Stadiums do affect property values

Michael Ward estimates the effects of Dallas Cowboys’ search for a new host city in the Dallas-Fort Worth area:

...residential property values in the city of Dallas increased following the announcement of a possible new stadium in the city of Dallas. At the same time, property values fell throughout the rest of Dallas County, which would have paid for the proposed stadium.

Mountain lions are back

When I saw one in Southern Utah about ten years ago, I thought it was a once in a lifetime experience. But now:

"There may now be more mountain lions in the West than there were before European settlement."

Do stadiums boost local economies?

Economists find little evidence of large increases in income or employment associated with the introduction of professional sports or the construction of new stadiums. Here are some possible explanations:

• consumer spending on sports may simply substitute for other kinds of spending
  
• spending at the stadium translates into salaries for wealthy athletes, many of whom live outside the city where they play.
  
• stadium subsidy comes from raising local taxes which makes the economy less efficient.
  

McCain unveils health care plan

McCain's proposal calls for:

1. ending the link between employment and health insurance
   
2. paying providers for outcomes, rather than procedures
3. allowing drug reimportation

Comments:

1. If consumers have to shop for insurance directly, rather than with other people's money, they will choose cheaper plans with bigger co-payments, which would likely reduce price inflation. UPDATE: evidence here.
   
2. If we can measure performance, then this would reduce moral hazard by linking pay more closely to performance; and
   
3. This would likely end price discrimination. The big losers will be foreign countries, e.g., Africa, that currently buy drugs very cheaply.
   

DISCLAIMER: I am supporting McCain

Failing to Educate

Say you were running a business and you found out that just under 1/2 of your customers were not satisfied with your products. Time for some pretty big changes, wouldn't you think? Not if you are in the undergraduate education business apparently.

According to a recent annual national survey of freshmen conducted by the Higher Education Research Institute at UCLA, 44.6 percent said they were not satisfied with the quality of instruction they received (as reported in this story from The Chronicle of Higher Education). The story reports some other disturbing statistics about the proficiency of college students

College students may be dissatisfied with instruction, but, despite that, do they learn? A 2006 study supported by the Pew Charitable Trusts found that 50 percent of college seniors scored below "proficient" levels on a test that required them to do such basic tasks as understand the arguments of newspaper editorials or compare credit-card offers. Almost 20 percent of seniors had only basic quantitative skills. The students could not estimate if their car had enough gas to get to the gas station.

House prices still dropping

ETF's or index funds?

ETF's or Exchange Traded Funds are becoming popular investment vehicles due to their tax advantages and low fees. Business Week offers advice.

• ETFs are generally cheap to hold but can be expensive to buy, while index funds are easy to buy but slightly more expensive to hold.
• If you invest a lot all at once, the ETF is probably a better choice. If your investing is spread over time—just a small portion of each paycheck, for example—then index funds might be cheaper.
• Resist the Temptation to Trade: ETFs are easy to buy and sell, which make it tempting to try to gamble your way to riches by buying and selling them frequently.
• Some have high expenses—though they're almost always lower than a comparable mutual fund—and others, especially specialized ETFs (such as those that trade commodities), might not shield you from taxes

Should football coaches be paid more than professors?

The AAUP, the closest thing that professors have to a union, released its annual survey on salaries and finds a large and growing gap between wages of professors and those of football coaches.

If the purpose of the institutions were to produce football entertainment for profit and serve as farm teams for the National Football League, then arguments about letting market forces determine college coaches’ salaries would make sense. Otherwise, they don’t.

I wonder if they allow these guys to teach econ.

Worst places to get sued

From Institute for Legal Reform. Darker is worse.

Candidates respond to incentives

Senator Clinton's "staggering" $2.3B earmark request hands her Republican opponent, John McCain, a ready made campaign issue, especially since McCain is well known for eschewing earmarks. So her request doesn't make much sense, unless Senator Clinton thinks she is not going to win the nomination. Prices for Clinton Futures are trading at $0.21.

DISCLAIMER: I am supporting McCain.

Are the candy mergers anticompetitive?

To advocate for the 1988 Hershey's/Peter Paul & Almond Joy merger, attorneys for Hershey's came into the Justice Department with three lawyer briefcases--the ones that are 12 inches wide--filled with candy bars. They dumped them onto three conference tables put end to end, and separated out the merging candy bars. The Hershey's brands were Hershey's Chocolate, Hershey's Chocolate with Almonds, and Mr. Goodbar, and the acquired brands from Cadbury were Almond Joy, Peter Paul, and Peppermint Patties. They said "Gentlemen, this is the merger we are talking about."

