The Opportunity Cost of Masking

CNN Medical Analyst changes her mind about masking:

Masking has harmed our son’s language development, and limiting both kids’ extracurriculars and social interactions would negatively affect their childhood and hinder my and my husband’s ability to work.

Analysis from Fee.org:

For most of the pandemic, many Americans and most public health officials refused to acknowledge the reality of tradeoffs. In 2021, The New York Times described a phenomenon known as “Covid Absolutism.” It consists of two primary factors: 1. Taking every conceivable step that could reduce the spread of Covid regardless of its actual effectiveness; 2. Downplaying or ignoring the unintended consequences and tradeoffs of these policies.

Unfortunately, politicians on both sides of the aisle never admit to tradeoffs when they discuss policy. That may be what makes economists valuable.

Do Workplace Diversity Programs Work?

The Economist suggests that they don't: 

Frank Dobbin and Alexandra Kalev ... collected data on anti-discrimination training programmes and ... found that ... the group [whose representation increased among managers] were white men. 

One large experiment compared the effects ... interventions to reduce unintentional biases, such as reading a vivid story with a black hero and a white villain. ... all reduced implicit bias ... But when retested one to five days later, the effects of all interventions had faded.

Nonetheless, these ineffective programs remain popular because judges view them of "evidence of compliance with civil-rights laws..."

Collapse of Britain's Single Payer

from link:

Breast cancer sufferers had critical mammograms cancelled due to the pandemic. Nine out of ten NHS dental practices are not accepting new adult patients. GPs are quitting in droves. An unwell father of two waits 20 hours in A&E, refusing to leave until he gets a blood test, which ultimately reveals he is suffering from terminal leukaemia. A patient who, during lockdown, had his blood pressure managed remotely finally discovers his problem isn’t high blood pressure: he’s got a brain tumour.

HT:  marginalrevolution.com 

President Biden pours “roughly half trillion dollars of gasoline on the inflationary fire already raging"

Right after Congress passed President Biden's spending bill, increasing subsidies to consumers for Electric Vehicles,

GM and Ford had raised the prices of certain electric models by between $6,000 and $8,500, roughly matching the $7,500 tax credit introduced under the inflation bill.

Anticipating crticism, GM and Ford say, "The price hike was 'completely unrelated' to Democrats' inflation bill," said a GM spokesperson. (link)

Now, Larry Summers has warned the President that student debt cancellation would make inflation even worse [as above, by increasing demand.] 

And, as deserving as college students may be, there are better uses for the money:

“Debt relief rather than head start? Adequate funding of fundamental science? COVID care? Strengthening opportunities for non-college workers? I don’t get it.”

UPDATE:  Megan McArdle (Wash Post) piles on:

How many ways can a single policy be bad? This one could cost the federal government somewhere between $400 billion and $600 billion, completely unpaid for. Its legality is at best an abuse of the law to address the “national emergency” of upcoming midterm elections. It will pour “roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning,” says Jason Furman, formerly the top economic adviser to President Barack Obama. And with the income caps set so high, it remains an extremely regressive policy, heaping benefits on the most affluent demographics, while leaving everyone else to pay the cost through some combination of higher taxes, lower benefits, or higher inflation and interest rates.

HT: Cramer 

Before risk-adjustment, Medicare Advantage applicants had to climb four flights of stairs

Since the plans were paid a fixed "per member per month" fee (pmpm), they could increase profit only by reducing costs.  So they located their sign-up rooms on fourth-floor walk-ups to "screen out" higher-cost applicants.

After risk adjustment (higher payments to plans to compensate them for covering higher-risk patients), they did enroll people with higher risk scores, but ...

... those people still tended to be significantly below the average cost in their risk category.  (NBER)

HT: Cramer

Hidden cost of the shutdown in Britain

From Yahoo:

The pandemic shutdown ==> delayed medical care ==> increased cancer and diabetes deaths today

“These come through more slowly – if cancer is not treated promptly, patients don't die immediately but do die in greater numbers more quickly than would otherwise be the case.”

The Government has admitted that the majority of the excess deaths appear to be from circulatory issues and diabetes – long-term, chronic conditions that can be fatal without adequate care.

HT:  MarginalRevolution.com

CEO's are talking price elasticity!

They probably read Chapter 6 and the NY Times Reports on what it calls their "obsession" with the idea that consumers purchase fewer items as their price increases.

Keurig Dr Pepper

“The good news is our brand strength has held up well in the face of new pricing with modest elasticity impacts across our portfolio during the quarter.”
— Robert J. Gamgort, chief executive

Callaway Golf

“To offset inflationary pressure, we have raised prices nicely this year and, as the avid golf consumer is both affluent and passionate, there has been no discernible pushback.”

Walmart

“The rising cost for essential items and customers’ reprioritization of spending led to significant mix shifts in our business.”
— John David Rainey, chief financial officer

Southwest Airlines

“Leisure travelers have a price elasticity effect where you can’t go much higher.”
— Andrew M. Watterson, chief commercial officer

Procter & Gamble

“As they are more exposed to inflation broadly in the marketplace, with the highest inflation in 40 years, it’d be naïve to assume the consumer is not looking at their cash outlay and their spending even in our categories.”

