomenon can be explained by the Banzhof power index. The index is calculated as follows. Let us look at the Israeli election in 2003 for the Knesset. Here are the voting results of…
Sean Carroll, a physicist at California Institute of Technology, has some interesting comments regarding how economists use the utility function in a post titled “So what have you been maximizing lately?“Â For instance, here are his musings on ‘rational choice’: If the job of science is to describe what happens in the world, then there…
Why do people, like myself, go through the grueling, boring, masochistic process of obtaining an Economics PhD. Well, according to Paul Kedrosky (“Self help“) getting a PhD can help you discover what you really like to do. …what I found out when doing my thesis — and something I noticed in pretty much everyone I…
There have been some interesting economics blog postings in recent weeks about the theory of the second best. Dani Rodrik of Harvard argues (“Why do economists disagree“) that economists can generally be viewed as first-best economists and second best economists. For instance, first-best economists would claim that all healthcare should be privately financed, with a…
Here are two interesting articles from the blog-o-sphere: Cat Bonds The NY Times has an interesting article about catastrophic risk (“In Nature’s Casino“). The article talks about how individuals such as John Seo and Karen Clark have helped to create a market for cat bonds. The problem with catastrophes is that insurance companies have not…
While almost all economists will argue that a single payer health care system is inefficient, many economists support the idea on redistributive ground. Taxing the young and healthy–either directly through taxes or by forcing them to buy non-actuarially fair insurance–and giving the money to pay for the medical care for the old and sick seems…