That was the substance of the presentation. I remember combing through the 3 inch thick pile of candy to find one of my favorite candy bars from childhood, Abba Zaba, and being very disappointed that they didn't leave a copy of the evidence with us.

Watching the gales of creative destruction

In this blog, we have been watching the rapid demise of daily newspapapers. On the circulation side, the aging and immigrant population hurts (young or non-English speakers are less likely to read daily papers). On the supply side, more targeted and attractive advertising media, like Google Adwords, have put a lot of pressure on the dailies. Now more bad news, as the latest circulation figures are released.

The New York Times lost more than 150,000 copies on Sunday. Circulation on that day fell a whopping 9.2% to 1,476,400. The paper's daily circulation declined 3.8% to 1,077,256.

When housing markets clear, so will the credit markets

Peter Bernstein, author of "Against the Gods" opines on the financial and housing markets.

WSJ: What kind of indications are you looking for as signs that the economy is about to get better and that the stock market and the investment world are about to turn the corner?

Mr. Bernstein: Somehow, the housing trouble has to at least flatten out. As long as that is going on, I think the pressure on the credit system is going to persist. It is kind of the leading indicator. It is where the trouble started.

“We cannot tax our way out of this problem,”

Doug Holtz-Eakin, McCain's economic advisor, was profiled by the NY Times:

In all, federal taxes now equal about 19 percent of the nation’s economic output, which is in line with the historical average. But the costs of Medicare and Medicaid, on their current path, would require that number to rise to an unmanageable 30 percent, and beyond, in coming decades.

“We as a nation cannot tax our way out of this problem,” Mr. Holtz-Eakin says. “It’s just not an option.”

DISCLAIMER: I am supporting McCain, largely because of Holtz-Eakin.

Raising Price to Increase Demand

As anyone who has taken even the most basic economics class knows, increasing price leads to a drop in quantity demanded. Well, not always. Sometimes (as noted in a prior post), price may be interpreted as a signal of quality by consumers, and they might actually get greater utility from the same good with a higher price.

Here's some evidence reported in Business Week from a study by researchers at Stanford and the California Institute of Technology. Subjects were placed in an MRI and drank samples of the same wine with different price tags. The subjects liked the "more expensive" wines better, a finding supported by increased activity in the prefrontal cortex of the brain.

A Blockhead Move by Blockbuster?

I was reminded of this cartoon about Belton Iron Works and Fried Chicken when reading about the proposed acquisition of Circuit City by Blockbuster. While their businesses may be more related than iron and fried chicken, it's far from clear how this acquisition makes sense. Here's an article from Reuters and one from Cnet's news.com also questioning the logic of the deal.

The market seems to agree. Blockbuster's shares dropped around 14% the afternoon of the announcement.

Canine timeshare

Where there is demand and supply, there is a market:

To borrow a dog for four days a month costs a tail-drooping monthly fee of £279 in the UK (in the US, it's $279.95) - plus extra for drop-off and collection, if needed. The company says the high cost of maintaining and paying for vets' bill explains the disparity. The target clientele in London will be much like those who have signed up in Los Angeles and New York - urbanites whose busy lives make full-time pet ownership difficult. So far it says 100 have pre-registered in London.

There is a rent-to-own option as well:

"The hope is that a member will fall in love and adopt it, once they've seen if a dog will fit into their lifestyle," says Ms Woolard. All of the dogs are available for adoption, at a price subject to negotiation, if a customer finds that a permanent dog does fit into their lifestyle.

Ancient insurance

Short article on the History of Insurance:

...in ancient China people paid their doctor while they were well and in return the doctor treated them without payment when they were ill.

British antitrust takes off

The Office of Fair Trading is beefing up cartel enforcement with an investigation of bid-rigging in the construction industry:

The OFT's recent run of heavy-duty cartel-breaking reflects two changes. The first is that it has moved from investigating lots of little cases to pouring its resources into fewer high-profile cases that will serve as examples. The second is that the watchdog is beginning to benefit from the American-style trust-busting powers it was given in 2003: these allow it to bring criminal charges against price-fixers while offering amnesty to whistleblowers. “Deterrence is the key,” says John Fingleton, the head of the OFT. “People only go for leniency if they think there is a chance of them being caught and if the penalty is severe.”

...and the Competition Commission (it sits "over" the OFT in the British system) is contemplating the break-up of BAA, which owns four airports in Britain.

