Asthma and the Limits of Public Choice

Posted: November 29, 2014 by Jim Rose in economics

Originally posted on Brad Taylor's Blog:

Jason Kuznicki wonders why politics has robbed him of an effective asthma treatment:

My old CFC albuterol inhaler is much more effective than my new non-CFC inhaler. The medicine is the same, but the delivery system is awful.

I’m dreading the day that my old inhaler runs out. Yes, I follow the directions on the new one, and I know that it’s used differently. I know about priming and cleaning and all that. It doesn’t matter. The old inhaler works. The new one, if it works at all, may take around twice as many applications. (…)

But enough about asthma per se. The public choice aspect of the problem seems to run counter to the usual, doesn’t it? Here we have a concentrated group of people taking a huge utility loss. Being unable to breathe is one of the most unpleasant experiences you could possibly imagine. The old inhalers…

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Statistics: Why Figures Don’t Lie, But Liars Figure…

Posted: November 28, 2014 by Jim Rose in economics

Originally posted on The Barrister's Toolbox:

More and more, figures and statistical information finds it way into litigation, both criminal and civil. At some point in your career as an attorney you will need to understand what can and cannot be accomplished in utilizing statistics. Most laypersons and attorneys are ill-equipped to handle such information. Oftentimes experts can find refuge in statistics which may or may not be truly relevant to the legal issue you are confronting. As Mark Twain (a/k/a Samuel Clemons) famously noted:

“Figures don’t lie, but liars figure.”

Another often quoted quip is:

“There are three kinds of lies: lies, damn lies and statistics.”

In litigation, you will often hear someone argue that the odds of being injured in a particular fashion are so low that a jury should not compensate them. However, there is a real risk in engaging in such post hoc analysis. How would you feel for example, if the…

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HT: Sean Fitzpatrick

Are Transaction Costs a Distraction?

Posted: November 28, 2014 by Jim Rose in economics

Originally posted on Organizations and Markets:

| Nicolai Foss |

Yes, says Harold Demsetz in a paper, “Ownership and the Externality Problem,” which was published in 2003, but which I only read recently (there does not seem to exist an online version; the paper is chpt. 11 in this book).  

Consider the steel mill and the laundry of the Traditional Externality Tale. The two firms could merge, in which case externalities per definition would be absent. This, of course, only substitutes (additional) management costs (the costs of reduced specialization) for the transaction costs of market exchange. The former may exceed the latter in which case specialization is preferable, but then externalities emerge. 

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Image  —  Posted: November 28, 2014 by Jim Rose in comparative institutional analysis, entrepreneurship
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Image  —  Posted: November 28, 2014 by Jim Rose in discrimination, history of economic thought, labour economics, minimum wage
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Singapore: A Remarkable Free-Market Success Story

Posted: November 28, 2014 by Jim Rose in economics

Jim Rose:

Singapore has done well, but real consumption per capita is about 20% less than Hong Kong despite similar GDP per capita because of government waste through the government linked corporation

Originally posted on International Liberty:

I’ve written about the success of Hong Kong (particularly when compared to nations such as Cuba, France, and China), but haven’t paid as much attention to Singapore.

But it’s time to correct that oversight. I’m motivated to write about Singapore because of a story that reveals one of the unique features of that jurisdiction: The bureaucracy gets monetarily rewarded if the economy prospers.

Here are some passages from a Bloombergreport.

In Singapore, civil-servant bonuses rise and fall with the economy’s performance… The nation…links civil servants’ bonuses to how well the $298 billion economy does. …Civil servants are typically paid a variable incentive twice a year, on top of a fixed one-month bonus. The mid-year payment was skipped in 2009, when the economy contracted during the global recession. …“Singapore may be one of the few countries that explicitly pegs bonuses to growth,” said Vishnu…

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1. Physicians may not agree on the medical condition causing the symptoms the patient presents.

2. Even if physicians agree on their diagnoses, they often do not agree on the efficacy of alternative responses — for example, surgery or medical management for lower-back pain.

3. The reason patients seek advice and treatment is that they expect physicians to have vastly superior knowledge about the proper diagnosis and efficacy of treatment.

4. Medicine proceeds on the basis of double blind trials and other small field experiments. Control and treatment groups are used before any treatment is applied widely.

5. Medicine is not perfect as was the case with the misdiagnosis of the causes of stomach ulcers.

6. The lag between cause and effect are short as would be the case if you rejected emergency treatment after a car accident or cancer treatment.

7. Medicine tests the efficacy of invasive treatments, weighs side-effects and encourages adaptation and prevention.

8. The staying power of self-interest in medicine is well-known: much higher rates of surgery when there is fee for service and much lower rates of surgery if the patient is a doctor or his partner. The efforts of the medical profession to suppress competition is well-known.