Incentive Problem in Cancer Drug Trials
I saw this brief New York Times article syndicated in the San Jose Mercury News. Evidently, one of the challenges in identifying new cancer treatments is recruiting enough patients for drug trials. The issue is that oncologists have little incentive to encourage their patients to enroll in drug trials.
Evidently, 60% to 80% of an oncologist’s revenues come from providing chemotherapy. When a patient enrolls in a trial, his doctor loses that revenue. As Scott Schaefer recently posted, the evidence is pretty clear that doctors respond to financial incentives. Result: a dearth of volunteers. So here’s an idea. Let’s pay a significant finder’s fee to oncologists that refer patients to trials. You could even start a “charity” to do this.
Is Money an Emergent Phenomenon?
The two economists that have most informed my view of the current macroeconomy are Arnold Kling and Scott Sumner. In both cases, their models and explanations make sense to me. They use solid reasoning and evidence; I don’t feel I’m getting a lot of hand waving. Unfortunately, at first glance, their views seem mutually exclusive. Kling believes business cycles are the result of many planning errors by individual agents (for example, this recent post and this follow up). Sumner believes business cycles are the result of contractionary monetary policy by the central bank (for example, this recent post and this one).
How can they both be right? I think they are operating at different levels. Yes, individual agents make their particular planning decisions. In aggregate, these decisions drive monetary variables like interest rates, exchange rates, liquidity demand, etc. However, these variables then feed back into the next round of planning decisions. Moreover, at least some of these plans take into account the effect of the agent’s actions on the monetary variables. So you get classic chaotic/complex behavior with temporarily stable attractors, perturbations, and establishing new regimes. There may even be aspects of synchronized chaos. I think the monetary variables are the key emergent phenomena here. They are like “meta prices” that provide a shared signal across just about every modern economic endeavor.
Food for thought. I’m going to keep this in mind when processing future articles on the economy and see if it helps my thinking.
Must Read Article on Farming
Some of you may recall my post Organic Farming Harms the Environment. As I wrote, one of the things that bugs me about organic proponents is that they act as if there are no tradeoffs. I don’t understand much about farming, but I do understand something about how economic activity works. I presume that modern farming has responded to market pressure and evolved to optimize along many different dimensions. I’m pretty sure you can’t magically improve along one dimension without sacrificing along another dimension.
Thus, I was not surprised to read this article (hat tip to Tyler Cowen at Marginal Revolution) on modern farming by an honest to goodness family farmer. It is full of good examples of the tradeoffs I suspected were lurking. For instance, by using herbicides, farmers reduce the need to till, which is a major source of soil erosion. Hog crates and turkey cages may seem inhumane, but they prevent sows from killing piglets and turkeys dying from drowning. Crop rotations that decrease the need for synthetic fertilizer increase the amount of water needed to produce the desired crop.
Read the whole thing. It reinforced my confidence in the general rule of trying to avoid legislating solutions. Send pricing signals by allocating resource rights and taxing negative externalities. Then let the market do its optimization.
(Price) Inflation Is All In Your Mind
I apologize for the non-existent blogging the past few weeks. I’ve been really busy with my new company. I’m going to try blogging more short items rather than my trademark essays in the hope that reduced barrier to entry will result in more supply.
First up is a provocative post by the ever-interesting Scott Sumner. Rafe in particular should read it because Sumner starts from one of Rafe’s favorite premisse that “laws” of nature are purely cognitive constructs. We should measure them by their usefulness and not ascribe to them any independent existence. So Newton’s laws of motion are useful in certain contexts. Einstein’s are useful in others. But neither are ground truth. Moreover, we will never find ground truth. Just successively more accurate models.
Sumner uses this bit of philosophy to justify abolishing inflation, not, “…the phenomenon of inflation, but rather the concept of inflation.” More specifically, price inflation. He explains why this concept is ill-defined and not only unnecessary, but confusing, for understanding the macroeconomy. He asserts that we should expunge it from our models. It doesn’t really exist anyway, so if models do better without it, we won’t miss it in the least.
Save the Madagascar Rain Forest
Last night, I was lucky enough to get a personal tour of the California Academy of Sciences from Dr. Brian Fisher, a taxonomist specializing in ants. He’s doing some amazing work trying to help Madagascar prioritize and save the 10% of native rainforest they have left. It’s reminiscent of Willie Smits‘ work in Borneo, though focused on preservation rather than revitalization. But it has the same feel of getting the local people committed to managing their own ecological resources.
You can donate here (I gave them $500), but make sure to write “For the Fisher Madagascar Project” in the “Comments” field. Otherwise, you’ll be paying for the building lights. Go ahead and leave the “Allocation” field at the default, “Campaign for a New Academy”. Update: Forgot to mention that if you donate $2,000 they’ll name a new species after you or whomever you designate.
It’s hard to do justice to what I saw last night in a blog post, but here goes…
Specifying a Climate Bet
As I mentioned in the comments on this post, I am currently in the process of negotiating a bet on Anthropogenic Global Warming (AGW) with another blogger. The challenges are interesting, so I thought I’d give you a peek inside the sausage factory.
Wall Street Wizards? Not so Much.
Here’s a nice post on how little old Amherst Holdings of Austin, TX got the best of J.P. Morgan Chase, Royal Bank of Scotland, and Bank of America. Amherst sold them all Credit Default Swaps (CDSs) against mortgages that were already under water. CDSs pay out if the underlying mortgages default. Everyone knew these mortgages were in bad trouble. Sure thing for the big guys, right? Wrong.
Fantastic Book on Terrorist Interrogation
Thanks to a pointer from Sandeep Baliga over at Cheap Talk, I recently Kindled Matthew Alexander’s How to Break a Terrorist. If this were a novel, it would be in the top 10% of thrillers I’ve read in the last 5 years. But it’s a true story.
Will The Real AGW Skeptic Please Stand Up?
Normally, I don’t debate random bloggers on Anthropogenic Global Warming (AGW). However, I made an exception for Robin Hanson. For those who don’t already know of him, he was both an early proponent of decision markets and has a reasonably well known journal article on why two Bayesian rationalists can’t agree to disagree. I’m a fan of his work and have been reading his blog for years.
Yesterday, he put up a post titled CO2 Warming Looks Real. He’s not an expert. Like me, he has an economics background and did some detailed research. Yet from the title and body of the post, I though he must have reached a very different conclusion than I did. So I thought I’d try to engage him to find out where we differ. The results were interesting.
More on the California State Budget
A number of people responded to my recent post on the California budget. So I thought I’d dig a little deeper into the issue. The three points I’d like to address at the moment are whether spending as a percentage of income is rising, where the extra spending is going, and whether the extra spending is beneficial.
Possible Insight 