...the prognosis for BAA is not good. The company has three Scottish airports—Glasgow, Edinburgh and Aberdeen—and four in England—Heathrow, Gatwick, Stansted and Southampton—and the Competition Commission says there is potential for competition at all of them.

The commission finds particular fault with the situation in south-east England, where BAA serves 91% of passengers.

Our current view is that at the south-east airports BAA currently shows a lack of responsiveness to the interests of airlines and passengers that we would not expect to see in a business competing in a well functioning market.

I want a better censor

Consume Less, Pay More (Part 2)

Atlanta is joining Charlotte (prior post here) in wanting to charge its residents more for water usage. The problem? According to this article in the Atlanta Journal-Constitution, the city successfully encouraged residents to conserve water during recent drought conditions; however, the fall in consumption has seriously reduced revenue to the water department. So, the city wants to raise rates to make up for the lost revenue.

"The problem is you want people to conserve," said Janet Ward, spokeswoman for the Department of Watershed Management. "It's the right thing to do. But ... operating budgets don't change."

I wonder how residents will respond to the next call to conserve? Remember: fool me once, shame on you; fool me twice, shame on me.

Education, not trade, causes inequality

Contrary to the rhetoric coming out of the Democratic primary, trade is not responsible for rising inequality:

...America no longer makes some of the low-skilled, labour-intensive goods that it imports. In those goods there are no domestic workers to lose out to foreign competition. Second, even when America does produce something that is imported from China, it may make it in a different way, with more machinery and only a few high-skilled workers. If imports from China and other poor countries compete with more-skilled American workers, they may displace workers but will not widen wage inequality.

More likely, it is the increasing returns to education that is behind the rising inequality:

an information revolution has increased the economic rewards of education and punished those who lack it.

When the legal system becomes too costly, contract around it

from WSJ:

Nursing-home patients and their families are increasingly giving up their right to sue over disputes about care, including those involving deaths, as the homes write binding arbitration into their standard contracts.

The clause can have profound implications. Nursing homes' average costs to settle cases have begun dropping, according to an industry study, even as claims of poor treatment are on the rise. The industry notes arbitration is slicing the number of patients winning big punitive judgments, the added penalties for severe negligence that can pump up the size of jury awards.

New bank regulations aimed at shareholders

Just as the Fed is trying to inject more liquidity into the system to induce banks to lend more, comes a regulatory push in the opposite direction:

The world's leading financial regulators finally in 2004 producing a recommended rulebook called Basel II....It's based on the uncontroversial notion that bank shareholders need to have skin in the game, so if there are big losses, shareholders get wiped out before depositors or taxpayers are harmed. Like any company, a bank dies if its assets are worth less than its liabilities. The shareholders' skin in the game is the surplus of a bank's assets, such as the loans it makes and the securities it holds, over its liabilities, such as borrowings from other banks, savings accounts, and certificates of deposit. Basel II says the riskier the loans a bank makes, the more of a buffer shareholders are required to put up.

Here's the problem. Today, many banks already face so many risks that implementing Basel II as written will put them in a capital squeeze. They will either have to reduce risk by cutting back on lending, or sell more shares to give themselves a bigger capital buffer, or both. If the banks do lend less, it could cause an even steeper economic decline, which would lead to more defaults and cause banks to ratchet back even more, and so on in a downward spiral.

I bid $100 to try to prevent this

What happened after BluRay won the standards war?

We have been following the standards war between HD DVD and BluRay. At week 10 below, Toshiba conceded and Wal-Mart went exclusive with BluRay. Predictably, price of BluRay players increased realtive to both HD DVD and to Dual players (both formats).
The Price Premium over HD DVD players increased by about 50%; and the price discount realtive to Dual players (that can play both formats) decreased by about 50%.

The Hidden Costs of Layoffs

A new study published in the Academy of Management Journal highlights some hidden costs associated with layoffs. Perhaps not a surprise, but downsizing is associated with increased rates of retained employees leaving the company, according to the study's authors, Charlie O. Trevor and Anthony J. Nyberg of the University of Wisconsin-Madison.

Highlight from this press release about the article

Perhaps the most striking finding in this study of quitting rates in some 200 companies was the considerable exodus that even a small downsizing could set off. For example, companies that laid off a mere 0.5% of their workforce sustained, on average, a turnover rate of 13%, a rate that was 2.6 percentage points higher than the average turnover rate of non-downsizing firms. In other words, an extra 2.6% of the workforce left of their own accord, more than five times more workers than were laid off.

