Pay Limits and Adverse Selection

Some AIG executives are quitting over pay limitations imposed by the government. And, who do you think are the most likely people to quit? The better employees, of course.

Cut out the middleman

By going straight to a medical lab:

The name of one fast-growing chain of walk-in labs encapsulates the field's business model, Any Lab Test Now. The company says it can generally have testing results within 24 hours and at a cost that is as much as 80 percent less than going through a doctor. The lab franchises offer up to 1,500 tests, from a simple cholesterol check to more sophisticated packages of tests that address complex medical issues.

Everyone wants to go to heaven, but no one wants to die

The Secretary of Agriculture is concerned that farmers will respond to the incentives to reduce carbon by--get ready for ths--reducing carbon. 

According to the economic model used by the department and the Environmental Protection Agency, the legislation would give landowners incentives to convert up to 59 million acres of farmland into forests over the next 40 years. The reason: Trees clean the air of heat-trapping gases better than farming does.

"If landowners plant trees to the extent the model suggests, this would be disruptive to agriculture in some regions of the country," he said.

XKCD Learns the One Lesson of Business

The XKCD web comic takes the Spinal Tap "These go to eleven" scene to its logical business conclusion.















Note that the original's alt-text jokes about confusing averages for marginals.

Want to be Happy? Be a Teacher

The the Gallup-Healthways Well-Being Index indicates that teachers score highest "on how they evaluate their lives, access to resources needed to lead a healthy life, emotional health, and their the likelihood of engaging in healthy behaviors."

Increasing Incentives to Donate Organs

Continuing our interest in the issue of organ donation, here's some promising news from Israel. The country now gives higher priority in receiving donated organs to those who have volunteered to donate themselves. Close relatives of volunteers also receive higher priority.

The story quotes the head of science and ethics at the British Medical Association, who has some concerns. "Once you start prioritising certain groups, for example those that sign up to the organ register, patients who are really sick and in danger of dying if they don't receive an organ may end up being pushed to the back of the queue".

I think this really misses the point. If you don't do something to increase donation rates, patients who are really sick and dying aren't going to get an organ.

(HT: Marginal Revolution)

Last Minute Gift Idea

Shouldn't everyone have one of these?


Available from the American Economic Association for only $15. Uncle Miltie looks particularly happy.

Lincoln Electric: how to align the incentives of employees with the goals of the organization

Zoning run amuck

Gallatin Pike is one of the main commercial corridors in Nashville.  It is home to pay day lenders, pawn shops, and used tire stores.  In July 2007, NIMBY residents rezoned it for coffee shops, art cafes, and book stores.  Here is my take on the likely effect of the zoning.

• The Gallatin SP zoning creates mismatch between (zoned) supply and demand which causes reduced sales, investment, and tax revenue
  

• The alternate view, that SP zoning would create new demographics (higher density) to support the zoned uses seems unlikely because the compliance trigger reduces incentive of existing firms to renovate or rebuild

Microfinance Impact

Tim Harford, the Undercover Economist, reviews recent evidence on the value of microfinance programs. The title of the article gives away the punchline: "Perhaps microfinance isn’t such a big deal after all"