— Andre Schulten, chief financial officer

HanesBrands

“I think you’re seeing a macro environment change in the second quarter, and particularly towards the middle to end of the quarter, with the inflation really hitting the consumer, and you saw an inflection point in the consumer behavior.”
— Stephen B. Bratspies, chief executive

Crocs

“We anticipate, as the drag of high interest rates, high inflation and uncertainty continues to impact the consumer, that they will soften as the year goes on.”
— Andrew Rees, chief executive

Sweetgreen

“In Sweetgreen’s 15-year history of sales patterns, we’ve never seen this before. Our historical seasonality always showed growth during this period.”

— Mitch Reback, chief financial officer 

Hershey:

“In the first half of the year, we saw minimal price elasticity across our portfolio,” Michele Buck, the chief executive of Hershey, told investors. “We continue to expect more elasticity in the second half of the year than what we have experienced year to date.”

HT:  David

Digitization and University Market Structure

Arizona State University (ASU) will enroll 140,759 students this year. They plan on continuing to increase enrollment aggressively. Some are larger, but for decades most higher-tier US universities have enrolled 30,000 to 40,000. ASU was at around 50,000 students less than a decade ago. So this is a huge jump. This can be interpreted as the university Minimum Efficient Scale (MES), where costs per unit is at its lowest, has increased three or four fold.

ASU has done this by being aggressive about online education. Nearly half of these students will be online. Michael Smith has a project examining the economics of digitization in higher education. Digitization represents some key differences. For example, quality of instruction may be harder to maintain, but this may simply reflect fits and starts in using the technology. But a nearly universal finding is that information goods scale considerably. And this increases the MES considerably. More of ASU's enrollment increases are from out-of-state students and international students than most universities. If this trend continues, more students will be served by many fewer universities that are not constrained regionally. Or, competition between universities will increase dramatically. Who will the winners and losers be?

Exchanging dollars (USD) for Argentine Pesos (ARS)

 From Free Think:

ARS has a pegged exchange rate, meaning its value is not set by market demand like USD but rather is set by government mandate — and the pegged exchange rate almost always overstates the value of the peso. As a result, there is a thriving black market ... If you bring $1 USD to a legal exchange, you get just 110 ARS pesos, whereas you’ll get 215 ARS pesos in return for that same dollar at a cueva ["cave" or illegal "black market"].

And the government keeps printing money, which devalues the currency, and eats into savings:

If you’d saved $100,000 USD worth of pesos in 1995, they would be worth about $310 USD today. In the mid 1990s, 1 ARS = $1 USD; as of July 2022, the value is 322 ARS = $1 USD. Anyone who held onto pesos in that time would have had their life savings obliterated.

Argentinians have learned that it’s much better to save in other countries’ currencies, and the favorite for decades has been USD, particularly in the form of $100 bills.

As a result, Argentinians are using Crypto (mostly stable coins), rather than ARS, to move money around, mostly in illegal "black markets."   

BOTTOM LINE:   Crypto will make it harder for a country with its own currency to profit by printing money (no one will accept it) and make it easier to evade taxes (because governments cannot track transactions in cryptocurrency.  

HT:  MarginalRevolution.com

100 Rules for living (lot of econ in these)

Dru Riley's 100 Rules

5. “Use models.” — Don’t recreate the wheel. Learn from others and save time. 

12. “Set goals. And work backwards.” — Use big goals and small goals. Milestones can expose whether you undershot or overshot.

19. “Think probabilistically.” — Think grey. Not black and white. This comes from Annie Duke and her book, Thinking in Bets. Assign percentages to your beliefs instead of speaking in absolutes.

20. “Short engagements. Test situations.” — Test partnerships and commitments with trial runs. Build a small project together before going all in.

21. “Red team. Blue team.” — Approach decisions as a critic and a supporter. Answers often reveal themselves.

25. “Use simple language. Few syllables. Short sentences. Short paragraphs.” — Simplicity is hard to achieve. Work hard so your audience doesn’t have to.

26. “Our brains are built to enjoy stories.” — Stories help information stick.

28. “Don’t argue. Bet.” — Test belief through sacrifice not words.

29. “Appeal to interest, not reason.” — We don’t care about what makes sense. We care about what makes sense for us.

34. “The more you understand incentives, the less you take things personally.” — Incentives drive behavior. Sometimes it’s not personal. Change incentives instead of trying to change people.

41. “Negotiation and business are about alternatives.” — Good decisions are relative. It’s about choosing the best option among alternatives. Know your BATNA.

47. “If you decide to only do what works. You’re leaving a lot of opportunity on the table.” — Experiment.

54. “Keep it simple.” — Stay away from unnecessary complexity. “Everything should be made as simple as possible, but not simpler.” -Einstein

57. “Start with problems. Not solutions.” — Start by studying the problem instead of offering solutions. Study the lock before you make a key.

67. “Copy businesses that are working. These are formulas. Steal and improve them.” — Find a proven market. Study the problem. Be different or better or both.

95. “Get the incentives right.” — It’s the most important thing in management. You get what you reward. Align incentives.

HT:  Donna