Although the release doesn't mention it, who do you think are the employees who are most likely to leave after a layoff? Probably the higher quality ones who have better job prospects, leaving companies potentially understaffed with lower average employee quality.

Why is health care so expensive?

Because supply induces demand:

Where more alternatives are available, costs tend to be higher -- adding to the growing evidence that the supply of health care drives its use...

Total U.S. health-care spending rose to about $2.1 trillion in 2006, and hospital care made up the single largest chunk of that at $648 billion, or 31%, according to federal figures.

What makes gasoline look cheap?

from Carpe Diem:

Post-merger product repositioning

Brilliant new article showing that mergers may not be as anti-competitive as we thought:

... combining close substitute products creates a strong incentive for the merged firmto separate those products, and that separation greatly reduces the incentive to raise prices.

Thomas Jefferson on outsourcing

“It is better for the public to procure at the market whatever the market can supply; because there it is by competition kept up in its quality, and reduced to its minimum price.”
– Thomas Jefferson, 1808

Librarians beware

The city of San Diego is trying to save money. The Reason Foundation suggests managed competition as a way to better align the incentives of city employees with the goals of the taxpayers:

Managed competition is different from simply “outsourcing,” or “contracting out” in that it encourages public employees to submit bids and compete with private bidders. Thus, it is a way of bringing private-sector competitive pressures and incentives to the public sector.

Which divisions are the best candidates for managed competition?

• Water/Wastewater Treatment
• Environmental Services (Including Collection, Landfills, and Recycling)
• Fleet Maintenance
• Street Maintenance
• Parks and Recreation
• Golf Courses
• Libraries
• Permits
• Facilities Management
• Information Technology
• Printing/Copying

The proverbial middleman fights back

An online price war for books has broken out, pitching Amazon against some of Britain’s biggest publishers. From TIMESONLINE:

Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer.

There are fears that Amazon may retaliate ... If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.

One senior executive said: “It’s very serious. I can’t believe they’d be allowed to get away with it under competition law. Forcing people to increase prices seems to me entirely wrong.”

The party of Sam's Club, not just the country club

Irwin Stelzer endorses John McCain''s economic policy as the right balance of populism and conservatism:

The goal in each instance is not to abandon markets but to improve them, a goal that can also be applied to assist workers displaced by trade carried on in a market in which one of our major trading partners undervalues its currency, or to tackle global warming with taxes or other programs that force users of fossil fuels to pay the cost of the externalities they produce. John McCain was either typically candid or equally typically in a humorous, self-deprecatory mood when he said he knows little about economics. No matter. His instincts, informed by his understanding of how markets work and what to do when they malfunction, and his understanding of the benefits sound domestic policies confer on America's ability to pursue a vigorous foreign policy, allow us to hope that his advisers will let McCain be McCain, a candidate who will worry less about country club and "base" Republicans, and a bit more about the mass of Sam's Club Republicans.

DISCLAIMER: I am supporting McCain

Ballooning Household Debt

Business Week chart showing the ratio of household debt to GDP in the US from 1990 through 2007.

It is happening again...

The incentive effects of the "2 and 20" compensation scheme (2% of assets and 20% of profit) for hedge funds and private equity managers are well known (see Before you Invest in a hedge fund). Managers use other people's money to make bets whose payoffs can be characterized as "heads I win and tails you lose."

Now we learn the Investment Banks pay 50% of their revenue in compensation which causes them to lever up their investments. This turns even safe investments into risky ones. In fact the story is beginning to sound a lot like the subprime debacle.

A few weeks ago the financial world was presented with the imminent failure of a publicly traded entity called Carlyle Capital Corporation. ... it had leveraged itself more than thirty to one. ... the Carlyle portfolio consisted of government agency securitities, ... among the safest around. ... Carlyle's investors lost most of their investment and [we] learned that investment companies with thirty times leverage are not safe.

Uh, oh...

The last recession (in 2000) was caused by the bursting of a stock market bubble, where stock price valuations were bid up to levels not supported by fundamentals, particularly in the technology sector. In contrast, during the current slowdown, stock market valuations, as measured by P/E ratios do not look unreasonable. Unless earnings fall, the stock market should be OK, ...

General Electric reported a 5.8 percent decline in first-quarter profit on Friday, falling far short of expectations and stunning investors who consider the company one of the nation’s most reliable earners.

The unexpected decline, from a company known for rarely missing its estimates, will probably further erode confidence in the economy’s ability to rebound from the current financial crisis.

Why is the US exporting cars?

