Yesterday Tom Friedman wrote about the costs associated with the U.S. government taking ownership positions in banks in order to inject capital into the financial system.
There's the financing, an overt cost, but Friedman talks about the implications for risk-taking when government steps in. On the one hand, you might imagine that government ownership would inspire too much risk --- kind of like how Freddie and Fannie, with their assumed government support, extended mortgages too far into the subprime market. But as Friedman points out, another common effect of government ownership is actually to stifle innovation and risk-taking by all but the largest, surest-bet players.
Monday, October 27, 2008
Friday, October 24, 2008
Baseball and ... health care?
Billy Beane, Newt Gingrich, and John Kerry (yes, you read that combination correctly) write today about statistical methods in optimizing health care delivery, like statistical methods in optimizing a baseball team!
As a longtime Oakland A's fan, however, I'm sure I think we should be listening to Billy Beane about putting together a winning health care system. Sorry, Billy! At least you have good company with Gingrich and Kerry!
As a longtime Oakland A's fan, however, I'm sure I think we should be listening to Billy Beane about putting together a winning health care system. Sorry, Billy! At least you have good company with Gingrich and Kerry!
Sunday, October 19, 2008
Anna Schwartz on the crisis
The NBER's own Anna Schwartz weighed in on the credit crunch and Fed policy in the Wall St. Journal. She made the dead-on point that current policymakers are fighting the last credit crunch. The problem has been that there are about as many ideas on how to fight the current crunch as there are economists, and that's a lot.
Views on health and recessions
Yesterday's Times included an article on health during recessions that offered some circumspection about recent research findings in the area.
Thursday, October 16, 2008
More from Kashyap and Diamond
More from Doug Diamond and Anil Kashyap on the financial crisis, courtesy of the Freakonomics blog.
More on business cycles and health
Today's New York Times included an article on exercise during economic downturns.
We suspect that job stress is probably higher during economic upturns, when population health actually seems to deteriorate. But ameliorating stress is cited in the article as a reason why during downturns folks at least on Wall Street flock to gyms and yoga classes. These two facts seem at odds insofar as the implicit source of stress is the recession itself; but maybe they aren't at odds if upswing-stresses never get treated with exercise because of time constraints.
The article also cites career counselors who tell unemployed clients to focus on fitness, which is interesting and certainly fits the statistical findings of better health during downturns.
To be sure, the current downturn is also a little different from others in that there has been a massive hit to financial wealth. In a paper I'm currently working on, I model time use, which can include exercise, controlling both for changes in stock prices and for changes in unemployment. As you might expect, the two suggest different things. Higher unemployment can reduce the price of time and incentivize health behaviors that are otherwise viewed as too costly in terms of time. Lower stock prices lower wealth and through a pure income effect can lead to lower purchases of everything, including leisure (and exercise) time.
We suspect that job stress is probably higher during economic upturns, when population health actually seems to deteriorate. But ameliorating stress is cited in the article as a reason why during downturns folks at least on Wall Street flock to gyms and yoga classes. These two facts seem at odds insofar as the implicit source of stress is the recession itself; but maybe they aren't at odds if upswing-stresses never get treated with exercise because of time constraints.
The article also cites career counselors who tell unemployed clients to focus on fitness, which is interesting and certainly fits the statistical findings of better health during downturns.
To be sure, the current downturn is also a little different from others in that there has been a massive hit to financial wealth. In a paper I'm currently working on, I model time use, which can include exercise, controlling both for changes in stock prices and for changes in unemployment. As you might expect, the two suggest different things. Higher unemployment can reduce the price of time and incentivize health behaviors that are otherwise viewed as too costly in terms of time. Lower stock prices lower wealth and through a pure income effect can lead to lower purchases of everything, including leisure (and exercise) time.
Monday, October 13, 2008
Food policy, energy policy
Over the weekend, the Times magazine ran a long article that read like an op-ed on food policy. It is clear that efficiency and energy-consciousness in agriculture is on people's minds given the recent run-ups in food prices and energy.
A New Yorker article earlier this year revealed how difficult it is to embrace a particular food policy as being relatively more environmentally friendly. Sometimes growing stuff in one corner of the earth that is best suited to do so, and then shipping some elsewhere in the world, could actually be the "greenest" thing to do, in the sense of minimizing the sum total of costs. Growing locally is not necessarily the most earth-friendly option if the costs or doing so are high. The difficulty arrives in trying to measure the costs.
Market solutions are by no means guaranteed to minimize costs when prices of some things, like environmental quality, are unclear, and when there is significant government involvement in the promotion of certain activities and the impeding of others. Indeed, with as much government interference in agriculture as there is, is there any hope a market-based solution could work?
A New Yorker article earlier this year revealed how difficult it is to embrace a particular food policy as being relatively more environmentally friendly. Sometimes growing stuff in one corner of the earth that is best suited to do so, and then shipping some elsewhere in the world, could actually be the "greenest" thing to do, in the sense of minimizing the sum total of costs. Growing locally is not necessarily the most earth-friendly option if the costs or doing so are high. The difficulty arrives in trying to measure the costs.
Market solutions are by no means guaranteed to minimize costs when prices of some things, like environmental quality, are unclear, and when there is significant government involvement in the promotion of certain activities and the impeding of others. Indeed, with as much government interference in agriculture as there is, is there any hope a market-based solution could work?
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