From WSJ:

For years the U.S. has been one of the most expensive places in the world to make cars. But the new contracts with the United Auto Workers union signed last fall significantly improve the global competitive position of Big Three plants. The weaker dollar, which makes production in the U.S. less expensive, is also helping to turn the economics of domestic production upside down.

What do you get when you require physicians to go to school for 12 years?

Over-educated academics whose productivity (bang per buck) is among the lowest of any profession. And just as we have seen pharmacists being groomed as substitute physicians, now we see nurses being trained as substitutes:

As the shortage of primary-care physicians mounts, the nursing profession is offering a possible solution: the "doctor nurse." More than 200 nursing schools have established or plan to launch doctorate of nursing practice programs to equip graduates with skills the schools say are equivalent to primary-care physicians. The two-year programs, including a one-year residency, create a "hybrid practitioner" with more skills, knowledge and training than a nurse practitioner with a master's degree, says Mary Mundinger, dean of New York's Columbia University School of Nursing. She says DNPs are being trained to have more focus than doctors on coordinating care among many specialists and health-care settings.

Are you over-insuring your employees?

To find out, run a simple test:

... [give your HR director] an insurance brochure for [some] small group insurance plans, ... including HMOs, PPOs and HSA-Compatible Health Plans. [Also give] her a rate sheet so she can see the premiums for each of the plans. Then [ask her], “If you had to pay the entire premium yourself, which plan would you choose?”

If she doesn't choose your current plan, then you are paying for something that she wouldn't purchase herself. Here is what is likely to happen:

[she will] chose an HSA-compatible plan with a $3000 deductible. With this plan, she pays all costs up to $3000 and the insurance company pays all costs over the $3000 deductible. ..."Since it’s my money, I would rather put that premium saving into a health savings account than pre-pay for low office visit and prescription copays I rarely use.”

Is it time to buy an expensive house?

The spread between "conforming" loans (less than $417,000) and "jumbo" loans is at historic highs, between 2-3%. This is reducing the number of potential buyers of expensive homes, resulting in a very high vacancy rates. In Nashville, for example, about 2.4% of the homes are for sale and vacant.

If you try this, use the FTC-designed disclosure forms to shop for mortgages. Here is a blank form. Try asking a bank for a combination conforming loand and a second mortgage that your bank would hold in exchange for keeping your demand deposits in the bank.

Hiking the Cumberland plateau

About 75 miles from Nashville:

April is "financial literacy" month

In this blog we have bemoaned the financial ignorance of many consumers, and it is clear that ignorance makes it easier for fraudsters to practice their trade. But if we don't penalize consumers when they make mistakes, what incentive do they have to learn?

Often borrowers did not even realise that their monthly payment would rise if interest rates went up, says Mr Bryant. Subprime borrowers on adjustable interest rates, whose mortgages make up just 7% of the total, accounted for more than 40% of the foreclosures begun in the fourth quarter of last year (see chart).

It is also not clear to me that these foreclosures were the result of ignorance rather than rational speculation.

Do we care about conservation?

Not if it costs us anything:

Thousands of farmers are taking their fields out of the government’s biggest conservation program, which pays them not to cultivate. They are spurning guaranteed annual payments for a chance to cash in on the boom in wheat, soybeans, corn and other crops. Last fall, they took back as many acres as are in Rhode Island and Delaware combined.

Environmental and hunting groups are warning that years of progress could soon be lost, particularly with the native prairie in the Upper Midwest. But a broad coalition of baking, poultry, snack food, ethanol and livestock groups say bigger harvests are a more important priority than habitats for waterfowl and other wildlife. They want the government to ease restrictions on the preserved land, which would encourage many more farmers to think beyond conservation.

Capitalism is NOT a zero-sum game

After Mexican micro lender Compartamos (“let’s share” in Spanish) went public, it raised over $400 Million, and then earned a 40% return for its investors. Predictably the non-profit world went nuts, vilifying them as "pawnbrokers" and "money-lenders," earning "obscene" profits off of poor people. Even Vandy grad and Nobel Laureate Mohammed Yunnus (DISCLAIMER: he never took my class, but I am overnighting a copy of my textbook to hiim) criticized their emphasis on "investor returns" rather than helping the poor.

Both sides agree that there is a need for capital, too great to be met by the donor groups that initially financed microlending. Deutsche Bank estimates the global demand for microfinance loans at about $250 billion, 10 times the amount that has been lent.

But Compartamos’s decision to go public last April became a flashpoint in what had been a genteel debate over how microfinance could tap into the financial markets’ vast resources. The initial public offering gets special mention at every microfinance conference, and has been condemned by Mr. Yunus, the Nobel laureate.

Seems like the lefties are missing the main point: voluntary transactions create wealth because they benefit both parties to the transaction. It also sounds as if the criticism would be better aimed at the Mexico's red-tape, taxes, and barriers to entry:

On average, customers pay an annual interest rate of almost 90 percent, which includes 15 percent in government tax. In much of the world, microfinance interest rates range from 25 to 45 percent. But in Mexico, high costs, inefficiency and limited competition keep interest rates much higher. Compartamos’s rates are only a few percentage points higher than Pro Mujer’s [a competing non profit lender].

[thanks to colleague Bart Victor for tip.]

Wouldn't a market be much simpler?

Anyone who reads this blog knows that there are more than 60,000 patients who want a kidney; and less than 20,000 donors (cadaver and live). Attempts to create individual "matching" markets are extremely cumbersome, and fraught with problems of trust and verification:

US doctors have carried out what is believed to be the world's first simultaneous six-way kidney transplant.

Six recipients received organs from six donors in operations at the Johns Hopkins Hospital in Maryland.

The procedure was made possible after an altruistic donor - neither a friend nor relative of any of the six patients - was found to match one of them.

Five patients had a willing donor whose kidney was incompatible with theirs, but it did match another in the group.

This meant that suddenly, there were six people who could receive an organ.

The operations were carried out simultaneously to make sure no-one backed out after their loved one had received a kidney.

A 2-Foot Fish in the Toilet

Here’s another dark side to the recent increase in foreclosures across the country. What are the incentives for those facing foreclosure to continue to care for their properties? Pretty thin when you consider most lenders are unwilling to expend the effort to chase down property damagers. Check out this recent article from the South Florida Sun-Sentinel for the experience of real estate agents trying to sell foreclosed properties in South Florida. One agent reports that one of his more memorable experience was finding a 2-foot fish and cement poured down the toilet at one of his listings.

The article also mentions a recent national survey of real estate agents that reports roughly half of all foreclosed properties are returned to the bank with substantial damage. How are lenders fighting back? By changing the incentives facing these homeowners, of course. In a “cash-for-keys” deal, lenders offer homeowners money (typically $500 to $2,000 according to the article) to vacate the houses quickly and leave the property in reasonable shape.

Humor: if Microsoft Designed the iPod Package

If you haven’t seen this video before, it’s worth a look (HT: Peter Klein at O&M)

How many politicians does it take to provide emergency medical care?

None, the market will do it.

Doctors with Columbia's MedStar Health soon will provide urgent care services at area Rite Aid (OOTC:RADCO) (NYSE:RAD) stores, through a partnership the organizations plan to announce today.

"Health care has been late to having a consumer focus, and consumers are increasingly demanding service in a variety of settings that are much more convenient," said Eric R. Wagner, a senior vice president of managed care for MedStar, a nonprofit. "We're taking health care to a place where consumers already are."

Such convenience-care clinics have mushroomed since their modest beginnings in Minnesota in 2000. Today, more than 800 such clinics exist across the country in places such as Target and Walgreens (NYSE:WAG) , and that number is expected to nearly double by the end of the year, according to industry trade group Convenient Care Association, or CCA. Most are staffed by nurse practitioners, or physician's assistants, with doctor oversight because it is less expensive and there is a shortage of doctors.

Should you work for a nonprofit?

only if you dont care too much about money:

According to PayScale.com, a salary Web site, typical pay at nonprofits for entry-level to midlevel employees is about 5 percent to 10 percent lower than it is at for-profits; for midlevel executives it is 20 percent to 25 percent lower. For executive directors, it is at least 50 percent lower, compared with a C.E.O.’s salary.

Why not let pharmacists treat patients?

Pharmacists in the US go to school for eight years and then become glorified bean counters, filling prescriptions by hand that could be done better, faster and cheaper by machines. Now Great Britain is letting them treat patients without a physician:

While many countries are slowly loosening the rules on non-doctors giving out medicines, none has given pharmacists as much power as Britain has in its effort to increase services and cut costs to a financially overburdened health system. ...

Last week, Britain issued a new government strategy to strengthen the role of pharmacists even further. According to the proposal, pharmacists will be the first port of call for certain ailments (colds, minor stomach and skin problems). That will save doctors 57 million consultations a year, officials said. In the near future, the government also hopes pharmacists will routinely screen people for vascular and sexually transmitted diseases, as well as giving vaccinations.

How much does it cost to die?

Depends on where you do it:

Differences in the last six months of life were even more striking. Medicare spent an average of $52,911 for U.C.L.A. patients and $28,763 for those who used the Mayo hospital, St. Marys. ...

"Some chronically ill and dying Americans are receiving too much care -- more than they and their families actually want or benefit from," Dr. Wennberg said. "Contrary to popular assumptions, it's the volume of services, not the price per service, that accounts for most of the variation in Medicare spending."

Smoking Bans Kill

As we note in our book, Henry Hazlitt, former editorial-page editor of The Wall Street Journal, reduced all of economics into a single lesson: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists of tracing the consequences of that policy not merely for one group but for all groups."

Here's some evidence of an interesting unintended consequence of smoking bans that are passing in many local areas across the country. The Capital Times of Madison, Wisconsin reports on a study authored by Scott Adams of the University of Wisconsin-Milwaukee Economics Department and Chad Cotti of the University of South Carolina, which will be released in the Journal of Public Economics. According to the article,

[the study] found an increase of fatal accidents involving alcohol after communities prohibited smoking, compared to arrests in communities without a ban.

The authors attribute that to people driving to places without a ban, and also to driving farther to find a place within a ban area that has an outdoor smoking accommodation, such as a patio.

"The increased miles driven by drivers who wish to smoke and drink offsets any reduction in driving from smokers choosing to stay home after a ban, resulting in increased alcohol-related accidents," the study says.

Not for profit, but certainly not for loss

When the US antitrust agencies analyze mergers involving non-profit hospitals, the parties often argue that the merger is is pro-competitive because any anti-competitive proceeds will be used for charity care of patients. The agencies, if not the courts, always reject this argument and treat non-profits as if they were trying to maximize profit. Now we have some evidence that the agencies were right:

Nonprofits, which account for a majority of U.S. hospitals, are faring even better than their for-profit counterparts: 77 percent of the 2,033 U.S. nonprofit hospitals are in the black, while just 61 percent of for-profit hospitals are profitable, according to the AHD data.

How do they do it? By avoiding their historic responsibility to provide charity care:

In 2006, Northwestern Memorial spent $20.8 million on charity care — less than 2 percent of its revenues and a fraction of what it received in tax breaks.... In 2006, Northwestern Memorial's former chief executive officer, Gary Mecklenburg, received a $16.4 million payout.

...and by making tax free investments:

Untaxed investment gains have greatly increased some hospitals' cash piles. Ascension Health reported net income of $1.2 billion in its fiscal year ended June 30, 2007, and cash and investments of $7.4 billion. That's more cash than Walt Disney Co. has.

Has your city's housing market hit bottom?

Find out at nationalcity's housing market analysis. Nashville's housing market is "fairly valued", or 1.1% below fundamental value.

How many economists does it take to cure the obestity epidemic?

None--the market will do it.

Medical-device makers, venture capitalists and surgeons are racing to turn a once-controversial weight-loss procedure into the next big thing in elective surgery. Once dismissed by some surgeons as a gimmick, gastric banding -- in which a silicone band is wrapped around the upper stomach to restrict food intake -- is now the focus of a fierce competition pitting consumer-products giant Johnson & Johnson against Botox maker Allergan Inc. Venture-capital-backed outpatient centers are popping up to implant the bands. Growing ranks of surgeons are touting the procedure at free public seminars. All see a vast market in a country where diet and exercise programs have failed to slow an obesity epidemic.

Demand is down, supply is up, so why are oil prices rising?

The answer: Investment demand is increasing because oil is a hedge against dollar inflation:

the oil market is coming to resemble the gold market (which has also been soaring). ... most gold traders don't even ask the question of how much gold was mined last year or how much spare gold mining capacity there is.

What happens when you raise the cost of cheating?

Women cheat less.

Never mis-underestimate stupidity

What do you get when you elect a populist/leftist whose husband was recently president? The answer from Argentina:

With world prices for wheat and soyabeans at record levels, Argentina's president, Cristina Fernández de Kirchner, reckons that the farmers ought to share their windfall with the rest of the country. And the idea is catching. With stocks of some staple foods suddenly in short supply, governments around the world are slapping taxes or quotas on agricultural exports in the hope that this will stop prices from rising at home.

Virtually every tariff is a little piece of economic madness; but one aimed at hobbling your best exporters would seem to take the galleta. ... Néstor Kirchner, Ms Fernández's predecessor and husband,... even banned beef exports for six months, wrecking years of patient brand- and market-building abroad and encouraging farmers to switch to crops. His public-spending binge has turned robust economic recovery into wild overheating.

Is the US losing its labor mobility? (redux)

In past blogs we have talked about how the housing downturn has made it difficult for workers to move to where the jobs are, reducing the US economy's ability to respond to shocks. This will exacerbate a downturn.

When housing is not an obstacle, more than five million men and women, nearly 4 percent of the nation’s work force, move annually from one place to another — to a new job after a layoff, or to higher-paying work,

Retireees are also having a hard time moving to be near their children.

What do you get when you reward carelessness?

Even my kids know the answer.

About 50 million homeowners have mortgages. Who wouldn't like the government to cut their monthly payments by 20 percent or 30 percent? But Frank's plan reserves that privilege for an estimated 1 million to 2 million homeowners who are the weakest and most careless borrowers.

What would it take to compensate you for moving your business from Denmark to Angola?

But the US is slipping. From the Economist:

Fundamental features of America's business environment will remain attractive (deregulated labour markets, the high quality of infrastructure, leadership in technology) ... Other countries will make improvements to their business environments, while the overall quality of conditions in America will stagnate.

What would it take to compensate you for moving from Oslo to Caracas?

...a 300% raise. From the Economist.

We knew this already--but keep reminding us

Anyone who reads this blog knows about the US entitlement problem. Treasury Secretary Paulson took the first of twelve steps by recognizing that the problem exists:

The Social Security program is financially unsustainable and requires reform...[and] the Medicare program poses a far greater financial challenge than Social Security.

Not exactly a rousing call to arms. I prefer Cato's characterization as it comes close to using what is known as the "dead baby defense". If you can link a policy to infant mortality, you win the debate.

...It cannot pay future benefits without drowning our children and grandchildren in a sea of debt and taxes.

Game Theory View of Doping in Sports

The most recent Scientific American offers an article by Michael Shermer that views sports doping from a game theoretical perspective. A few of the key ideas:

Game theory highlights why it is rational for professional cyclists to dope: the drugs are extremely effective as well as difficult or impossible to detect; the payoffs for success are high; and as more riders use them, a “clean” rider may become so noncompetitive that he or she risks being cut from the team.

The game theory analysis of cycling can readily be extended to other sports. The results show quantitatively how governing bodies and antidoping agencies can most effectively target efforts to clean up their sports.

Expensive euro ends Irish miracle

In this blog, we have lauded Irish economic policy.

Starting more than three decades ago, policymakers slashed corporate taxes, pumped money into higher education, deregulated aggressively, and courted multinationals desperate to escape the slow-growth, red-tape environment of Continental Europe. The strategy worked brilliantly: Ireland's economy expanded an average of 6% annually for a decade or more.

But now the miracle is over, as the euro surges against the dollar and sterling, the currencies of Ireland's two biggest trading partners. GDP growth is forecast at 1.6%.

How to prepare for a slump

The financial and housing sectors have already begun to slow down. What should your company do if the slowdown spreads to the rest of the economy? Here is the answer from McKinsey:

The prospect of a prolonged downturn should lead to the introduction of more severe contingency plans for managing credit risk, freeing up cash, selling assets, and reassessing growth. But executives should also think through the opportunities that a downturn provides. .... A downturn can be a great opportunity to hire talent, to continue spending on long-term strategic initiatives, and to target acquisitions.³ Companies that now enjoy strong balance sheets have a good position to take advantage of current credit market conditions and reap outsized value for shareholders.

...Executives must therefore understand how to make costs more variable, and CFOs need to understand how to get their balance sheets ready to do so. The desirable moves include shaping the investor base to generate support for ideas that might seem to go against conventional wisdom in a downturn and could require a reduction in dividends. Companies shouldn’t rule out investigating and approaching potential financial partners, such as private-equity players or sovereign wealth funds, whose resources could help their allies to make the most of a slump.

Off-color humor: Eliot Spitzer's new political ad

Dem's vs. Repub's on interpreting failure

There are two policy reactions to observed failures. Democrats are more likely to think that more regulation is necessary to prevent future failure while Republicans are more likely to intrepret failure as the normal functioning of markets which punish bad behavior more swiftly and surely than the government could. The loss associated with failure creates an incentive to avoid future failure.

These two views are manifest in this video policy debate. In the case of Bear Stearns, Democrats want new regulations while Republicans think the market punished Bear Stearns for investing heavily in mortgage-backed securities.

Humor: Anonymous Philanthropist Donates 200 Human Kidneys To Hospital

Anonymous Philanthropist Donates 200 Human Kidneys To Hospital